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ECONOMICS LEGISLATION COMMITTEE
08/05/2000
Excise Tariff Amendment Bill (No. 1) 2000

CHAIR —I welcome representatives of the Australian Taxation Office and the Australian Customs Service. I remind committee members that, under the parliamentary privilege resolutions agreed to by the Senate, officers of a department of the Commonwealth or of a state shall not be asked to give opinions on matters of policy. Officers shall also be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. Do any of you wish to make an opening statement?

Mr Jackson —We have provided a response to the committee. I should note that response needs to be read in conjunction with the Customs response because the two things interact. We hope that addresses the concerns of the committee. I would like to add, as I think the commissioner has said in a statement a little while ago, that our preferred solution to these sorts of issues is a systemic one. We would look to take that approach when confronted with any issues by industry.

CHAIR —Any questions senators?

Senator MURPHY —I would like to ask a question of Customs with regard to the fuel substitution. In your submission you state on the second last page:

Under World Trade Organisation agreements constraints exist which prevent Australia increasing duties on imported goods unless similar taxes apply to locally produced goods.

With regard to the toluene matter and, as I understand, what the principal uses for toluene are, why was it not the case that you picked up the significant increase in the importation of toluene as an issue?

Mr Burns —There are a large number of goods that come across the border on a daily basis. Customs' role is administering the clearance procedures, the classification of the goods, the description of the goods, making sure the values are correct, that the right duty is collected, et cetera. We do that on behalf of a wide number of agencies in terms of their policy interests. We just do not keep a monitor as to what is coming across the border on a daily basis. We rely on advice from the policy agencies who have concerns in that regard to give us advice that there is something that needs to be addressed and we then jointly address it.

Senator MURPHY —That to me is no solution at all. For instance, if the tax office, being the interested party from an excise point of view or a tax point of view, do not know that the stuff is coming in then it is not an issue for them in terms of the volume. What you are saying to me I think is that, unless somebody raises an issue with you with regard to volume—we are not talking about small volumes here; there was a huge increase—I would have thought that, as part of your monitoring processes, you would keep tabs on what is seen to be a level of import at something like five per cent of the total domestic use at one point and then it went up out of all proportion in a very short period of time. I cannot understand how Customs would not pick that up.

Mr Burns —Once the issue was brought to our attention—

Senator MURPHY —I know that, Mr Burns—once it was brought to your attention. What I am talking about is, before it gets brought to your attention, why can't Customs pick some of these things up? That is the fundamental issue here. If this had not been brought to your attention, it would have continued.

Mr Burns —That is probably true. Customs has a range of procedures where if the agencies with portfolio responsibilities bring things to our interest like drugs then we can profile those goods. We can make sure that when trends are discernible importation figures are available to us. We would then pass those, as we did in terms of toluene, over to the ATO so that we were providing them with that information. We do that for a whole range of goods for a whole range of agencies on a daily basis. So mechanisms for doing that are pretty straightforward and simple once the issue has been brought to our attention to do that. Customs does not come to work on a particular day and decide to report a particular good to a particular department just because we think it is a good idea. We need that advice from the agencies with the expertise. Once they tell us that we need to monitor red pencils, then we will monitor red pencils. The system is not fail-safe because if somebody imports red pencils and describes them as pens then we would not necessarily know without inspecting those shipments. But where the goods are properly described, then our commuter systems are very able to provide that information.

Senator MURPHY —With regard to toluene, I think you said that there was an `inconsistency between the excise and customs tariffs whereby locally produced toluene was taxed but imported chemical grade toluene was duty free'. Was there a difference between chemical grade toluene and locally produced toluene?

Mr Burns —I am not a chemist—

Senator MURPHY —Who wrote this letter?

Mr Burns —The imported toluene was higher quality, shall we say, produced under different circumstances. It had not featured in anybody's thinking as a fuel substitute until the end of last year when it was brought to our attention. As I say, we monitored it from then on.

Senator MURPHY —I do not know how many tonnes came in from memory, but can you tell us what were the reasons given on the importation documentation?

Mr Dawes —The goods were just entered in the normal course of trade and no reason was presented to Customs for end use or other purposes. The nature of the tariff before the amendments were made was such that it was freely available and able to be imported and entered for home consumption free of duty.

Senator MURPHY —You say in your letter that inconsistencies of this type—and I am referring to what I read out before—are rare and consultation between the two agencies, that is the ATO and yourselves, should prevent a recurrence. Let's assume that there is some other product—I am not a chemical expert either—other than naptha or toluene. If they do not know and you do not know, who is going to tell somebody?

Mr Burns —I think that is also part of the extended relationship between government and industry. Gentlemen like Mr Kevin who are in the industry and know what is going on will have close relationships with the ATO and ourselves. That information comes to us, and we are then able to jointly, or independently as the case may be, discuss what all of that means, undertake monitoring arrangements, or whatever action is agreed, to see whether we have a problem.

Senator MURPHY —The letter goes on to say:

The principal risk in relation to imported products is posed by misdescription to avoid the classifications subject to the excise equivalent rate. Instances of this practice have included importation of products that are essentially diesel fuel described as lubricating oil or solvent, which are not subject to the excise equivalent duty.

How did you actually work that out? Was it ad hoc testing?

Mr Burns —Where we have a suspicion that the goods being entered are not in fact what they are being described as then Customs has powers to take samples and test those products and draw our own assumptions after we have the results of those tests as to the correct classification of those products. And we have had in this particular industry considerable experiences where goods have been imported as one thing when they are in fact another. That can happen for a number of reasons. If it is a deliberate intention to deceive Customs, then the goods can be misdescribed in the import documentation themselves—and we have seen evidence of that. We have seen evidence where Australian buyers and importers have ordered fuel from overseas and ask that it be described as XYZ instead of ABC—XYZ is free and ABC is not. It comes to us and, unless we have some reason to suspect that particular shipment, it is a moot point as to whether we pick it up. We have experience with those sorts of things in this industry.

As we heard from the gentleman from Liberty Oil, this industry is very adept at changing very quickly what it is mixing and blending so what was being blended in week 1 does not necessarily feature in week 2. The agencies can get all revved up and ready to go in terms of the first week's blending and not even know that the second one is around and therefore always be a bit behind the game in that sense. We need to overcome that. We have attempted to formalise much closer working relationships with the Australian Taxation Office to assist in that regard. Imported product is not all there is about fuel substitution. We certainly are very interested in making sure that any imported products are properly described and that the proper customs duties are paid and, as Mr Jackson said, in the sense of the context of imported product, coming to be part of the systemic solution for the government in addressing these issues.

Senator MURPHY —But fuel substitution has been around a long time. Has it ever been the case that you have had a list of potential substitute products?

Mr Burns —I can only talk for Customs in the time that we were responsible for fuel substitution.

Senator MURPHY —How long has that been?

Mr Burns —I was at the forefront of the fuel substitution legislation in the Customs Act and putting together all the administrative arrangements that supported that process. I was very heavily involved in discussions with industry through the AIP with the big four companies. I have met Liberty Oil on a couple of occasions. The nature of the business, in the time that I was very closely associated with it, was that it was both an import but more a domestic product substitution issue. The imports issue in the mid 90s, which is, as I say, when Customs had the responsibility, was heating oil. There were examples of other products as people tested things. But there never was a definitive list because, as we have heard from the Liberty evidence, anything is interchangeable basically so long as you just keep mixing them up. One of the frustrations we had was that there was no benchmark of a definition of what is diesel or what is petrol or what is this or what is that in order that when you did test something you could say, `Ahah, I have something that is described as this but in fact it is something else.' There is a DNA approach to fuel, and what continually showed up for Customs was that what we were testing had the characteristics of a wide number of petroleum products and it made enforcement and prosecution and all of those sorts of things very difficult for us—impossible, in fact.

Senator MURPHY —Was toluene ever mentioned as a potential fuel substitution?

Mr Burns —Toluene has been around in the past, yes. When Customs entered the fuel substitution industry toluene did not feature largely in the scheme of things—as I said, heating oil was the big issue back then—but it was around. It seemed to, as I say, disappear.

Senator MURPHY —It seemed to loom very large in recent times.

Mr Burns —Indeed.

Senator MURPHY —That is why I am curious as to why with some previous knowledge when it was in the picture that you would not pick up what were huge volumes. Has any assessment been made of the excise that was lost?

Mr Jackson —I think the commissioner is on record as making a statement that if all the toluene imported was diverted to fuel substitution then the maximum amount of revenue might be in the order of $10 million. It is highly unlikely that all of the volume imported was substituted.

Senator MURPHY —Where would it have gone?

Mr Jackson —If not substituted?

Senator MURPHY —Yes.

Mr Jackson —There is a whole range of legitimate chemical uses for toluene in solvents and the like.

Senator GEORGE CAMPBELL —You said that it was `highly unlikely' that all of the imported toluene was used in fuel substitution. Have you specific evidence of that?

Mr Jackson —I cannot produce a bit of paper for you. But in any situation things go to different uses; they are not exclusively for one use. I guess there is some possibility that it all did go for substitution but highly unlikely.

Senator GEORGE CAMPBELL —I may come back to Mr Kevin in a few moments, but we had evidence given to us that the domestic market requirements for toluene was essentially met by what was produced locally.

Mr Jackson —That might be right.

Senator MURPHY —You people should know that, with the greatest of respect.

Mr Jackson —The question was: what was the volume? The response was that if all the toluene that was imported was substituted the revenue consequence would be about $10 million.

Senator MURPHY —But insofar as we are trying to understand this issue as a problem, as Senator Campbell said, we were provided with information that, as I understand it, Shell is the only domestic producer of toluene and they essentially made enough to supply the domestic market needs. There was some degree of importation albeit small. I am curious as to why you would not know the volumes, that the people who are chasing or should be chasing the excise on these things would not have some idea about the volumes that are legitimately used in a domestic market. If you do not, with regard to a proposition to have an excise on everything and then have legitimate users supposedly making a claim, how do we know which are legitimate users and which are not?

Mr Jackson —We can provide you with numbers of the known use of toluene domestically. If company A walks in tomorrow and says, `We have come up with a new process. We have created a new market. We are going to do this or that,' it could be that the volume of toluene could change significantly. It is those issues that surround the fuel substitution matters. The rate of excise or customs duty which is imposed on product depends on the intended use. If someone comes and says, `We intend to use that,' it is a prima facie case that it should be at the appropriate rate. I do not have the numbers to hand, but we can tell you what the domestic usage that we know of currently is. But the market changes constantly, as Mr Kevin said, not only in the illicit area but also in the legitimate area. Legitimate users are creating markets and changing their processes all the time. So it is a difficult issue. We need to know that it is happening. We have to find out that it is happening.

Senator GEORGE CAMPBELL —Do you say that the potential loss of revenue is $10 million?

Mr Jackson —For toluene, yes.

Senator GEORGE CAMPBELL —Perhaps you or Customs can explain then why the then minister, Warren Truss, said that in total $35 million was the potential fuel fraud under investigation.

Mr Jackson —That is probably not just toluene.

Senator GEORGE CAMPBELL —Perhaps you can explain then what proportion of it was toluene and what proportion of it was something else.

Mr Jackson —Sorry, I was not involved in the preparation of that.

Senator GEORGE CAMPBELL —I am putting the question to both ATO and Customs.

Mr Burns —As I understand that letter, it was 1998 or something like that?

Senator GEORGE CAMPBELL —I do not have the letter. I just have the quote.

Senator MURPHY —It talks of 1998-99.

Mr Burns —That would have been an estimate of the total value of fuel substitution cases that were in the investigations branch at the time.

Senator GEORGE CAMPBELL —What percentage of those was toluene?

Mr Burns —I do not have that information. I am not even sure that we could dig that out. Certainly my memory of fuel substitution in those early days for Customs was that heating oil was the vast majority of the substituted product. The toluene, as I said in my evidence, was featured as a substituter from time to time—whether that was imported toluene or domestically produced toluene, I do not know. We could try to get that information for you. As I say, it is just a matter of trying to work back as to what cases were the $35 million and—

Senator GEORGE CAMPBELL —How long would it take you to get that information? Is it tomorrow that we have to report this by?

CHAIR —Yes, tomorrow.

Mr Burns —I will do my best.

Senator MURRAY —Mr Burns, I go back to this kind of early warning system, which Senator Murphy was trying to expose. As far as I am aware, there is a national chemical classification agency—I forget the name of it—whose responsibility is to identify chemicals and their proper storage and usage and so on. That body has rights to search and entry and all the usual paraphernalia for making sure that things go on. Are you aware of that body?

Mr Burns —Is that body named NICNAS?

Senator MURRAY —What does that stand for?

Mr Burns —I am not sure what it stands for, but NICNAS fits that description.

Senator MURRAY —It is a national chemical classification scheme; I just do not know the acronym or the proper name of the agency offhand, although I can dig it up. I would assume that there would be an automatic link with you, particularly in the excise area, because they are required to establish that chemicals are what they say they are and are appropriately stored and classified and used. Is there an interaction with you?

Mr Burns —Again I can only speak for Customs in the time that we had the fuel substitution issue. We liaised very closely with that organisation when we introduced the marker system. That was done to make sure that it was acceptable to mix the marker into fuel and that it was not going to add any problems to the fuel—that the marker was not going to make it unusable, as it would in other industries such as drycleaning and what have you where it would in fact become a dirty cleaner and therefore unusable. So we spoke to that organisation extensively during the time we introduced the marker.

Customs retained Professor Trimm from the New South Wales University; he was the expert involved in the aviation fuel issue. We retained him to provide us with specialist interpretation advice for our investigators when we were running into these samples of fuel that we were testing. I do not doubt that what you say about NICNAS is true. All I know is that there was such a wide definition as to what constituted petrol, diesel, heating oil or any of those particular petroleum products that there was no definitive description with which we could then go back and compare the samples that we had just taken to discover whether this sample was diesel or whether it was this or whether it was that.

The analysis always told us that it was a product that contained a bit of crude oil, that certainly it had some diesel in it, that there was something else there and, if it had been blended on top of old fuels and what have you, it was whatever was in the tank at the time. And, if there had been a whole lot of different things in the tank over time, those features continued to come back up in the analysis, which was very specific. At the end of the day you had, if you like, a sample that had a very wide descriptor in terms of the scientific characteristics that could have been just about anything and it proved very difficult for us to get a handle on it to say that is or is not diesel or can or cannot be used in an internal combustion engine.

Then there was the issue as to whether or not it was an excise issue domestically produced or an imported issue that is where Customs has the responsibility now. The nature of the industry also is that not only were they very smart in terms of changing their modus operandi in terms of the blending product but also they had not committed an offence almost until the very last moment because the blending more often than not, in our experience, was the pouring of fuel A on top of what was in a tank. That was the blending act. If we were not there to see that at midnight or 2 o'clock, when a lot of these service stations and the like were refilled, or if we did not see it when these products were sent to the various distributor points around the place, then the evidence of blending became circumstantial and, therefore, again much more difficult to prove. So there is a collection of these difficulties.

Senator MURRAY —But, Mr Burns, you have not answered my question. This is my question—and let me rephrase it for you: do you have a formalised regular interaction with the chemical classification agency such that they can acquaint you with any idea they may have of something odd going on?

Mr Burns —When Customs had responsibility for fuel substitution, the answer to that question is no.

Senator MURRAY —And there is none now.

Mr Burns —That is for the ATO—certainly not in terms of imported product; we do not have a relationship with NICNAS in terms of testing the imported product. If we take samples, we have them tested and then we seek advice from the testing agency as to what that product is, `Describe that for us, please.' We then apply the rules of the customs tariff, which are an internationally accepted code, and make sure that the classification is the correct one.

Senator MURRAY —Perhaps I will hear from Mr Jackson as well. Let me give you an analogy. The tax office at present interacts with a number of authorities to try to ensure it maximises its revenue collection. So it interacts with the NCA; it interacts with the AFP; it interacts with AUSTRAC. In other words, it is using intelligence gathered by government agencies to try to keep its finger on tax avoidance. It is not always successful, but at least it is interacting with those bodies on a regular and formalised basis. In terms of a known and long-term problem of fuel substitution and of difficulties, as you have quite rightly outlined, of classifying products and picking up on whether they are excisable or not, it seems to me that it would be obvious that a formalised and regularised nature of interaction should exist with any agency that is capable of providing that, plus with industry bodies.

We all know that the AIP produced those tables and graphs of what is happening, what is being imported and what is being sold and so on. That comes back to the difficulty which Mr Kevin outlined, which was that it was he as a private operator who eventually had to blow the whistle, whereas Senator Murphy was saying but surely there were some indicators already in existence in terms of import statistics and what was going on that this was a problem. If we are going to avoid it in the future, not only must we address the legislation, which is the purpose of this hearing, but also we must surely address the question of early warning systems. Mr Kevin's point is that there are other products that can be used in this way. If the government in its wisdom decides not to make all products excisable, then we are forced to rely on you and other agencies doing the detective work and finding out about these things in time. So we should become proactive and not reactive. That is a fairly long introduction, but you can see where I am going with this and where Senator Murphy was going with his questions.

Mr Burns —Certainly. That is the sort of approach that underpins the relationship between Customs and the tax office at the moment where we are jointly examining a number of options for a systemic solution so that we do not have to keep rushing off and doing little bills like this every time some new substitutable product pops out of the woodwork. We are trying to ensure that there is a process that can take these things up and deal with them as they are discovered, for the very reasons that you and I have just been putting.

To go back to the beginning of your statement, the bottom line for Customs was that, in our experience, there was no set definition of fuels or petroleum products that we could then compare against, in terms of the analysis that we got when we took samples, to then say categorically that the sample was this and that it does not meet the standard of that, therefore it has been misdescribed and abused and, therefore, we can do something about it. That has been an ongoing frustration for us, regardless of where that NICNAS organisation sits. We even had trouble with the chemical experts at the New South Wales University; they could tell us what it was, but that did not give us too much of a definition in terms of what it could be used for because it could be used for just about everything.

CHAIR —In both of your submissions, you have made reference to the subcommittee of the Petroleum Liaison Committee as currently examining this option. Can you inform us where that is at? Are the recommendations far away? What is happening?

Mr Jackson —The committee has been in discussion for a period. I think there have been two or three meetings of the subcommittee. There are a number of difficulties because, as you would expect, the plastics manufacturers and the like use a fair bit of stuff that could be readily substituted for fuel. They are concerned, rightly, that any major change to the tariff, such as imposing a tariff across the board, would be an impost to them in terms of the value of money and so on. But we are looking at mechanisms to deliver a rebate or omission or something of that nature which will overcome those things. I could not say with any certainty that a solution is imminent, but we are certainly working on it regularly.

Mr Free —There is a further issue there in that the excise tariff for petroleum has two kinds of rates that are below the full duty rate. One is what is duty free, which is where product is used other than as a fuel; and Mr Jackson has just referred to those where there are people who are using product as solvents, chemicals and the like—perfectly legitimate businesses. It is very important that we address the type of cashflow issues that have been raised by members of the committee. There are also products on which the excise is approximately 7c a litre where they are used as a fuel but not in an internal combustion engine. They are colloquially known as `burner fuels' and some of the prominent burner fuels are heating oil and kerosene.

Another issue is that there is still a significant use of heating oil in Australia by private consumers where they have a heating oil tank on the side of their house and distributors deliver that heating oil to them. Through the subcommittee, we have engaged in discussions with AIP about finding firm information on how many such people there are because, if the excise rate on all products were to be raised to 44c, a significant number of private consumers using heating oil and kerosene could be seriously disadvantaged. We are still to get receipt of that information from the AIP, but we certainly need to assess the effect of such options on people who have the expectation that they will continue to receive products in some shape or form delivered to them at a net zero or lower excise rate.

Senator MURPHY —What are you doing about naptha?

Mr Charleston —Up until I saw the submission from Liberty, I was unaware that there was any rorting at all in respect of naptha. I sent a letter to Mr Kevin seeking information on what he had that would enable us to take some action, if such a rort were on.

Senator MURPHY —That is interesting. I do not know whether Mr Kevin is still with us. Can you hear us, Mr Kevin?

Mr Kevin —Yes.

Senator MURPHY —Mr Charleston has said that he was unaware of the naptha issue until such time as he had seen your submission. If my memory serves me correctly, that would seem to contradict the information that you gave to me.

Mr Kevin —I do not have any record of this letter that has been sent to me about naptha. I am pretty sure that in previous conversations the tax office said that they knew about naptha and, in fact, named some of the people who were involved in transporting this product around. So I am a little dumbfounded as well.

Senator MURPHY —Mr Charleston, do you want to respond to that?

Mr Charleston —I can only assume that that information was given to our investigation area, and I would not have been privy to that information. But there have not been any direct allegations given to my area about any rorting with respect to naptha.

Senator MURPHY —Mr Kevin, can you recall to whom you spoke in the tax office?

Mr Kevin —I can recall seeing John Charleston in a conference about two months ago about this exact thing. Maybe I have to write every conversation down and send it in a letter, but I am a little frustrated with what the tax office is saying.

Senator MURPHY —We have a bit of a problem here. It would appear from the tax office's point of view that we have no official complaint with regard to naptha being used as a substitute. Is that right?

Mr Charleston —That is my understanding.

Senator MURPHY —We will just see where we end up with that. That is interesting. I am sure that is interesting to Mr Kevin. If there is no official complaint, perhaps we need to get one in so that we can find out what the tax office will do to address that.

Mr Jackson —Could we place a copy of this letter on the record?

CHAIR —Certainly, Mr Jackson. The committee accepts the letter of 20 April 2000, addressed to Mr Kevin. It states:

Reference is made to your submission of 6 April 2000 to the Senate Economics Committee.

I note in your submission you allege that naptha is being transported to Sydney and Melbourne in order to be mixed with ULP without the payment of appropriate excise duty. It would be appreciated if you could provide further details of this alleged fuel substitution racket to this office to enable Excise to assess the allegation and institute appropriate remedial action.

If you wish to discuss this matter, please contact me ...

Then there is a phone number, and it is signed by John Charleston.

Mr Free —One further matter on the issue of naptha may be of use. As evidenced in that letter to Mr Kevin, we have sought details of any specific illicit use that he is aware of. In general terms, there have always been allegations that light crudes, condensates, naptha and the like are substitutable products. We have alluded to that in our submission.

The only recent issue that I am aware of in relation to naptha is that a licensed excise manufacturer who does produce naptha indicated to us that it had had approaches for naptha, and the approaches were framed in such a way that the naptha would have a chemical composition such that it could potentially be classified to those parts of the tariff where the lower excise rate is payable. That manufacturer was concerned about the issue of classification and it held discussions with us. The proposition we put to it was that, to the party that was seeking the naptha, it should say that it would only be provided on the basis of the ATO agreeing that it was appropriately classified as a product that would attract a lower rate of tax. I am not aware of more recent developments in that. But my understanding is that the proposal by the company that was seeking that naptha to this stage has not proceeded further.

Senator MURPHY —Even with regard to the tax office agreeing to allow the sale of this particular product and/or any other product with its chemical make-up such that it would attract a lower duty, that could still be a problem from a substitution point of view, could it not?

Mr Charleston —Apart from the chemical make-up, we would also address the issue whether it was a reasonable circumstance that the naptha could be—to use the technical term in the excise act and the excise tariff act—entered into home consumption at those lower rates or, indeed, whether there was any reasonable evidence that it was to be used as a fuel other than in an internal combustion engine, or other than as a fuel. The proposition that we would be putting would be that, unless there was such evidence, it should be classified at the rate that attracts 44c. I should stress that the party that has sought advice from us is the one that has expressed concerns to us that approaches were made to it about a product. It did wish to do the right thing, and we were in consultation with it on that matter.

Senator GEORGE CAMPBELL —I have a question for the tax office. When did the tax office take over responsibility for the task of testing for fuel substitution?

Mr Jackson —The AAOs that gave effect to the move of excise from Customs to the tax office were in October 1998. The actual move of staff across into the tax office was in February 1999. Customs retained responsibility for the fuel substitution staff and vehicles and the like up until the end of June 1999 on a sort of fee for service level agreement basis. Those staff and vehicles moved across to the tax office on 1 July 1999, or fairly close to that.

Senator GEORGE CAMPBELL —From that period, how many sites have been tested?

Mr Jackson —I cannot tell you off the top of my head, but I can look into it and find out what we have done there.

Senator GEORGE CAMPBELL —Will you take that on notice?

Mr Jackson —Certainly.

Senator GEORGE CAMPBELL —How many instances of fuel substitution were detected?

Mr Jackson —I guess I would have to do the same to find out what that is. But I should say there that our response to this issue is not to try to tackle it by enforcement action alone. The systemic solution, which is the subject of this inquiry today, was really to change the rates and change the tariffs to do away with the kind of mechanism that was allowing this to happen, rather than running around with trucks and trying to catch every single person, as Mr Burns said earlier, at 2 o'clock in the morning when they are tipping stuff into a service station tank somewhere.

Senator GEORGE CAMPBELL —It is fair to say then that you have virtually abandoned the testing process after 1 July 1999?

Mr Jackson —Not at all. The use of vehicles in the testing program would continue as part of our strategy but as a part of a multistranded strategy.

Senator GEORGE CAMPBELL —So you have continued with the testing process?

Mr Jackson —I can check and see what the actual numbers were and what success or otherwise we have had with that process.

Senator GEORGE CAMPBELL —Can you also check on what sites fuel substitution was detected at?

Mr Jackson —Okay.

Senator GEORGE CAMPBELL —Are you aware of how many prosecutions were commenced as a result of this testing?

Mr Jackson —From 1 July onwards, no, I am not.

Senator GEORGE CAMPBELL —Can you take that on notice as well?

Mr Jackson —Certainly.

Senator GEORGE CAMPBELL —Can you also take on notice how many proprietors have been found guilty of fuel substitution and what penalties were levied upon them?

Mr Jackson —Okay.

Senator GEORGE CAMPBELL —Can you tell us what resources were devoted to the task of testing for fuel substitution?

Mr Jackson —The full number of people who came over. Again, I would have to check that. The number of people who moved across from Customs to tax in February, or the funding equivalent, was about 260. There were about 17 additional people, I think, with fuel substitution in July—roughly.

Senator GEORGE CAMPBELL —So it was 277 all told.

Mr Jackson —In total. That looks right across the spectrum that is paying out diesel fuel rebates. It is collecting excise on tobacco, petroleum, alcohol products and the like.

Senator GEORGE CAMPBELL —Are those 277 personnel still working on the fuel substitution issue?

Mr Jackson —The 277 were never all working on the fuel substitution issue. That is the entire excise and diesel fuel operation.

Senator GEORGE CAMPBELL —Are they all still working on the total excise and diesel fuel substitution operation?

Mr Jackson —Sorry, they were not working on fuel substitution to start with. Some of them were; a number of people were.

Senator GEORGE CAMPBELL —What did you say the 277 were working on?

Mr Jackson —On excise and diesel fuel.

Senator GEORGE CAMPBELL —Are those 277 still working on excise and diesel fuel?

Mr Jackson —That is right.

Senator GEORGE CAMPBELL —None of them have been used in respect of the GST?

Mr Jackson —No, no-one has been moved off to GST, other than people who have applied for a job in the GST area and have been successful. Where that has happened, we have sought to backfill their positions.

Senator GEORGE CAMPBELL —You have replaced them?

Mr Jackson —We have. Indeed, we have increased the resource allocation into the excise area.

Senator GEORGE CAMPBELL —In a press release, dated 2 March 2000, the Tax Commissioner, Mr Carmody, said, `The Tax Office is responsible for ensuring the correct excise is paid on fuel; it is not responsible for the quality of the fuel.' On 25 June 1997, Minister Prosser, in the second reading speech to the Excise Tariff (Fuel Rates Amendments) Bill 1997 stated:

As well as a fraud on the government and the honest taxpayer, these practices designed to avoid paying the correct excise are also a fraud on consumers and on those honest participants who form the vast majority of the petroleum products distribution and retail system who wish to compete on level terms. In many cases, use of these fuels can greatly harm engine performance and expose consumers to great danger as the blends containing substituted fuel may have a much lower flashpoint than proper diesel.

Given that statement, why does the ATO believe it is not responsible for the quality of fuel? The second reading speech clearly saw the government taking an element of responsibility for that.

Mr Jackson —I cannot comment on the second reading speech. I do not know whether Customs can make a comment. That was considerably before our involvement. Our legislation does not empower us to deal with the quality of fuel. If people want to mix half a litre of water with half a litre of petrol and say that is petrol and, if they pay the excise on it, they have paid the excise. No-one wants that to happen of course, but we do not have legislative powers to deal with it.

Senator GEORGE CAMPBELL —You are saying that is an irrelevant issue?

Mr Jackson —No, I am saying we do not have the powers to deal with it.

Senator GEORGE CAMPBELL —Do Customs have the power to deal with it?

Mr Burns —No, but I think it was reflective of the circumstances in the industry at the time when Customs was involved in fuel substitution and there were some accidents or accidents had happened that we had heard about. I think the point is that it was not Customs responsibility but it was a responsibility of either other Commonwealth agencies or the state governments.

Senator GEORGE CAMPBELL —But I thought you were at that testing. Did you not have a series of trucks—

Mr Burns —Yes, we certainly did.

Senator GEORGE CAMPBELL —What did you do when you found that fuel substitution had occurred, that the quality of fuel was not up to scratch?

Mr Burns —The Customs function in those early days was to test for whether the marker was present in fuel and then to examine whether that fuel was in a situation where it was obviously being intended for use in an internal combustion engine. If that was the case, then we had fuel substitution, and we referred those cases to our investigations unit. As I have said in my evidence, our experience was very frustrating in terms of getting those cases to finality because of the difficulties we had with establishing a benchmark for fuel and other difficulties that were around at the time.

Senator GEORGE CAMPBELL —What did the ATO do with the vehicles purchased by customers?

Mr Jackson —Those vehicles continue to be part of our fleet and are part of our ongoing compliance and enforcement strategy. I think, just off the top of my head, we had a vehicle in Darwin. I do not think we have one there any more because I do not think there was sufficient work for it there. So we may have disposed of one vehicle. Again I could check for you. But other than that, as far as I know, they are all still available and ready for use.

Senator GEORGE CAMPBELL —Can you check where they are now, how many of them were sold, whether they were put up for sale and how much was received for them?

Mr Jackson —Yes.

Senator GEORGE CAMPBELL —In a press release dated 3 March 2000, the Tax Commissioner said, `Complaints of fuel substitution involving abuse of lower excise petrol and diesel, heating oil and solvents were raised with us in mid-1999.' What did the ATO do when it became aware of this?

Mr Jackson —We certainly commenced the process which has lead to the legislation that is the subject of today's inquiry.

Mr Free —As previously mentioned in evidence, the tariff is such that where there is an intended end use of certain petroleum products, other than in internal combustion engines, lower rates apply. There are people who have a legitimate use for those lower rates, including private consumers in the case of heating oil and kerosene, and industry such as paints, solvent users, chemical companies where petroleum products classify for tariff where they are used other than as a fuel.

In the tariff, we wanted to address the issues of those products that were being exploited but at the same time ensure that we protected the interests of the legitimate users and did not impose costs or red tape, as you would call it, to put them through a fairly administrative cumbersome process so that they could continue to access those products. We wrote to a number of industry associations representing users of the products including the AIP, the Plastics and Chemicals Industry Association, the Australian Paint Manufacturers Federation and commenced a consultation process directed at systemic solution whereby we would change the tariff and remove some of the items that were being abused and, where there was a real legitimate usage, replace those by other mechanisms.

Those consultations took place over some time because we found that it was, in certain instances, difficult to preserve those entitlements and also, because of the way the legislation was written, there are certain parts of the tariff that are not easy to change. That matter is being addressed systemically in another bill that is being introduced into the House of Representatives. But we engaged in that discussion with industry and recommended a tariff to the government that was accepted. Under parts of the excise tariff act, there is a mechanism where a tariff proposal can be introduced into the House of Representatives. Certain parts of that act protect revenue collected under that tariff proposal until it is legislated—and it has to be legislated within the next 12 months. These bills actually formally legislate those tariff proposals.

Senator GEORGE CAMPBELL —I understand all of that as far as the legislation that is currently before this committee. What other action did you take in respect to the substitution that was occurring? Did you attempt to take any action against the individuals or companies that were engaged in the substitution? Did you investigate the complaints, or did you simply put all your eggs in this basket?

Mr Free —We certainly put a lot of effort into this particular process, which was designed to choke off the supply in a systemic fashion of those products that were being abused. As I think we have mentioned—

Senator MURPHY —One successful prosecution?

Mr Free —We mentioned in our last submission that there is no doubt that the legislation that governs the marking regime can be improved and made better, and we have also instituted action to do that, which will be delivered by the legislation that has been introduced into the House of Representatives.

Senator GEORGE CAMPBELL —And as Senator Murphy rightly says, there has been one successful prosecution.

Senator MURPHY —This is the first successful prosecution relating to misuse of marked fuel.

Mr Free —My understanding is that there are a number of cases currently before the courts but, because of the time taken for cases to proceed through the courts, only one has come to conclusion and, as you are aware, a gentleman in Queensland was sentenced to a jail sentence for misuse of marked fuel, although my understanding is that the prosecution was made under the Crimes Act because of the nature of the offences.

Senator GEORGE CAMPBELL —Can you take on notice, if you cannot answer it now, how many prosecutions have actually been launched?

Mr Free —Okay.

Senator MURPHY —In your submission you talk about `the first successful prosecution', is that just for the time that the tax office has been looking after this or is that the first ever?

Mr Jackson —Certainly as long as the tax office has been looking after it, but I cannot speak for Customs.

Senator MURPHY —Perhaps Mr Burns might inform us.

Mr Burns —I will have to take that on notice. I think my recollection accords with the circumstances that Mr Free alluded to, and that is that a number of these investigations are very complex and are suffering from a number of frustrations. I do not think there had been a successful outcome to any of them when the function of fuel substitution shifted from Customs to the ATO but I will check what records I can.

Senator MURPHY —It might be useful for us to have that information as well.

Senator GEORGE CAMPBELL —Mr Jackson, when and how did ATO become aware of the toluene substitution?

Mr Jackson —I think our first advice of toluene substitution was in January of this year when we received some information. I do not have the letter to hand. Do you remember whom it was from?

Mr Free —By toluene, let us stress that what we are talking about is the chemically pure form of toluene that is classified in the customs tariff as a chemical and prior to 10 March did not attract customs duty equivalent to a rate of excise duty. It was one of a number of products that were considered as risks. My understanding is that the first time we had a specific allegation of toluene misuse was in January this year.

Senator GEORGE CAMPBELL —And that is consistent with press release you issued on 3 March?

Mr Jackson —That is right.

Senator GEORGE CAMPBELL —Was the ATO advised by the Assistant Treasurer's office about the allegations raised by Liberty Oil in a letter to the minister on 22 June 1999?

Mr Jackson —There is no reference in that letter from Liberty, as far as I can recollect, of toluene. I do not have the letter with me but I think there is some reference to generic solvent use as possible substitutes, and those things were addressed in the November changes as part of the legislative administrative changes that were made.

Senator GEORGE CAMPBELL —Was the ATO advised of the allegations of fuel substitution by Apco service stations that wrote to the Attorney-General, Daryl Williams, on 31 May 1999?

Mr Jackson —Yes, I am aware of those allegations.

Senator GEORGE CAMPBELL —When did you become aware of those allegations?

Mr Jackson —I cannot tell you off the top of my head. I will see if I can find out for you, if that is necessary.

Senator GEORGE CAMPBELL —It is important if you do, because you say you were not aware of the toluene substitution until January this year, yet the Apco service stations wrote to the Attorney-General on 31 May 1999?

Mr Jackson —I think there is no mention of toluene in that submission.

Senator GEORGE CAMPBELL —It mentions toluole?

Mr Jackson —Toluole is a fuel grade of toluene. When it is imported it is classified to a different part of the customs tariff and is a different proposition.

Senator GEORGE CAMPBELL —I suppose the question when we are buying a bagel as to whether bagels are bread or whether a loaf of bread is a bagel, but at the end of the day people were aware in government that there was substitution and fraud going on in a related product. It is a bit weak to come along and say, `It is slightly different one from the other, so we did not bother looking into it.'

Mr Jackson —I guess the subject of that letter was toluole and that was dealt with in the November changes. But subsequent to that toluene became an issue. It was raised with us in January. Customs may be able to advise—I do not have the numbers to hand—but I do not understand that imported toluene was an issue prior to that time and there was no indication it was necessarily going to become an issue.

Senator MURPHY —You obviously have some breakdown of some substitution problems with toluole and heating oil. You have some figuring on those; you have some information in respect of those because they have been raised as an issue. I am still trying to understand it. This is not a new phenomenon. It did not happen yesterday; it has been happening over a long period of time. As you and Mr Kevin have said, it is a bit of a moving feast across petroleum products. I still cannot understand why it does not ring a bell somewhere when you get significant increases in the import of a particular product which is a possible fuel to be used in the substitution and somebody says, `Look, maybe we need to check on this.' Your earlier submission was: `We would not do that.' Mr Burns said, `We do not watch out for a specific product,' but, if somebody raises a particular product with them, then they watch out for it. It still seems to be fraught with problems.

Mr Jackson —We do watch out for those things, and indeed the law was changed on 10 March. A number of people said—

Senator MURPHY —But that was after the event when we had tens of thousands of litres of it—I cannot recall the specific number but a lot. It went up out of all proportion. I cannot understand why some bell did not ring somewhere that there is clearly something here we ought to check on.

Mr Jackson —I am saying that a bell did ring—

Senator MURPHY —Somebody had to ring it for you; you did not ring it.

Mr Jackson —We are continually liaising with industry and seeking information from industry as part of our strategy. We did respond, and the law was changed.

Senator MURPHY —I know that is ultimately what happened, but it took a little while to do it. The accusation that has been levelled at you—by at least some of the industry—is the time that it takes for you to deal with problems.

Mr Jackson —Yes, I have heard the accusations.

Senator MURPHY —Have you been giving some thought to how we might address that?

Mr Jackson —Absolutely. We liaise quite closely with Customs; we continue to monitor various products; we are looking at a systemic solution internally; and we are also liaising with industry at a broader level to look at how we might do something, responding to the AIP proposal, which is a flat tariff across the top— but all those issues are fraught with a balance between the legitimate users who will be disadvantaged by a significant change like that and those people who at the margin may seek to rort the system and who need to be dealt with. We need to do that in a balanced and consultative way and not move in with a heavy-handed approach and simply say, `We are going to do that.'

Senator MURPHY —I am curious about naptha. Are you aware of how many possible sources there are for naptha? That might be a question to take on notice.

Mr Free —My understanding is that the way naptha occurs is that when you take a light crude oil and subject it to a refinery process, as the fractions boil off, naptha is a range which is at the heavy end boiling after gasoline comes off. Naptha can potentially be produced in all the major Australian refineries, all of which are licensed excise manufacturing sites, and in normal circumstances it may be sold for petrochemical use or it may be subject to further processing within the refinery to turn it into compounds with a higher octane rating so it can be legitimately used as a component of petrol.

There is one small mini refinery located in Queensland owned by a major oil company which has a small production of product which can potentially, in terms of the Excise Tariff Act, be entered into home consumption as naptha. I mentioned to you earlier that the company that owns that refinery has had approaches seeking product to be entered into home consumption under tariff classifications that did not attract the full rate. They quite rightly, in our opinion, held some discussions with us about that matter. But our understanding would be that the potential supply of naptha, whether entered into home consumption at lower rates or illegally diverted in some shape or form, is not as huge a problem as might be indicated from some of the concern we have shown about it today. There is no doubt there is a potential problem there. We have alluded to that in the list of risky products that were put in our submission. But it may well come up because, as has been given in evidence by Mr Jackson, we have been fairly successful in closing off those methods of evasion that were in place last year by this tariff change which has been discussed today. As other witnesses such as Mr Kevin have said, what happens is that, when that does occur, the people who wish to evade excise or avail themselves of products that are taxed at a lower rate and then misuse them continually look for products that will fit that purpose.

Senator GEORGE CAMPBELL —Just going back to the toluole issue, you said you dealt with that in November last year.

Mr Jackson —That is right.

Senator GEORGE CAMPBELL —Did you deal with the issue of imported toluole?

Mr Jackson —Was imported toluole picked up in the same administrative changes?

Mr Free —Mr Banvill is the expert on tariff classification, but my understanding is that imported toluole is classified to chapter 27 of the customs tariff, which is indeed picked up in the customs tariff amendment bill which we are discussing today.

Mr Banvill —Toluole has been subject to excise equivalent rates of duty since 30 January 1998.

Senator GEORGE CAMPBELL —Imported toluole?

Mr Banvill —Yes.

Senator GEORGE CAMPBELL —The letter that I referred to earlier, which was to Senator Vanstone from Liberty Oil, raised a range of methods that were being used to avoid excise, including use of solvents and heating oil. Does toluene fall within the definition of solvents?

Mr Jackson —I am not a chemist but I guess it falls under the chemical classification of the customs tariff and therefore would not normally be considered as a product in the fuel substitution area.

Senator GEORGE CAMPBELL —Are you saying that none of these letters were drawn to your attention?

Mr Jackson —No. I am sure they have been but I was not sure of the exact times when those letters were drawn to our attention.

Senator GEORGE CAMPBELL —You do not know when you were advised of the correspondence received by the Assistant Treasurer's office or by Minister Vanstone at the time?

Mr Jackson —No, I cannot off the top of my head. We were aware of the issue of fuel substitution towards the middle of 1999 and commenced that process of consultation with industry to look for a solution, which was then implemented in November.

Senator GEORGE CAMPBELL —But the solution that was implemented in November was not a total solution to all of this, otherwise we would not be sitting here now, would we?

Mr Jackson —I guess so—what is a total solution to anything? Where there are taxes and excises there are always those people who will look for ways to take advantage of that situation. There are some quite creative people in the community. We look to deal with these things as systemically as possible and to close them down. We continue to pursue matters as they arise and as our intelligence dictates that they are emerging.

Senator GEORGE CAMPBELL —Have you ever seen any of these letters from any of these ministers?

Mr Jackson —I am fairly sure that I have seen all of them.

Senator GEORGE CAMPBELL —You have seen the letters to the minister. Have you seen letters from the ministers drawing this to the attention of the tax office requesting action to be taken?

Mr Jackson —It is 12 months ago. I will have to check. It may well be the copies of those letters that we provided. But I have certainly seen the letters to which you are referring.

Senator GEORGE CAMPBELL —Will you take that on notice and get back to us?

Mr Jackson —Sure.

Senator MURPHY —Could you also take on notice, if you did receive any letters or if you received copies of those letters, the responses and what you actually did—

Mr Jackson —You would like to see the responses?

Senator MURPHY —Whatever courses of action you can outline, including responses, to whomever.

Mr Jackson —Okay.

CHAIR —Whilst you are obviously looking at a more comprehensive solution—or systemic solution were the words you were using—which is an ongoing process, and you also indicated to us that a solution to that is not going to be forthcoming in a very short time, can you, Mr Burns and Mr Jackson, confirm that it is your strong advice that these bills should be passed through the Senate?

Mr Jackson —Senator, from our perspective, it is absolutely critical that they be passed through. These bills closed off what was at the time the major, in our view, petroleum substitution approach. It is through the changes made here that issues such as toluene and other things, which are much more difficult for the industry to deal with, have started to emerge. We will continue to deal with those things as they do emerge whilst pursuing that broader solution. But if these bills were not to pass, it could well open the floodgates in terms of fuel substitution.

CHAIR —Thank you, Mr Jackson.

Mr Burns —I second those views, Mr Chairman. It is critical to us that they be passed, yes.

CHAIR —Thank you, Mr Burns.

Senator MURPHY —There is one point that I would like you to explain to me. On page 4 of your submission under `Other potential avenues for petroleum excise avoidance or evasion', the second last dot point reads:

equivalent imported products over which the administrative methods described above (in the Section "The New Tariff and Associated Administrative Measures") are not available as importers do not need to be licensed and the supply of product on world markets is essentially without limitation.

Are you talking there about heating oil or about those petroleum based solvents and chemicals? I might just be missing something—

Mr Free —I could address that question, if you wish. Firstly, I will speak from the perspective of the ATO and the excise act: as well as changing the tariff on 15 November which is due to be legislated by these bills, should they be passed, the ATO has carried out some administrative actions where we have looked very critically and closely at the level and circumstances of those products that are entered into home consumption at lower rates—they include products such as heating oil, kerosene and the like. We have an advantage there in that, to manufacture or produce excisable product in Australia, you have to be licensed under the Excise Act and the act sets up certain conditions where we issue the companies that are licensed with permissions and the like. Our legal advice is that we can use those permissions to control the level of products that can be entered into home consumption at the concessional rates, such as heating oil, kerosene and the like. The point is that we have a concern, which we have discussed with Customs, that it is likely that that same level of protection or control may not be available to Customs in instances where those products are imported. We are having ongoing discussions with Customs about that matter. Because of the provisions of the two acts the difference is that the type of products we are talking about are heating oil, kerosene and the like.

Senator MURPHY —So you are making a suggestion that importers ought to be licensed or only licensed importers could actually import?

Mr Free —Given that we have not settled a position with Customs and we continuing to take legal advice on that, I think Mr Burns would be better to respond to that.

Senator MURPHY —Mr Burns, would it be a useful approach if that were the case?

Mr Burns —I think the issue is not so much licensing the importers but building bridges between the customs legislation and the excise legislation to ensure that imported product that has a possible substitutability characteristic about it is not lost between us. We need to ensure there is some relationship between the two pieces of legislation so that imported petroleum product can be dealt with in a comprehensive manner rather than simply being treated by Customs as an issue in terms of coming across the border—which, as I have said, is an issue of value and proper classification and what have you— and then, once we have basically done our business with that good, we simply clear it and it enters home consumption; whereas the tax office has other considerations to be brought to bear. We need to ensure that the products do not fall between us.

Senator MURPHY —But that is what I not what I asked you. I asked you: would licensing importers be a useful approach or mechanism? It would seem to me on the fact of it that, if they were licensed, you would know who was at least importing the stuff. Then if there were significant increases, it would make it easier to track and to ascertain what they might be using it for.

Mr Dawes —There may be some potential, and it will form part of the discussions we will have with tax.

Senator MURPHY —I understand that; I am asking you whether or not you think—I do not think it is a policy matter.

Mr Burns —Certainly. There is a wide range of importers: there is the small-scale importer who imports very particular products for their very particular purposes; and then there are the big players who import millions of litres at a time. The issue with licensing and the issue with putting oil products up to the top rate and then putting in place remission circumstances comes down to the same issue, and that is to make sure that the bona fide industry with legitimate needs to access product are not so inconvenienced that the whole system does not work. The general importers of large quantities of product are in the petroleum industry. That is their business.

Senator MURPHY —But on the substitution issue, nobody is going to enter into that game for a few thousand litres. They are only going to do it on a scale that would make it worth their while, surely; they are not going to get 1,000 litres of whatever in to flog it off to somebody as a substitution.

Mr Burns —When we spoke to the industry two or three or four years ago, we were told that under no circumstances would people use product that had been placed in 210-litre containers, 44-gallon drums basically, because the economic viability of taking product out of those containers and using them for substitution just was not on—it was too expensive to put them in the containers and take it out. Yet, in our experience, that is exactly what happened. As the profits in this industry ebbed and flowed, the realities of the profitability of this thing went with it; so we saw dramatic changes of procedures and industry practice—not industry practice but practices by the fuel substituters. That has been a characteristic of this whole environment since the day we started. I would not rule anything out in terms of thousands of litres at a time because, if you did it regularly enough, it could be very profitable to do that.

Senator MURPHY —You would not get in 1,000 litres as a one-off, you might have it over regular intervals, but I am still curious about the licensing. If it is a problem of administrative difficulties or whatever, if the people were licensed and they stipulated on their licence application the intended quantities and the intended use for those quantities, doesn't that provide you with a better tracking mechanism than what you currently have?

Mr Burns —Anybody who imports petroleum products at the moment provides that information. They provide us with a description of the goods and the intended use, if it is one of the goods that has been the subject of fuel substitution.

Senator MURPHY —What information did the tax office get on toluene? Do you do the same thing?

Mr Jackson —We do not monitor imports.

Senator MURPHY —In terms of the imported toluene?

Mr Burns —Before it was controlled there was no requirement on anybody having to provide an end use. It is when the goods appear in the tariff and there are different rates when it is used for this and when it is used for that that the question of its use becomes an issue, and then that helps in the classification of those particular products. When toluene was being imported in the quantities you were talking about, there was no restriction so therefore that was free of duty. So at the end of the day its end use did not matter. It was when we introduced the controls. The control was if it was for use in an internal combustion engine then people had to pay the top rate, and that was when the use became an issue.

Let me say to you we have legal advice at the moment, which is one of the issues that Taxation Office and Customs are working through, to say that what Customs can demand in terms of a declaration for the intention of the importer is somewhat different from what the end use of that product might be. So the importer might intend that heating oil being imported is going to be used as heating oil and declare it as such and pay the rate of duty on it, but then the importer sells it two or three times before it gets to the end use, you find the person who has bought it in transaction No. 4 has no intention of using it as heating oil, but the liability in terms of duty at the point of import is a different issue. Customs would have no evidence—suspicions maybe but no evidence—to ground a decision to say, `This is a lot of heating oil. We think you are going to use it for fuel substitution. Therefore, we are going to make you pay the top rate.' It is that lack of evidence that is one of the many frustrations that we have.

CHAIR —I think that winds up our hearing. I thank the officers for appearing before us today and to you, Mr Kevin, I thank you for your patience in sitting through this and for your evidence to the committee.

Mr Kevin —Thanks.

CHAIR —That concludes the hearing of this committee. I thank the officers and Hansard.

Committee adjourned at 12.48 p.m.