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Treaties tabled on 12 May 2010

CHAIR —Welcome. Although the committee does not require you to give evidence under oath, I should advise you that this hearing is a legal proceeding of the parliament and warrants the same respect as proceedings of the House and the Senate. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of the parliament. If you nominate to take any questions on notice, could you please ensure that your written response to questions reaches the committee secretariat within seven working days of your receipt of the transcript of today’s proceedings. I invite you to make any introductory remarks before we proceed to questions.

Air Vice Marshal Staib —Thank you. I will make an opening statement. In my capacity as the strategic joint logistician of the Australian Defence Force I am responsible to the Chief of the Defence Force for the negotiation and conclusion of our international logistic agreements and arrangements.

The Australia-United States acquisition and cross-servicing agreement—we call it ACSA for short—is the principal means of facilitating the reciprocal provision of logistic supplies and services between our respective defence forces, and that is primarily doing combined exercises, training, deployments, operations or indeed other co-operative efforts, and in unforeseen circumstances or for exigencies. I am talking about, for example, humanitarian assistance and disaster relief operations in that context. The ACSA enhances logistic support available to Australian forces in deployed operations, and that has previously been the case in our operations in Iraq and certainly currently in our operations in Afghanistan. Payment for any supplies and services transferred under the ACSA is either by cash or by reciprocal provision of supplies and services that are agreed to be of equal value. Transfers under the ACSA are subject to the availability of funds and any limitations established by the laws and regulations of either or both parties.

The proposed ACSA replaces its predecessor agreement, which was concluded in 1998 and was due to expire on 22 September 2009. However, we were able to extend that until 22 September 2010 to enable Australia and the United States to complete negotiations on the proposed agreement. The extended negotiations were necessary to ensure the inclusion of Australian requirements which were not adequately covered in the Department of State approved template which the US uses as a starting point. The proposed agreement is substantially the same as the 1998 agreement and does not create any new obligations for Australia or any changes to our national laws, regulations or policies as a requirement to implement the proposed agreement. It does incorporate amendments to reflect organisational changes in both the United States and Australia, and includes revised procedures to satisfy current legal and financial requirements.

The agreement and its subordinate implementing arrangements are used on a daily basis as the authority for the transfer of logistic support to the ADF during current operations in Afghanistan, as I mentioned before, and other areas where Australian and US forces are operating together. The agreement is also used as the authority for the transfer of logistic support during major exercises, such as Talisman Sabre, Red Flag, Southern Frontier and RIMPAC. Additionally, we have in place a number of standing implementing arrangements under the ACSA covering activities in the region with US Pacific Command and in the Middle East area of operations with US Central Command, as well as for global activities such as strategic airlifts, air-to-air refuelling and the transfer of marine, aviation and ground fuel.

In closing, I note the importance of the ACSA to the maintenance of support to ongoing and future ADF operations and I seek your recommendation to parliament that the replacement agreement be approved. Thank you.

CHAIR —Thank you. We will go to questions. Senator Cash.

Senator CASH —Thank you very much. In your opening statement, you noted that the agreement was meant to expire in September 2009 but you managed to get an extension until 22 September 2010. You said that that was because a number of Australian requirements needed to be added because the American template did not necessarily cover them. What were those requirements, and are you satisfied that they are included in the agreement that we are considering today?

Air Vice Marshal Staib —One of the changes was that we included Headquarters Joint Operations Command—that is from the Australian side. That organisation did not exist in 1998. There were some other, small changes to the clarification of what is included. For example, we were able to redefine what we call ‘chaff’ and ‘chaff dispensers’. That is the material that we disperse from aircraft that you can see; it looks like fireworks. Originally that was considered ammunition, and if was ammunition it could not be included. The fact that we were able to change that from the United States side was of benefit to Australia. They were the main areas.

Senator CASH —Can I ask you to take on notice what the requirements were that we raised during the negotiation process and what requirements were agreed to. If any requirements were not agreed to, why; and what are the implications for us?

Air Vice Marshal Staib —We will take that on notice.

Mr FORREST —I would like clarification on some definitional terms. I note that the agreements do not include weapons but there is no clarification of what a ‘weapons system’ or a ‘major end item of equipment’ is. Unless there is some common understanding of what these terms mean, it remains unclear what they mean.

Air Vice Marshal Staib —When we refer to a ‘weapons system’ we mean complete aircraft, ship or tank. So it is the major equipment that both militaries would use. That sort of equipment or major weapons system is not included in this arrangement.

Mr FORREST —What does the term ‘major end item of equipment’ mean?

Air Vice Marshal Staib —That would be, for example, the aircraft or the ship itself. When we say ‘major weapons systems on an aircraft’, it is the aircraft. It includes the weapons attached to the aircraft. It would also include the radar systems, for example. That is when we say that it is a system. The major end equipment would be, for example, the aircraft.

Mr FORREST —If there is an elemental component like a bolt—to put it simply—that would be exchanged but not the entire assembly of the missile or whatever it is.

Air Vice Marshal Staib —That is correct.


Mr MURPHY —I have just one question: what consequences flow from the amendments to the pricing principle?

Air Vice Marshal Staib —Can you repeat that for me?

Mr MURPHY —What consequences flow from the amendments to the pricing principle?

CHAIR —I suppose what John Murphy is asking is: could this increase the costs of procuring logistic support for Australia?

Air Vice Marshal Staib —In general it would not, but the agreement sets out that we must agree to a price, and there is a pricing mechanism for doing that. It is the same cost that it would be to us as we would charge the United States and, similarly, the reverse occurs.

Mr MURPHY —Thank you.

Senator McGAURAN —This is a follow-up on John Forrest’s question about exactly where the line is drawn. You say it is drawn on weapons and weapons systems. So is this just a treaty about going down to the general store to get your rations—chocolate bars and things like that? It does not deal with boots on the ground, weapons systems or anything of that order; it deals with your general supplies.

Air Vice Marshal Staib —That is correct. It includes, for example, fuel—aviation fuel, marine fuel and ground fuel. It could include things like construction materials, and it has done so in support in Afghanistan—for example, timber. It is a broad class of supplies or services but certainly not any major weapons systems or munitions.

Senator McGAURAN —What does ‘logistical support’ mean? Does it mean just that?

Air Vice Marshal Staib —It could be that or it could be transport. For example, we may have a United States C17 transiting a particular area, and we might seek some available space on that aircraft. We would describe that as a logistic service.

Senator McGAURAN —So, in a sense, it does cross the line into full military support. It is more than just going down to the general store.

Air Vice Marshal Staib —It is definitely military support.

Senator McGAURAN —If our troops get on board their transport planes and are taken to an operations zone, that then involves more than just the general supply store, doesn’t it?

Air Vice Marshal Staib —That example I gave you includes logistics support. It is in support of operations, or it can be.

Senator McGAURAN —It can be.

Air Vice Marshal Staib —It can be. It is in support of training exercises. It can be in support of humanitarian assistance or disaster relief where both countries are going to the assistance of another country.

Senator McGAURAN —It is actually broader than what I first thought. John, I do not know what you thought. In a sense it is a mini ANZUS, because you can call upon the US for logistical support—it is a very broad term—to supply surveillance and even command boots on the ground.

Air Vice Marshal Staib —The agreement does not cover surveillance or that sort of thing.

Senator McGAURAN —Doesn’t it?

Air Vice Marshal Staib —It does include, for example, medical services. It is confined to logistic support and that sort of thing.

Senator McGAURAN —I have an idea what it is but, on first read of the presentation here, I thought if you did not happen to have your rations you could go down to the American store and get them. But for the purposes of the committee it is actually more than that, as far as I understand it. It broadens itself right into logistical support, which is use of their transport and use of their military helicopters. Who knows how far you could push it? It is a little more in-depth than on first presentation. That is not a bad thing but, on first read, I would have thought it was just the general store. It is actually boots on the ground. You could call for boots on the ground.

Air Vice Marshal Staib —Senator, when you say ‘boots on the ground’ do you mean calling up soldiers?

Senator McGAURAN —Yes.

Air Vice Marshal Staib —No, it does not cover that.

Senator McGAURAN —Okay. But it does call upon medical support and transport support, which is boots on the ground. The transport support is being flown by the Americans and guarded by the Americans. Even the medical support gets backup support and coverage by the US, doesn’t it?

Air Vice Marshal Staib —Yes.

Senator McGAURAN —There is nothing wrong with that, but it is a little more than presented.

CHAIR —The final report of a congressional review into US Defense procurement arrangements was delivered on 23 March. Do you see foresee any significant reforms to the United States legislation or policy arising from that process?

Air Vice Marshal Staib —I could not comment on that, but this particular agreement that we are proposing, as I said before, has no significant changes compared to the one that currently operates. I certainly do not see any significant changes in the foreseeable future.

CHAIR —What about the existing agreement in practice? Have the price negotiations been smooth and timely? Have you had requests refused? Has either party defaulted on payment obligations? How does it work in practice?

Air Vice Marshal Staib —It works extremely well for us and it certainly works well for the United States. For example, last year at Exercise Talisman Sabre, a major exercise conducted here in Australia, the US spent about $4 million here. It is definitely a mutually beneficial arrangement for us. It works very well. I cannot recall any time where we have had a request refused.

CHAIR —You are not aware of any cases in which exchange of supplies or services between us and the United States has caused loss to a recipient party or a third party?

Air Vice Marshal Staib —No, I am not aware of any loss.

CHAIR —As there are no other questions, thank you for attending to give evidence today. If the committee has any further questions, the committee secretariat may seek further comment from you at a later date.

[9.45 am]