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Australian Bureau of Agricultural and Resource Economics

CHAIR —I welcome officers from ABARE. Senator Joyce?

Senator JOYCE —Gentlemen—there are no ladies there—I want to go to this report on the Murray-Darling Basin in which you assess the future impact of the Australian government’s environmental water purchase program. Can you please describe who commissioned this work, who you consulted with during the study, how many visits you made to the basin itself and where these visits were.

Mr Glyde —Could I hand over to my colleague Peter Gooday, who is the principal author of that project, to answer those questions.

Mr Gooday —The report was commissioned by the Department of the Environment, Water, Heritage and the Arts. We travelled to the basin. I cannot recall exactly how many trips we made to the basin, but we made a number.

Senator JOYCE —Was it roughly five, 10 or 20?

Mr Gooday —Three, probably—principally to talk to stakeholders about the flow-on impacts of some of the results we were getting. We wanted to talk to, in particular, the rice industry and the cotton industry.

Senator JOYCE —Can you remember where you went?

Mr Gooday —If you have a copy of the report, there is a list at the back in the appendices—I will just find the right spot for it; I am having trouble myself finding the right page but there is a list. I think it is pages 77 and 78. There is table 21.

Senator JOYCE —Bear with me and I will find it. It refers to Moree and Narrabri. It looks like community group consultation and industry group consultation. Is it No. 22, ‘community group consultation’? Is that the one?

Mr Gooday —Tables 21 and 22. There are industry groups—table 21—that we spoke to, and in table 22 are some of the community groups that we spoke to.

Senator JOYCE —It looks like Goondiwindi, Moree, Wee Waa, Myall Vale—I imagine that is near Narrabri—Narrabri, Sydney and Melbourne. There is not a lot of irrigation in Sydney and Melbourne. Rice—is that a place called Rice? Where is that?

Mr Gooday —No, that is the industry.

Senator JOYCE —Where have you gone for rice? Where did you go to look at the rice industry?

Mr Gooday —We spoke to SunRice. That may have been over the phone.

Senator JOYCE —You spoke to them over the phone?

Mr Gooday —Yes, we spoke to them over the phone and exchanged correspondence.

Senator JOYCE —And sent them emails and stuff?

Mr Gooday —I cannot recall whether we exchanged emails or not, but we definitely spoke to them over the phone.

Senator JOYCE —Don’t you think, with the effect that it is going to have on the rice industry, that it might have helped if you had actually gone to a rice-growing area?

Mr Gooday —The purpose of speaking to the processors was to find out what sorts of decisions might need to be made about processing capacity—in the case of the rice industry, whether the reductions that we were talking about were likely to lead to decisions to close down, for example, a rice mill. That is the sort of information we were after, and we were able to get that reasonably easily over the phone.

Senator JOYCE —A rice mill in a town such as where?

Mr Gooday —There are only three of them, I think. Leeton is an example. But we were not looking in this report at trying to identify which particular mills would close down.

Senator JOYCE —It would have been helpful if you had.

Mr Gooday —We are fairly careful in the report to point out that the analysis is at a particular level—a fairly broad level—

Senator JOYCE —Very.

Mr Gooday —and that it is difficult—

Senator JOYCE —Especially over the phone.

Mr Gooday —to be able to specify below that.

Senator JOYCE —It would have helped if you had actually gone there, though, to find out more about the industry.

Mr Gooday —We have a good picture of the industry.

Senator JOYCE —What? Over the television?

Mr Gooday —We have done detailed surveys throughout the Murray-Darling Basin over the last three years, surveying irrigators. We have built up a good picture of what is going on.

Senator JOYCE —Anyway, you didn’t go there. That is all I need to know. My understanding is that the economic impacts of this study were modelled by dividing the basin into seven regions. Is that correct?

Mr Gooday —The modelling was done in two stages. The first stage of the modelling looks at the irrigated agriculture sector. That sector is split up into 22 regions, and there are around 14 commodities considered in that analysis. Those regions are based on the CSIRO sustainable yield regions.

Senator JOYCE —So you are saying it was based on 22 regions, not seven regions.

Mr Gooday —That is right, for the first stage of the modelling, the irrigated agriculture sector. Then we take the outputs of that modelling, which tells us what will happen in the rice industry in a particular region versus the horticulture industry versus some other industry, by region. And we feed that into a general equilibrium model, which, as you say, is split up into seven regions for the basin.

Senator JOYCE —A general equilibrium model is what you were using, was it?

Mr Gooday —That was the second stage of the modelling, designed to look at the flow-on impacts of the reduction in water availability on the irrigation sector.

Senator JOYCE —If it is a general equilibrium model, my understanding would be, for example: say I buy a place in Leeton—a town that you did not visit—and the money just goes to everybody in the town, not to the person you actually bought the licence from.

Mr Gooday —You are getting at the way in which we distributed the proceeds of the sale of the licences back into the regional economies. The way we modelled it is what you described. For a region that sold, say, $10 million worth of water entitlements, the modelling was done by putting $10 million back into the region by spreading it across each industry. We recognise in the report that that is probably not the ideal way to do it, but the general equilibrium model does not distinguish between farm households and irrigation households. So we were not able to do it the other way.

Senator JOYCE —It is not even vaguely close to what happens. What happens with the general equilibrium model is: Bilbo Baggins gets $5 million for his water licence and he goes and retires on the coast. He does not go back into town and buy battered savs off the local servo.

Mr Gooday —Yes. And we understand that. I think the real point here is the level at which the general equilibrium model is constructed. It really does not matter how we give the money back. It does not make any great difference to the results, because the regions are rather large, and each of these seven regions contains—

Senator JOYCE —It is seven regions now. It was 22 and we are back to seven again.

Mr Gooday —No, the general equilibrium model contains seven regions.

Senator JOYCE —Okay. Can you disaggregate that database down to smaller regions?

Mr Gooday —It is possible to aggregate the database down to smaller regions, but you have to make a number of rather restrictive assumptions, so we are not comfortable in doing it.

Senator JOYCE —So you cannot disaggregate the model.

Mr Gooday —The Centre of Policy Studies at Monash University has a general equilibrium model of the Murray-Darling Basin at the 20-region level.

Senator JOYCE —I have got some real problems with the model now. You have got a general equilibrium model which basically assumes that the money goes and, like confetti, falls on everybody. Benevolence from God falls on everybody in the community. It does not. It just disappears over the coast or back to the bank. Secondly, you have got seven regions—which does not talk about the peculiarities within a certain region. If, for instance, the government were to do something crazy and buy all the water around a town—say, Collarenebri—it starts to mean that the functionality of model is for the wondrous corner of department but has no real effect on the ground, no real reflection of what is actually happening.


Mr Gooday —The modelling was not designed to look at the impacts on particular towns. That was not the job we were asked to do. We were asked to look at what the basin level and catchment level impacts would be—and when I say ‘catchment’ I am talking about the CSIRO sustainable yield region impacts—of the first part of the water buyback program. Looking at what the impacts are on a particular town is a separate exercise and I would suggest that we would not have approached it using a general equilibrium model.

Senator JOYCE —I think we have punted general equilibrium as a relevant model out the door for this one, so let’s go to some other areas. You talk about—what was it?—627 gigalitres or 2.4 per cent. You said that agricultural production will reduce by 2.4 per cent with the 627 gigalitre purchase of entitlements. We know that there is a range that people wish to purchase between 1,500 and 4,500 gigalitres and the Productivity Commission estimates that it is going to be around about 2,540 gigalitres.

So is your model competent enough to say that if I get my 2.4 per cent and extrapolate it out—multiply it roughly by four—and if I buy 2,540 gigalitres I would therefore be reducing agricultural production? It is a 9.6 per cent fall in gross value or more particularly, and this is where it becomes really important because it did not actually go to Leeton or Deniliquin or any of the rice growing areas, a 32 per cent fall for the rice growing areas, which would be disastrous.

Mr Gooday —First of all, the cost of removing water will increase slightly as more water is taken out of the system because of the way we model it, which is that—

Senator JOYCE —It could be worse.

Mr Gooday —It comes from the lower valued activities first. I have not run the particular scenario you are looking at but given the pattern of water use in the basin, I would not expect the cost to be much different than the sort of thing you are outlining—which is a reasonably linear relationship between the two.

Senator JOYCE —That is very important. So it has a lineal relationship—

Mr Gooday —Not exactly. As I said, the cost will increase slightly.

Senator JOYCE —So it is slightly exponential?

Mr Gooday —Well, as you start taking more water out some of the more highly valued activities become more affected.

Senator JOYCE —If the model is slightly exponential then we will not be heading towards a 32 per cent reduction in the rice area, we could be heading to more than that—which would be just economic disaster. That would turn these towns into—

Mr Glyde —It might be handy if Mr Gooday was to outline what the actual impacts were by sector, just so we are clear that the impact on the rice industry and the other industries are as you say they are.

Dr O’Connell —Just before we get there I would also be keen not to speculate about what model runs might do with different parameter settings, which I think we are in danger of getting into here.

Senator JOYCE —So what is the answer there? Is that a statement or is that an answer?

Mr Glyde —I think the nature of the discussion we have been having is that you have been putting forward alternative hypotheses to the one that had been modelled. I think what we are saying is that we talked to you about what we have done. We explained the limitations of the model and you have pointed out some of them. They are also pointed out within the paper as well—that we are modelling for a particular purpose using the best level of disaggregation we can come up with that will give meaningful results.

We are not saying that we can go down to that very fine level. That is another modelling exercise we would have to do. We are giving you what we know with the intention of trying to do it at a basin-wide level and then at a catchment level within those basins. As the report points out, there is a possibility of quite a wide range of impacts between high and low depending on where in the basin you are, how things actually transpire in the future and what might be some of the limits that are set by the Murray-Darling Basin plan.

Senator JOYCE —The key issue is that it is lineal and slightly exponential in its effect. We have now identified sectors that have not been properly ascertained and because it is a premise of deciding especially what the effect of the SDLs—the sustainable diversion limits—will be, there could be massive disruptions in certain areas within the basin because of this. It has not disaggregated it down to certain areas—for instance, Dirranbandi, Leeton, Deniliquin or Berri—and what exactly could happen in these areas, because we could have a—

Dr O’Connell —That is because that was not the task that was set in this case.

Senator JOYCE —Why do we do it?

Mr Glyde —It has not been done as yet to get to a basin wide impact of what might happen with the water buyback program, and we are working our way through that. I think it makes sense to start out large and work through within the limitations, model and the data that we have.

Senator JOYCE —How much did it cost to do this study?

Mr Gooday —We might take that on notice. Neither of us have got it in our heads.

Senator JOYCE —What—$10 million?

Mr Gooday —No, it would be in the order of $300,000.

Senator JOYCE —I note that in your study you say:

A brief review of other research indicates that the elasticity implied by the Water Trade model is at the low end of the range of elasticity estimates.

What implications does the low estimate have for your estimation of agricultural output changes as a result of the buyback and ultimately the effect on regional output? Would agricultural output be higher or lower with a higher estimate of the elasticity of the demand for water?

Mr Gooday —The discussion there was about our estimates of what would happen to the price of water, so we were estimating that removing six per cent of the entitlements would lead to, I think it was, a 13 per cent increase in the price of water in the northern basin and a 17 per cent increase in the price of water in the southern basin. The most sensitive part of the whole exercise is around the price elasticity of water. The assumptions around that do not affect the results as far as gross value of irrigated agricultural production, land use change or water use, but obviously there is this issue around the estimates of the price changes that we came up with.

Senator JOYCE —Ultimately, it is almost going to be a static event: if you put up the price of water, the product becomes unaffordable. They cannot grow it, therefore they stop growing it and go broke, therefore the Australian consumer purchases an import form overseas in which we do not have any control over the water whatsoever. We are just sort of slowly putting ourselves out of a job quickly.

Mr Gooday —There are plenty of choices. There are lots of different products produced in the basin, and they will all be competing for water. The changes in the price of water, yes, will determine what gets produced and what stops getting produced.

Senator JOYCE —I know it does not but purpose your model does not talk to the issue that farmers have bank managers and the bank managers could not give a flying toss about the elasticity; what they want is their money paid back. If you do not grow the crop that pays the money because you can only grow that with the water, you go broke and therefore the whole thing just flips on its head.

Mr Gooday —You are right: the model does not include an assessment of the individual sort of debt characteristics of different irrigators.

Senator JOYCE —So in certain areas there is not going to be the capacity to change because you might talk about it as a functional aspect of the person’s capacity to go from crop 1 to crop 2 but crop 2, if it does not pay the bills, is just devoid of being a choice. If you do not produce what pays the bills, you go broke. That brings about in its own way a complete sort of dissembling of the irrigation area.

Mr Gooday —I suppose this is why we are comfortable in talking at a sustainable yield region level because these things tend to average themselves out over lots of different people making lots of different decisions. But it is very difficult to try and predict what might happen around a particular town which has a small group of irrigators around it. We are not saying we can predict what each irrigator can do.

Senator JOYCE —What assumptions have you made in the modelling with respect to the capacity of irrigators to substitute towards other inputs as water becomes more expensive or less available? How do your assumptions compare with other assumptions made in similar modelling, such as Dixon et al 2009 or Peterson et al 2004?

Mr Gooday —The Dixon model is a general equilibrium model, so it is a different type of model from the model we are using to look at the impacts on irrigated agriculture, which is pretty much what we have been talking about here, so they are quite different approaches, but the results tend to be quite similar. I cannot recall exactly what was in the Peterson model, but we have reviewed that in here. Sorry, what was the first part of your question?

Senator JOYCE —What assumptions have you made in the modelling with respect to the capacity of irrigators as a substitute towards other inputs as water becomes more expensive? I have to be honest, I do not know what you substitute water for. Prayers I suppose.

Mr Gooday —There is some capacity in the model for irrigators to use less water and more land as water becomes more expensive. The model does not have alternative technologies. It is not a future-looking thing where we are expecting them to switch into some new technology that we do not know about, so it is limited to that switch between water and land use.

Senator JOYCE —This really brings us to the issue. Given the limitations of this study which we have just spelt out—and that has been in 10 or 15 minutes—in your view, does the study’s conclusion support the minister’s view that the report, and I quote:

… confirms that the Rudd Government’s long-term Water for the Future plan is supporting the future viability of our Basin communities and returning the rivers to health …

Senator NASH —That is hilarious.

Mr Gooday —The report says what the report says.

Senator JOYCE —That is not an answer; that is a statement.

Dr O’Connell —I think you are asking Mr Gooday to get into an area which is not reasonable.

Senator JOYCE —It appears to me it is not so much about returning it to health; it has completely sandpapered over—it has not gone into the detail to deal with the effects. The report, if the government are relying on it, is lacking—and it is not your fault, if they have not given you the resources to do it. It just lacks any effect to be given any acumen as to deliver any indication of where the basin will actually end up.

Dr O’Connell —The report followed the terms of reference that were asked and gives effect to those fairly precisely. The constraints around that are all quite clear in the report, and I think, as Mr Gooday says, it stands on its own.

Senator JOYCE —I am really interested—are we going to find any other work? This is terribly important. The SDLs are coming out, people are absolutely freaking out about what is going to happen to their lives and we in this place have an obligation to give them some indication about what is going to happen to them. Are you performing any other works for the Department of the Environment, Water, Heritage and the Arts? Are there any plans for you to perform work with regard to water issues in the future?

Mr Gooday —We are doing some work for the Murray-Darling Basin Authority. It is one part of the work they are using to look at what the economic impact of proposed SDLs may be. It forms part of a program of work they have.

Senator JOYCE —I can help you out on that. In some areas the SDLs will just be disastrous; you will shut down the communities. They are at the edge at the moment. Are you currently providing any advice? You are providing advice and doing work for the Murray-Darling Basin Authority?

Mr Gooday —Yes, that is what I just said.

Senator JOYCE —Does ABARE have the capacity to evaluate the economic and social impacts of the basin plan, a draft of which is to be released mid this year?

Dr O’Connell —I think you are there looking for the full effects of the plan in terms of the social and economic effects. ABARE is probably not the place to come to solely for that. ABARE can assist in terms of provision of some modelling advice to help, but that is a much broader task you are looking at including site-specific, town-specific sets of issues which Mr Gooday has just said is not what this current modelling capacity is either aimed at doing or capable of doing.

Senator JOYCE —So how would you go about assessing the economic and social impacts of the plans, or are you—

Dr O’Connell —Underneath that I am suggesting, I guess, that there are other parts of government who are responsible for developing this which you may want to go to in terms of the—

Senator JOYCE —What part of government?

Dr O’Connell —The environment portfolio is managing this water buyback—

Senator JOYCE —Who would do the assessment—

Dr O’Connell —I am just suggesting that you may wish to ask there as to what assessment process they are undertaking.

Senator NASH —Can I just ask on that, though, given that ABARE has been tasked with this particular job, why would they not then be tasked with a more detailed job? If it has come to ABARE now to try and determine the socio-economic impacts, why would it not come to ABARE to have a more detailed report be done on request? Why would you send us to somewhere else?

Dr O’Connell —I think what we are talking about here is what is the capability of doing things like town-specific and site-specific work. This is not the ABARE skill set.

Senator NASH —So ABARE does not have that capability?

Mr Glyde —There is capability that we have got where we can go a little bit further but I think where Senator Joyce was coming from is wanting to get down to a really quite precise, almost if you like farm type, level assessment, and I think we would not want to hold out any prospect that modelling, using the sorts of tools that ABARE has, is going to be able to give you the real precise farm-by-farm type assessment of the analysis. We would not want to hold out the prospect that the modelling will actually replicate the real world.

The benefit of the modelling is that it gives you some ideas about broad trends and broad directions that help inform policy. For example, the sort of conclusion that I read into the report we have done is that at a basin-wide level the buyback is a relatively small impact. The devil, though, is in the detail. Even when you begin to look at seven regions you can see that there are really quite strong variations between the regions. When you look at the impact on gross value of irrigated agricultural production across the 20-something regions, it is quite detailed and the impacts are quite large in some areas and quite small in others. It gives you ideas about the direction of change, and that helps inform policy. I would not want you to think that we will be in a position where we could actually model at the farm level.

Senator JOYCE —Don’t you think that people living in the Lower Balonne-Condamine are going to pick up the report and look under ‘L’ for Lower Balonne-Condamine to see if they have a community in the future? And I imagine that people in Senator Nash’s area are going to look up ‘Y’ for Young to see if they have a future. To talk about a basin-wide outcome—it’s a big, old, dry carpet. They are going to say: ‘Do I have a job in this town? Should I buy that service station in that town? Should I open up a chemist’s shop in that town?’

Dr O’Connell —That is clearly closely the interests of a range of people, but the report that ABARE has done was not aimed at that. They were not asked to do that level of analysis nor do they have the capacity to do that level of analysis.

Senator JOYCE —Could anybody anywhere in the Commonwealth public service do that? Where could we go to try to get that sort of information?

Dr O’Connell —I would suggest that those questions should be put more to the water area of the environment portfolio that is managing this overall process.

Senator JOYCE —So no-one has any possible suggestions that I might be able to suggest to them to suggest back to me?

Dr O’Connell —I would leave that to them to respond.

Senator JOYCE —What happens if they suggest to you?

Senator Sherry —They will not.

Senator JOYCE —That is interesting because you are the ones who did the report.

Senator Sherry —Because Mr—

Senator JOYCE —Minister, they are the ones who were suggested to do this initial report which is here on my desk.

Dr O’Connell —We stand by the report. The report had a certain purpose and was within certain limitations. We have provided that report and we stand by that report. The report did not pretend to be a report that would give you highly localised impact assessment of buybacks at the level that you have been talking about.

Senator JOYCE —Thank you very much.

Senator MILNE —The International Energy Agency in recent weeks upgraded its forecast for the take-up of solar energy, predicting a quarter of the world’s energy could be sourced from solar PV or solar thermal by 2050 and also predicting that both technologies would achieve grid parity by 2020 in the sunniest regions. I want to know what ABARE’s analysis or prediction is about the potential for solar energy in Australia in terms of 2050 and 2020.

Mr Glyde —I might ask my colleague Jane Melanie to take us through that. We released in March of this year our long-term energy projections, which goes to the question of the relative shares of various technologies and sources of energy with an outlook horizon to 2029-30.

Ms Melanie —As my colleague just stated, ABARE undertook a comprehensive energy resource assessment with Geoscience Australia that was released in March of this year. The assessment looked at both renewable energy and non-renewable energy. There were two components to the assessment. The first part was a scientific assessment that was contributed by GA that looked at the energy resources that Australia has. The second part was related to the economic perspective, looking at what market developments are likely to be and what the policy settings are. On the basis of the modelling done by ABARE, we provided an outlook for the energy sector in Australia that covered both renewable and non-renewable energy.

In terms of solar in particular, what the assessment found was that Australia had vast and largely untapped solar resources. We have some of the best solar resources in the world; however, at the moment solar accounts for a very small share of total electricity consumption. The main barrier to the growth of solar is its cost relative to other technologies. If you look at the spectrum of costs, solar is certainly at one end of the spectrum. For this reason, we do not see a lot of solar currently in Australia. However, under the RET, the renewable energy target, which requires that 20 per cent of electricity be sourced from renewable technology by 2020, we see a significant growth in renewable energy, including in solar. So what we are seeing for solar is that there is potential growth of about 17 per cent a year between now and 2030.

Senator MILNE —That is very conservative compared with what the IEA is now saying its revised forecasts are in relation to solar. What were the assumptions in that model about a carbon price in terms of coal and oil?

Ms Melanie —In doing the projections, ABARE basically considered policies that have already been implemented and those that can reasonably be expected to be adopted over the outlook time frame. So we took into account the renewable energy target, which is the main driver of what happens to renewable technology over that period, but we also had a five per cent carbon emissions reduction target below 2000 levels by 2020.

Senator MILNE —So you did not model anything greater than a five per cent reduction.

Ms Melanie —No.

Senator MILNE —To come to oil for a moment, what is ABARE’s analysis of the impact of the oil spill off Western Australia and the oil spill now in the Gulf of Mexico in terms of the cost-benefit of offshore exploration and drilling into deeper and more dangerous waters, compared with demand reduction and efficiency?

Ms Melanie —We have not looked at the issue.

Senator MILNE —So ABARE did not anticipate that by having to go into deeper water and more dangerous terrain there was a higher probability of accident?

Ms Melanie —No, we have not looked at that aspect of oil markets. Essentially, we look at market factors; what demand is doing and what supply is likely to do.

Senator MILNE —All right. So given that we currently have a European crisis with Greece and so on, and that has dampened demand, what analysis are you planning in response to the environmental crisis in the Gulf of Mexico, given that it is unlikely that the US drilling program that has previously been announced is likely to proceed?

Ms Melanie —As you are probably aware, ABARE puts together a set of forecasts every quarter. We are now in the process of revising our forecasts, which we publish in June. That will only cover the short term, so a year or a year and a half in advance. The impact of what is happening in the Gulf of Mexico is probably more of a long-term issue. At this point in time it is not something that we have looked at.

Senator MILNE —Can you tell me whether ABARE believes that oil has peaked or whether we are still anticipating peak oil from ABARE’s point of view? Just keeping a monitoring eye on ABARE and oil—

Ms Melanie —We are certainly—

Senator MILNE —Perhaps, Mr Glyde, you would be able to tell me that?

Mr Glyde —I am very happy for Ms Melanie to continue. I would be very interested in the answer.

Senator MILNE —Wouldn’t we all?

Ms Melanie —ABARE is certainly constantly doing the same—keeping an eye on what is happening in oil markets. On the basis of that we are constantly reviewing our long-term assumptions. But we are still of the view that in the longer term oil prices will be determined by the cost of alternative fuels. That is certainly where we see the ceiling, I suppose, in the longer term.

Senator MILNE —Yes, but you must be making some judgment about peak oil. In ABARE’s view have we reached peak oil or not?

Ms Melanie —We do not tend to look at the issue from that perspective. Basically, underlying our forecast is the notion that markets—demand and supply—will determine the price of oil and will determine when alternatives come in. The point is not so much whether we will be running out of oil; it is more when and whether the alternatives will become economically viable.

Senator MILNE —I have only got three minutes, so I will not pursue that right now. I wanted to move on to forestry projections. Can ABARE just indicate to me the point at which plantation sawn timber production in Australia displaced native forest sawn timber production? When did that occur? Do you recall?

Mr Morris —We would probably have to have a close look at the data to make sure we answered that accurately because we are not quite sure on that off the tops of our heads.

Senator MILNE —According to Dr Judith Ajani, who has done a lot of work on this, it was 1993 when the plantation sawn timber overtook and displaced native forests. I wonder what your outlook for the native forest hardwood industry in Australia is? At the moment, what do you say in explanation for the crisis in Tasmania, for example—for native forest hardwoods?

Mr Morris —If we go specifically to the Tasmanian forest industry situation, I will just reiterate a couple of points that were made earlier. The Tasmanian native forest industry, in particular, is very heavily dependent on the export woodchip trade. About 71 per cent of logs harvested in Tasmania actually go to the export woodchip trade. If you look at native forest harvest, about 80 per cent of the native forest timber goes to the woodchip trade, and about 93 per cent of the plantation hardwoods are going to the woodchip trade. That just highlights the extreme importance of that market for the Tasmanian industry compared to other states.

As you know, of the markets Japan is the number 1 market for Tasmania for those woodchips. About 67 per cent of the woodchip exports are going to Japan, and we have seen some decline in demand coming out of that market due to a few things. One is that the global financial crisis obviously had a big impact on demand out of Japan. To some extent, we have also heard about increasing environmental demands having some impact as well. So those two factors have probably been the most important ones in terms of affecting demand.

On the more positive front, Tasmania does have an increasing share of its woodchips going to China. About 19 per cent of the woodchips coming out of Tasmania at the moment are going to the Chinese market. And that is quite high relative to some of the other big woodchip exporting Australian states where 90-plus per cent of woodchips from those states are actually going to Japan . So I guess that is one positive in terms of prospects for Tasmania.

Proceedings suspended from 4.00 pm to 4.15 pm

CHAIR —Welcome back.

Mr Glyde —I have been able to get a couple of answers to questions that were posed that we took on notice earlier on. Senator Joyce asked how much we receive from the Department of the Environment, Water, Heritage and the Arts for the modelling work, and Mr Gooday said $300,000 was his recollection. He was quite right: we received $300,000 from DEWHA for that work. Senator Milne asked us a question about when plantation and non-plantation production swapped over. It was certainly in the mid-nineties when that happened. By our calculation it looks like it was around 1994-95. We could be more precise than that, but the general thrust is right—it is early nineties to mid-nineties.

Senator HEFFERNAN —How much an hour was that 300 grand worth of consultant work charged at?

Mr Glyde —I do not know. They have certainly put a lot of work into it.

Senator HEFFERNAN —Can you give us the details of the work?

Mr Glyde —We can take on notice how much effort went into that.

Senator HEFFERNAN —Not how much effort. I want to know how you invoiced it and how you came to a figure of 300 grand.

Mr Glyde —That is our estimate of the people time, the computing time, any data that we require and the trips that we have to undertake.

Senator HEFFERNAN —But you took the consultancy and were paid 300 grand, right?

Mr Glyde —We were paid $300,000.

Senator HEFFERNAN —Can you give us the details of who decided it was 300 grand and on what basis you came to 300 grand?

Mr Glyde —I will have to take on notice how that happened.

Senator HEFFERNAN —I think it will be a hazardous guess.

Mr Glyde —No, we operate in a competitive environment.

Senator HEFFERNAN —How much an hour do you charge your time at?

Mr Glyde —I do not really know.

Senator HEFFERNAN —You have the full department there with you. If you do not know, who does?

Mr Glyde —I just do not know off the top of my head. We have charge-out rates depending on the level of expertise and the—

Dr O’Connell —We were trying to be helpful answering a question on notice early!

Senator HEFFERNAN —I know, but I am just interested in what the charge-out rate is.

Mr Morris —We have a costing model, which is salaries for each different level within the agency. We then allocate how much time for each person is going to be spent on a project, and then there are allowances made for other things.

Senator HEFFERNAN —Table the documents on how you arrived at the 300 grand.

Senator MILNE —Before the break, we were discussing the state of the Tasmanian timber industry. I appreciate the clarification that it was some time in the mid-nineties or earlier when plantation sawn timber production took over from native forest sawn timber production in terms of the growth area. I also heard you say that 80 per cent of the forests logged in Tasmania end up as woodchips into the export market. You said that China is becoming an important market for Tasmanian native forest woodchips. Can you indicate at what price they go into China? What is your economic analysis of the price that we get for those native forest woodchips into China?

Mr Morris —To clarify, the numbers that Mr Glyde gave were for roundwood removals, so not just sawnwood, which is only one part of what the logs are used for. In terms of the question you just asked, I have some numbers on prices into Japan from various suppliers, but we do not have the equivalent numbers on hand for China. We have the price that various countries receive on exporting to Japan—and Australia gets a higher price than most other countries, probably because of the quality of the woodchips we provide—but I am afraid I do not have the equivalent for China.

Senator MILNE —Can you take it on notice? I would like to know what price we get for native forest woodchips into China. You also mentioned the global financial crisis and changed attitudes towards certification and environmental issues as being reasons why the Japanese woodchip market has declined. Would you care to comment on the competition also from the plantations coming on stream from around the rest of the world? What is the trend? The information we have been given is essentially there is a wall of wood on stream from plantation hardwoods around the world.

Mr Morris —That is right. Our main competitors into the market in Japan are Chile, South Africa in particular—and both of those countries do have plantations—Vietnam and Thailand. I would think that those would be native sources of hardwood, at a guess, but certainly Chile and South Africa do have plantation timber and that would be competing directly with our woodchips. In addition, for Tasmania it is facing competition from production from other states in Australia as well. A number of those states are producing hardwood woodchips from plantation timber.

Senator MILNE —What is ABARE’s outlook forecast for Tasmanian native forest generated woodchips?

Mr Morris —We do not have a very specific forecast for Tasmania. I think the trend in demand in the future is pretty likely to follow closely on what happens with economic growth. The future, I think, will be very dependent on what happens particularly in the Japanese market in terms of economic growth and demand for woodchips and also more globally, of course, because of the flow-through effects to Japan.

Senator MILNE —Regardless of the pick-up in demand, the question was in relation to hardwood native forest woodchips as opposed to hardwood plantation woodchips and the competition into those markets from South Africa, Chile and other states.

Mr Morris —It is going to be very much dependent on whether we can meet the price points that the Japanese buyers are paying for the various sources of woodchips. In the case of Chile there has been a short-run disruption due to problems in that market—disruption to transport links and so forth, due to the earthquake, which is going to have a short-term effect in that market. So for Tasmanian exports that is a potential positive, but that is probably only a short-term effect, and over the longer term it is going to be very much dependent on whether the timber coming out of the native forests in Tasmania is able to be produced at a cost which is competitive with Chile, South Africa and plantations in Australia as well. But we have not done that level of analysis to determine what the relative costs of production of the various sources of timber are at this stage.

Senator MILNE —Do you intend to do that? We have been spending a good deal of taxpayers’ money rescuing the Tasmanian forest industry for a number of years. Isn’t it time we had some significant trend forecast analysis on what the reality is for a native forest woodchip market?

Mr Morris —At this stage it is not on our program for next year. But as you know we are 50 per cent externally funded, and if somebody was interested in funding us for that work we would be more than happy to undertake a survey and analysis of that work.

Senator HEFFERNAN —In other words, ABARE does not know the cost of production of woodchips out of a native forest in Tassie.

Mr Morris —We do not have those numbers, Senator.

Senator HEFFERNAN —So when the government subsidises the industry, you could well be subsidising an operation that is running at a loss.

Mr Morris —We would have to do a survey—

Senator HEFFERNAN —But isn’t that stupid? Wouldn’t you want to know whether you were peeing money up against the wall?

Dr O'Connell —The issue you are raising there really is not an issue for ABARE. It is a broader issue. ABARE does the work—

Senator HEFFERNAN —If I worked for ABARE, given the modelling you do, I would think one of the things you would want to model against is the cost of production.

Mr Glyde —There are lots of things that ABARE can collect data on and lots of lots of things that ABARE can model but there is a limited budget that we have despite, as Mr Morris has pointed out, the fact that we do receive funds from other Commonwealth agencies. We have not done this work

Senator HEFFERNAN —But to follow up on Senator Milne’s point there is a huge subsidy program, what would you call it—industry assistance—

Senator MILNE —Corporate welfare.

Senator HEFFERNAN —going on. Surely the government would have consulted people like yourselves to find out at which point this work is a proposition.

Senator MILNE —Exactly.

Mr Glyde —I do not think that ABARE is in a position to make any judgments along the lines that Senator Milne has outlined.

Senator HEFFERNAN —Who is? If you are ABARE, who can actually tell us what is the cost of production of a native forest in Tassie?

Mr Glyde —I think the starting point might be the Tasmanian government, the organisation that is responsible for the production of timber.

Senator MILNE —That is Forestry Tasmania and they would not have a clue.

Senator HEFFERNAN —So you do not care?

Mr Glyde —It does not matter whether I care or not, Senator.

Senator Sherry —They are not before estimates. The fact is, whether you agree or disagree, ABARE are not in a position to provide those figures.

Mr Glyde —We do not have them.

Senator HEFFERNAN —Do you know where to get them?

Mr Glyde —As I said a starting point would be there but the other way to do it—

Senator HEFFERNAN —Can you get them and provide them to this committee?

Mr Glyde —I might have take that on notice because I imagine there would be a cost in that. The other way to get that is to survey the industry and, again, we do not have the funding for that.

Senator HEFFERNAN —So the subsidy or the government assistance program that has been put in place is against the background of no knowledge on the job?

Mr Glyde —I would not say that. I am telling you what it is that ABARE has and publishes and what it does not have and does not publish.

Senator HEFFERNAN —Forget it. Bloody hopeless.

Senator COLBECK —We have had some focus on woodchips I would like to broaden that out to get a wider sense of future demand for timber products generally. Do you have any more current or recent work on recent trends in global demand for timber and timber products? I am not talking specifically about woodchips which go to paper but more about timber products and where the general demand is there. I have seen some recent pieces of work which talk about growth in demand globally for timber and timber products. Do we have something relatively current on that?

Mr Morris —We do not do long-term forecasts for forest products in the same way we do for agricultural products unfortunately, so we cannot directly answer that. There are a few points that we could make though that might be a little bit helpful. One is that tomorrow we have the next edition of Australian forest and wood product statistics that will be issued and that contains a lot of—

Senator COLBECK —We might have to reschedule you to come back tomorrow.

Mr Glyde —It will not answer your question.

Senator COLBECK —You guys are absolutely brilliant at providing documentation in the week after a week of estimates. I do not know how you do it.

Mr Glyde —When we plan our publications schedule and work we do not really know when the Senate is going to be sitting. It is one of those concepts. We say we are going to put a document out on a certain day—

Senator COLBECK —One of those glorious coincidences, I know. That is all right. I say it with a smile on my face, Senator Sherry.

Senator Sherry —There have been lots of reports issued about a whole range of issues you go to at estimates since the last estimates.

Senator COLBECK —We do not need to have an argument because I think Mr Morris is going to give me some inside information.

Mr Morris —I think in future I will not try to be so helpful, it just gets me into trouble! This is coming out tomorrow but it is a historical document. Why that is useful is that it can actually give you a better idea of trends and it is an update of the data we provided last year, so that might be helpful to some degree. In terms of the forest demand more generally essentially, if you are looking globally, the demand for forest products is very much linked to what is happening with economic growth. In the past when we did do more forestry related forecasts on things like pulp and paper consumption and on timber consumption globally it was very much related to what was happening with economic growth. We can assume that if we get a strong recovery in economic growth that would be positive in terms of demand for forest products, in particular for our exports of woodchips.

Domestically, what tends to drive timber demand are new dwelling commencements and construction. Again, a strong Australian economy and strong growth in new dwelling commencements is a key factor in driving demand for forest products. So with a relatively strong Australian economy we can expect that that will have a positive effect on timber consumption in Australia in the future. For what it is worth, they are a couple of thoughts about what might be driving the market in the future.

Senator COLBECK —I am heading for your website first thing in the morning. When did you stop doing the forward projections on forestry?

Mr Glyde —We might have to take that one on notice. It would be at least five years ago. It was quite some time ago.

Senator MILNE —In response to a question Senator Colbeck just asked, my understanding is that global wood production has only increased by about 0.4 per cent over the last three decades. That is not consistent with what you have just said about economic growth suddenly driving an increase in wood production.

Mr Glyde —I was talking about demand.

Mr Morris —I think it was about what drives demand. With any demand and consumption of product you do not get a one-to-one relationship with income and with growth. So it is more the variation in economic growth that affects the variation in consumption and growth of timber products. An example of that is what has happened with woodchips to Japan where we have seen a reduction in demand partly driven by economic growth factors. It does not mean there is a one-to-one relationship.

Senator MILNE —Notwithstanding what you have said, you talk about construction timbers leading to an increase in demand for wood products but that is largely plantation for those timber products these days, isn’t it?

Mr Morris —I was talking about wood products generally, not differentiating between native and plantation. I am sorry if you asked about native, I thought it was—

Senator COLBECK —It was a pretty general question. Senator Milne and I can debate or disagree on different products. Senator Milne makes the comments about the take up of plantation based timbers in construction and that is true to a certain point. I accept that that occurs but there are still some products that are not possible to get from plantation forests as we know them and are best grown in a native forest-type setting—for example, face grade products, flooring veneers and things of that nature. Plantations have not been managed to an extent that can provide those products yet.

The plantation based products have very different properties to a native forest-grown product basically because of growth rates and a whole series of properties that go into that. There are some intricacies in it and that is why I did not try to get into that. It was more about general demand for timber and timber products on a global level and where that was actually going. There is a report that was done by the Forests and Forest Industry Council in Tasmania that talked about future demand and I was interested to know whether you had any data on that because I was interested in where their assumptions may have come from.

Dr O’Connell —The markets are obviously quite significantly segmented and the house frames are overwhelmingly plantation softwood. You are talking about other furniture and veneer-type facing—

Senator COLBECK —Even flooring, for example, skirting architraves, finishing timbers and some specialty timbers that go into residential and commercial construction—those sorts of things still require a timber that is not yet available through plantation. A lot of them are interconnected. While they are siloed, there are connections in them because of some of the secondary products that you will get out of a sawlog. You are not going to get 100 per cent recovery of a first grade product out of a sawlog. There are going to be other products that come out of it, which is where the connections into woodchips, veneer and all those other things come into it. I just want to go onto some quick questions about projections and perhaps a bit of history on oil and gas production.

Senator MILNE —Before we go off timber, can I ask a final question on that. I want to finish on forestry. Who is doing the work on the economic cost-benefit of what price you would have to get for these specialty timbers in order to continue logging native forests to get them, if you have no market for woodchips?

Mr Glyde —The short answer is that I do not know. Certainly ABARE is not doing that work.

Senator COLBECK —This goes to someone research of yours that has been quoted in the media, Mr Glyde. There are claims that the Petroleum Resource Rent Tax Scheme in 1987 did not stymie growth and in fact produced growth. I have a report here which says:

But industry and ABARE data shows that just about every tonne of extra gas production has been generated by the North West Shelf gas project and it is not covered by the PRRT regime.

Further, the data shows that oil production in Australia has declined pretty consistently since 1987, while production from fields not covered by the regime (Bass Strait and Timor Sea) consistently rose to a peak at the turn of the century, although they now appear to be in natural decline.

Do we have any data that can provide trends in oil and gas production in Australia since the introduction of the petroleum resource rent tax in 1987, and is it possible to break the data down into production regions, and is it possible to further break the data down to show projects subject to the rent tax and those that are not?

Mr Glyde —I think it is possible; whether ABARE has all of that data and can generate that itself I am not sure. I will have to take that on notice. You have asked across a wide range of different categories. We tend to focus on the economic aspects of the minerals and energy sector and our colleagues in the Department of Resources, Energy and Tourism and Geoscience Australia do some of the other physical elements. I will ask Ms Melanie whether she can be a little more specific than that. But I think it is a question we will have to take on notice.

Ms Melanie —The Australian petroleum statistics database is the database which holds data about oil and gas production in Australia, and currently this database is maintained by the Department of Resources, Energy and Tourism.

Mr Glyde —So that is a question probably best asked of the Department of Resources, Energy and Tourism.

Senator COLBECK —All that data should be held in that database?

Ms Melanie —Yes.

Senator HEFFERNAN —All I want to know is whether ABARE has done work on the consolidation of the cattle market and the herd size.

Dr Sheales —The quick answer to that is no.

Senator HEFFERNAN —Are you interested in the consolidation of the beef market—the future economic well-being of the cattle industry?

Dr Sheales —We certainly do our farm surveys and our commodity forecasts, so in that sense, yes, we take an interest in what is happening in the beef market.

Senator HEFFERNAN —Given the fluctuation and the currency going back the other way, are you interested in the JBS Swift consolidation of the Australian cattle market?

Dr Sheales —We keep track of those things. In a research sense we—

Senator HEFFERNAN —This is serious.

CHAIR —It might be serious but it was not your call. Your colleague had the call, Senator Heffernan.

Senator HEFFERNAN —Too bad; I am taking the question.

CHAIR —That is too bad. I am sorry, Senator Nash, you have just lost your time to your colleague.

Senator NASH —I did just want to put it on notice that, in 2007, BRS did a study, an overview of tools for assessing groundwater, surface water connectivity, so I am just interested to know what input you have been asked to give or what role BRS is going to play in terms of the draft basin place coming out in the middle of the year. I am happy for you to take that on notice, but if could you come back with the detailed input—if there is any—that BRS will have to drafting the plan.

Senator HEFFERNAN —I will get back to this cattle job—JBS Swift have just taken over Australian Meat Holdings. You guys are allegedly interested in the economic profile of an industry and I am talking about the beef industry. Have you looked at the effect of that merger on the economic profile of the beef industry?

Dr Sheales —No we have not.

Senator HEFFERNAN —Do you think you should?

Dr Sheales —Along with a lot of other issues affecting the industry, we keep track of it, but we do not have any specific research topics in mind.

Senator HEFFERNAN —It is not hard to keep track of it, why doesn’t someone do some work? Can I just briefly give you a snapshot of southern New South Wales—and you may be interested in this. JBS Swift, if they succeed in the takeover of Rockdale feedlot, are going to have 100,000 cattle in 400 kilometres of catchment on feed, which is 350,000 cattle a year. What I would like you fellows to tell me is what impact that is going to have on the market and the vulnerability of the farm gate price against the consolidation of the market.

Dr Sheales —As with any market such as the cattle market, there are always options to move cattle around, and no doubt the transport costs will be factored into that. If all these things happen, while they might be the major buyer in the area, it does not mean to say they have got any sort of monopoly or buying power.

Senator HEFFERNAN —At the present time they are trying to consolidate Woollies and Coles into the operation. As I say, there are 350,000 cattle and no-one seems to give a rats. I am bloody concerned about it, and I think you blokes ought to be to. I think someone ought to have a serious look at it, because these guys, JBS Swift, are now sending some of the AMH employees to the United States to a school over there to learn to consolidate a market. Their ambition, let me tell you, is to control the price of beef in Australia.

Senator Sherry —Senator, that is a competition point that you are raising.

Senator HEFFERNAN —Yes, I know it is, but it is also the economic wellbeing of the industry, which is you guys.

Mr Glyde —Our role is to try to understand the industry and where it is heading so we can do commodity forecasts. We are interested from that perspective, but we have no skills or expertise in relation to understanding competition policy issues and, as the minister has pointed out, that is a matter for the ACCC.

Senator HEFFERNAN —You cannot silo the information. Surely, you need to put it on to one data base, the impact of all this, and surely you are the master of the course then to give guidance to the government on the impact. At the moment you are saying, ‘We have not had a look; it is siloed in a different area.’ I am saying unsilo it; could you report back to this committee on the impact of the JBS Swift consolidation of the cattle market in Australia?

Mr Glyde —No, the point I am trying to make is that we are interested in what is happening in the industry, to monitor what is happening in the industry so we can try to make accurate commodity forecasts. To that extent we work with the industry and with the ACCC to understand that, but making a commentary on the impact that that is going to have and making an assessment of how that is going to go—

Senator HEFFERNAN —I am not asking for—

CHAIR —Senator Heffernan, it is a half hour, I understand your passion for this and it is shared by the rest by the committee.

Senator HEFFERNAN —It is not shared, did you say?

CHAIR —It is shared by the rest of the committee. On that, we thank officers from ABARE.

 [4.46 pm]

CHAIR —I welcome officers from Sustainable Resource Management and we will go to questions.

Senator SIEWERT —To begin I want to go to the budget cuts in Caring for our Country and for reducing duplication. As I understand it, there is $70.4 million being cut from the Natural Heritage Trust and $10.9 million from Landcare. Could you outline where those cuts are coming from and in particular how they are ending duplication?

Mr Thompson —In terms of the duplication, that is a reference to the grants for similar purposes going to similar groups, but it also referred to opportunities to save money in administration of the program. The cuts over four years in the Landcare area are, as you said, $10.9 million. They come half off administration and half off  the future forward estimates for the program. It is probably worth noting that there is still an increase in funds available for Landcare groups over those four years. Landcare actually increases from $35 million to $36 million next financial year.

Senator SIEWERT —Can we go to your comment about cuts. First let us do the grants for similar program purposes. Can you explain what you mean there?

Mr Thompson —The grants are available under Caring for our Country and for Landcare for things like the community action grants and the competitive grants and there is also funding available through regional bodies. So there was a large amount of money for similar activities and the government, in terms of achieving its budget outcome, made some reductions across the whole range of programs and so some reductions were made in this area.

Senator SIEWERT —The last comment is the one that seems to me to go to the heart of the matter—that the government wanted to make cuts and that is where they made cuts. Even if they are similar sorts of programs they are still Landcare programs, they are still on-the-ground programs. Whether the money is delivered from the regional grants program or from another program it is still money hitting the ground for Landcare.

Mr Thompson —Yes, and there still will be money hitting the ground from Landcare. As I have said, in the case of Landcare the money that was removed from the grants component was an indexation amount for Landcare that the Landcare appropriation had retained for many years, and which other programs did not have.

Senator SIEWERT —Can you tell me how much of the $10.9 million is actually money that came out of the grant program?

Mr Thompson —Yes—out of the $10.9 million it is $6.4 million over four years.

Senator SIEWERT —So $6.4 million you say was indexation.

Mr Thompson —Largely indexation, yes.

Senator SIEWERT —How much is largely and how much is real cuts? I still call not giving indexation real cuts, so how much is indexation and how much is not indexation?

Mr Thompson —It is virtually all indexation. There was a bit of a complication in that there was actually some slight supplementation of the last set of indexation for the Landcare appropriation that took place, and then the indexation applied.

Senator SIEWERT —Sorry—could you explain that in English that I can understand!

Mr Thompson —The amount of money for Landcare was indexed for the last time effectively at the end of the last indexation period for 2009-10, and then the indexation was removed into the future.

Senator SIEWERT —Okay, thank you.

CHAIR —This is Landcare, so there is an increase?

Mr Thompson —There is still an increase in Landcare from this year to next. Landcare had an increase in profile—

Senator SIEWERT —Of a million bucks.

Mr Thompson —and it increases this year and stays pretty much the same for the next three years.

Senator IAN MACDONALD —Funding for Landcare was reduced by $10.9 million—is that right?

Mr Thompson —That is right.

Senator IAN MACDONALD —And yet you are saying that Landcare funding was increased by a million?

Mr Thompson —Landcare funding was increased over the current appropriation. There was an increase in profile for Landcare. The reduction actually meant a slightly—

Dr O’Connell —The rate of increase is not tapering off.

Senator IAN MACDONALD —You are saying that last year there was a certain expectation for this year, but the expectation for this year is $10.9 million less than what you forecast it would be last year?

Dr O’Connell —Over the forward estimates.

Mr Thompson —Over the forward estimate period.

Senator IAN MACDONALD —Over four years?

Dr O’Connell —Yes.

Senator IAN MACDONALD —You are saying that the money that will be spent on Landcare in this year to do things is a million dollars more than it was last year, but $10.9 million less than you expected—

Mr Thompson —It is a million more than this year, but at last year’s estimates it would have been—

Senator IAN MACDONALD —A quarter of $10.9 million—

Mr Thompson —$1.5 million more. So the reduction over the growth is of half a million dollars. It grows by $1 million, and it was to have grown by $1½ million.

Senator IAN MACDONALD —You answered Senator Siewert that the $1½ million was simply indexation on last year’s figures, so effectively there is, in real terms, less money for Landcare.

Mr Thompson —I would not have thought so. I have not calculated that, but going from $32 million to $34 million in terms of money on the ground is probably more than indexation.

Senator IAN MACDONALD —But by indexation do you not mean retaining the value of money?

Mr Thompson —Yes it does, but the forward estimates of the program are not just purely indexed. They contain various ups and downs, depending on estimated cash flows for projects.

Senator IAN MACDONALD —You told Senator Siewert that most of the $10.9 million was removal of the indexation that was planned—

Mr Thompson —No, the $6.4 million was mainly the indexation. That was the administered money for money on the ground. The duplication largely related to the component of the program that goes for implementation of the program, which is $4.4 million. That was not indexed; that meant we have got less staff to administer the program.

Senator IAN MACDONALD —You are saying that $4.4 million, which your department used to spend in administering this program, you are not going to spend any more.

Mr Thompson —No.

Senator IAN MACDONALD —Which means you have been wasting it in the last four or five years, obviously, if you can now do it this year without that money.

Senator SIEWERT —I want to hear what the duplication is.

Senator IAN MACDONALD —Sorry—I am—

Senator SIEWERT —Because duplication depends on what the duplication is—it depends whether it has been wasted.

Senator IAN MACDONALD —Yes, that is right.

Senator SIEWERT —When you say ‘duplication’ can you tell us what the duplication actually is?

Mr Thompson —In terms of implementation of the program, I would not say we have wasted money over the years. But in the early years of any program it takes more resources to set a program up, put in place assessment processes, establish communications with and get information from people about what sorts of projects should be funded and those sorts of things. Landcare projects and Caring for our Country projects are being rolled out together. What we are planning to do is make more effective use of our staff in terms of things like monitoring projects, visiting projects, undertaking audits of compliance, making better use of automated contracting systems and automated acquittal systems and those sorts of things to reduce the administrative overhead on the program.

Senator SIEWERT —So when you say you are going to reduce duplication in monitoring et cetera, do you mean that departmental staff were going out to look at Landcare projects separately from the other components of Caring for our Country?

Mr Thompson —Not always, but there is always scope for targeting which projects are visited, what things are looked at, when visits take place and whether we use people based in the regions or not, to do it in a more cost-effective way.

Senator SIEWERT —How many staff are being taken off this program?

Mr Thompson —The number of resources for staff that will be reduced from the program will be around seven into next financial year.

Senator SIEWERT —FTEs?

Mr Thompson —Yes.

Senator SIEWERT —They are based in Canberra, the regions or both?

Mr Thompson —They are largely based in Canberra. There will be no redundancies involved. We are carrying some vacancies, as is always the case, and it will be a matter of redesigning some workloads. Some people will do some different things and we will do some things in different ways, but no existing staff will lose their jobs.

Senator SIEWERT —What is the forecast in terms of the amount of money that will be available for Landcare on the ground? You said that it is going up from $35 million to $36 million.

Mr Thompson —That $35 million to $36 million is the total amount for Landcare. For projects it is $34 million this year and then $37 million in the three forward years.

Senator SIEWERT —For the out years it is the same, so in reality that is a cost cut, because it is not getting indexed. That is correct, isn’t it?

Mr Thompson —This year we expect to spend $32 million; next year, $34 million; and in the year after, $37 million. It is a decrease on what might have been expected to have been spent if one looked at last year’s forward estimates. But, as the numbers show, there is still that increasing profile and then a plateau.

Senator IAN MACDONALD —But the value of money is going down, so you are going to get less value out of those increased amounts.

Mr Thompson —The government took a decision some years ago to not index quite a number of programs, because programs go on roughly a three-year review cycle. The amount of money available for programs for that forward estimates period is considered at that point in time, rather than it automatically indexing.

Senator IAN MACDONALD —It does not matter who decided. If the indexation is no longer there, you can do fewer things for the same amount of money each year. I am not blaming you.

Mr Thompson —If the money is the same, yes.

Senator IAN MACDONALD —The money has gone up but, from what we understand from what you said previously, not by the amount you expected the indexation would need to be last year. So you were either wrong last year or—I do not know what else.

Dr O’Connell —The amount administered this year is $32 million. It is going up in the out years to $37 million. That is certainly well above the indexed component of that.

Senator IAN MACDONALD —So where does the $10.9 million come from?

Dr O’Connell —Take the indexation off and you still have a very significant increase for people on the ground between this year, which is $32 million, and those out years, which is $37 million.

Senator IAN MACDONALD —Assuming the value of money stays the same.

Dr O’Connell —No, even with the indexation. That is with the indexation taken out, so what I am saying is that it is $37 million in each of those out years. This current year was $32 million, so they are going to see a rise now to the level we had before.

Senator IAN MACDONALD —What did you have last year for the out years?

Dr O’Connell —Over those out years, an extra $6 million—$6.4 million.

Mr Thompson —Without the savings, 2010-11 would have been $34.6 million on administrative projects and 2011-12 would have been $38.3 million.

Senator IAN MACDONALD —If you were right last year in your indexation calculations, there is less real-value money available from now through to the out years—either that or you were wrong last year, and I am sure you were not.

Dr O’Connell —But not less than this year, which is the point I think we were making, which is that the—

Senator SIEWERT —It is just semantics, Senator Macdonald.

Senator IAN MACDONALD —It is; that is right.

Senator SIEWERT —There is $10.9 million in the bank.

Dr O’Connell —It is a real cut in terms of the indexation, there is no question about that. I am not trying to suggest that; I am just trying to suggest the effect on those people who are receiving that administered fund. It needs to be taken in the context of it being $32 million this year, $34 million next year and $37 million beyond that. Even with that indexation removed, that is still $37 million in dollar terms for that year, so you will still be considerably above the $32 million in real terms now.

Senator SIEWERT —You said there was duplication and you were getting rid of duplication between projects that were going through the Competitive Grants Program and the regional groups. The implication from that is that you are changing the way those funds will be delivered.

Mr Thompson —No, the reduction was described as duplication. We have not yet made a decision—or ministers have not made a decision yet—about how the program will be delivered beyond this financial year. This year we have a business plan that has projects in now that are still being looked at. A commitment has been made to regional money, and that will not be reduced. We have committed to retain funding for facilitators and that will not be reduced.

Senator SIEWERT —For this financial year or permanently?

Mr Thompson —For regions, I think the commitment by ministers was that we would stay with the commitment they made to the end of Caring for our Country, and I think for all facilitators the same commitment was made, so we are talking to the end of the current Caring for our Country period, which is 2012-13.

Senator SIEWERT —Can we be clear about when you are talking about facilitators. Are you talking about the regional facilitators?

Mr Thompson —We are talking about the 56 Landcare regional facilitators.

Senator SIEWERT —They are still remaining with the regional organisations?

Mr Thompson —There is a process currently being finalised for the appointment of the 56 Landcare facilitators at a regional level at the present time. It was an open call. They do not necessarily have to be in regional bodies, but they will be located in regions.

Senator SIEWERT —Can you remind me how much that is out of the Landcare budget? I presume that comes out of that Landcare budget we have just been talking about.

Mr Thompson —It does. It is $8.4 million.

Ms Allan —It is $8.4 million a year over the four-year period, so a total of $33.6 million.

Senator SIEWERT —So those people do not get a pay rise for the next three years?

Mr Thompson —It is an aggregate figure. Some of the pay arrangements in that period do vary a little bit from individual to individual and depending on their job, so I could not say whether they receive or do not receive a pay rise, but the amount of money is the same.

Senator SIEWERT —The money remains the same, though.

CHAIR —They will not lose their jobs.

Mr Thompson —They will not lose their jobs; that is the point.

Senator SIEWERT —No, but they will not get a pay rise. Those facilitators will continue for the next period for the life of Caring for our Country.

Mr Thompson —Yes.

Senator SIEWERT —I am trying to get back to that point about how the grants will be delivered. Is it intended that there will still then be a process to the regional bodies? That is what I understand you have been saying—it remains a competitive process.

Mr Thompson —In the overall Caring for our Country budget, the commitment of $138 million a year to the regional bodies is separately appropriated at the moment via Treasury. That sits there.

Senator SIEWERT —That is that minimum amount that they get?

Mr Thompson —That is that minimum amount they get. The competitive arrangements vary a little bit. Some were EOIs this year; some were a bit more direct tender; some were open expressions. Virtually all of Landcare projects are funded that way. That may vary a little bit next year when we again look at comments on this year’s experience with the business plan, or it may not, but essentially the bulk of the money will still go out through a process which will enable a range of people to apply.

Senator SIEWERT —The bulk of the money will go through the competitive process—the Landcare competitive process.

Mr Thompson —The bulk of the Landcare money. The Landcare money also pays for commitments to some other projects, like Landcare Australia Limited and SeaNet.

Senator SIEWERT —How much is available for grants—or how much is it anticipated under the new arrangements will be available for grants? Is SeaNet funded under Landcare?

Mr Thompson —Caring for our Country receives funds for a number of different appropriations. For the purposes of calling for projects we pool the money, but then we have to track it back to the different appropriations.

Senator SIEWERT —Where does SeaNet come in under Landcare?

Mr Thompson —SeaNet is funded as part of Landcare. The minister agreed to fund SeaNet for three years out of the call for projects late last year.

Senator SIEWERT —That is one I missed.

Senator IAN MACDONALD —That is good for SeaNet; I am delighted to see it there, but it does mean that there is less for Landcare. Is that right?

Senator SIEWERT —And how does SeaNet get funded under Landcare?

Mr Thompson —It is part of the community based measure to improve sustainable resource management and working with industry.

Senator SIEWERT —How much was for SeaNet?

Mr Thompson —SeaNet is $2.6 million over the next three years.

Senator SIEWERT —When was that funded?

Mr Thompson —The first year of funding under this process was 2009-10.

Senator SIEWERT —When was the announcement made?

Mr Thompson —I would have to take that on notice. It was September-October last year.

Senator SIEWERT —Was it part of the announcement under Caring for our Country when those projects were announced?

Mr Thompson —There were a range of announcements for Caring for our Country at different times for different groups of projects. It was made in the same group—

Senator SIEWERT —When was the competitive grants process announced?

Mr Thompson —It was announced as part of the process of announcements for competitive grants. It was not part of the initial announcement but it was part of one of the subsequent ones. There were two or three announcements that followed in sequence.

Senator SIEWERT —Can we go through what Landcare is funding?

Mr Thompson —Landcare is still funding a number of sustainable practices grants that started in 2008-09. There are estimates for that continuing. There were a range of open grants towards the end of 2008-09 that had Landcare projects in them, including SeaNet.

Senator SIEWERT —What I am trying to get to is: you fund particular grants and that then necessitates forward estimating for those grants. What I want to get to is: how much money is now available out of the $32 million, $34 million and $37 million in the forward estimates? How much is available for open grants and what has been committed to existing programs like SeaNet, like the facilitators, et cetera, all of which come out of that money?

Mr Thompson —In terms of the amount of money from Landcare that is available, aside from commitments, in 2009-10 we estimate—and these numbers do change a little bit as some projects advance and some slow down—on top of what we have estimated would be spent out of the current business plan, there is $1.3 million. In 2010-11 there is $8.6 million, and in 2011-12 there is $20.4 million. Sorry, it is $8.6 million, $19.2 million and $20.8. million. That is available for projects on top of the ones that will be considered in this year’s business plan. We have estimated what the call in this year’s business plan might consume, and I think we announced in the business plan that it was around $15 million, and that is spread over those three years.

Senator SIEWERT —That comes out of the business plans for 2010-11. What is being applied for now—

Mr Thompson —In the current business plan for 2010-11, we estimated we would spend, I think, about $15 million on sustainable agriculture-type projects, and the majority of those are Landcare projects.

Senator SIEWERT —That is the forward planning, which includes the facilitators, SeaNet, and forward commitments on existing projects.

Mr Thompson —The numbers I advised were: 1.2, 8.6, 19.2 and 20.8. They are on top of any existing commitments that we have.

Senator SIEWERT —Thank you.

Senator IAN MACDONALD —And what are the existing commitments that you have for those four years?

Mr Thompson —The existing commitments for those four years are: 2010-11, $25 million; 2011-12, $17.8 million; 2012-13, $16.2 million.

Senator SIEWERT —What I am still trying to get to is what are the ongoing projects that come out of that funding?

Mr Thompson —The ongoing projects that come out of those figures that I quoted and the $29 million that we will spend this year include the various rounds of grants that have been made its 2008-09—business plan open grants; sustainable practices; community action grants, which were announced earlier this year; the national network of Landcare coordinators; the national Landcare facilitator; funding for the Australian Landcare Council; some sustainable farm practices facilitators that operate at the state level—

Senator SIEWERT —How many of those are there?

Mr Thompson —There are seven of those. Each state has one—

Senator SIEWERT —There are the 26, and then you have your state ones as well.

Mr Thompson —Yes. And then there is some funding that is committed to supporting the Australian Landcare Council and innovative farming systems projects, which are expected to be part of this year’s business plan.

Senator SIEWERT —Applications have closed for 2010-11. What they are going for is $8.6 million. How many applications did you get, and for what value?

Ms Allan —Overall, in Caring for our Country, there were 614 applications. For the sustainable agriculture expressions of interest, there were 52 sustainable farm practices expressions of interest.

Mr Thompson —There were 300 projects that expressed sustainable farm practices as one of their targets but people were able to target more than one priority area. There were quite a number of sostainable practices ones that targeted both that and community skills, knowledge and engagement, biodiversity, farm practices or improving coastal water quality.

Senator SIEWERT —So 52 have specifically been channelled into sustainable land practices?

Mr Thompson —There have been 52 in the expression of interest process. We ask that people who are applying for larger projects put in an EOI, rather than a detailed application.

Senator SIEWERT —Going back to the 614, how much was that worth?

Ms Allan —They were worth just under $277 million.

Senator SIEWERT —I will come back to how much is available under Caring for our Country in a minute. Of the 52 for the sustainable land practices under the EOIs, how much do they add up to?

Mr Thompson —I think the total amount of money is $50 million.

Senator SIEWERT —So we had $50 million worth of applications for $8.6 million worth of grants?

Mr Thompson —The $50 million is for the total funding over the three-year period. The $8.6 million is what we have available next year. The total amount of money for sustainable practices that we estimated at the time of the business plan was around $15 million over three years. The business plan advertised, as a target, that there was around $15 million for sustainable practices over three years. As I said, these numbers can vary a little bit because projects can come in under budget or can be delayed, and budgets do shift.

Senator IAN MACDONALD —The $50 million over the next four years means about $14 million a year, for which this year there was $8.6 million available.

Senator SIEWERT —That is if all the projects were for four years; sometimes they are not. Sometimes they are only for a year or two.

Senator IAN MACDONALD —I am only averaging because—

Mr Thompson —Most of the projects have a variable profile but the uncommitted money in the next financial year is $8.6 million.

Dr O’Connell —I think we are starting to stretch the ability to flip the paper backwards and forwards accurately. Would it be useful if we took this on notice and got clarity for you? From what I understand, you are trying to see how the expressions of interest cast over the forward estimates of their expressions of interest match the available funding. Is that right?

Senator SIEWERT —Yes.

Dr O’Connell —I think it is probably easiest if we take that on notice and come back to you.

Senator IAN MACDONALD —That would be useful provided we get the answers before the next estimates meetings, which will be well after the next election.

Mr Thompson —We can do those numbers fairly quickly, Senator. We have all the information; it is just a bit scattered.

Senator SIEWERT —If you could do that, it would be appreciated.

Senator IAN MACDONALD —Even if we could get them before this committee finishes tomorrow.

Dr O’Connell —I think we can do that.

Senator SIEWERT —Is the assessment process going to remain the same, in that case, for Landcare projects so that they are dealt with separately from other Caring for our Country programs?

Mr Thompson —The current assessment process involves one common application form and in a sense one broad assessment process following similar principles of preliminary assessment panels, then national moderating panels, then an executive panel finalising the advice. That is the same for all projects. The Landcare projects go through a stream whereby it is ensured that people with Landcare experience and sustainable practices knowledge participate in that assessment and, because the funding comes from a different appropriation for Landcare, that is made separately by the minister. But, by and large, the processes are the same. For the expressions of interest, it is a very similar process except that after they have gone to a national moderating panel to identify which are the ones that should be developed further, the minister then would take a decision about which ones should be developed further. Then they will go through that iteration process of identifying negotiating points or discussing new partners or whatever might happen. Then they will come back for consideration as part of the overall funding for Caring for our Country for next year. That is the process for this year. As happened last year, we will go out and do a consultation process on this year’s business plan and listen to people’s comments. There might be some changes next year with a view to improving things where necessary.

Senator SIEWERT —Where are you up to in terms of the assessment process?

Mr Thompson —The assessment process is right in midstream at the moment. In terms of assessing broad open call projects, they are currently going through a preliminary assessment by staff from the department, staff from the community and experts at a state level doing the initial assessment and scoring. The expressions of interest have been through initial assessment to a national moderating panel and advice is currently being finalised on which ones should be recommended for further development.

Senator SIEWERT —And national moderating panel is deciding that?

Mr Thompson —A national moderating panel for the expression of interest is deciding that, yes.

Senator SIEWERT —Who is on the national moderating panel?

Ms Allan —We have three panels: a panel that looked after soil condition, one for aquaculture and commercial fisheries, and one for landscape scale conservation. The national moderating panel had the chairs of those three panels and a departmental officer and an independent chair on them. The moderating panel consisted of Mike Logan, who was the independent chair; the general manager from Landcare and Sustainable Agriculture Branch, which was me; the EOI assessment panel chairs, which were Mr Alex McNee, who looked after fisheries, Mr Col Creighton, who looked after the soil panel, and Mr Andrew Lang from the landscape scale conservation panel.

Senator SIEWERT —I am sorry to labour the point: we had an independent chair, chairs from the three panels and two departmental staff—seven. Is that correct?

Ms Allan —Yes.

Senator SIEWERT —So there was one overall national moderating panel for all the expressions of interest.

Mr Thompson —There was one done on each of those areas: soils, landscape scale conservation, and fisheries and aquatics. They looked at the ones within that theme area, then they can together into a national moderating panel to look at recommending a number from those areas.

Senator SIEWERT —And each of those panels were all at a national level, but you had already gone through a process at a state level.

Mr Thompson —For the EOIs, there are only 56 and when you break them into the theme areas each area ends up with 15 to 20 per or even fewer. So we did them all at the national level in terms of themes and then the national moderating panel looked across the themes to ensure there was a balance and reasonable equality between the three areas. For the open call, there was a far greater number of projects so the initial screening was done at the state level across all the themes of Caring for our Country. Then they came into a national panel to look across the themes and state distribution.

Senator SIEWERT —So you have the two separate processes.

Mr Thompson —Yes.

CHAIR —With the variance in the funding for next year, we know there will still be the same number of facilitators—56, 57—next year?

Mr Thompson —Yes.

CHAIR —What about the community action grants?

Mr Thompson —Final decisions have not been made on those, but they have been well supported and ministers have announced their commitment to funding in this area. So it is not something that we are looking to target for many reductions.

CHAIR —Are there any other areas that the government has said would not be affected by the reduction in funding?

Ms Allan —Within the greater Caring for our Country, we would not be targeting the election commitments for funding cuts.

CHAIR —Good.


Mr Thompson —Things like Reef Rescue. Reef Rescue, in particular, is not going to be targeted.

CHAIR —The government sponsored the National Landcare Forum. Can you tell the committee how that went?

Mr Thompson —The National Landcare Forum was held in Adelaide in March this year. It was very successful, with about 600 to 650 people attending—all of whom expressed enthusiasm and a positive attitude about it. One of the recommendations from it was calling upon the Commonwealth and the states to support similar forums on perhaps a biannual basis.

CHAIR —Where to from here, apart from suggesting that it carry on every two years? Anything else?

Mr Thompson —The other thing that came out of it, which is really just my comment, was that there was a tremendous amount of enthusiasm by community and regional groups for getting on with the job. There was also quite a degree of formal discussion at the forum about a framework for Landcare in the future and how it could contribute. The whole group listened to presentations from a whole range of people, including the minister, and they are currently working on a framework to look at how Landcare could work and contribute in the future to things like addressing climate change, food security, working with volunteers and improving the environment.

CHAIR —It is a very positive initiative. To get 600 or 650 people in the room in all green was worthwhile. That is great.

Senator SIEWERT —I am still trying to tease out the amount of money that is available for the different programs. Of the $8.6 million, how much is then available for the community action grants, the open grant process and the EOI process? Do you allocate amounts against each of those programs?

Mr Thompson —The amount allocated for community action grants this year—and they are a one-year program—was $5 million.

Senator SIEWERT —When you say ‘this year’ is that—

Mr Thompson —That is for the financial year 2009-10. Ministers have not taken a final decision on the amount of money for community action grants next financial year, although they have indicated that a call for grants will be made shortly. But no final decision has been made on that one yet.

Senator SIEWERT —So how much of the $8.6 million for next year is likely to be available for the community grants program, which are only one-year funding programs?

Mr Thompson —When we talk about the $8.6 million being available we just make an assumption that community action grants would continue at the current level of funding at least.

Senator SIEWERT —Okay, that takes it down to $3.6 million that is available for the open grant process.

Mr Thompson —No, the $8.6 million takes account of there being at least the same amount of money available for community action grants. If community action grants run at $5 million next year, and some consideration is being given to increasing them, there would still be $8.6 million available because we took into account that they would at least go at that level. Community action grants were equally funded by Landcare and the broader Caring for our Country.

Senator SIEWERT —It is like trying to grab hold of jelly. How much is available for each of the granting programs, which is what I asked a while ago? You did not mention—I apologise if you did; I did not catch it—that the $5 million was likely to come prior to the $8.6 million. So you have budgeted at least $5 million in each of the out years—we will forget 2009-10—2010-11, 2011-12 and 2012-13 for the community grants program? Is that right?

Mr Thompson —Yes. As I said, some of these numbers change because of changes in demand from the community. But the amount of money that is broadly available for the sort of thing that we would call the business plan are the $8.6 million, the $19.2 million and the $20.8 million. That also allows that, in addition to that, there would be at least $2.5 million available from Landcare plus an additional $2.5 million from elsewhere in Caring for our Country for community action grants.

Senator SIEWERT —So the $8.6 million that is available in the next financial year is solely for the open process and the EOI process.

Mr Thompson —Yes.

Senator SIEWERT —How much are you allocating the EOI process and the open process each?

Mr Thompson —We have not made a split in that regard. We have not actually done it this year either, other than notionally. That is because we would actually like to look at the relative quality of projects that come in under the EOI versus the quality that come in under the open call. But there would be a notional amount. I think we said we would fund up to five EOIs for up to $1.5 million. So there is a notional amount over three years for them, but we are not locked into that.

Senator SIEWERT —As I understand what you just said, under the EOI process there were 52 projects for $50 million.

Mr Thompson —Yes.

Senator SIEWERT —Under the open call process, how many projects were there that would be potentially funded under Landcare, and for how much?

Mr Thompson —There are about 173 projects that might be called Landcare.

Senator SIEWERT —So there are 173 projects.

Mr Thompson —There are 173 applications in improving management practices, which is the on-farm type stuff, and another 127 for landscape scale conservation, which is more or less on-farm and off-farm environmental management. For improving farm practices, the funding sought was $32 million. For the landscape scale consideration, it was $18.4 million.

Senator SIEWERT —So, overall, going for the $8.6 million, we have $50 million plus $32 million plus $18.4 million.

Mr Thompson —Not quite. That $8.6 million is for one financial year. The funding that I was quoting was over a three-year period. So if it is compared with anything it should be compared with—

Senator IAN MACDONALD —So, on average, it is $33 million, a third of $100 million, for which you have $8.6 million.

Mr Thompson —Roughly you are right. If we just looked at the crude budgets put in by applicants without any adjustments or examination, roughly a third of them would be able to be funded.

Senator SIEWERT —Of the $19.2 million for 2011-12, how much of that would you allocate these projects, for example?

Mr Thompson —Probably the majority of that would be available for innovative farm practices, improving farm practices, landscape scale conservation and some weed and pest management.

Senator SIEWERT —Sorry, I misphrased the question. How much would you forward-allocate of the 2011-12 budget for existing programs? So when you are approving projects this year, knowing that you are committing for the next year at least, probably the next two—

Mr Thompson —The rule of thumb we will use is that in the first year—so for 2010-11—we try at the beginning of the year to commit 100 per cent of our budget, so we would spend the full budget in that year. In the second year, which would be 2011-12, we would aim to spend 40 per cent of the budget, and in the third year we would spend 30 per cent of the budget, and that would enable funding to be available.

Senator SIEWERT —That is what I was looking for. Of the projects that you had under both the EOI process and the open call process, how many were one-, two- or three-year projects?

Mr Thompson —I do not have the detail of those applications or analyses in front of me. All we have is the total amounts. But, for the EOIs, I would be surprised if they were not all three-year projects, given that they could get up to $1.5 million over three years and a project of that size would probably take two or 2½ years to do. Many of the other projects are probably two to three years. There will be very few projects that are only one year. Most of the community action grants are one year, but everything else will be two to three years.

Senator SIEWERT —Most of the projects that were community based projects last year were funded for just two years, weren’t they?

Mr Thompson —They varied. Some were two and some were three. But certainly the expenditure in the last year of three-year projects was usually a lot smaller than in the earlier years.

Senator SIEWERT —Thank you. Those are my Landcare questions.

Senator IAN MACDONALD —You are dealing only with Landcare now?

Senator SIEWERT —We have done only Landcare. Then we will move on to Caring for our Country if that is okay.

Senator IAN MACDONALD —Yes, I do not have any other separate Landcare ones.

CHAIR —Senator Colbeck and Senator Back, do you have any Landcare questions? If not, shall we move to Caring for our Country?

Senator SIEWERT —Yes.

Senator IAN MACDONALD —I do not mind if other senators interpose while we are on this. The funding for the Natural Heritage Trust has been reduced by what in this budget?

Mr Thompson —The NHT has been reduced by $70 million.

Senator IAN MACDONALD —Again following Senator Siewert’s questions in relation to Landcare, where are those savings coming from?

Mr Thompson —Again, the NHT-funded component of Caring for our Country was on a rising profile again, so the actual numbers continue to go up. The savings were also phased in so that they were smallest in the first year of the program and larger in the latter years, when there was more uncommitted money. In the first year of the program, they were obtained largely by efficiencies in implementation costs, costs associated with monitoring and evaluation, project management and communications. In the latter years, they will have some effects on programs. The areas where it is currently estimated that there will be some reduction are areas like national reserves, World Heritage, Coastcare—excluding the Barrier Reef, as I mentioned—and some of the implementation costs associated with facilitators, largely looking at savings in travel and overhead costs.

Senator IAN MACDONALD —Can you tell how the $70 million is going to be allocated over the three out years—or is it four? As I understand it, the $70 million is over this year and three out years.

Mr Thompson —It is over this year and the three out years.

Senator IAN MACDONALD —How has that been allocated to each year?

Mr Thompson —It has been allocated at minus $8.8 million in 2010-11, minus $12.8 million in 2011-12 and minus $17 million in 2012-13.

Senator SIEWERT —What about 2013-14?

Mr Thompson —That is beyond the life of Caring for our Country, but the amount in the forward estimates has been reduced by $31.5 million.

Senator IAN MACDONALD —While you are on that page, what is available in those same four years following the reduction?

Mr Thompson —The total budget?

Senator IAN MACDONALD —Well, for the part of Caring for our Country that the $70 million worth of savings are coming from.

Mr Thompson —The number I have actually includes the Landcare amount. So I can give you the total amount and give you the Landcare amount for that period because I don’t have a calculator with me. In 2010-11 the total amount is $423 million minus $36 million of Landcare; in 2011-12, the total is $411 million minus $39 million for Landcare; in 2012-13 it is $407 million minus $39 million for Landcare; and in 2013-14 it is $387 million minus $39 million for Landcare. One thing I should say is that the number reduces beyond 2011-12 because at the current time there is no forward estimate for Environmental Stewardship beyond 2010-11. Future funding will be considered in next year’s budget but it runs at—in 2010-11 there is $17 million in the budget for it.

Senator SIEWERT —Where does that money come from?

Mr Thompson —Environmental Stewardship is the appropriation for Caring for our Country. Like Landcare, it is part of a package of funds that makes up Caring for our Country.

Senator SIEWERT —Yes, that is what I thought. The money that has been allocated outside the stewardship program, where is that likely to come from then?

Mr Thompson —That comes from the Natural Heritage Trust special account.

Senator SIEWERT —Okay.

Senator IAN MACDONALD —So the figures are going $423 million, $411 million, $407 million and $387 million.

Mr Thompson —Yes, and the big decline is due to Environmental Stewardship not being in the forward estimates at present beyond next year. That is a matter for next year’s budget.

Senator IAN MACDONALD —What is Environmental Stewardship in 2010-11?

Mr Thompson —In 2010-11 we expect to spend $17 million on past commitments under the program and new ones entered into.

Senator IAN MACDONALD —What you are saying is for the 2011-12, 2012-13 and 2013-14 years you would add $17 million onto those figures?

Mr Thompson —One could, but I cannot because at the present time I have nothing in the budget to sustain that. That is a matter that will be considered for next year’s budget so at the moment we do not have a number there.

Senator IAN MACDONALD —What comes under the Environmental Stewardship Program?

Mr Thompson —Environmental Stewardship is a program of essentially paying landholders for managing rare or endangered biodiversity on their properties. At the present time we have had some market-based tenders for farmers to submit tenders for payment to manage particularly box gum grassy woodlands in New South Wales through into Queensland. We have contributed to a volcanic grasslands project in Victoria and we are looking at extending the program into parts of South Australia for woodland protection. So if a farmer has 20, 30, 40 or 100 hectares of an endangered Environment Protection and Biodiversity Conservation Act woodland of the targeted sort, a tender process is undertaken so that they can put a patch of land up and offer it to the government for receiving stewardship payment for 15 years to maintain and improve that woodland on their property. So the government is paying them to maintain, weed, fence out, and graze appropriately if it is allowed or improve the status of that piece of woodland.

Senator IAN MACDONALD —And the $17 million that is included for that this year could well go for 15 years, I think you said—

Mr Thompson —No, the $17 million for this year—

Senator IAN MACDONALD —Not a new $17 million but out of this year’s $17 million you could be paying for the next 15 years.

Mr Thompson —No, it is a little bit confusing because the $17 million is the money which is in the budget which will be paid in 2010-11 for payments for contracts that have payments falling due in 2010-11 and for the first year of contracts that have payments falling in 2010-11. The forward years of the program are appropriated in the contingency reserve of the budget and then brought into appropriation as the year falls due. So there is a long tail.

Senator IAN MACDONALD —So the $17 million for this year really is paying this year’s payment for grants that have been made in many years past?

Mr Thompson —Some in the past but also it is around—

Senator IAN MACDONALD —Some new ones.

Mr Thompson —There would be some new ones, about $6 million or $7 million worth of new ones next year, but only the first year of the payment.

Senator IAN MACDONALD —You are saying to us that for the out years, how were you going to?

Mr Thompson —Say someone has a contract to preserve some grassland or woodland, they enter into a contract which may be a $50,000 a year payment for 15 years. In the first year you will see that $50,000 appear in 2010-11 but the other 14 years worth of $50,000 payments do not directly appear in the Caring for our Country line; they sit in a Treasury appropriation which is moved across to Caring for our Country each year they fall due. It is a budgetary mechanism.

Senator IAN MACDONALD —I am sure it is a budgetary mechanism but is it budgeted for in the out years in this budget?

Mr Thompson —Yes.

Senator IAN MACDONALD —But not in this department, in the Treasury department.

Mr Thompson —Not in this department, in Treasury.

Senator COLBECK —Do we have a sense of what the liability is in the out years?

Mr Thompson —In the two calls we have made to date, the liability for stewardship is about $38 million and $30 million, and we have also paid some $3 million into Victoria. Next year we would enter into some more, and I think the total cost could be something of the order of $140 million.

Senator COLBECK —Do you have a sense of what the annual liabilities are for the forward estimates?

Senator IAN MACDONALD —What would they be in the Treasury estimates?

Mr Thompson —I do not have the details of what those annual liabilities would be. We know the ones that have come to date because I have the funding for them, but the future ones may depend a bit on the program. I would have to take that detail on notice.

Senator COLBECK —But you must know what the contracts say, if we are the ones managing the contracts for the stewardship program. So you would know what the annual liabilities for the stuff that is already signed would be?

Mr Thompson —We do, but the only numbers I have with me are for the total value of the contracts and not the annual value of the contract.

Senator COLBECK —So that total value could extend for 15 years?

Mr Thompson —It could extend for 15 years.

Senator COLBECK —And it is in the order of about $100 million?

Mr Thompson —After another year of stewardship the total value could be of the order of about $140 million.

Senator COLBECK —What do you mean by ‘after another year of stewardship’?

Mr Thompson —Over the next 12 months we would expect to enter into another tranche of contracts.

Senator COLBECK —What is your budget for entering into new contracts over the next 12 months? You would have a number of contracts that would be signed now which would have a liability attached over the life of the contracts—we would like to know what that is. Then there would be a budget that you will have up to which you could obviously enter into contracts.

Mr Thompson —I do not have the numbers of the detail of the potentially contracted amounts of the stewardship. As our discussions have identified. it gets a bit complicated because of those forward year figures. I would have to take that on notice and get back to you.

Senator COLBECK —What are the criteria for actually getting into the Stewardship Program?

Mr Thompson —The essential design around the program is that it is about a community that is vulnerable, endangered or declared rare under the Environment Protection and Biodiversity Conservation Act. That is so that the Commonwealth can actually secure management of any investment it might make in that. There also has to be, for a market to operate, a reasonable amount of private land involved. That then has to be capable of being measured and assessed as to its value—so a metric needs to be determined to distinguish between one area and another—and there needs to be sufficient knowledge of where it occurs so that it can be targeted. Then there is a metric that has been developed that takes into account an environmental score that is given to the land in terms of its environmental value, its condition and the management measures that the landholder might be taking. Then that takes into account the price that someone is offering to protect that parcel of land for 15 years. Then it is picked off accordingly. So the price can vary a little bit from year to year.

Senator COLBECK —How does one apply?

Mr Thompson —We tender out the administration of this. To date the detail has been administered by a consortium of regional bodies.

Senator COLBECK —What coverage do the regional bodies have?

Mr Thompson —There has been one run by the Lachlan and Murrumbidgee NRMs in southern New South Wales. In northern New South Wales one has been run by the Central West, Namoi and Border Rivers-Gwydir CMAs. Moving into Queensland, the Border Rivers Maranoa-Balonne, Condamine and South East Queensland NRMs were are administering—

Senator COLBECK —So if the government offer a tender process—

Senator IAN MACDONALD —Did you finish?

Mr Thompson —I finished on who is involved in the detailed on-ground administration.

Senator IAN MACDONALD —So there is only the one in Queensland: the border rivers NRM group.

Mr Thompson —There are the Border Rivers Maranoa-Balonne, Condamine and South East Queensland NRM regions, and they are targeting box gum grassy woodlands. Those woodlands do not go all that far north into Queensland. The NRMs run a communications program with local landholders to explain how the system works. They have people that go out and talk to farmers about how they might make an application. Then applications are called for. They get assessed centrally and contracts are assessed centrally. Essentially, the regional bodies do the on-ground management of the calls for projects and the assessment of them is done centrally.

Senator COLBECK —So is becoming a management body to deal with that a process that is tendered through the annual NRM process or through the Caring for our Country process? How does an organisation engage?

Mr Thompson —There are two steps. The first step is assessment and determination by ministers of which areas meet those criteria for applying environmental stewardship.

Senator COLBECK —How do you get the minister to do that?

Mr Thompson —As I said, we go through a process of looking at which areas meet the criterion of ‘endangered’ under the EPBC Act. It has to be capable of being operated through a stewardship type approach, as opposed to grants or some other form of approach. Then a tender process to obtain groups that are able to deliver the program in these areas is called for. It has tended to run in parallel with the business plan process, but the first one started before the business plan and the second one started in parallel with the business plan and runs on a slightly different track. Essentially, any regional body could apply, but the regional bodies that exist in the area where the woodlands, the grasslands or whatever exist are probably better placed to manage it. There is one in South Australia that is going to be delivered shortly involving a range of South Australian regions.

Senator COLBECK —I am not clear and I want to be clear on how you arrange the start of the assessment process, which appears to be the trigger for this trickle-down process. The reason I am asking is that there are a number of grassland communities that were listed by Minister Garrett last year in northern Tasmania. They asked for some assistance to manage it. Mr Garrett said, ‘Apply to Caring for our Country.’ They said, ‘That’s great. We’ve done that, so we’re fine,’ and a week later they were told that their application had been refused. If we are looking at this particular program, it appears to me that it meets those criteria. It is listed as endangered, and there is a whole heap of other stuff listed with it. If it needs the minister—I am not really fussed about which particular minister—to do an assessment, I want to know how we make that happen.

Mr Thompson —I think you are talking about the grasslands in Tasmania. I am not sure whether they would actually suit this project or not, but the process I have described is that they have to be listed, which they are.

Senator COLBECK —They are listed.

Mr Thompson —They also have to be assessed as to whether there is a suitable market for a tender round to be delivered.

Senator COLBECK —What does that mean?

Mr Thompson —That means that there have to be a sufficient number of properties with a sufficient amount of grassland on those properties to have a market. If it were all on, say, one or two properties, an alternative approach might be more efficient. I do not know the case in Tasmania. The other complication is that environmental stewardship was instituted only 18 months ago. While the first area picked was the area that was listed at that time, the box gum and related grassy woodlands in New South Wales extending into Queensland, and subsequently the continuation of those woodlands into South Australia, I am not sure—until we know what the forward estimates for the program are—whether, aside from those, there would be sufficient money to open up another one in Tasmania in this area. But that would not mean that something similar could not be considered for funding from other parts of Caring for our Country more broadly.

Senator COLBECK —We have already been down that road, but it just piqued my attention, as I have had some intimate involvement with it and have heard that a lot of boxes cropped up that I knew that it ticked. Perhaps it comes down to appetite, to a certain extent. I can have another look at the transcripts and consider what the options are. Sorry to jump on you, Senator Macdonald.

Senator IAN MACDONALD —That is okay. I want to get back to the $70 million savings in the NHT with Caring for our Country. The PBS states that a significant proportion of the saving comes from departmental expenses. Again, I think you may have done this, but can you tell us what savings you are talking about, bearing in mind that the impression out there is that already the departmental resources for this general program have contracted so substantially that there is now little corporate knowledge, there are an increasing number of mistakes and there are difficulties in administering the program as it is. I am not going to argue with that; I am just saying that is the impression out there with your clients, as you might call them. Where are these additional savings going to come from?

Mr Thompson —As I said, the savings are to come both from implementation or administrative costs and from delivery projects on the ground. In the first year, when the savings amount is smallest, we think we can take a fair proportion of it from delivery costs. Some of the areas are greater efficiencies in travel. We will use teleconferencing and, as we were talking about, with Landcare we will be more strategic about who travels where and to what and how that is done. There has also been some significant money set aside to do monitoring, evaluation and reporting. We believe we can do that in some slightly different ways and perhaps reduce some costs there. We may be able to reduce some of our costs in communicating some of the arrangements for the program. In terms of administration, what we would be looking to do, now that the program has started to settle down, is to make greater use of more systematic or automated processes for contract management, milestone tracking, reporting arrangements and acquitting of projects and those sorts of things, which should enable our resources to be freed up to still maintain the essential services, but with some reductions in areas sufficient to meet the budget target.

Senator IAN MACDONALD —Mr Thompson, has anyone complained to you or your officers following last year’s reductions that there is a serious loss of interest by volunteers who have offered their time, expertise and money because they felt they were contributing to the bigger picture; that is, to the protection of Australia’s heritage. A lot of good will has been generated and by applying a multiplier effect funding grants were stretched much further and other people were contributing money as well as time, but it is now becoming harder and more costly for NRM groups and community groups to access what is seen by them to be an increasingly limited funding. First of all, has that complaint been made to the department in the last 12 months? If so, are these further reductions going to exacerbate that general feeling of hopelessness that is growing up amongst all these volunteers who were making the government dollar stretch five or six times by their own input? Have you heard that?

Mr Thompson —We have received a number of comments from the community, some negative and some positive. We received quite a number of negative comments last year about the shape of Caring for our Country and we addressed that through measures such as introducing community action grants, the 56 Landcare facilitators, working with the Landcare community through the community forum, and we have simplified the application process this year considerably on last year. My sense is there has been a significant reduction in the number of complaints and concerns about funding levels. As I said earlier, a lot of enthusiasm came out of the Landcare forum by volunteers.

Dr O'Connell —It is also true that the business plan has been very well accepted in terms of the way that has gone down with the community. In terms of overall feedback, it seems to be more positive this year than last year rather than the reverse.

Senator IAN MACDONALD —Repeating comments that have been made sotto voce from two of my colleagues, one is that people have just given up complaining in hopelessness and, two, what you are saying is quite different from what we are hearing on the ground. You would appreciate that none of these things are political; these are genuine people giving up their time to do something they actually believe in. But we are really losing it as a Commonwealth institution, I have to tell you. Is there an expectation that there will be further cuts into the future?

Mr Thompson —The budget process is something for the government to consider. This budget has been set for the forward years, so I have no indication whether there are any changes likely.

Senator IAN MACDONALD —I might leave it there for questions from other senators.

Senator SIEWERT —I want to go back to where you are cutting the duplication and get a bit more detail please. When you talk about $70.4 million out of the NRM side of things, can you tell us how much you plan to save on each of those areas you were talking about—the administration, communications and monitoring—and whether it is just the department that faces those costs or whether it is the community as well? I am particularly interested in the monitoring side of things.

Mr Thompson —I can only give indicative figures at the moment because the final detail is still being sorted through. Perhaps it would be easiest to do it on the basis of the comparison between what we had notionally allocated for some of these areas over the four-year period and what we are now allocating. Before the reductions over the four-year period, for example in 2010-11 we had $14 million for monitoring and evaluation and we are now looking at somewhere around $9 million.

Senator SIEWERT —What was encompassed in that $14 million cost for monitoring and evaluation?

Mr Thompson —The sorts of things that were encompassed in that cost were some of the costs of producing reports on Caring for our Country, undertaking surveys or studies of the impact of our projects, and work on the impact those projects were having in their local context. So we will be reducing some of those areas and looking for more efficient ways of doing that.

Senator SIEWERT —One of the great criticisms, as I understood it, of the Auditor-General’s reports over the years of NHT was the fact that you could not prove outcomes and a constant criticism was lack of monitoring and evaluation. Now we are cutting the money that is going to monitoring and evaluation.

Mr Thompson —We will be spending $8 million a year on monitoring and evaluation, which is still a significant amount of money. We have also built in monitoring and evaluation of around 10 per cent into each project as it is delivered, which will also contribute to that picture.

Dr Troy —To deal with monitoring and evaluation and respond to the Auditor-General’s comments, we have a MERI strategy for Caring for our Country. So under that projects that are over $80,000 are required to have a MERI plan—MERI meaning monitoring, evaluation, reporting and improvement. Those plans outline how they are measuring the achievement of their targets for the project and also the effectiveness and impact of the on-ground works of the project. That is all projects over $80,000 and the regional base level funding will come under that requirement as well.

Senator SIEWERT —Where are the $5 million worth of cuts this financial year in monitoring and evaluation coming from?

Mr Thompson —We haven’t finalised that budget yet.

Senator SIEWERT —So you do not know?

Mr Thompson —We do not know yet.

Senator SIEWERT —So people may be reporting under the MERI approach on their projects and that needs to be assessed—

Dr Troy —Just to clarify the way that the strategy works and the individual project reporting, those individual projects are looking at their effectiveness but the sorts of money being held for monitoring and evaluation by the department is looking at a national level achievement of outcomes, which includes things like commissioning the Bureau of Statistics to do land manager surveys to look at practice change, looking at wind erosion and consequent dust problems in the atmosphere, monitoring the condition of the box gum grassy woodland. They are looking at a holistic level at a particular outcome, whereas the projects are measuring their contribution to the targets that contribute to that outcome and measuring the effectiveness of achieving those targets on the ground.

Senator SIEWERT —I still would like to know where the $5 million cuts are coming in monitoring and evaluation.

Mr Thompson —Monitoring and evaluation is a little bit like the rest of the program. There are activities that we commenced last year and which continue into the future. Then there are things that we were going to commence at the beginning of next financial year. The details of those still haven’t been finalised. There is sufficient there to know where the MERI plan is going and that sort of thing. But we have not yet finalised which and what surveys might be necessary for the forthcoming financial year yet, so I could not say whether activity A or activity Y will be reduced or not.

Senator SIEWERT —How did you make the decision on what to cut? If you have not cut specific activities, how did you know what to cut?

Mr Thompson —When budgets are reduced, clearly we avoid cutting areas where we have contracted commitments. We avoid cutting areas where there is a high priority or expectation of people to receive money because a particular announcement has been made or the like but the contract has not been finalised, so they are set aside. Then we look at areas where there is a reasonable degree of discretion, there might be alternative ways of doing things or there might be ways of finding partners who might be able to do something similar and we might each change our approach a little bit but be able to pool our money to achieve some sort of outcome. The monitoring and evaluation area was an area that had a reasonable level of flexibility because it was not fully committed and there are opportunities there for working with other parties—it might be regions, it might be the CSIRO or it might be state governments where we can pool our resources and achieve some of the outcome but without having to spend all the money. That is the process we will be going through over the next few months.

Senator SIEWERT —I look forward to next estimates, whenever it is. I interrupted you, I apologise. How much has been cut overall for monitoring and evaluation? Five million dollars has been cut this year. What about the out years?

Mr Thompson —Again, they are somewhat notional amounts of money because if we got really good projects on the ground we might actually move more money into projects on the ground versus monitoring and evaluation, or monitoring and evaluation might come through the projects. On the broad amount of money, the saving that we take off that would be about $5 million each year. These are somewhat notional estimates; they are not locked solid because each year we have to look at what we have been achieving through various elements of our program and ministers then look at the balance for the forthcoming year.

Senator SIEWERT —That was monitoring and evaluation. What about communication?

Mr Thompson —I do not have a separate itemised budget for communication because we are not running a communications campaign or program under Caring for our Country. The main forms of communications activity have really been about information provision, which is the holding of workshops; forums and seminars; the travel of some facilitators and other staff; the preparation of summary material and the maintenance of a website. Sally can give you some more information.

Senator SIEWERT —When you said that was the area that could be potentially cut, are those the sorts of things that you are talking about?

Mr Thompson —One of the areas that we would reduce would be the straight implementation of Caring for our Country where we have both staff and activities supporting the program, so some of that is the travel, communication, material on websites, workshops and forums.

Dr Troy —Some of the savings on communications can come from more efficient ways of communicating. For example, in the first year of the program we had to spend $453,000 on a community information unit because we did not yet have sophisticated online forms whereas in this current year we have brought that down to $107,000. There are some savings to be made where we have invested more in putting together better information on the web, providing online forms and giving good guidelines so that the phone lines are not running so hot with people getting advice on how to use the application forms.

Senator SIEWERT —That is a relatively small amount of money in that barrel.

Dr Troy —It is relatively small in terms of the total Caring for our Country spend on communications.

Senator SIEWERT —What are the savings?

Dr Troy —The savings are in the order of hundreds of thousands rather than millions of dollars.

Senator SIEWERT —Mr Thompson, you mentioned money coming out of national reserves, World Heritage and facilitators. What is coming out of national reserves?

Mr Thompson —They are estimated amounts of money and they may move a little bit from year to year. That one is run by the environment department. I think we have advised previously that the reserve in 2010-11 was to be $36.6 million. It was $37.7 million and it could well be $36.6 million.

Senator SIEWERT —So we have lost a million out of that for next year?

Mr Thompson —These numbers are quite indicative at this stage. Ministers still have to go through and look at the overall budget and review their priorities between now and the commencement of the next financial year. I do not think any of them could be treated as solid. The ones that probably are reasonably solid are that we are going to take some money out of travel costs and some of the administration costs and try and reduce the costs of some of our facilitators because that is within the department. These ones about areas of programs are matters the ministers will be discussing over the coming weeks.

Senator SIEWERT —And they are the most sensitive?

Mr Thompson —Of course, so ministers would try and maximise the amount of money that is available for a delivery of projects on the ground that is why I am uncomfortable actually giving those numbers when ministers have not agreed on them.

Senator SIEWERT —How much is coming out of facilitator work?

Mr Thompson —We think we can reduce facilitator support costs.

Senator SIEWERT —Which reduces their work effectiveness.

Mr Thompson —We think we can reduce them by about $1 million from $9 million back to $8 million. There are quite a lot of travel and support costs involved in hosting events. We think, given that there are about 30-odd of the state level facilitators across the country, some of those support costs will be able to be reduced.

Senator SIEWERT —They will sit in the office and not get out. We are talking about a country the size of Australia.

Mr Thompson —No, I do not think they will be sitting in the office. One of the things we are looking is that they will bring them to Canberra less or travelling out to the regions. We will communicate with them via teleconference or videoconference. We will try and reduce the costs to bring the ones in from the Northern Territory down to Canberra.

Senator SIEWERT —So $9 million to $8 million in each of the out years.

Mr Thompson —Yes, that is about the amount.

Senator SIEWERT —I have $4 million. So far I have got if we are taking $5 million out of monitoring for three years that is $15 million, plus $1 million per year out of facilitators for three years that is $8 million. Of the $7.4 million I have $8 million so far.

Mr Thompson —Those sorts of numbers are sufficient to virtually cover the reduction in 2010-11. As I said ministers have not looked yet at the allocation of funds between theme areas into the out years and how that might be done. That is where the larger amount of money has to be reduced.

Senator SIEWERT —Are you telling me there is no money coming out of the open grant process for Caring for our Country or any of those granting processes?

Mr Thompson —There may have to be. In the NHT special account there is an $8.8 million reduction in 2010-11 and then going up to $17 million in 2012-13. By the time we get out to 2012-13 there will have to be some reductions to some of the granting programs and ministers have not taken the decision on which granting programs the reductions may come from.

Senator SIEWERT —You have already flagged national reserves and World Heritage, so those two are on the table, but you are also saying money could come out of the actual open granting process.

Mr Thompson —I flagged a couple of areas. Coastcare was one that we mentioned. We have already mentioned that Landcare has had funding reduced.

Senator SIEWERT —We are talking about the $17 million. I am dealing with that separately. Landcare has lost $10.9 million. I am talking about the $17 million.

Mr Thompson —The areas that have been flagged that we may have to look at would include reserves, World Heritage, Coastcare and then wherever else across the program we can make the money and ministers have to take a decision on where that would come from.

Senator SIEWERT —So that is outside of admin. For the duplication—and I must say I do not agree that cutting $5 million out of monitoring is duplication—so far you flagged about $3 million duplication money.

Mr Thompson —Regarding the duplication that could be said to be in the program, some of it is in the monitoring area where we may have two people monitoring the same thing. Data collection is expensive. The administration of the program is largely where that is. Of course we will have to look at how well any of the granting programs are achieving their outcomes. Action for money on the ground is one of the last areas that one would go to in reducing funding.

Senator SIEWERT —What is counted as ‘action on the ground’? Are national reserves counted as ‘action on the ground’? Is World Heritage?

Mr Thompson —World Heritage and natural reserves are ones that Minister Garrett ran. I am sure he counts those as ‘action on the ground’.

Senator SIEWERT —When do you make the decisions on which of these areas will be cut?

Dr O’Connell —Ministers will make the decisions. Mr Thompson is trying to be helpful by illustrating the areas which are likely to come up. He has been very clear that ministers will need to assess these and go through the processes.

Senator SIEWERT —So the process has not been that you have gone through and looked at these programs to see where duplication is. In fact, you are still making the decisions on the cuts. You have not identified savings in these areas; you have just said that the $70.4 million needs to come out of this program.

Dr O’Connell —What Mr Thompson has been pointing to is that the final decisions on these have to be made by ministers and the distribution of the overall Caring for our Country money is settled by the minister. I think that is important, otherwise you will get the impression that we are just making these decisions, but clearly the ministers need to settle on these decisions in due course.

Senator SIEWERT —The government has decided they want to take $70.4 million out of this program. This is coming out of the NHT special account, isn’t it?

Mr Thompson —Yes, it is. It is a less than five per cent cut out of the forward estimates for the NHT special account.

Senator SIEWERT —Try telling the people on the ground who have already received cuts for their granting program that there is another five per cent cut. What is the normal process for expenditure of the money from the NHT special account? If that money is not being spent, where does it get spent? This is money directly out of the NHT special account, isn’t it?

Mr Thompson —You would have to ask those detailed questions about the operation of the special account in the DEWHA estimates because they actually administer that appropriation.

Senator SIEWERT —Funnily enough, I will be there on Wednesday.

Senator IAN MACDONALD —You did tell me earlier, when we were talking about staffing numbers in the general area, that there was no diminution of your involvement in those jointly administered programs. Do you recall that being said this morning?

Mr Thompson —I do recall that being said this morning.

Senator IAN MACDONALD —So wouldn’t you have some say regarding the question Senator Siewert has been perceptively asking you?

Mr Thompson —Certainly the decisions to spend money out of the NHT special account, aside from some areas where ministers have agreed between themselves that they will have sole responsibility, are joint decisions by ministers and there is joint advice by the department. What I meant in response to Senator Siewert was that, if there are questions about the operation of the NHT special account and what happens to money that is unspent, or whatever, in that account, I think they would be better directed to towards DEWHA because they actually administer and are accountable for the appropriation in that overall budgetary sense.

Senator IAN MACDONALD —If I suggested to you that they be transferred to consolidated revenue, is that possible?

Mr Thompson —My understanding is they stay in the special account, but the special account is now operated in such a way that they do not become available to us in future years. It is that sort of detail of how the special account now operates that I think would be best to ask of the people who are accountable for the special account. There are some quite technical rules about how it operates.

Dr O’Connell —The decisions on the expenditure coming out of that special account are made under the National Heritage Board—in other words, the two ministers, in the same way that it used to be.

Senator IAN MACDONALD —Do not get us wrong—we are not blaming you, Mr Thompson, or you, Dr O’Connell, for the decisions made by your political masters, but unfortunately you are the ones to whom we express, on behalf of our constituents, our very great disappointment about the whole process in this area.

Senator SIEWERT —Okay. I will follow up that special account issue on Wednesday with DEWHA. I want to clarify how many applications you have had for the open call process. You have had 614 applications overall. Is that correct?

Mr Thompson —That is overall and that includes expressions of interest. It is 614 for $277 million.

Senator SIEWERT —Does that include the Landcare projects that we have already been through?

Mr Thompson —Yes.

Senator SIEWERT —The assessment process that we outlined before covers the assessment process for the broader Caring for our Country process.

Mr Thompson —Yes, it does.

Senator SIEWERT —When do you expect to be making announcements? What is the time frame?

Mr Thompson —The time frame is for announcements in July.

Senator SIEWERT —We have already been through how much is available for Landcare. How much is available for the rest of the program—so do not include the Landcare money. Is that possible?

Mr Thompson —It is possible with a bit of subtraction. Would it be easier for us to take this on notice and provide you with a simple table?

Senator SIEWERT —Can you do it tomorrow? Quite frankly, I do not want to wait until just before next estimates, whenever that is, to get this information.

Mr Thompson —We should be able to do a simple table of the amount of money—

Dr O’Connell —We can run through it now.

Senator SIEWERT —Have you got a simple table you can table?

Dr O’Connell —We do not have a simple table. We can either give it to you now verbally or we will take it on notice, one or the other.

Senator SIEWERT —I do not want to take it on notice, because I want it in the near future, not four months down the track.

Mr Thompson —I can give you the uncommitted amount that would be available through the open call by the broad thematic areas. Do you want it by year, or just the total?

Senator SIEWERT —Basically, last year $56 million went to competitive grants. I want to know how much this year is going to competitive grants.

Mr Thompson —I could not say how much will go to competitive grants this year. What I can say is how much money is uncommitted.

Senator SIEWERT —Okay.

Mr Thompson —In 2011-12 in total there is—

Dr O’Connell —Could I just clarify, Senator, whether we are talking about what is coming through the business plan? I think there is a relatively straightforward table.

Dr Troy —There is a table in the business plan which outlines that $171 million is available through the business plan. Of that, $15 million was the $15 million that we were discussing earlier which was available for sustainable practices projects. I can give you my copy of the business plan if you want to table that, or I can read it out verbally. This is the multiyear budget that is available through the 2010-11 business plan: $38 million is available for the National Reserve System expansion; $10 million is available for expanding Indigenous Protected Areas; $10 million is for the Environmental Stewardship Program; $6 million is for the protection of environmental values in and around World Heritage areas; $6 million is for increasing native habitat and reducing the impact of invasive species; $49 million is for protecting the Great Barrier Reef, including $9 million for research and development—that is part of Reef Rescue; $29 million is for community Coastcare to improve water quality and coastal hotspots and to protect and rehabilitate coastal environments; there is $7 million for sustaining the environmental values of Ramsar wetlands and high conservation value aquatic ecosystems. Then there is the $15 million that is available for sustainable farm practices projects.

Dr O'Connell —That is all on table 1 in the business plan.

Senator IAN MACDONALD —How many years was that?

Ms Allan —That is available over the next three years.

Senator IAN MACDONALD —Over the next three years?

Senator SIEWERT —But we do not know how much of that is available. We will have this discussion when we come back after dinner.

Proceedings suspended from 6.30 pm to 7.31 pm

CHAIR —I welcome back officers from the Sustainable Resource Management Division. Senator Siewert will continue.

Senator SIEWERT —You were telling me what was being funded from which area. What I want to know is how much of those indicative amounts are affected by the cuts, but you cannot tell me that yet, I think, can you?

Mr Thompson —We can tell you something that perhaps goes close to that. If you need more detail, we will have to take that on notice. This gives you a summation of the overall level. In the budget as it currently stands, we can give you the totals of uncommitted funds per year, so in 2010-11 we have $109.8 million uncommitted; in 2011-12, $13.2 million; and, in 2012-13, $150.4 million. That is a total of $392.4 million. Out of that the broad estimate of what we will spend on this year’s business plan is $171 million over those three years, which means there are two hundred and—

Senator SIEWERT —Sorry. That is already allocated under the business plan.

Mr Thompson —It is allocated but not committed. So that would leave $221.4 million for future business plans or that type of project—for competitive projects or new projects. Before the budget, the total estimates were $114.4 million in 2010-11, $137.8 million in 2011-12 and $159.5 million in 2012-13, which totals $411.7 million. Taking off the $171 million that was to be provided for this year’s business plan, that leaves approximately $240.7 million for calls to projects in 2011-12 and 2012-13.

Senator SIEWERT —Or ongoing funding from the projects that are approved this year.

Mr Thompson —No. The $171 million that is approved this year is for the three years.

Senator SIEWERT —I beg your pardon.

Mr Thompson —And previous commitments are already taken into account.

Senator SIEWERT —So, with the projects that you will approve this year, you will approve up to $171 million for the forward years.

Mr Thompson —Yes, through the forward years.

Senator SIEWERT —Thank you.

Mr Thompson —In relation to that, I may have inadvertently given you a wrong number when I said how much money the current budget has in it for each year of the program. The current budget for Caring for our Country in 2010-11 is $423 million.

Senator SIEWERT —Sorry. Can I just go back to my other page. I will correct that. It is easier.

Mr Thompson —It is $423 million.

Senator SIEWERT —Yes.

Mr Thompson —And then $406 million in 2011-12 and $407 million in 2012-13.

Senator SIEWERT —And $387 million for the following year that is not—

Mr Thompson —It is $382 million for the following year.

Senator SIEWERT —Okay.

Mr Thompson —While I am doing a few corrections, someone asked when SeaNet was announced. It was announced on 24 November 2009.

Senator SIEWERT —Was that by Minister Burke?

Mr Thompson —It was by Minister Burke, yes.

Senator SIEWERT —That did not use to be funded under that portfolio, did it?

Mr Thompson —SeaNet was previously funded under various programs. I think Landcare contributed to it and I think the NHT had contributed to it in past years. I think every year for quite a few years SeaNet has received money to reduce bycatch and improve fisheries’ practices by working with the fishing industry.

Someone wanted the stewardship forward contracts broken down by year. We cannot break them down by year at the moment. What I can say is that at the present time there are $71 million worth of approved contracts over the next 15 years.

Senator COLBECK —That is without any potential new—

Mr Thompson —That is without potential new ones that might be entered into over the next 12 months.

Senator COLBECK —What is your budget for this one?

Mr Thompson —The budget for new projects this year is, I think, $6.5 million.

Senator COLBECK —Is that for this year?

Mr Thompson —That is for 2010-11 only. I could not say what they will be over the 15 years because—

Senator COLBECK —You do not know what the potential total is because you do not know what people are going to ask for.

Mr Thompson —we do not know what people will ask for.

Senator COLBECK —And for how long.

Mr Thompson —Or for how long. Most of them ask for the full 15 years, but the amount does vary. The other statement that I think would be useful to clarify while we are talking about this is that you were asking where the budget reductions might come from and we referred to facilitators. Under Caring for our Country we have two groups of facilitators. We have 56 Landcare facilitators, of whom there are some in each region—they are the ones that cost $8.4 million a year. They are not being cut. There is no change to their business.

Senator SIEWERT —Their travel or anything?

Mr Thompson —To travel, nothing. Their budget remains unchanged. There are four Commonwealth government employees in each state who are also referred to as ‘state-level facilitators’. We are going to make savings in some of their travel by the greater use of teleconferencing and the like, in terms of briefing them and advising them of what is going on in Canberra. Because they are in every state in Australia, it is quite expensive to bring them to Canberra and there are considerable savings to be made by briefing them better by teleconferencing and the like while we are here. But they are Commonwealth employees: they are not the ones in the regions who actually work with regions to do projects. They communicate more with the regional bodies and help with water projects on the ground.

Senator SIEWERT —They can be based in the regions, though, can’t they—or are they all based in the capitals?

Mr Thompson —Some of the Indigenous ones are based in the regions. Most of the others are in capital cities, but I think there is one in Toowoomba for Brisbane for sustainable agriculture. That makes sense. Essentially, they are city based.

Senator SIEWERT —They are doing essentially the same roles previously under NHT that those facilitators were doing?

Mr Thompson —They are doing a similar role to the ones that operated before at the state level.

Senator SIEWERT —Yes.

Mr Thompson —They are not community based ones.

Senator SIEWERT —No. Thank you.

Ms Allan —Can I also clarify: there was a question asked about the sustainable practices EOIs and the amount of funding sought by each year for the total of the $51 million. In 2010-11 it is $18.6 million; in 2011-12, $18.4 million; and, in 2012-13, $14.5 million.

CHAIR —Do you have any more questions, Senator Siewert?

Senator SIEWERT —I am double-checking to see if I have covered all mine. I have for the time being.

CHAIR —Okay. Senator Colbeck, do you have any more questions of SRM?

Senator COLBECK —I do, but I am on to fishing.

CHAIR —We have until quarter past eight, so I suppose we should go to fishing straightaway.

Senator SIEWERT —I do not know about Senator Macdonald, though.

CHAIR —Let’s go into fishing, because we are running out of time and, if Senator Macdonald comes back and does have some burning questions, I am sure he can liaise with his colleagues. I am keen to stick to the timetable, unless other senators want to talk about it. We are still in SRM but we are doing domestic and international fisheries.

Senator COLBECK —Can we have the current staff numbers in the fisheries unit, please.

Mr Thompson —The number is 37 FTE. There could be vacancies from time to time.

Senator COLBECK —How has this changed since 2007?

Mr Thompson —We do not have the 2007 figures. I have the 2008-09 figures.

Senator COLBECK —That is a start.

Mr Thompson —It was 51 FTE in 2008-09, so the current number is effectively for 2009-10.

Senator COLBECK —Is there any reason for the reduction?

Mr Thompson —When the budgets were cut across the department a decision was taken to look for more efficient ways of doing fisheries work and to focus on priority areas as they were.

Senator COLBECK —What is the actual budget for the unit for this year and how has that changed in the last two years?

Mr Pittar —The budget for the branch going into the next financial year is still being worked out. We have the overall envelope of funding in the PBS, but the detailed project planning and budgeting will happen between now and the end of the financial year. The amount of funding that the branch had in 2009-10 was in the order of $4.3 million.

Senator COLBECK —Can you give me the 2008-09 figure?

Mr Pittar —I do not have the 2008-09 figure with me for the branch.

Mr Thompson —The 2008-09 figure would have been somewhat larger, reflecting the number of staff.

Senator COLBECK —I am just trying to get a sense of what it was. Obviously, 14 full-time equivalents have come out of it.

Mr Thompson —They were full-time equivalents. The actual number of staff at the time was only 43½, so the actual expenditure in 2008-09 would have been less than that amount. There was a reduction of only 5½ staff between the head counts at the end of 2008-09 and the beginning of this year. The budget in Fisheries largely reflects that, and travel.

Senator COLBECK —Was there a reduction during the year? How do you get from 51 FTEs for the year to a 5.5 reduction in full-time equivalents when you have gone from 51 full-time equivalents to 37?

Mr Thompson —There were eight vacant positions and then five staff left.

Senator COLBECK —Were they brought about by a staff freeze or something of that nature?

Mr Thompson —That was brought about by the budget reduction last financial year.

Senator COLBECK —Why were there eight positions that had not been filled?

Mr Thompson —Because it takes time to fill positions and they were vacant at the time.

Senator COLBECK —And they were caught up by the reduction in staffing?

Mr Thompson —They were just caught. Positions take time to fill, about 40 days, and if a number of people leave at once you can get caught with vacancies.

Senator COLBECK —So was it as a result of staff leaving or transfers?

Mr Thompson —Some were promotions, some were transfers and some people left to do other things. There were a range of reasons why they left.

Senator COLBECK —They could have seen the writing on the wall too.

CHAIR —Wait till Mr Abbott gets hold of the Public Service!

Senator COLBECK —Sorry, I was thinking aloud.

Senator IAN MACDONALD —He is going to do what they were talking about before. There were going to be people leaving this department and not being replaced.

Senator COLBECK —I was thinking aloud. I apologise for that.

Senator IAN MACDONALD —No, you are quite right. That is what this department is already doing. They have anticipated Mr Abbott’s announcements.

Senator COLBECK —I would not be surprised if professionals are shaking their head in disbelief.

Senator IAN MACDONALD —Who is?

Senator Sherry —Isn’t that still maintaining the efficiency dividend, Senator Macdonald? It will be on top of cuts that you are claiming.

Senator IAN MACDONALD —No, but some of your officials sitting next to you mentioned that when they were explaining how they were going to implement those cost cuts that have been announced in your budget. I do not know why you are criticising Mr Abbott. You are already doing it yourselves.

Senator Sherry —You are proposing to make an additional cut, to the best of my recollection.

Senator IAN MACDONALD —No, we would not replace retiring public servants.

Senator Sherry —That would save you $4 billion, you claim, over the forward estimates.

Senator IAN MACDONALD —It is across the entire budget.

CHAIR —It is good of you to at last acknowledge it, Senator Sherry.

Senator Sherry —I do acknowledge it.

Senator COLBECK —Good, pleased to hear it. We have had a couple of conversations about the marine bioregion planning process before. Can you give me a run-down of any involvement with DEWHA in the process since estimates in February?

Mr Pittar —Certainly. The key thing to cover there, recognising that the process is ongoing, and perhaps to cover a bit of background first, is that draft plans for the south-west, north-west and north marine regions are estimated to be released in the second half of 2010. Areas for further assessment have been put out for public consultation. The south-west plan will be the first draft plan to be released and the East Marine Region is likely to be released in early 2011.

The key involvement from this portfolio falls into a number of areas. Firstly, the Bureau of Rural Sciences is undertaking analysis of fisheries data for each bioregion. BRS has an MOU with DEWHA to undertake this work. The main focus of that BRS work is to provide an estimate of the GVP of commercial fishing displaced by proposed reserve networks. This includes the Commonwealth, state and territory fisheries. BRS will also undertake a limited qualitative assessment of the impacts on recreational, Indigenous and charter fishers and fishing communities.

As part of the process, DEWHA will be providing opportunities to engage with the commercial, recreational and Indigenous fishers in each bioregion. There will be consultation periods available for the public, and that includes a 90-day consultation period after the release of draft plans. We understand too that BRS’s interim impact assessment reports will be released at that time. They will be providing information to the public on assessments of the GVP of commercial fishing activities and estimates of what the level of displacement might be for commercial fishing under different scenarios.

The second element that we are involved with is being part of a displaced activities working group at the Commonwealth level. That is looking at developing a policy for government consideration on what approach government might take in relation to the displacement of activities as a consequence of bioregional marine planning, and that includes the fishing industry. There is a stakeholder reference group that is associated with that as well, which involves industry itself. A key thing in that is that DEWHA has advised that the displaced fishing policy will be released, before the draft bioregional plans are put out, so that industry has the opportunity to look at that policy and have input. One of the things that we have been very keen to stress in this is that sufficient time is given to industry to consider the plans and information, such as with the GVP type assessment work that BRS is undertaking, and ensure effective consultation and engagement with the sector.

To help with that assessment and the consultation around the various draft assessments, AFMA plays a role in attending the stakeholder consultation workshops that DEWHA holds. AFMA also discusses marine bioregional planning at its management advisory committees and at the various fisheries levels and also provides regular information, as I understand it, via its circulars to industry on the state of play with marine bioregional planning. They are the main elements in how this portfolio is involved.

Senator COLBECK —What data, if any, are you providing to the process, or is that being done through agencies like BRS?

Mr Pittar —AFMA is the holder of the data. AFMA provides information to BRS for BRS to assess some of that GVP information and some of the other socioeconomic aspects, so it is ultimately data that AFMA collects based on logbook data from AFMA. BRS also collects fisheries data from state and territory jurisdictions, but I understand that the information is at a coarser resolution than the information that comes from AFMA.

Senator COLBECK —You mentioned there were three things. You have told me about BRS and their analysis of fisheries data for each region. You have talked about the displaced activities stakeholders group. What is the third one?

Mr Pittar —The third was the mechanism to assist with consultation—so AFMA’s involvement in that consultation and communication with stakeholders.

Senator COLBECK —That is being conducted through AFMA, not necessarily through the department?

Mr Pittar —That is being dealt with through AFMA, but DEWHA also has processes where it is going out and consulting directly with stakeholders, given that it is a process that DEWHA is running.

Mr Thompson —In that space, we do liaise directly with DEWHA to provide advice on who some of the key stakeholders might be and why they might need to be consulted and what might be some of the best regions to consult with them. We spend a bit of time trying to make sure that the consultative process is adequate, and the industry had every opportunity to represent themselves in this process.

Senator COLBECK —You have mentioned the social and economic analysis of each bioregion from a commercial fishing perspective. What about recreational?

Mr Pittar —I mentioned that BRS is also undertaking more qualitative assessments around the recreational, the charter and the Indigenous sector. Given that there is not a lot of current data available on recreational fishing levels—I think the last survey was conducted in 2001—BRS is having to draw from that to the extent that it can but also undertake some qualitative assessment.

Senator COLBECK —If this data is to be available, you said prior to the release of the plans, how far away are we from that? The south-west one must be awfully close. That is the first one to come out, as I understand it, so how far off are we with the information from BRS? When was that initially commissioned?

Mr Pittar —I do not have the answer to when it was originally commissioned.

Senator COLBECK —How would I find out when it was commissioned?

Mr Pittar —We will have to take that on notice. I do not have that information.

Dr O’Connell —I am not sure if our BRS people are still here. I do not think they are, but we could get that information from them. Yes, they are.

Senator COLBECK —They are here?

Dr O’Connell —Yes.

Senator COLBECK —How fortuitous. We had to get to ask them something! Thank you for waiting around.

Dr Begg —The contract that we started with DEWHA kicked off last financial year. We are currently in the process of negotiating into the second year. The first year will be over on 30 June.

Senator COLBECK —Do you have a terms of reference? Can you give a sense of the terms of reference of that initial contract?

Dr Begg —Certainly. The terms of reference, as mentioned by Roland Pittar, were basically to look at displaced GVP, particularly for the commercial fisheries, focusing largely on the Commonwealth fisheries but also state and territory fisheries and, as was also mentioned before, a qualitative assessment of the impacts that could be displaced with respect to recreational and Indigenous fishing. That contract was basically to look at all of the four regions. There is a preliminary analysis to give a first overview, then that feeds into an interim report which will go out with the draft plans at the same time—that process is being run by DEWHA—and then, following the consultation phase which BRS will be involved in, to gain greater information and finer resolution of displaced fishing activities that will then go into a final report, which will provide the analysis of displaced fishing activities.

Senator COLBECK —You mentioned a qualitative report in respect of recreational fishing. Where are you drawing your data from and what is your basis for preparing that?

Dr Begg —There are a variety of sources. There is not a lot of information, depending on what region you are working in. There is a national recreational fishing survey that was taken back in the early 2000s, as was mentioned before, but some of the other states and territories have had much more recent data collection for the recreational sector. So we will be looking at whatever available data sources there are, to give us an indication of the magnitude of potential recreational or Indigenous fishing activities in each of the particular regions.

Senator COLBECK —Do you have any sense of what level of activity there is in various regions?

Dr Begg —It varies. Basically we are talking about Commonwealth waters.

Senator COLBECK —I understand that.

Dr Begg —So, in terms of the level of activity, it is obviously going to be less than what would be occurring within state waters, but we would expect—

Senator COLBECK —I would be cautious about making that assumption, I would have to say.

Dr Begg —Fair enough. That is one of the activities, to look at what level of activity is occurring in those Commonwealth waters. Some of those activities, for example, would be charter fishing out in those zones, and we would certainly look at that information. So it will be a synthesis of whatever information we can find. The consultation period is going to be particularly important because if there are information sources that have been lacking then refinement of data will occur during that period.

Senator COLBECK —So you are effectively going to state government bodies to gather your information at the moment, or is it broader than that?

Dr Begg —No. At the moment we are getting the commercial data directly from each of the jurisdictions. In terms of the recreational data or Indigenous data, we will be looking at what datasets or information are available.

Senator COLBECK —So what is your process for determining what those available datasets are, particularly for the recreational guys, because it is a bit disparate.

Dr Begg —It certainly is. We have a very good network, though, and a level of understanding of what those information sources are with respect to the various sectors. We have compiled a number of those datasets already and we have a good idea of where those datasets exist and what information is currently available.

Senator COLBECK —Can I just ask—and you might have to decide amongst yourselves who takes this one, from Mr Pittar through to Professor Hurry—what feedback you are getting back through the process at the moment, particularly through the displaced activities stakeholders group? What sort of feedback are we getting at the moment about level of consultation issues surrounding particularly displaced effort?

Mr Pittar —I might go first, if that is okay with Professor Hurry. From where we are sitting, the key thing that we are getting back from industry is a desire to see the displaced activities policy prior to further decisions about declaration of marine protected areas, so that industry understands what the procedures will be for displaced activities.

Senator COLBECK —It is a fair precursor.

Mr Pittar —Yes.

Senator COLBECK —Do you know where that policy currently sits in its preparation?

Mr Pittar —DEWHA is still preparing that draft policy and consulting internally with a number of agencies over that policy. I know DEWHA is very keen and we are also keen to finalise that, so that industry does have the opportunity to consider that policy prior to the next steps. To go back to your original question about the other things that industry raises, I think the other key thing that industry has an interest in is to ensure that it has time to consider the draft management plans and the draft boundaries for marine protected areas. The provision of sufficient time for industry to be consulted with and consider the matters themselves is also probably a key element that industry puts forward to us at this stage of the game.

Senator COLBECK —Is there a perception that they have sufficient time?

Mr Pittar —The process has been extended a number of times in order to provide for additional consultation with industry and to allow industry time to consider and develop its advice back to government. It would probably be fair to say that the process, from an industry perspective, was too tight earlier in the process, but additional time has been granted in response to those concerns that industry has raised and the consultation periods that have been talked about have been extended beyond the statutory period, as provided under the environmental legislation.

Senator COLBECK —In respect of these displaced activities, where does the definition of a statutory fishing right fit within that process?

Mr Pittar —That is one of the issues which was being considered by some consultants who were looking at issues in relation to statutory fishing rights and what that might mean in this context. The message that is coming out of that is that, whilst there is perhaps a black letter definition of statutory fishing rights, there are issues where government is keen to look at that and provide a broader interpretation of that, recognising that, if activities are displaced, issues around potential assistance, adjustment assistance—whatever you might want to call it—are principles which need to be thought about pretty carefully. But that is still working through.

Senator COLBECK —I have asked questions before—in fact, I have sought briefings before—about the definition of ‘statutory fishing right’, and it is an important element in this overall process.

Dr O’Connell —It is.

Senator COLBECK —And it is one that I would like to get nailed down at some point in time, if I possibly can. Perhaps the ministers are in the same boat and would like to get it nailed down, too, but it is absolutely pivotal to the potential outcomes of this MPA process.

Dr O’Connell —There is clearly a range of legal interpretation issues around that that need to be provided to ministers, for ministers to collectively decide on the policy approach to the displaced effort and the statutory fishing rights.

Senator COLBECK —I understand that, and I have asked questions here and in other places before. That is why I ask it again now. But we are starting to bump up against some other pressures, and Mr Pittar’s response indicates that there are a range of considerations to be made as part of this process. I would hate the Commonwealth’s desire not to have to pay significant compensation for lost statutory fishing rights to be a determinant of the policy. The policy should be dealt with in clearer air than going down that road; therefore, quite clearly, it should be dealt with away from the glare of this process. As I understand it, we have signed up to an international obligation to finalise the MPAs by 2012. Is that correct?

Dr O’Connell —It is a government policy.

Mr Pittar —It is a government policy that they will have things settled by, I think, the end of 2012.

Dr O’Connell —But I think the issues you are looking at are ones which quite clearly will come under the displaced effort policy framework, which is to be decided by the whole of government.

Senator COLBECK —But shouldn’t the definition of a statutory fishing right be decided away from that process? It is a totally and utterly different thing and it is a fundamental question of where they are. I have been through the process before. You start getting into a trading situation—

Dr O’Connell —I think the point I was making, and the point that Mr Pittar was making, was that there is the potential to interpret statutory fishing rights in terms of the legal requirements, and then there is placing that set of issues in the broader context of how the government wishes to deal with displaced effort, and that will be managed on a whole-of-government basis. What he was suggesting was that that will be settled before we end up getting into the final stages of this process, so that the relevant people affected by it understand the displaced effort policy that the government will bring to bear. But all these things need to be considered by the ministers before this will be finalised.

Senator COLBECK —That is all very well, but if you talk about someone, for example, who might have some licences in the Coral Sea, who believes that they have something that has a value—and say it cost $300,000 for them to purchase that fishing right—the question is, ‘How is that value maintained?’ If the government decides to make a decision that what they think it is isn’t, and then declares that region an MPA, and they lose access and their investment, where does it leave them?

Dr O’Connell —That was exactly what I was pointing to—that, in terms of any effort that is displaced by a decision of that nature, it is important that there is a clear policy position from the government that can be communicated, and that is the clear intention here.

Senator COLBECK —So do we have a time frame on that process?

Dr O’Connell —That is with government obviously.

Senator COLBECK —I understand that, but Mr Pittar has clearly said that that displaced policy will be released prior to the south-west regional plan. What is the current time frame for the south-west regional plan to be released?

Mr Pittar —My understanding is that that will be in the second half of 2010. So the expectation or the understanding that we have is that the displaced activities policy would be released prior to then. I cannot be more specific than that.

Senator COLBECK —No, I understand.

Senator IAN MACDONALD —Bearing in mind that you are part of the Department of Agriculture, Fisheries and Forestry, and accepting what I think is incontestable—that if the department of environment had its way it would shut down fishing right around Australia at this very moment—what form of advocacy role is either the department or the minister taking on to make sure that the marine protected areas are a balanced outcome, as I suggest they were in the south-east marine protected area? Is there some advocacy role the department is taking in defence and promotion of Australia’s fisheries so that we do not end up buying all of our fish from fish ponds in Vietnam?

Mr Pittar —I think that there are a number of elements to the answer to that question.

Dr O’Connell —Just in advance of answering in those terms, probably we should not just accept the premise of your question that the environment department would shut down fisheries.

Senator IAN MACDONALD —Dr O’Connell, you cannot in your position.

Dr O’Connell —No, and I would just—

Senator IAN MACDONALD —But I think everybody else in the room accepts that what I say is correct.

Senator Sherry —No, we do not.

Dr O’Connell —I would just like to put that clearly on record.

Senator IAN MACDONALD —You and Senator Sherry, I should have—

Senator Sherry —We do not accept the editorialising.

Dr O’Connell —I am looking at my comrades. I am sure they do not either.

Senator IAN MACDONALD —I would not ask Senator Sterle publicly, Senator Sherry.

CHAIR —I was actually talking to Senator O’Brien. I missed that. What was that?

Senator IAN MACDONALD —I protected you, Senator Sterle, so be thankful!

Mr Pittar —Dr O’Connell has made a point I was going to make. I was also going to add, again going back to the work that BRS is undertaking, looking at that—

Senator IAN MACDONALD —There is a difference in providing data in a balanced and fair way. What I am asking is: what advocacy role is either the department or the minister taking to make sure that fisheries are not decimated around Australia by the Marine Protected Areas Program?

Senator COLBECK —Bear in mind that MPAs are not necessarily about protecting fish stocks. That is a fundamental. There are some species that they will provide protection for that live in that particular zone but, if you are talking about pelagics, they do not necessarily have an impact.

Mr Pittar —In terms of the advocacy, I think the points that flow out of that BRS work are for government to understand what the impacts of particular boundaries would be on particular fisheries. Ultimately, the drawing of those boundaries needs to take into account a number of factors. One, of course, is the biophysical environment that the marine protected areas are designed to protect. The other is what the cost might be in declaring or drawing particular boundaries on a map, taking into account the nature of economic activities, including fisheries, in those particular areas. There will be a whole-of-government process in relation to that, which we will see later in the year.

More immediately, our minister has been very strong in advocating the sorts of things which ensure effective consultation with stakeholders and a good opportunity for industry to consider the information that flows from the displaced activities policy that we have talked about earlier—and also, ultimately, the decisions, or the draft bioregional marine plans—and to provide that information back to government.

Senator IAN MACDONALD —I want to come back to that. Mr Pittar, compared to a couple of years ago, what are the numbers in your branch of the department?

Dr O’Connell —We have just responded to that.

Senator IAN MACDONALD —Can you do it again, please? It should be easy to do again. I am making the point—perhaps I should hear the answer before I make the point.

Mr Thompson —I think we said that the number of people working in the fisheries branch—potential FTE—has reduced by about 14 from the number that there were in past years. They were people doing a range of things, including program management, which has changed needs over time. There are somewhat fewer resources, but we are still doing the job of ensuring that policies about marine protected areas and bioregional planning are based on good science. It is challenging to ensure that that is correct.

Senator IAN MACDONALD —Mr Thompson, I understand all that, and I know you can lose us in science. The mere fact of the matter, though, is that the fisheries branch is an advocacy area against the department of the environment, which has literally hundreds of people working on shutting the place down. I only ask the position regarding the numbers in your branch to perhaps emphasise the point that it is extremely difficult for you to carry on the advocacy role against the might and influence of the department of the environment. You do not agree?

Dr O’Connell —I think you are putting it in a way which makes it very difficult for us to comment. You are suggesting there are hundreds of people in the environment department working on this issue. I am not sure that is the case. I think that would have to be put to the environment department. That is not my understanding—nothing close to it, in fact. I could take it on notice, if it is useful to you, to find out how many resources are being managed in the environment department on fisheries related issues.

Senator IAN MACDONALD —We will do that in a couple of days time to save you the trouble.

Dr O’Connell —Okay.

Senator IAN MACDONALD —I think the question I asked and the answer I got are almost self-explanatory.

Mr Pittar —I would go back to the fact that the Bureau of Rural Sciences is providing information as part of the process. It is all about trying to understand and get a better handle on the economic impact of where boundaries might go. That information will be provided publicly.

Senator IAN MACDONALD —That presupposes that the department of the environment is being balanced and fair in its dealing with this marine planning. I am suggesting to you that that is not the case, and I will suggest this to Environment when we get there.

Dr O’Connell —Can I just draw your attention to the decision-making arrangements that come into play here. These are decisions of ministers, in the end. They are not decisions of departments. We work with other departments right across the board to try to assist ministers in coming to decision-making points but, in the end, the decisions that will be made here are ministerial decisions.

Senator IAN MACDONALD —Thank you, Dr O’Connell. You have made my point exactly. We have been told that there has been consultation in the Gulf of Carpentaria. I attended a forum in Normanton just two weeks ago, where fishermen got up and told me—they are state fishermen; they are barra fishermen, I accept—that they knew nothing of it. Then others said that they got a phone call from whoever was running it, to one or two government agencies there, saying ‘We’re coming through, consulting,’ and they came and spent a short period of time, left, and the state fishermen were not even consulted. The Gulf of Carpentaria and that northern marine bioregional area encompass the Commonwealth prawn fishery, and I assume they were consulted, but they do also contain a number of other Commonwealth-state fisheries and some state fisheries where the fishermen only found out after the event. Since then there has been pressure put on them to go back and reconsult.

This is why I question you again on your comments regarding the consultation. There is consultation taken, it seems. What I am asking is: how can we be assured that the fishing industry, for which your department has an advocacy role on Australia’s behalf, is being consulted and that you are not just believing that those who are doing the consultation—appointed by the Department of the Environment, Water, Heritage and the Arts—have actually consulted the industry in all of its forms?

Mr Pittar —I would make two points in response to that question. Firstly, as you have described the situation in Normanton, if stakeholders considered that they were not being adequately consulted and have raised that—

Senator IAN MACDONALD —They did not even know about it.

Mr Pittar —as a concern and DEWHA is considering going back and talking further with stakeholders, that is responding to some concerns that there is—

Senator IAN MACDONALD —But DEWHA would have told you that they had been consulted.

Mr Pittar —Secondly, I would be very happy to raise that particular point with DEWHA and explain that the feedback we got at this hearing was that there was an issue around consultation in the gulf. So I would suggest that DEWHA would be responsive to feedback from industry and stakeholders, narrowly and broadly, that their consultation mechanism at times maybe was not ideal and some further consultation is necessary.

Senator IAN MACDONALD —Thanks for that, Mr Pittar. I am aware of it happening in the gulf. I am also aware of it happening in the Coral Sea Conservation Zone. Sure, they had consultation, but it was after the decision was made—and we have been through that in previous estimates. There are two that I know about. It makes me suspect that everywhere else in Australia the same sort of thing is happening, hence my assertion earlier on that, as far as Environment is concerned, they will do the minimum requirement for consultation. They will not tell the fishermen they are coming; they will slip in, see a couple of greenies, move out and the consultation is done, with respect. Thank you for the offer to make sure that happened but, with respect, I would have hoped that you would have been doing that prior to having been alerted to these things—and that is my concern. With 14 fewer staff, how can I expect you to do that?

Mr Pittar —If I could perhaps just build on something I mentioned early in the questioning. There are other mechanisms whereby stakeholders are consulted and those management advisory committees, under AFMA’s jurisdiction, provide opportunities for government to liaise with stakeholders. AFMA also attends stakeholder meetings, from what I am told, and provides information to stakeholders via its circulars with industry on what is going on. The point you raised was in relation to state fisheries and where that is occurring, or where there might be some concerns with the efficacy of it. That is important feedback for DEWHA to get and take into account.

Senator COLBECK —I want to make one final point on this MPA process and I want to take up Senator Macdonald’s point about the perception that there should be somebody from within government that is advocating on behalf of the fishing sector—recreational and commercial—and they see that as the minister’s role in this position. The feedback that I get, as the minister’s shadow and getting around a bit and talking at some of these meetings that Senator Macdonald has talked about and the feedback from my colleagues, is that the industry believes that they have no advocacy in government in this process.

I recognise that consultation work is going on, I recognise that you have just acknowledged a preparedness to take some feedback, but the industry across the board do not believe that they have any advocacy at all from within government. There is nobody in government on their side in this. That is their view, and we have had interactions about this matter at previous estimates. I have to say that I appreciate the amount of information that you have been able to provide tonight in comparison to what you have had in the past, because it is a significant improvement. But that is a clear message that comes back and, recalling the south-east process that occurred in 2005, it was very much that political advocacy that occurred from within the government at the time that made all the difference in the outcome at the end of the day.

My final questions are on this SRM stuff and Caring for our Country. Do you want to finish those quick questions on that so that those people can leave if they want to?

Senator IAN MACDONALD —Yes, thank you. I do want to ask Mr Pittar about international fisheries later, if we could.

CHAIR —We are not letting him go.

Senator IAN MACDONALD —We are not letting him go, okay. Perhaps Professor Hurry might be able to help in that, too. Getting back to Caring for our Country, one of the concerns that the various resource management groups tell me about is that, under the new arrangements, they are now competing with each other in various applications for grants. So, whereas in the past there would be combined approaches for funding, now they are being required to put in individual applications. Therefore, rather than working together, I am told that we are finding various resource groups are secretively bidding against each other because it is the only way they can get funds. Has that matter come to your attention or perhaps has Senator Siewert raised that issue?

Mr Thompson —That issue has been flagged to us, particularly on last year’s business plan, which was the first time that there was such a competitive process whereby all sorts of people were competing in the same pool. A couple of comments are probably worth making. The regions do have a guaranteed amount of money and their projects are negotiated projects as opposed to purely competitive. That $138 million is discussed with them and worked through with them and that therefore takes out that element of competition.

The regions are also encouraged to use their institution in the region to work with other groups to encourage collaborative type projects. We made a few changes in this year’s business plan which we believe will help that apparent competition that troubled our groups last year and the first is the separation out of community action grants. So the very small groups that want very small amounts of money can do that, and do that knowing they are not competing with bigger groups.

We have also been a lot clearer in the business plan about the amount of money available for the size of the project that we were expecting and the nature of the applicant means that there is a fair indication of which ones a collaboration would be most effective for. In the case of sustainable agriculture, the expression of interest for the on-farm better resource management and the landscape scale conservation, for example, encouraged people to put in collaborative projects and, because of the expression-of-interest step, when we can actually look at the project they have got and say, ‘We would like a bit more collaboration around it,’ or ‘We are aware of another project that you could perhaps work with or bring in another partner,’ there is an opportunity for people to build up more collaborative arrangements. So I think we did hear that noise last year and we have tried to respond to it this year in the range of methodologies I just outlined.

Senator IAN MACDONALD —I am pleased to hear you are aware of it and are trying to address it. I suspect that people, when they read this Hansard, as they do quite religiously, will more than chuckle at the responses. That is not meant as a comment on the respondee but simply on the system that the respondee is required to administer. Thanks for that.

The government in one of its better decisions eventually decided to grant exceptional circumstances funding to the gulf country of north-west Queensland for unusual floods that had covered the ground up there for up to eight weeks. That exceptional circumstances funding goes to landowners to try to help them meet their financial commitments and to try to see them through a difficult time, but the EC does nothing for the landscape, the environment or the ecology of the area.

If you imagine land being under water for eight weeks, every living thing that once used to be in that land is dead: seeds, animals, all the biodiversity—all gone. Is there a way that this very substantial part of what was quite a unique natural environment can be assisted to try and bring back to normality, if one could call it that, the ecology, the whole landscape of those hundreds of square kilometres, I think it would have been, that were under water for a long period of time?

Mr Thompson —I am familiar with the problem as you describe it. In terms of solutions to the physical problem of the lack of plant growth, and perhaps loss of the seedbed in some places, we would have to take advice from scientists on that and we would also be talking to the regional body about what could be done. What we have offered to the regional body is that we would look at changing their project base, if they felt that was one of the priorities they wanted to address now, so that they could change from some of the things that were previously approved to address the current problem, and also allow them to extend milestone payments and things that are affected.

One of the things that was put to us at the time was that being able to rest the country from grazing would be particularly important to allow more extended recovery and that, particularly, some of the smaller graziers in the area found that financially difficult. My understanding is that the availability of exceptional circumstances assistance would help the finances of those graziers and enable them to better manage their country because they would not be quite as immediately in need of income.

Senator IAN MACDONALD —This is not landowners’ concerns but the actual landscape concern: I am told it may require a long-term project costing in the vicinity of $1½ million to do it. Is there any way that the people involved up there could apply for that sort of money? Would that come within the Caring for our Country investment proposals?

Mr Thompson —Caring for our Country, while it is a targeted program, does allow a degree of flexibility around things. I mentioned that we looked at variations and extensions and there were some $2 million worth of variations to existing projects, plus we have also got $10 million into the area for flood affected areas. I do not know whether they have put in an application for improved management of the area that is directly affected at the present time as part of the current round. I do not think there was one in the expression of interest round, which was up to $1.5 million, but within the open call they may have put some projects in the biodiversity space, which also had $1 million projects over three years as possible, with some combination, with perhaps a sustainable agriculture project. Something could be in there, but if a project was targeting restoration of the environment affected by floods and the improvement of ground cover across that region, that is something that certainly could be considered eligible for funding.

Senator IAN MACDONALD —I am told that, as you mentioned, spelling from grazing, reseeding, pest species management—particularly weeds of national significance—and feral pigs, all need attention. Bearing in mind this is country which is said to be unique, quite pristine, part of our natural heritage, would it be sympathetically considered by the government if there were applications for that sort of help?

Mr Thompson —Within the guidelines for the program and the funding, yes, they could be considered. I should add that there are some projects we are already undertaking that fall into that area. Control of weeds and WONS is something that can be funded. There is a prickly acacia project going at the moment. Control of feral animals, particularly pigs, is something that is funded. We are funding a project to develop best management practices and codes of practice for the northern gulf area. Applying those practices is something that can be funded.

Senator IAN MACDONALD —They were projects in place well before the floods, as I understand it. I am told that this sort of funding is needed to particularly address those issues which have arisen since this unique natural occurrence.

Mr Thompson —All I am suggesting is that the sorts of activities that you are talking about—reseeding, feral animal control, weed control and grazing practices—are really expansions or extensions of some of the things that are already funded. I could not see a problem in them being considered for funding but whether they can be funded depends on their assessment against other projects across the program. They certainly can be considered, yes.

Senator IAN MACDONALD —It depends on what is the priority across Australia. Thanks for that. I appreciate that. Thank you, Mr Chairman, for allowing me that indulgence.

CHAIR —Senator Colbeck, have you finished now with SRM and we can go to AFMA?

Senator COLBECK —No. There are a few things here that blend across the two agencies.

CHAIR —So I cannot say to Mr Thompson, ‘Unfortunately, all good things come to an end’?

Senator COLBECK —No.

CHAIR —Sorry, Mr Thompson.

Dr O’Connell —Can I just check whether the people who have been handling the Caring for our Country and Landcare are finished?

CHAIR —Yes. Thanks very much.

Senator COLBECK —But anyone who has anything to do with fisheries needs to hang about. You are still on the hook! That is corny, I know.

Senator SIEWERT —Can we make this a pun-free zone, please?

CHAIR —Give us a break—we have to have some fun.

Senator SIEWERT —It is half past eight.

Senator COLBECK —That is when it starts getting worse.

Senator SIEWERT —Yes, I know. That is why I am saying can we agree to put a cork in it now.

Senator COLBECK —I have a couple of quick questions on recreational fishing. Does DAFF believe there is any value in a peak body for recreational fishers?

Mr Thompson —A peak body for all organisations would be one of the useful mechanisms for engaging with state bodies; so, yes, there is value in a peak body.

Senator COLBECK —Is the department still in discussions with Recfish with respect to their potential future?

Mr Thompson —We have discussions from time to time with Recfish about what their future might be or what the representation of the rec fishing sector might be, yes.

Senator COLBECK —Can you tell me whether the minister has responded to their letter of 22 February seeking some assistance with support for Recfish as an organisation?

Mr Pittar —I do not know the answer to that directly. I need to take that on notice. If I can take that on notice, that would be helpful.

Senator COLBECK —Is the department aware of the minister saying to the industry that the government is not interested in funding somebody that might lobby against them?

Mr Thompson —Yes, Senator.

Senator COLBECK —Is the department in any discussions with any other organisations regarding the funding of the peak body?

Mr Thompson —Not that I am aware of.

Senator COLBECK —Can you give me some advice as to the reason for the chair of the Recreational Fishing Advisory Committee resigning from that position?

Mr Pittar —My understanding was that he had competing work pressures.

Senator COLBECK —What is the replacement process, if at all?

Mr Pittar —The government is currently considering its approach to replacing that position.

Senator COLBECK —That means, what, that the government will replace the position, the government might replace that position, or the government is going to replace that position?

Mr Pittar —I expect that the government will replace it and that it is currently considering who that person might be.

Senator COLBECK —That is a clearer response. The issue is with the minister?

Mr Pittar —It is for government’s consideration.

Senator COLBECK —You cannot say when government will make the decision, yes. Can you tell me the status of the $500,000 initiative announced by the minister when he released the draft discussion paper of the group relating to collection of recreational fishing data?

Mr Pittar —We are liaising with the Fisheries Research and Development Corporation and putting together a project proposal that will include a range of stakeholders to contribute to that collection of information and data.

Senator COLBECK —Are you going to contract the FRDC to do that work?

Mr Pittar —The FRDC will have a key coordinating role and they will have primary carriage for running that project, liaising with stakeholders in the industry, liaising also with state and territory fisheries agencies which have responsibility for recreational fishing and which, in some cases, are collecting information and data at a state level.

Senator COLBECK —You provide a beautiful segue. Has the minister mentioned a request to the state and territories for co-investment in the project? What has the response been to date?

Mr Pittar —As you say, the minister has written asking for that information from the states and territories. I would have to check on the status of how complete the response is from the states and territories.

Senator COLBECK —Do you have terms of reference for the project yet?

Mr Pittar —They are currently being finalised with the FRDC.

Senator COLBECK —So that is being negotiated. You do not know who will be consulted or who will be surveyed at this stage?

Mr Pittar —The intention is to have it as broad as possible. The intention is to have states and territories able to feed into that process so that we can capture and use information and data that already exists. The intention is also to look for ways where individual recreational fishers themselves can potentially feed in information in relation to recreational fishing activity.

Senator COLBECK —Is there a target completion date for this process?

Mr Pittar —I do not have that information in front of me. The key thing was to ensure that the project was as comprehensive as it could be within the funding envelope. I do not think it was seeking to have it done by a date in the next few months. The main thing is to actually design something which is going to be as inclusive as possible.

Senator COLBECK —Can you also advise on the remaining funds from the recreational fishing allocation that was made in the budget?

Mr Pittar —We are also liaising with the FRDC on the use of those funds because part of the exercise that we were referring to, as far as the information and data collection is concerned, would also have the FRDC assisting with management of other projects that have come forward via the consultation that the Recreational Fishing Advisory Committee has undertaken and, where that committee has identified priorities arising from that consultation, the FRDC will essentially seek projects to address those priorities. So we are working with the FRDC on that as well.

Senator COLBECK —At the last estimates we talked about $200,000 to $250,000 being expended on the preparation of the base report that looked at the recreational sector, which left $1.8 million, $500,000 of which is being allocated. That $500,000 comes out of that money?

Mr Pittar —It does.

Senator COLBECK —So there is still $1.3 million left there to expend?

Mr Pittar —We are looking at providing funding to the FRDC in order to try and develop co-funding arrangements with the FRDC, develop co-funding arrangements with other bodies such as state and territory governments to try to get maximum bang for the buck in relation to those dollars.

Senator COLBECK —So, effectively, all that funding is going to be put into research?

Mr Pittar —Not into research. We will have FRDC assisting with managing the projects so that they could then fund outwards to other bodies that would assist in the implementation of the Recreational Fishing Industry Development Strategy.

Senator COLBECK —Can you tell me what role DAFF has played or what advice it has given to the NHMRC in their new document A Food Guidance System for Australia, Foundation and Total Diets?

Mr Pittar —I am not able to advise on that from a Fisheries perspective.

Senator COLBECK —So when they say that we should aim at one fish serve a week, which is down from two fish serves a week in their previous report, based on some varieties being more environmentally sustainable than others, this department or anyone at the table—I will open it up to all comers—has had no input into that process?

Senator Sherry —I just had my one-fish minimum.

Senator COLBECK —According to the previous advice, you are down on quota, Senator Sherry. The fishing industry would love to know where the NHMRC, which, last time I looked, had expertise in human health and diet, are getting advice on fishery sustainability.

Mr Thompson —I am not aware of anyone in the department providing advice—

Senator COLBECK —I hope the minister is on notice that I am booked in to see him next week.

Mr Thompson —to the NHMRC on that question.

Senator IAN MACDONALD —So ‘From no-one in the department’ was the answer?

Senator COLBECK —Professor Hurry, they have not spoken to AFMA?

Prof. Hurry —I have no recollection of any discussion with them at all but I will check for you. It is not the sort of advice that we would be providing.

Senator IAN MACDONALD —Can I suggest WWF?

Senator COLBECK —Perhaps that is where it is. My next question is when—and I know the BRS people are still here and I think ABARE are still lurking at the back of the room, too—is the sustainability report due? Do you know when that is due? I note that you are working together now on the fishery status report?

Dr Begg —We are looking at September this year for the release of that report.

Senator COLBECK —So the core preparation work is done but you are still a couple of months off finalising where it is all at.

Dr Begg —That is right.

Senator COLBECK —Any particular direction that things are moving in, given the positives out of last year’s report?

Dr Begg —Yes. We are still working through those results.

Senator COLBECK —While I have got you at the table, in April the committee received a copy of the 2009 aerial survey results for southern bluefin tuna and at the time it was suggested to us that the 2010 survey may be completed and the results available by about now. A very interesting read for someone who is interested in looking at that sort of thing, I suppose, but it was a worthwhile read from my perspective. How are we going with the results from this year’s survey?

Dr Begg —The results are still being worked through. There is a presentation that CSIRO is giving down at Port Lincoln on Thursday and Friday, which I will be attending as well. They are preliminary results and the results are positive again for this year. The final analyses, though, will not be completed until later in the year.

Senator COLBECK —I know you probably do not want to give a heap of stuff away but the industry told us during the season—and I think we discussed this in February—that they had seen a lot more fish about this year. Does the aerial survey reflect what the industry were telling us?

Dr Begg —Yes, it does.

Senator COLBECK —Can you give us a factor?

Dr Begg —Not at this stage.

Senator COLBECK —One of the other things that came up in the report was the proposal to change the number of observers as part of the process. Has any final decision been made on that?

Dr Begg —No. That was a calibration exercise that was ongoing. That is yet to be finalised in terms of moving forward.

Senator COLBECK —What are the pressures that are pushing that? Is it effectively finance that is available to undertake the survey? What are the drivers for changing from two observers down to one?

Dr Begg —I think that would be part of it, but it is also looking at efficiencies into the future so you are not relying on those two spotters every time. It is an efficiency gain as well.

Senator COLBECK —I was interested in reading through the elements of that report. Is there any thought to any further technologies? For example, is there a possibility of using thermal imaging as part of that process with a large mass of fish close to the surface? I do not know whether they are in range of those sorts of facilities. One question I wrote down when going through the report was: ‘At what height are the flights flown and at what spacing?’

Dr Begg —Not at this stage. Part of the analysis, as you would have seen in the report, incorporates a range of environmental variables, but looking at some of those further technologies. There are no plans at this stage to incorporate anything along those lines. The aerial survey itself is just starting to get embedded in terms of its process.

Senator COLBECK —It was suspended for a period of time. What is the certainty of a future? It appears to be a relatively valuable management tool.

Dr Begg —It is certainly input into the assessment, and we are looking at it in terms of an input and in terms of the future management procedure. In relation to ongoing funding, obviously that is a discussion that we will encounter in the future.

Senator IAN MACDONALD —I know we have spoken about basa at previous estimates committees. I will table this email, which I and every other senator received, from a Mr Glen Santacaterina. Forget the political comments in it, but it talks about ‘brought up with high levels of poisons and bacteria’, ‘raised in Vietnam with the food that comes from Peru’, ‘their hormones, which are injected into the female fish, come from China’ et cetera. There is a bit of material there. Could I ask either AFMA or the department—do not spend a lot of time on it—to do a short critique on what is said in the email. Do we know if the comment about the injection of hormones is correct? Could you do that on notice.

Secondly, as Mr Pittar may know—and Professor Hurry may have a little bit of knowledge in this—has there been any meeting of the Indian Ocean Tuna Commission since we discussed this commission at the last estimates meeting, or any progress on what is happening with the management and operations of the Indian Ocean Tuna Commission, which looks after one of the last great tuna fisheries in the world—but not very well, I am led to believe.

Mr Pittar —The Indian Ocean Tuna Commission met in early March of this year. It considered a range of fisheries and other conservation and management measures and adopted a number of them. So it has met since the last estimates hearing.

Senator IAN MACDONALD —Who represented Australia at the meeting?

Mr Pittar —I led the Australian delegation and had one of my staff accompany me.

Senator IAN MACDONALD —Are the minutes of that meeting available? Rather than wasting the time of the committee, could the committee be provided with a copy of the minutes of that meeting?

Mr Pittar —I believe the report from that meeting is now up on the IOTC website.

Senator IAN MACDONALD —All right. I will have a look. Before I read that, there was no progress made on getting the IOTC out from the FAO’s influence and out as an RFMO instead of an FAO subsidiary?

Mr Pittar —The governance of the IOTC and where it fits—whether, as it does now, in the FAO or alternative models—was not something that was considered in detail at the last meeting. The focus was very much on a range of fisheries management issues.

Senator IAN MACDONALD —Is the IOTC involving the Taiwanese, who I understand are one of the biggest takers of tuna in the Indian Ocean but who are excluded from the organisation formally because of the FAO and the UN?

Mr Pittar —We covered that, I think, at the last hearing.

Senator IAN MACDONALD —Yes, we did.

Mr Pittar —The fishing entity of Taiwan is not part of the IOTC, given its status.

Senator IAN MACDONALD —Does that concern anyone at the IOTC meetings?

Mr Pittar —I think it is an ongoing concern, but the IOTC basically would want to cover all entities that go fishing in the region, so that those entities contribute to decisions, are bound by decisions and have the same sorts of obligations on them as other members.

Senator IAN MACDONALD —Yes, but it is not happening, Mr Pittar. Is there anyone—I would hope it would have been Australia, but clearly not—moving the sentiment to get it out of the FAO so that it can be an RFMO which can involve Taiwan and which can then more effectively try and manage the tuna stocks in the Indian Ocean? Is anyone leading the charge, so to speak? If not—and I think the answer would be ‘no’—is there any reason why Australia should not be leading that charge and doing something absolutely positive for international fisheries? Whilst they are not terribly important to Australia, they are on our doorstep, and one day in the future it may be an important fishing area for Australia.

Mr Pittar —Going back to 2007, Australia did join a consensus on drafting amendments to the IOTC agreement to remove it from the FAO framework, but those amendments were ultimately rejected.

Senator IAN MACDONALD —We would argue: rejected by who? By the FAO, who clearly have a financial interest in keeping them involved.

Mr Pittar —What I was trying to outline is that there has been activity in recent times to try and draw them in. Ultimately, the decision of how they would be covered is a decision of members, a decision of the FAO. Given that there was that recent rejection, we need to think about alternative ways of trying to cover the involvement of the fishing entity of Taiwan in that ocean so that it is subject to the obligations on it that other fishing entities, other fishing countries, have in regard to tuna in the Indian Ocean.

Senator IAN MACDONALD —Mr Pittar, who knows where we will be the next time we have estimates committee! But I will forewarn you that I will ask you again, and could I urge you in the meantime to take the knight’s lance and lead the charge. Dr Kalish was doing that very well in the time he was in the role that you are now playing, and I will look towards asking you at a future estimates how far your charging steed has got in this, because it really is important to what I say is the last great tuna fishery in the world.

Mr Pittar —We understand the importance of Taiwan, so I take your point.

CHAIR —Senator Macdonald, do you have any further questions of SRM? If not, we will go straight to Senator Boswell.

Senator BOSWELL —I refer to the advice of consultants MAXimusSolutions to provide limited compensation on structural adjustment to fishers whose efforts will be displaced in the development of marine protected areas under the marine planning process now under way right around the coast and out to the 200-nautical-mile limit of the Exclusive Economic Zone. Has the department been asked to contribute to the development of a displaced effort policy in relation to the marine planning process?

Dr O’Connell —I think we have covered this issue beforehand.

Senator BOSWELL —Would you mind covering it—

Dr O’Connell —But we can give a quick snapshot of the processes again, if that is helpful.

Senator BOSWELL —It would assist me greatly. I have only a couple of questions, so I will not keep you long.

Mr Pittar —The department has been asked by DEWHA, as have a number of other departments, to provide input to the development of that displaced activities policy that you referred to.

Senator BOSWELL —When were you asked to do that? Has that work been completed?

Mr Pittar —The work has not been completed. DEWHA is still developing that policy and still liaising within government on that. A key element in all of that is that DEWHA intends to release that draft displaced activities policy prior to putting out draft marine bioregional plans and marine protected areas.

Senator BOSWELL —The only category of fishers for whom some structural adjustment has been recommended is holders of Commonwealth statutory fishing rights or equivalent state or territory rights. What is a statutory fishing right? Is it a licence?

Mr Pittar —We covered some of this a little earlier. The issue that we discussed was that the government will need to consider that policy and its coverage of not just statutory fishing rights but also fishing permits and fishing licences, so that government can take all of that into account in determining the coverage of the displaced activities policy.

Senator BOSWELL —What I am trying to understand is, what is a statutory fishing right and what is a licence? Is a licence a statutory fishing right or is it a quota?

Dr O’Connell —AFMA might be able to help you with this.

Dr Findlay —Yes. A statutory fishing right is issued under a statutory plan of management, which forms a stronger right, in the minds of many, than a permit. We do not actually issue licences. We issue permits under the Fisheries Management Act. There was a differentiation in the MAXimus report to say that one had a stronger legal right and was eligible for compensation, whereas the other one was not. That report is now being considered in the development of the displaced activities policy and the government will make a statement on that before moving in with—

Senator BOSWELL —Yes, but can you tell me what is a fishing right?

Dr Findlay —Fishing rights take a number of forms, either in the form of a statutory fishing right—so it could be a right to use a boat in the fishery or to catch a certain amount of fish—

Senator BOSWELL —It is a quota, in other words.

Dr Findlay —It can be quota, that is right. That is one of the main forms.

Senator BOSWELL —I want to know, if you could tell me, the difference between a fishing licence and a quota. A quota is a statutory fishing right, where a licence is not?

Dr Findlay —Quotas generally take the form of statutory fishing rights issued under plans of management. They do not have to. They are separate tools. But the actual permits can say that you can go and catch a certain amount of fish or that you can use a certain amount of fishing gear in a certain place and time to catch certain things. So it is actually the instrument under which they are issued. One is done under a statutory plan of management—for example, the Southern Bluefin Tuna Management Plan or the east coast tuna management plan—whereas others are managed under statements of policy under the Fisheries Management Act, which is a form of permit.

Senator BOSWELL —In other words, if you have a quota that you can catch so many fish, then you have a better prospect of getting some compensation if you were displaced?

Dr Findlay —In the minds of the consultants, they saw rights issued under statutory management plans—whether they be quotas or a right to use a certain amount of gear in the fishery—as a stronger right than those issued under a permit which is issued each year.

Senator BOSWELL —How many statutory rights, in your interpretation, which are quotas, would be in those areas that will have some closures in them?

Dr Findlay —Most large Commonwealth fisheries now have statutory fishing rights in place under formal statutory management plans. Those fisheries occur right around the coastline and there will be fisheries affected by the marine planning process, both under permits and under statutory fishing rights. The actual number of rights I could check for you, but it is in the millions. We issue many rights. To give you the number of operators, there are 370-odd boats operating under permits or statutory fishing rights.

Senator BOSWELL —Three hundred and seventy boats?

Dr Findlay —Yes, 370-odd boats.

Senator BOSWELL —Do you know when the department will put this displaced effort policy out to the public?

Dr Findlay —I am not sure on the details of that. They have committed to releasing that policy prior to the draft bioregional plans being issued.

Senator BOSWELL —Do you know when they intend to release the plans?

Dr Findlay —The first one of those plans is the south-west plan and they are indicating that is likely to be the second half of 2010, with the displaced activities policy coming out before that plan is released.

Senator BOSWELL —South-west. Where is south-west? That is in Western Australia?

Dr Findlay —Yes.

Senator BOSWELL —Thank you, Mr Chair.

Proceedings suspended from 9.05 pm to 9.21 pm