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Rural and Regional Affairs and Transport Legislation Committee
21/05/2018
Estimates
INFRASTRUCTURE, REGIONAL DEVELOPMENT AND CITIES PORTFOLIO

INFRASTRUCTURE, REGIONAL DEVELOPMENT AND CITIES PORTFOLIO

In Attendance

Senator Scullion, Minister for Indigenous Affairs

Department of Infrastructure, Regional Development and Cities

Executive

Dr Steven Kennedy PSM, Secretary

Ms Pip Spence, Deputy Secretary

Ms Marie Taylor, Acting Deputy Secretary

Mr Luke Yeaman, Deputy Secretary

Corporate Services Division

Mr Carl Murphy, Chief Operating Officer

Ms Justine Potter, Chief Financial Officer

Infrastructure Investment Division

Ms Jessica Hall, Acting Executive Director

Mr Mitch Pirie, Acting General Manager, Major Infrastructure Projects Office

Mr Phil McClure, Acting General Manager, Infrastructure Investment Policy

Ms Christina Garbin, General Manager, North West Infrastructure Investment

Ms Sarah Leeming, General Manager, South East Infrastructure Investment

Ms Cathryn Geiger, General Manager, Land Transport Market Reform

Infrastructure Australia

Mr Philip Davies, Chief Executive Officer

Ms Anna Chau, Executive Director, Project Advisory

Surface Transport Policy Division

Mr Alex Foulds, Executive Director

Ms Stephanie Werner, General Manager, Land Transport Policy and Safety

Mr Andrew Johnson, General Manager, Maritime and Shipping

Cities Division

Ms Mary Wiley-Smith, Executive Director

Ms Claire Howlett, General Manager, Cities and Smart Technology

Ms Kate Lynch, General Manager, Strategy and Engagement

Mr Oliver Richards, General Manager, Cities Economic Policy and Analysis

Ms Ann Redmond, General Manager, Cities Strategic Policy

Civil Aviation Safety Authority

Mr Shane Carmody, Chief Executive Officer

Mr Graeme Crawford, Group Executive Manager, Aviation

Mr Rob Walker, Executive Manager, Stakeholder Engagement

Ms Tracey Frey, Executive Manager, Corporate Services

Mr Simon Frawley, Chief Financial Officer

Dr Jonathan Aleck, Executive Manager, Legal and Regulatory Affairs

Mr Peter White, Executive Manager, Regulatory Services and Surveillance

Mr Chris Monahan, Executive Manager National Operations and Standards

Mr Andrew Sparrow, Acting Branch Manager Air Navigation, Airspace and Aerodromes

Aviation and Airports Division

Mr Brendan McRandle, Executive Director

Mr Jim Wolfe, General Manager, Air Traffic Policy

Ms Leonie Horrocks, General Manager, Airports

Mr Stephen Borthwick, General Manager, Aviation Industry Policy

Mr Michael Rush, Remote Aviation Programs, Aviation Industry Policy

Australian Transport Safety Bureau

Mr Greg Hood, Chief Commissioner

Mr Nat Nagy, Executive Director, Transport Safety

Mr Colin McNamara, Chief Operating Officer

Mr Stuart Macleod, Director, Transport Safety

Dr Stuart Godley, Director, Transport Safety

Mr Patrick Hornby, Manager, Legal and Governance

Mr Peter Foley, Chief Technical Officer, Joint Agency Coordination Centre

Australian Maritime Safety Authority

Mr Mick Kinley, Chief Executive Officer

Mr Allan Schwartz, General Manager, Operations

Airservices Australia

Mr Jason Harfield, Chief Executive Officer

Mr Paul Logan, Chief Financial Officer

Ms Michelle Bennetts, Executive General Manager, Customer Service Enhancement

Portfolio Coordination and Research

Mr Richard Wood, Acting Executive Director

Dr Gary Dolman, Head of Bureau, Bureau of Infrastructure, Transport and Regional Economics

Ms Naa Opoku, General Manager, Freight and Supply Chain Inquiry

Ms Leanne Kennedy, Acting General Manager, Portfolio Coordination

Mr Roland Pittar, General Manager, Transport Technology Futures

Australian Rail Track Corporation

Mr John Fullerton, Chief Executive Officer

Territories Division

Ms Ruth Wall, Acting Executive Director

Ms Karly Pidgeon, General Manager, Indian Ocean Territories

Mr Steve Dreezer, General Manager, Norfolk Island and Jervis Bay Territory

Western Sydney Unit

Mr Nathan Smyth, Executive Director

Dr Garth Taylor, General Manager, Communications, Environment and Legal

Mr Greg Whalen, General Manager, Financial, Commercial and Operations

Mr Malcolm Southwell, General Manager, Rail and Land Use Planning

Inland Rail and Rail Policy

Mr Philip Smith, Executive Director

Ms Diana Hallam, General Manager, Operations

Ms Kim Forbes, Acting General Manager, Community and Industry Benefits

Mr Andrew Hyles, General Manager, Rail Policy and Planning

National Transport Commission

Dr Steven Kennedy PSM, Secretary

Ms Pip Spence, Deputy Secretary

National Capital Authority

Ms Sally Barnes, Chief Executive

Mr Andrew Smith, Executive Director, National Capital Plan and Chief Planner

Mr Lachlan Wood, Executive Director, National Capital Estate

Infrastructure and Project Financing Agency

Ms Leilani Frew, Chief Executive Officer

Mr Bill Brummitt, Chief Operating Officer

Regional Development and Local Government Division

Ms Donna Wieland, Acting Executive Director

Mr Drue Edwards, Acting General Manager , Regional and Dams Policy

Ms Pip Batten, Acting General Manager, Regional Programs

Ms Maxine Loynd, General Manager, Local Government and Regional Development Australia

WSA Co

Mr Graham Millet, Executive General Manager, Airport Infrastructure, and Chief Executive Officer

Mr Paul O'Sullivan, Chairman

Ms Shelley Cole, Chief Financial Officer

Committee met at 09:09

CHAIR ( Senator O'Sullivan ): I declare open this public hearing of the Senate Rural and Regional Affairs and Transport Legislation Committee. The Senate has referred to the committee the particulars of proposed expenditure for 2018-19 and related documents for the Infrastructure, Regional Development and Cities portfolio. The committee may also examine the annual reports of the departments and agencies appearing before it. The committee has before it a program listing agencies relating to matters for which senators have given notice. The proceedings today will begin with an examination of the Inland Rail and Rail Policy Division.

The committee has fixed Friday, 6 July 2018 as the date for the return of answers to questions taken on notice. Senators are reminded that any written questions on notice should be provided to the committee secretariat by close of business Friday, 8 June 2018.

Under standing order 26, the committee must take all evidence in public session. This includes answers to questions on notice. I remind all witnesses that, in giving evidence to the committee, they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee and any such action may be treated by the Senate as a contempt. It is also a contempt to give false or misleading evidence to a committee.

The Senate by resolution in 1999 endorsed the following test of relevance for questions at estimates hearings. Any questions going to the operations or financial positions of the departments and agencies which are seeking funds in the estimates are relevant questions for the purposes of estimates hearings. I remind officers that the Senate has resolved that there are no areas in connection with the expenditure of public funds and any person has a discretion to withhold details or explanations from the parliament or its committees unless the parliament has expressly provided otherwise.

The Senate has resolved that an officer of a department of the Commonwealth shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted.

I particularly draw the attention of witnesses to an order of the Senate of 13 May 2009 specifying the processes by which a claim of public interest immunity should be raised.

The extract read as follows—

Public interest immunity claims

That the Senate—

(a) notes that ministers and officers have continued to refuse to provide information to Senate committees without properly raising claims of public interest immunity as required by past resolutions of the Senate;

(b) reaffirms the principles of past resolutions of the Senate by this order, to provide ministers and officers with guidance as to the proper process for raising public interest immunity claims and to consolidate those past resolutions of the Senate;

(c) orders that the following operate as an order of continuing effect:

(1) If:

(a) a Senate committee, or a senator in the course of proceedings of a committee, requests information or a document from a Commonwealth department or agency; and

(b) an officer of the department or agency to whom the request is directed believes that it may not be in the public interest to disclose the information or document to the committee, the officer shall state to the committee the ground on which the officer believes that it may not be in the public interest to disclose the information or document to the committee, and specify the harm to the public interest that could result from the disclosure of the information or document.

(2) If, after receiving the officer’s statement under paragraph (1), the committee or the senator requests the officer to refer the question of the disclosure of the information or document to a responsible minister, the officer shall refer that question to the minister.

(3) If a minister, on a reference by an officer under paragraph (2), concludes that it would not be in the public interest to disclose the information or document to the committee, the minister shall provide to the committee a statement of the ground for that conclusion, specifying the harm to the public interest that could result from the disclosure of the information or document.

(4) A minister, in a statement under paragraph (3), shall indicate whether the harm to the public interest that could result from the disclosure of the information or document to the committee could result only from the publication of the information or document by the committee, or could result, equally or in part, from the disclosure of the information or document to the committee as in camera evidence.

(5) If, after considering a statement by a minister provided under paragraph (3), the committee concludes that the statement does not sufficiently justify the withholding of the information or document from the committee, the committee shall report the matter to the Senate.

(6) A decision by a committee not to report a matter to the Senate under paragraph (5) does not prevent a senator from raising the matter in the Senate in accordance with other procedures of the Senate.

(7) A statement that information or a document is not published, or is confidential, or consists of advice to, or internal deliberations of, government, in the absence of specification of the harm to the public interest that could result from the disclosure of the information or document, is not a statement that meets the requirements of paragraph (1) or (4).

(8) If a minister concludes that a statement under paragraph (3) should more appropriately be made by the head of an agency, by reason of the independence of that agency from ministerial direction or control, the minister shall inform the committee of that conclusion and the reason for that conclusion, and shall refer the matter to the head of the agency, who shall then be required to provide a statement in accordance with paragraph (3).

(d) requires the Procedure Committee to review the operation of this order and report to the Senate by 20 August 2009.

(13 May 2009 J.1941)

(Extract, Senate Standing Orders)

CHAIR: Witnesses are specifically reminded that a statement that information or a document is confidential or consists of advice to government is not a statement that meets the requirements of the 2009 order. Instead witnesses are required to provide some specific indication of the harm to the public interest that could result from the disclosure of the information or the document.

I now welcome Senator the Hon. Nigel Scullion, Minister for Indigenous Affairs representing the Minister for Infrastructure and Transport; Dr Steven Kennedy, Secretary of the Department of Infrastructure, Regional Development and Cities; and officers of the department. Welcome, Minister Scullion and Dr Kennedy. Minister Scullion, do you or Dr Kennedy wish to make an opening statement?

Senator Scullion: No, Mr Chairman, we don't. Could I again welcome the committee today, and we look forward to the deliberations.

CHAIR: Thank you very much. So we're going to open now with Inland Rail and the Rail Policy, and I call on Senator Sterle.

Senator STERLE: Thanks, Chair, and good morning, Minister, Dr Kennedy and crew. I want to go to a few questions around the faster rail program, if we could, thanks. Could you tell the committee, please, if the department provided advice or a specific recommendation on the joint ACT-New South Wales submission to fund a business case for a faster Canberra to Sydney rail line?

Mr Hyles : We certainly assessed all of the applications, including the application from the New South Wales government, for the Sydney to Canberra faster rail proposal along with, obviously, all of the others.

Senator STERLE: Great, thank you. Can you tell us what your recommendation was.

Mr Hyles : We came up with a matrix and ranked them according to the criteria published in the faster rail prospectus, and we provided, obviously, advice to government about how each of those proposals ranked against that criteria.

Senator STERLE: Can you tell us what the funding break-up was for New South Wales in your recommendation and for the ACT—both of them?

Mr Hyles : They were only seeking—

Senator STERLE: Sorry, 'they' being who?

Mr Hyles : The New South Wales government. Each of the proponents put forward information about how much they thought their business case would cost.

Senator STERLE: And that was how much?

Mr Hyles : I'd have to take that on notice.

Senator STERLE: For the purpose of expediency, surely there is someone from the department who could flick a page now and let us know now.

Mr Hyles : We could get you that.

Senator STERLE: Please, for both ACT and New South Wales. How long would you need?

Mr Hyles : Hopefully, only 10 or 15 minutes.

Senator STERLE: That's fantastic. I'll keep moving so we don't hold up the committee. I'd like to know if both those jurisdictions indicated they were going to contribute to the business case as well. You might be able to tell us now.

Mr Hyles : The government's commitment was that it would provide up to 50 per cent of the funding towards the—

Senator STERLE: This is the federal government?

Mr Hyles : Yes, that's correct.

Senator STERLE: So you'll come back with both those figures for us—thanks very much. Can you tell us what other agencies, if any, the department consulted with in forming a recommendation to the minister?

Mr Hyles : We consulted with a number of Commonwealth government agencies. Obviously, we consulted with IPFA, Infrastructure Australia—

Senator STERLE: What was the first one you said?

Mr Hyles : The Infrastructure and Project Financing Agency. We consulted Treasury and the critical infrastructure unit as well. I could get you a list of those as well.

Senator STERLE: That'd be good, thanks. While we're at it, was there any internal assessment of the BCR of various projects and did this form part of advice to government?

Mr Hyles : There weren't BCRs as such. It was an initial sounding from proponents about their interest in undertaking a business case. Obviously, the business case itself would develop the benefit-cost assessments.

Senator STERLE: So at the moment we've got soundings. That's fine—and we'll work towards getting that info. Could you tell us if commuter or passenger uptake formed part of those assessments?

Mr Hyles : Obviously, the criteria for the faster rail prospectus were published. It included a range of elements, including linkages to communities and those sort of things. In terms of the potential for those projects to be successful, I think that they were part of it.

Senator STERLE: Is that clearly outlined? Is that information about where we're talking, passengers, commuters and freight available—is it all broken up?

Mr Hyles : The focus was on passengers, it being about connecting the surrounding regions to the capital cities. In terms of the information, do you mean statistics to underpin that or—

Senator STERLE: Yes, that and from where to where. Was it all part of the soundings and assessments?

Mr Hyles : Certainly the proposals talked in detail about information about population, future growth patterns and those sort of things. They were included in the—

Senator STERLE: Could you could provide that for us too?

Mr Hyles : I'd have to take that on notice. I think a number of these are commercial-in-confidence. Some proponents are still continuing to push for these, even though they may not have been selected, so we'd have to take on notice.

Dr Kennedy : Excuse me, Senator, to clarify, it's not our commercial-in-confidence information. We just need to consult with the proponents themselves and let them know we'd be passing on their information to the committee.

Senator STERLE: Sure.

Dr Kennedy : If I could make one other quick comment, this was to fund business cases. So some of the information that you're talking about—the BCRs and how many passengers—is what we expected to come out of any business case that was subsequently funded.

Senator STERLE: So you haven't got that yet.

Dr Kennedy : The purpose of the exercise was to assist some of these proponents to fund a business case that they might then subsequently present that would include that information. Some proponents may well go ahead and develop a business case regardless of assistance of government, I might say.

Senator STERLE: And that's handy to know. So what we're just trying to find out is what you do know, what you do have. I think it's good if we can find out exactly what's been proposed, because at the end of the day no-one is opposed to fast rail—passengers, particularly. Are you also able to tell us about the assessment of benefit for regional towns along the Canberra to Sydney route? Have you got to that stage yet?

Mr Hyles : No. The Canberra-Sydney Faster rail prospectus wasn't selected by the government. The government chose the Sydney-Newcastle proposal.

Senator STERLE: Oh, so the Canberra-Sydney is not on the—

Mr Hyles : No. It's not one of the three that are being funded.

Senator STERLE: All right. Thank you very much. It's not on there. I won't ask about that.

Senator GALLACHER: You said three have been selected?

Mr Hyles : That's correct. It's the CLARA Melbourne to Greater Shepparton. That's the high-speed rail. There's Sydney to Newcastle, which is a New South Wales government supported proposal. And then there's the Brisbane to Moreton Bay and the Sunshine Coast, which is a North Coast Connect consortium proposal.

Senator GALLACHER: And they were all better cases than Sydney to Canberra?

Mr Hyles : They were all assessed as being worthy of government funding, yes.

Senator STERLE: I suppose I'll put the question to Dr Kennedy. The chair may put the bounce on me. I hope I'm not being hypothetical. Is there any reason you can tell us why Canberra-Sydney wasn't on the government's radar?

Mr Hyles : Obviously that was a matter for government. We provided our assessment—

Senator STERLE: That was a ministerial decision?

Dr Kennedy : It was a decision made in cabinet.

Senator GALLACHER: But based on a matrix of efficiency and need or benefit?

Mr Hyles : Yes. The criteria that were published in the Faster rail prospectus formed the basis of the matrix assessment, yes.

Senator STERLE: As part of the Canberra-Sydney proposal, to start with, before it was considered not to be considered—if I can use that terminology—do you know if the department looked at the potential freight transport benefits as well as moving people for the Canberra-Sydney leg?

Mr Hyles : No, we were just focused on the passenger.

Dr Kennedy : On the proposals, we were guided by whatever the proponent put forward. If a proponent put in a freight aspect or a passenger aspect, we could consider it. In that case, if it was predominantly a passenger one, that's the assessment that we made against it.

Senator STERLE: No, that's fine.

Dr Kennedy : We didn't develop any of the proposals independently ourselves. We simply took their information and evaluated it.

Senator STERLE: Sure. So it wasn't put to you for freight. I get that. That's very clear. You said it was cabinet that made that decision. Are you able to tell us any reasons why the cabinet—the government, I should say—didn't want to proceed with funding that business case? Are you able to tell us, Mr Hyles?

Dr Kennedy : Excuse me, Mr Hyles. It wouldn't be usual for us to discuss cabinet deliberations.

Senator STERLE: But it wouldn't be usual for me, Dr Kennedy, to at least try asking.

Dr Kennedy : What we can take you through is how we developed the advice that went to cabinet, and obviously the decision they took was for those three projects.

Senator STERLE: Yes.

Mr Hyles : As I mentioned, we referred to the prospectus in terms of coming up with the assessment criteria for the Faster rail prospectus proposals. There were two stages before the final stage of the business case process. So we went through an initial filtering phase, where those initial proposals were filtered against the first-stage criteria. That included things like transport infrastructure problem policy challenge identification, proposed solutions and outcomes, impact on access and supply of housing, impact on employment accessibility, and impact on regional economic activity and development. I think we received 26 proposals, and around half of those were selected to go through to the second stage of assessment. Again, in the second-stage assessment process, we went through another matrix assessment process where we compared it to the assessment criteria, which included the funding requested by the proponent in terms of the business case cost, value for money and financing opportunities, risk assessment and capacity to deliver.

Senator STERLE: Are you able to share with us the proposal cost?

Mr Hyles : In terms of the total—

Senator STERLE: Total business case.

Mr Hyles : For the ones that were selected, the business case costs haven't been finalised. But it will be within the government's $20 million commitment across all three.

Senator STERLE: For the three.

Mr Hyles : Yes.

Senator STERLE: Within. When you say 'within', do you mean there could be $10 million spare change, or right up to $20 million?

Mr Hyles : A small amount. We're still in negotiations with each of the parties.

Senator STERLE: Can you tell us how far off we think these business case reviews will be?

Mr Hyles : Work is already underway on all of them. We're quite pleased with the progress to date. We expect it to take between 12 and 18 months to complete the business cases.

Senator STERLE: From now or from the time it was agreed by cabinet?

Mr Hyles : Essentially from now.

Senator STERLE: From now. So 12 to 18 months. Thank you.

Senator GALLACHER: Was there no consideration of patronage and population in your matrix?

Mr Hyles : That certainly came up under the housing affordability aspect of it—population growth, those sorts of things.

Senator STERLE: So if we were to look at the three successful cases, they outbid Canberra in all areas—is that what you're saying?

Mr Yeaman : All of the projects were assessed against those criteria. Certainly the ability to generate benefits to passengers was the main focus of the criteria. We provided advice to government on the rankings, and the government chose the three that have been selected.

Senator GALLACHER: Have they published the rankings? Are they publicly available?

Mr Yeaman : No.

Senator GALLACHER: So it's a mysterious process. It's done properly but it's just not public.

Mr Yeaman : That was our advice to government, which went through the cabinet process, as Dr Kennedy said.

Senator GALLACHER: If I were a Canberran and I wanted to know why we didn't make the cut, how would I find out? How would I look into the detail and say, 'It's obvious: they had a better case.' How would I find out?

Mr Yeaman : As I said, the government took a decision based on the advice.

Senator STERLE: In other words, no-one can see that work.

Mr Yeaman : Correct. That was our advice to government.

Senator STERLE: I've got a couple of questions on high-speed rail, and then I know Senator Watt has some questions. I want to go to the corridor for a future high-speed rail network and other considerations for the high-speed rail. In the past 12 months, has the Commonwealth made any overtures towards New South Wales, ACT and/or Victoria about progressing construction of a high-speed rail link between Brisbane and Melbourne via Sydney and Canberra?

Mr Hyles : We're obviously continuing to have conversations with each of those three jurisdictions, but nothing has progressed in that case at this point.

Senator STERLE: Nothing's progressed. Can you share with us what has happened? Has there been any movement by any state?

Mr Hyles : Under the Faster rail prospectus process, the Consolidated Land and Rail Australia faster rail business case process is a high-speed proposal. And that's looking at Melbourne to Greater Shepparton. The proponent put forward two proposals, which included Sydney as well. My understanding is that the lessons that they'll learn out of this one will be applicable to that as well.

Senator STERLE: So for the Melbourne to Greater Shepparton one, there were two proposals from that consortium, were there? Or they chucked in one including Sydney?

Mr Hyles : CLARA put forward two aspects of it. Sydney was part of it as well. There were two separate components. Melbourne to Greater Shepparton was selected, but it's likely that the outcomes of that could be applicable to the other part of their proposal.

Senator STERLE: So the Melbourne-Canberra-Sydney proposal was assessed by you guys against all that criteria you were talking about earlier, like housing and so on?

Mr Hyles : That's correct, yes.

Senator STERLE: Did that proposal go to cabinet? Or it didn't make it?

Mr Hyles : The whole assessment was considered by cabinet.

Senator STERLE: In the past 12 months—and I can take it, in my words, that things aren't progressing very quickly so far on that conversation—has the Commonwealth had any contact with overseas firms interested in being involved in building a high-speed rail network for Australia?

Mr Hyles : We've certainly had firms visit us, more about the technology as opposed to having an active interest in building a line per se.

Senator STERLE: Just so we're clear, Mr Hyles, that's in terms of technology, like what?

Mr Hyles : Rolling stock.

Senator STERLE: So building and supplying the rolling stock, but not contributing to the rail or any of the infrastructure? Is that right?

Mr Hyles : More generally, yes.

Senator STERLE: Chair, I can talk about this in one way without referring to the inquiry you and I did on rail and rolling stock and all sorts of stuff. Are there still ongoing conversations or did international firms put forward a request to come and put a quote in? Did we say 'Thank you very much, but we'd like to do our own here in Australia rather than bringing it in from India and having to do it all up again?'

Mr Yeaman : Probably not to that extent. As the infrastructure department, we have people coming through who talk to us about the things they're doing in other countries and the kinds of technology they're deploying in those countries. They generally talk up the benefits that they could one day deliver to Australia. But to my knowledge we haven't had any direct approaches putting forward a proposal to fund a project in Australia.

Senator STERLE: So they're just dropping a note, saying, 'Hey, if you're going to spend all this money, we want to be able to offer our product'?

Mr Yeaman : Correct.

Senator STERLE: So that's just people coming, visiting you and dropping off a business card—nothing is set in concrete. There is still a chance to be made in Australia.

Senator McCARTHY: Are you able to identify those firms?

Mr Hyles : Yes, but we would have to take that on notice.

Senator McCARTHY: Can you take that on notice in terms of the firms and their locations?

Mr Hyles : In terms of countries, yes.

Senator WILLIAMS: Mr Hyles, I'm getting complaints from farms that they are living in the dark. They don't know definitely where the line is going. At the moment they're concerned that they've got plenty of crossings near Peak Hill, where the old train line is. The new train line won't give enough crossings for their livestock and machinery. They'll have to travel long distances to get the other side of their farm. What is the situation there?

Mr P Smith : The ARTC is engaging with the community, both through its community consultation committees and one on one with farmers. In particular they are looking at accessibility, movement of machinery, movement of stock and how water would affect that. So they're engaging in that process. The current study corridor has been selected. Through an EIS process it will be refined to the final route. That allows the community to engage in that process. It's a very active process as well. The ARTC is actively engaging with farmers to try and solve any issues at a localised level.

Senator WILLIAMS: When will the final route be concluded?

Mr P Smith : The final study corridor has been selected by the government. ARTC is going through the planning and EIS processes that are required to narrow it down to the final alignment. In some areas that does take 12 to 18 months, depending on the complexities.

Senator WILLIAMS: So the final alignment could be another 12 to 18 months?

Mr P Smith : Yes.

Senator WILLIAMS: Imagine that I'm on the farm and I have a little ill health and I want to get out. I have had an email about this situation. A couple want to get out of their property because they're not in good health. They can't sell it because of the question marks around it. Is the train line going through their property or not? What do you do in those situations?

Mr P Smith : There are provisions for hardship under the various land acquisition processes. ARTC at the moment are in the process, particularly in New South Wales, of negotiating with the state of New South Wales on those processes. There are options there for various hardship allowances. But ARTC, as I said, is out there engaging with farmers on an individual basis, and has met with people like that as well.

Senator WILLIAMS: That's good. These people are doing it tough as far as their health goes and they want to get off. Who do they contact to get someone to see them and to discuss what is happening and how to help them out?

Mr P Smith : ARTC is ultimately the body that will be negotiating those aspects. So ARTC is the person. They can obviously get in touch with the department and we will put them in touch with the right person as well.

Dr Kennedy : We can provide you with names and numbers in those organisations that you can pass to people if they need to call them, to contact directly.

Senator WILLIAMS: That would be good. You can email my office. Then we'll forward that on to those people to say, if you're in a jam, you can't sell your property, people are not interested because they're wondering whether it's going to have a train line through it or not, we can put them in touch to get some assistance. Thank you.

Senator STERLE: Dr Kennedy, just so we're all really, really clear, I have a Senate order from 13 May 2009. There is no excuse why you cannot, particularly when you're using taxpayer dollars to do the work, provide us with information that you have sent through to cabinet. If it gets down to a case where someone may want to claim public interest immunity, then the minister has to do. That's so we can't use this as a smokescreen to say that you can't provide information. The truth of the matter is that you can.

Dr Kennedy : To be clear, what I was concerned about was talking about cabinet discussions and decision making. The information that we prepared for decision making for cabinet was the information that Mr Hyles was talking about.

Senator STERLE: But there's absolutely no reason why you're not to supply that to the committee unless the minister wants to make a public interest immunity claim. That is up to the minister.

Dr Kennedy : Understood.

Senator WATT: Can I go back to the high-speed rail issues. I'll try not to go over any ground that Senator Sterle has already covered. You have already said that all up there has been $20 million allocated towards the development of business cases for various legs of the high-speed rail, and I think you said you were hopeful that the amount that would actually be spent would certainly come within that. Can we go back to the process of short-listing and settling on these three. I didn't quite catch the number, but was it 26 applications that were originally submitted?

Mr Hyles : That's correct.

Senator WATT: And they went through an initial filtering process against first-stage criteria.

Mr Hyles : That's correct.

Senator WATT: I think you said roughly half went to the second stage assessment?

Mr Hyles : Thirteen were assessed as part of stage 2, but two dropped out, so 11 were considered.

Senator WATT: I've seen the assessment criteria. You mentioned them yourselves: funding request, value for money, financing risk assessment and capacity to deliver. Were they the same criteria used at each stage, or were there different criteria used?

Mr Hyles : Different criteria were used in stage 1 and stage 2. Effectively, the stage 2 criteria built on the stage 1 criteria.

Senator WATT: And the ones I just read out were the stage 2 criteria?

Mr Hyles : That's correct.

Senator WATT: And the stage 1 criteria were a bit looser?

Mr Hyles : The stage 1 criteria were transport infrastructure problem and policy challenge identification; proposed solution and outcomes; impact on access to and supply of housing; impact on employment accessibility; and impact on regional economic activity and development.

Senator WATT: So by the time the second stage assessment concluded there were 11 proposals in the mix.

Mr Hyles : Yes

Senator WATT: And the department ranked those proposals according to those four criteria, and provided advice to government.

Mr Hyles : That's correct.

Senator WATT: You have been clear that it was the government's decision to settle on these three. I'm not going to ask you what cabinet decided, but were the three that were ultimately selected, the top three as ranked by the department?

Mr Hyles : They were certainly at the top of the list, yes.

Senator WATT: Were they the top three?

Mr Hyles : They were at the top of the list.

Dr Kennedy : Maybe I can help. Our projects fell into groups, and they were part of the top group. It becomes very hard to split these projects quite finely.

Senator WATT: So it didn't go one, two, three, four, five, down to 11. There was a better group, if you like, and a not so good group. How many groups were there?

Mr Hyles : They were ranked according to a numerical ranking, and there were a number that were in bands of the same ranking.

Dr Kennedy : They got the same number.

Senator WATT: The same score sheet. Was it a score out of 100 or something like that?

Mr Hyles : I'd have to go back and have a look.

Senator WATT: How many groups were there?

Mr Hyles : We'd have to go back and have a look. Certainly there were a number of proposals that were in the same band. I think the score was out of 20.

Senator WATT: And when you made your recommendation to government, there was a better group and a not so good group. Was there a third group or a fourth group?

Mr Hyles : There was a group at the top, and then there were proposals underneath with different or lower scores.

Senator WATT: How many proposals were in that top group?

Mr Hyles : I'd have to go back and have a look. I believe—

Mr Yeaman : I think it was in the order of five to six. I may be one off there, but I think it was five to six.

Senator WATT: Was there a Canberra proposal within the top group?

Mr Hyles : Yes, there was.

Senator WATT: So it was a decision of government to favour the three that were ultimately selected over one involving Canberra or any of the others?

Mr Hyles : That's correct.

Dr Kennedy : It might be worth remarking that all the proposals in the second phase were proposals that we saw had merit, to be honest. Then it was just this question of merit ranking. You mentioned less good proposals. By the time we were in the second phase we saw merit in all of the proposals. It was just the question of how then to try and split them.

Senator WATT: Prior to recommendations being made to cabinet, it's obviously pretty common for ministers and their offices or departmental officials to have discussions about different proposals. Did the minister or anyone from the minister's office give you any indication as to particular proposals that they would like to see included in the top group?

Dr Kennedy : We undertook a departmental assessment. Obviously any submission that goes to cabinet is a minister's submission, but the submission took our advice in terms of the ranking and the merit list as it was presented.

Mr Yeaman : That's correct.

Senator WATT: What due diligence has the department done on each of the three successful consortia? Has it simply been about evaluating them against those criteria, or has there been any further due diligence done to look into who is behind these consortia, or anything like that?

Mr Hyles : As I mentioned before, we've had conversations with a number of Commonwealth government agencies, including with Treasury and with the critical infrastructure unit as well. That would get to that issue of due diligence.

Senator WATT: If there are any sort of red flags about particular consortia, about issues that aren't covered in the criteria, the other departments may have brought that sort of stuff to your attention?

Mr Hyles : That was certainly the reason we undertook the process.

Senator WATT: Were any concerns raised by the other departments about any of the three consortia?

Mr Hyles : I don't believe so.

Senator WATT: I think you mentioned already that it's a requirement under this program that each of the successful consortia needs to be able to match government funding for the development of a business case?

Mr Hyles : Match or in kind, yes.

Senator WATT: Are you able to tell us how much has been allocated to each of the three consortia?

Mr Hyles : As I mentioned before, that's still being finalised. We're very close. But at this stage, because it's still being finalised and we're in negotiations, it's not possible to say.

Senator WATT: For argument's sake, if consortium A gets $5 million from the government, they have to come up with $5 million, and if B gets $6 million, they need to come up with $6 million. I understand, and I think you've actually mentioned this, that one of the selected consortia is Consolidated Land and Rail Australia Pty Ltd, known as CLARA.

Mr Hyles : Yes.

Senator WATT: You haven't yet finalised the amount of public money that CLARA is going to receive to develop its business case?

Mr Hyles : That's correct.

Senator WATT: But it will be a share of the $20 million.

Mr Hyles : That's correct.

Senator WATT: I'm not sure if this is the case for the other proposals as well, but I gather that the basis of the CLARA proposal is that they want to build a high-speed rail link between Melbourne and greater Shepparton. They say there won't be any direct cost to government or taxpayers, and they will raise the funds needed to build the rail line by building two new smart cities along the route.

Mr Hyles : That's correct.

Senator WATT: Specifically in relation to CLARA, what due diligence did the department do to determine its financial viability as an organisation?

Mr Hyles : As an organisation—in their proposal we certainly looked at aspects of the consortium, in terms of proponents and people backing it and those sorts of things. That was part of our assessment as well.

Senator WATT: You had no concerns about its financial viability, having looked into it?

Mr Yeaman : Just to be clear, as a general rule we were interested in who was behind the proposal and what sort of expertise they brought to the table. We didn't go into a deep financial analysis of CLARA or the company. The business case will look closely at the financial model the company is proposing for the rail link. That's something we'll test more deeply through the business case process. But we didn't provide a detailed financial assessment of the company or the operations.

Dr Kennedy : To extend on that, we simply don't know at this stage whether that project is viable in the broad terms that it's been outlined. That is the purpose of the business case—

Senator WATT: I'm more talking about the company itself and whether it's even got the capacity to do the business case. I'm not so much talking about the viability of building the rail line. I'm talking about the company itself and whether it's got what it takes to even do a business case, let alone more—

Mr Yeaman : We didn't identify, at a high level, any immediate concerns around that—the ability for the company to engage with us in a business case. But we are now in the process of this next stage of working out a memorandum of understanding with CLARA around the business case, and that will further flesh out those issues.

Dr Kennedy : Before we finalise any funding contribution, certainly we do go through an exercise of checking that the funding contribution it needs to match on the other side is available—we do that in any program—and all parts of the project are able to be delivered on. If they're not, then it's stopped and the money goes back and we go back to government for another decision.

Senator WATT: Have you established whether CLARA—

Dr Kennedy : We haven't finished finalising that arrangement, in terms of the matching funding that Mr Hyles was talking about.

Senator WATT: So, you are currently determining whether CLARA has the X million dollars it needs to match your investment?

Dr Kennedy : That would be the usual part of any of these matching processes. In terms of our value for money assessment and the contractual arrangements, we have to assure ourselves that the counter-party is able to acquit their responsibilities under the grant contract.

Mr Hyles : Just to add to the secretary's comments, they are obviously contractually bound, as well. They will sign a contract with us and that will have provisions for arrangements around the handling of various aspects, including funding.

Senator WATT: Are you aware the total financial capitalisation of CLARA is only $422,700? I have a document here that demonstrates this, if you aren't aware of that.

Mr Hyles : I wasn't aware of that.

Senator WATT: Currently you're proposing to provide a grant of presumably several million dollars to a company to work up a business case on the understanding it is going to be able to come up with the same amount of money, but that company is worth only a bit over $400,000?

Mr Hyles : There's a range of partners with the company, as well. These are, in most cases, large international firms. They're supporting CLARA with their own in-kind contributions towards the work of building up this business case. It's not just the company of CLARA or the business of CLARA itself; there's all of the partners with the company, as well.

Senator WATT: So, you'd be relying on those partners to put up the money?

Mr Hyles : They're making the contributions either directly or in-kind through actually undertaking the work that supports the business case.

Senator WATT: It might be something worth taking up with them, though, if you weren't aware of that already—their capitalisation. There are media reports about this: are you aware of CLARA having purchased any land options to give it the opportunity to purchase land for future development of smart cities?

Mr Hyles : Yes.

Senator WATT: There's been quite a bit of reporting about that. I understand the way it works is that they will go out to a property owner and pay them some money on an annual basis on the understanding that if this all comes to pass they can then purchase the land, and they have done that for multiple properties.

Dr Kennedy : They have informed us of that. We have not gone and assessed that ourselves, at this stage.

Senator WATT: How do you think a company with such limited financial means as CLARA, given it's worth only $400,000, is going to be able to continue to maintain its land options, let alone actually buy this land, if it ever gets this proposal off the ground?

Mr Hyles : As I mentioned previously, they are supported by a number of reasonably large partners in their process. These are in some cases multinational companies.

Mr Yeaman : As Dr Kennedy said, we'll continue to go through that process of due diligence around the proposal as the business case is further developed and we get a better understanding of how the project is meant to be brought together by the company. That's a process we still have to go through.

Senator WATT: How firm are these financial arrangements they've got in place with these multinational investors?

Mr Hyles : I understand they are of the nature of contractual arrangements.

Senator WATT: So they've demonstrated to you that they've got contracts in place with overseas investors to build this?

Mr Hyles : I think building it would be taking it beyond the step at the moment—

Senator WATT: Or at least to maintain their land options?

Mr Hyles : which is looking at the viability of this proposal. Certainly our contractual relationship also gets to issues about the partners with them as well.

Senator WATT: Does the department know exactly the sites that CLARA propose to build their new smart cities?

Mr Hyles : Certainly CLARA have proposals, but obviously part of the business case process is to look at those issues of alignment, routes, location of cities and those sorts of things.

Senator WATT: Have they informed you about the particular properties that they've acquired these land options on?

Mr Hyles : Not specifically about each particular property.

Senator WATT: Is the department aware that it's widely understood around Shepparton that the land CLARA reportedly has options on is on flood plains or subject to inundation by floodwaters?

Mr Hyles : Issues around the location of cities are still to be determined. Our business case will look at the location options around the location of the cities as well as options around the route alignment, so that will be a matter for testing as part of the business case.

Senator WATT: Would it concern you that the whole basis of CLARA's bid—that it's going to build some cities, which will raise some funding, which will build a rail line—is building cities on land that is flood prone?

CHAIR: Senator, you posed a question there where I think the basis of the question hasn't been established. Even by your own account, the 'reports are' that they are going to build it on a flood plain. I really do think this could stray into adverse comment with respect to this corporation. I think we need to tread carefully. If you've got some evidence that shows it's their intent to build on flood plains—evidence that we can rely upon—I really think it would be useful for the witnesses, and indeed the whole committee, to have that.

Senator WATT: I don't have any written evidence of this, but I can assure you that it is widely being discussed around Shepparton that the sites of these—

CHAIR: Yes, but I've heard rumours in Toowoomba that I'm overweight, and clearly they're not correct! I just think we need to be very careful. We can do a lot of damage to a corporation that's putting its best foot forward—and it may well deserve to be damaged, but I really do think that, based on rumours around Shepparton, it's probably not sufficient to underpin—

Senator WATT: Chair, isn't it also important—I'm sure you'd agree—to make sure that taxpayers' money is being used wisely?

CHAIR: You betcha, and that's why we're here, but it's also important—and let's not you and I get into a bloody match—that you put a foundation to your question other than rumours. I've been subject to some of this stuff myself.

Senator WATT: I remember.

CHAIR: And you know the rumours didn't stack up and failed, from a corporate allegations point of view.

Senator WATT: It depends on who you listen to.

CHAIR: So I'm probably going to firm up a bit around this line of questioning with respect to this particular company. If you've got evidence, present it and let us all have a good look at it, including the witnesses, so they can respond. I'll leave it to you, Mr Hyles, but I doubt you could respond to that last question.

Mr Yeaman : I think at the end of the day the business case is going to look closely at all aspects of this proposal, including the geotechnical aspects of the project, the financial aspects of the project. We just haven't done the detailed work yet. That's what the business case is for—to go through and assess those kinds of issues. We don't have any evidence to suggest that. We are aware of broad media reporting, but we haven't got anything beyond that. For us, the business case is the way for us to settle those matters in detail, with detailed analysis.

Senator WATT: What due diligence did the department undertake into the history and background of the people running CLARA, most notably its chairman, Nicholas Cleary?

Mr Yeaman : We fundamentally assessed the proposed project that was put in front of us by the company on the basis of the criteria that were in front of us. We didn't go through a detailed assessment of the company's history.

Senator WATT: I've got evidence of this if it's needed, but is the department aware that Mr Cleary is a discharged bankrupt?

CHAIR: Let's—

Senator WATT: I've got evidence of that.

CHAIR: I'm going to share with you how this committee works. If you're able to give the secretariat that evidence so they can make a copy of it, provide it to the witnesses and the other committee members, we can join you in the journey of assessment.

Senator WATT: Sure. There we go.

CHAIR: If you've got another line that you could go on with for a minute while we get those copies distributed—

Senator WATT: That's an ASIC search which demonstrates that Mr Cleary is a discharged bankrupt, and in that bundle you'll also find evidence to support this. Was the department aware that Mr Cleary is a long-time member of the National Party, and at one time he was even a vice-chairman of the New South Wales Nationals?

CHAIR: Now we've jumped out of the closet. We're finally there. It's a long path. No more questions until that evidence is produced and provided to these witnesses.

Senator WATT: Why are you touchy about asking questions about National Party mates getting money?

CHAIR: Clearly I'm not, Senator.

Senator WATT: That's the first time you've pulled me up—when we bring in National Party membership.

CHAIR: You've been called upon to produce the evidence upon which you make the statement. If you've evidence that he's a long-term member of the National Party, please provide it so we can distribute it and the witnesses can respond. I'd ask you to go to an alternative line of questioning until the documents are distributed; otherwise, perhaps someone else can fill the gap for you.

Senator WATT: Okay. We'll come back to that. Did the department receive any representations from the member for Murray, Mr Damian Drum, supporting CLARA's application for funding?

Mr Yeaman : No.

Senator WATT: There's been no letter written on behalf of, or written by, Mr Drum, supporting this proposal?

Mr Hyles : Not directly to the department.

Mr Yeaman : No, not to my knowledge.

Senator WATT: What about to the minister or the minister's office?

Mr Yeaman : Not to my knowledge. We can take it on notice.

Senator WATT: And no verbal support or meetings involving Mr Drum about this proposal?

Mr Yeaman : Not to my knowledge. There have been no representations that I'm aware of, but we can take it on notice.

Senator WATT: Minister, you're not aware of anything?

Senator Scullion: No, I'm not. You asked whether verbal assertions have been put to the minister. I think that would be very hard for the department to know, in any event. I think they have been very clear about that.

Senator WATT: Have any other members of parliament made representations, verbal or otherwise, that you're aware of, on behalf of the CLARA proposal?

Mr Yeaman : Not to my knowledge.

Dr Kennedy : Not to us at the table, but of course we'll take it on notice to determine nowhere else in the department has.

Senator WATT: Could you take on notice whether any representations were made to the minister or the minister's office?

Dr Kennedy : Yes, but, to be clear, not to anyone at this table have those representations been made.

Senator WATT: Was it Minister Fletcher who signed off on the funding, who ultimately gave approval?

Mr Hyles : The funding hasn't yet been confirmed.

Senator WATT: Sorry, yes.

Mr Yeaman : He is the minister responsible.

Senator WATT: It was a cabinet decision to choose these three proposals, but Minister Fletcher's the relevant minister. Do you know the date that the decision was made to choose these three proposals?

Mr Hyles : We'd have to take that on notice.

Senator WATT: Did the minister or the minister's office ever provide a view to the department about the pros and cons of the CLARA bid, or indicate the minister's view of the CLARA bid?

Mr Yeaman : The announcement was made on the three projects in March 2018. I don't have the exact day, but we'll see if we can—

Senator WATT: I think I've seen the press release.

Mr Yeaman : Yes, March 2018.

Senator WATT: It was 9 March, I think.

Mr Yeaman : On the representations from the office, as Dr Kennedy said earlier, we provided our departmental advice on all the proposals put forward as part of the program. That was provided to the minister's office, and we provided a briefing with that. That's the extent of our engagement.

Senator WATT: To go back to my question, did the minister or the minister's office ever express a view of the CLARA proposal to the department?

Mr Hyles : Obviously, we had a range of conversations about all of the proposals. In the course of those conversations, CLARA was raised, as were a number of other proposals as well.

Senator WATT: Just focusing on the CLARA one, in those discussions that you had, did the minister or the minister's office express a positive view about the CLARA bid?

Mr Yeaman : We would have to go back and check but, from memory, it was a fairly broad conversation about the pros and cons of all the projects attached. I don't remember a particularly strong view coming out on that particular project above and beyond any other. We had a general discussion around it.

Senator WATT: That's your memory. Maybe you could take that on notice and go back just to clarify that. Have we got those documents? There were multiple copies in the pack that I handed over.

CHAIR: Our secretary is very efficient. As soon as it gets here, we'll distribute it. I'm happy to fill in the gap if you have exhausted questions otherwise. So can I ask what the temperature is with the inland rail in the Lockyer Valley area of Queensland. That's that last leg that obviously runs from when you come down off the range. We've got to get ourselves eventually to the port.

Mr P Smith : In terms of temperature we're aware that there's some community sensitivities around that area. Again ARTC has set up some community consultation committees in that area to ensure it's got ongoing engagement with the community. Those committees have been operating. I think they've had several meetings each. So we're getting feedback from those as we speak. But we're certainly aware of community concerns about the alignment.

CHAIR: All right. How many of those committees are there?

Mr P Smith : I think there are four.

CHAIR: What are the geographical locations?

Mr P Smith : I think there are four community consultation committees set up in the Queensland area. Obviously they are servicing different areas.

CHAIR: I'm talking about the valley. I know there's one to the south of Toowoomba.

Mr P Smith : Yes.

CHAIR: I'm talking down in the valley.

Mr P Smith : We'll just get that information.

CHAIR: Thank you.

Ms Forbes : Yes, there are four community consultative committees in Queensland, and there's one for Lockyer Valley.

CHAIR: Where are the others geographically?

Ms Forbes : There are two in the Darling Downs, in the inner and southern Darling Downs, and one is in Scenic Rim.

CHAIR: How often are they engaging with the communities?

Ms Forbes : They all met for the first time in December last year and, since then, they have had approximately two or three meetings. I think they're all meeting this month as well.

CHAIR: Are the meetings well attended? Are you able to say?

Ms Forbes : Yes, they are. They are regularly attended and there is publishing, after the meeting, of the outcome of those meetings.

CHAIR: If you can wait patiently just for two or three minutes, each of the committee members will take an opportunity to quickly peruse these documents. A set will come to the table. We will just absorb these so Senator Watt can get on with his examination. The committee has accepted these documents as tabled. I just have one question, and it's not necessarily a big deal, but this extract for Nicholas Vincent Cleary—are you in a position to help us establish that that is this Nicholas Vincent Cleary and the same Nicholas Vincent Cleary who's over this rail line?

Senator WATT: That is my understanding. For what it's worth, based on the photo that I've seen of him, he looks about the right age. I've never met the guy. And I see his address is—well, I probably shouldn't say that on the public record, but his address seems to be roughly in the kind of area we're speaking about, so I am very confident that this is the same person.

CHAIR: All right. Well, look—

Senator WATT: We might want to redact his address.

CHAIR: I think that would be wise. The committee concurs with that, so we'll redact it. Keep those copies close by because we'll take them back off you after this passage of examination. I'm not trying to create a thing here, but you should take into account the fact that we're assuming the bankruptcy is the same Nicholas Vincent Cleary, and if you need to qualify your answers you should do so.

Senator WATT: Just returning to my questions—was the department aware up until I provided that document that Mr Cleary is a discharged bankrupt?

Mr Yeaman : Not to my knowledge, no.

Senator WATT: Was the department aware, prior to me tabling that document, that Mr Cleary is a former vice-chairman of the New South Wales Nationals and was a preselected National Party candidate for a previous federal election?

Mr Yeaman : No, senator, I wasn't, and I don't think the team was.

Senator WATT: No-one in the department was aware of that? Does any of that concern you particularly—his financial background?

CHAIR: Senator Watt, I don't want to frustrate this, but we need to be very careful here that we're dealing with the same Mr Cleary, seriously.

Senator WATT: I am confident that we are, on the assumption—

CHAIR: Your confidence is not the test. We just need to be careful. These proceedings are all published.

Senator WATT: Yes. It's taxpayers' money. The purpose of these inquiries is to—

CHAIR: And we've got parliamentary privilege to be able to do this. I'd like to be certain that we're dealing with the same Mr Cleary, that's all, as we make these allegations. You're basing questions—'Does it concern you that he's bankrupt?' Well, we know that a Mr Cleary is bankrupt. I'm yet to make the leap that it's the same Mr Cleary.

Senator GALLACHER: He's a discharged bankrupt.

CHAIR: Yes, same deal.

Senator WATT: I'm happy to go and do company searches on every Nicholas Cleary in the country, but we've got one here.

CHAIR: That may be useful, because that'd be a way to narrow this down.

Senator WATT: Okay. Out of what we've established today, your department is proposing to hand several million dollars in taxpayers' funds to a company that has a market value of about $400,000, and which has land options that require it to pay millions of dollars annually to landholders, so that it one day might buy the land. Some of that land, I am told, is on floodplains. This company is run by a discharged bankrupt who's a former National Party candidate.

CHAIR: Senator Watt—

Senator WATT: I just question your due diligence.

CHAIR: The National Party candidate is fine; I think that's established from what we've got here. But I'm asking you to be very cautious about this allegation that this individual is an undischarged bankrupt.

Senator WATT: Discharged bankrupt.

CHAIR: Discharged bankrupt, I should say.

Senator WATT: My question is: how satisfied are you with the due diligence that you've undertaken, given all of those factors?

Mr Yeaman : The company structure in and of itself, as we addressed earlier—we often deal in these cases with consortiums which are coming together to put together a proposal for a project. It's not entirely surprising to me that a company of this nature would not have a large market capitalisation in and of itself. The geotechnical issue that you described around the floodplain is an issue we would want to test clearly in the business case stage. There are ways of building infrastructure projects in areas that are prone to flooding. The cost can increase in those cases. That would then be something we'd need to weigh up in the business case, and decide whether those costs were justified in that case. Noting the chair's caution in this area, if I was to talk in a slightly more hypothetical case, the fact that someone's previously been declared bankrupt—I'm not saying they have been in this case—is in and of itself not a reason to doubt the veracity of the project as a whole—

Senator WATT: I agree.

Mr Yeaman : but we would want to test clearly through the next stage, as we go through discussions with the company around their contribution to the projects and work through the business case phase. We would want to test that very carefully.

Senator WATT: Any one of these factors on its own—the low company value; the fact that it's being run by a discharged bankrupt who's a former National Party candidate—doesn't disqualify someone from getting government funding. I accept that. But, surely, when you've got this series of factors, it raises questions about how this company should be given money at all?

CHAIR: Senator Watt, let's tighten this up. First of all, you haven't established that it's Mr Cleary who is this discharged bankrupt and you haven't established that we've got floodplains, so let's red-line them. The other two are relevant. The market capitalisation of the company is relevant, and I think Mr Yeaman has responded to you on that with the consortium answer, and it's established that Mr Cleary is a member of a political party. You can probe them as hard as you like as to whether that has influenced them or could influence them or, if they didn't know about it, did it influence them? But we're going to tighten up a little bit on the bankruptcy and the floodplain thing.

Senator Scullion: Perhaps because we are talking about the board—and we've indicated to the senator the most recent quote that Mr Cleary runs it rather than actually being the chairman of that board—what I'll do to assist the board is gather a list along with the credentials of the actual board, which includes, I understand, former New South Wales Premier Barry O'Farrell, former Victoria Premier Steve Bracks and the former United States transport secretary Ray LaHood. I think in that context it would be useful, as this is being painted as a two bob watch company with a discharged bankrupt—I think it's more than that. I think it may be useful if I ask the department to try to provide a full list of this organisation for the benefit of the committee.

CHAIR: Sure.

Senator WATT: Thank you for doing that. I actually wasn't going to mention this, but are you aware that both former Victoria Premier Mr Bracks and former New South Wales Premier Mr O'Farrell have resigned from the board? They were members, and they've resigned from that board.

Senator Scullion: It's even more important that we get an accurate and up-to-date list of those individuals who are on the board.

Senator WATT: I actually wasn't going to raise that, but it concerns me that—

CHAIR: That was very kind of you. But, once again, Senator, if you've got material there that shows—and you know it's a two bob search; you do two or three a day yourself—they've resigned from the board, please provide it to the secretariat and we can distribute it to everybody, as well as any other material upon which you want to reply to make these statements.

Senator LEYONHJELM: I don't think that's at all the test. You just had the minister make a statement and you haven't tested him.

Senator WATT: Exactly.

CHAIR: No, well—

Senator LEYONHJELM: You've got to play both sides of the street.

Senator Scullion: With respect, Senator, I made an offer to provide the list of those people currently on the board. That's the only offer I made.

CHAIR: It was his offer: he said he would go and search and provide.

Senator WATT: Today.

CHAIR: That was the minister's statement.

Senator WATT: I'll come back to you with the article that refers to them having resigned. As I say, I wasn't going to make that point, but, now that you have, that is another concern to me—that this board had attracted high-profile directors and had talked itself up on that basis, and they've now resigned. I'll provide some evidence of that.

Just in conclusion, the department has chosen to recommend and the government has decided to give money to this company with all of these issues around it and has chosen that one over the proposal to build the Sydney-to-Canberra rail connection?

Mr Yeaman : What I can say is that, based on the information that was provided to the department from CLARA, the proposal that was put forward was high quality. It certainly addressed all the aspects of the criteria that were put forward. Certainly, we'll continue to look closely at the due diligence matters that I've discussed, but the proposal that was put forward was high quality and was selected on that basis.

Senator WATT: Okay. I'll leave it there. Thanks, Chair.

Senator GALLACHER: On that point, can I ask before you go—Mr Bowditch, the Better Infrastructure Initiative person, characterises it as 'highly speculative and unreliable'. Is that not a reputable organisation?

Mr Yeaman : Sorry, which document are you referring to?

Senator GALLACHER: This is from Mr Garry Bowditch, head of the Better Infrastructure Initiative at Sydney university, someone who does some independent analysis of these things. I don't know anything about this, but just reading what's in front of us you're saying it's a highly professional, organised bid and it appears to be contested, at least in the public view, by a number of people, including those at this Better Infrastructure Initiative at Sydney university. You don't regard their—

CHAIR: It's in the article that reads, 'Land deal-funded $200b fast rail is "potential trainwreck"'.

Senator GALLACHER: Mr Hyles, I think you did say there were a number of infrastructure bodies that gave a view on this.

Mr Hyles : Yes.

Senator GALLACHER: Did they all come down as competent, professional and worthy of support?

Mr Hyles : Just to reiterate, it was a very high-quality proposal. It was very detailed, and certainly the intent of the business case is to fundamentally test whether this works at a financial level. That's the purpose of the business case.

Senator GALLACHER: Fair enough.

Senator WATT: I found that article, which I'll table as well. It's an article from The Monthly in December 2016 which notes that Steve Bracks and Barry O'Farrell have both resigned from the board.

CHAIR: All right.

Senator WATT: It also notes that the company's first managing director quit in July, and that the first managing director's firm has sold out of its shareholding in CLARA as well. So I'll table that.

CHAIR: Let's take those documents. When this is distributed, can I ask that we return to the secretariat for just the ASIC search for the moment while we establish that it is one in the same.

Senator WATT: That's it from me, Chair.

CHAIR: Thank you, Senator Watt. There being no further questions on Inland Rail, Mr Secretary, we thank your people for their attendance. We will go to morning tea and, when we return, we'll take up with Australian Rail Track Corporation. Thank you.

Proceedings suspended from 10:19 to 10:33