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Environment and Communications Legislation Committee
22/05/2018
Estimates
ENVIRONMENT AND ENERGY PORTFOLIO
Department of the Environment and Energy

Department of the Environment and Energy

[14:30]

CHAIR: Welcome.

Senator URQUHART: Who am I going to? Mr Sullivan, Mr Heferen or whoever?

Senator Birmingham: Let's hear the question, and then we can—

Senator URQUHART: Can you tell me does the department monitor trends in the renewable energy industry?

Senator Birmingham: It depends what you mean by monitor, but I expect the broad answer is yes.

Mr Heferen : The Clean Energy Regulator, I think, were on last night or yesterday afternoon. They are probably the best ones to do the monitoring, but two of my colleagues, both named James—one Chisholm, one White—are probably best placed to see if we have anything extra.

Mr White : The majority of the monitoring in terms of progress towards the Renewable Energy Target is undertaken by the Clean Energy Regulator as they set out in their evidence last night; they were describing their latest assessment of progress towards the renewable energy targets. The other component that the department is responsible for is that the department prepares updates to the Australian Energy Statistics in which the percentage of renewable energy is reported.

Senator URQUHART: But the department doesn't actually monitor? That's the role of the CER?

Mr White : In terms of progress towards the Renewable Energy Target, the Clean Energy Regulator does that work.

Senator URQUHART: Do you monitor trends in the renewable energy industry?

Mr White : In the sense that we look at the industry to identify whether there are patterns emerging that might have policy implications at some point. So we obviously monitor the industry in that sense, but again we rely a lot on the advice from the Clean Energy Regulator.

Mr O'Toole : We certainly monitor changes in the generation mix over time, including the different types of renewable energies which are coming online. So wind, solar et cetera.

Senator URQUHART: According to observers in the Clean Energy Regulator, the 2020 Renewable Energy Target is now all but met. Is that the department's understanding?

Mr Heferen : If that's what the Clean Energy Regulator says, that would be our understanding, yes.

Senator URQUHART: What they say goes, Mr Heferen?

Mr Heferen : Indeed.

Senator URQUHART: Excellent. What does the department expect to happen to levels of renewable energy investment post the RET?

Mr Heferen : I think that goes into a hypothetical which I don't think—

Senator URQUHART: So you haven't done any trends or monitoring forward on that?

Senator Birmingham: You've heard from the CEFC just before in terms of the areas of investment pipeline they still see applicable from Snowy in terms of the modelling that they see in terms of continued growth in that space. Indeed, the Clean Energy Regulator also indicated that they expect to see continued investment above and beyond the meeting of the 2020 targets.

Senator URQUHART: That's the expectation of the department. Has the department conducted any modelling or analysis of the investment outlook for renewable energy under a 26 per cent emissions reduction NEG policy?

Mr White : No, Senator.

Senator URQUHART: Is the department aware of analysis conducted by independent experts on the impacts on renewable energy investment over the 2020s of a 26 per cent target for energy?

Senator Birmingham: I'm sure the department—

Mr Heferen : If you have a particular report, we may have someone who is familiar with that. As you would appreciate, there are a number of experts out there who do work on this and they don't all necessarily align. If there is a particular report, I or the Secretary or one of the officers here might be familiar with that report.

Senator URQUHART: It was basically an analysis conducted by independent experts. So there is a number.

Mr Pratt : As a general rule, yes, we would keep abreast of these sorts of reports.

Senator Birmingham: There are many and they all come from different perspectives.

Senator URQUHART: So you're aware of them.

Senator Birmingham: And of course the government agencies that we've heard from already have expectations in terms of future investment in renewable energy sources as well, which we've been canvassing and which show continued growth in that investment.

Senator URQUHART: Has the department provided the government with advice on the impacts of the 26 per cent target NEG on the renewable energy industry?

Mr Chisholm : No, we have not provided that advice.

Senator URQUHART: Is the department aware of the views of Bloomberg New Energy Finance on the 26 per cent target for the NEG?

Mr Chisholm : We are broadly familiar with the reports about that work.

Senator URQUHART: They're quoted as saying:

After 2020 when the current renewable energy target is met, investment under federal policies would likely fall off a cliff, because the national energy guarantee, as currently floated by the Federal Government, would require very little effort to achieve.

Does the department share these concerns? And has the department provided advice to the government about the renewable energy investment impact of a low ambition NEG?

Mr Heferen : Senator, one of the tricky things about these sorts of reports that are done is that, at the moment, as you heard yesterday from the Clean Energy Regulator, there's sufficient committed projects in their view to easily meet the LRET target. If that were the case—and we're pretty sure it is the case—then, like a few years ago, people would be saying the price of the LRET certificate would pretty well plummet to zero, because it's no longer worth anything. That's not what the market is seeing. That's not what is occurring. Precisely why is that occurring? I think they would be a pretty brave person to bet their house on exactly why, because the future is inherently unknowable. But I think that does lead some commentators to arrive at the conclusion that surely the LRET is responsible for driving some investment, and in the early days it may well have been a key element. But now, seeing the reduction in costs across the intermittent renewables like solar, particularly PV, wind, and now increasingly large-scale solar, I think those reductions in costs could mean a different future to one where people thought that the overwhelmingly dominant driver of investment would have been the existence of the LRET itself. So, when we do look at some of these reports and we do try to keep up with as many as we can, there are differences depending on the most recent data that one has available. The more recent data would suggest that there is something else going on, and it could well be the reduction in costs that is leading to the continuing strong investment.

Senator URQUHART: With the quote that I read out from Bloomberg New Energy, my question was: does the department share the concerns that were in that? And have you provided advice to the government about the renewable energy impact of a low ambition NEG?

Mr Heferen : I think as Mr Chisholm may have said: the first bit, unsure; the second bit, no.

Senator URQUHART: So you're unsure if you share the concerns?

Mr Heferen : Yes, to the extent that BNEF provide that information, it's very credible. So those things need to be given due weight. It's a question then of balancing those views with the actual data available.

Senator URQUHART: Yes.

Mr Heferen : So it would be hard to sign up to that proposition 100 per cent.

Senator Birmingham: And, Senator Urquhart—

Senator URQUHART: Sorry, can I just finish on that one extra part of the question? Have you provided advice to the government about that?

Mr Heferen : About the—

Senator URQUHART: About the renewable energy investment impact of a low-ambition NEG, as outlined in that report?

Mr Heferen : Sorry, that's a bit of a loaded question, Senator!

Senator Birmingham: I don't accept the premise of the NEG as being low ambition. The NEG fulfils responsibilities to achieve emissions reductions that, in terms of our Paris commitments, are on a per capita basis or a—

Senator URQUHART: No, Minister, I'm not saying that. I'm reading it out of the quote. The question is in line with the quote. I'm asking the department whether or not they share the concerns, and I think Mr Heferen said he's unsure because there's a whole range of reports out there.

Senator Birmingham: There are a lot of reports out there. Bloomberg have produced a lot of reports over the years. Indeed, previous predictions from Bloomberg were that the investment pipeline in Australia was such that we would not meet the 2020 target under the RET. Of course, here we are now in 2018, hearing from the Clean Energy Regulator that they believe that it has been met, potentially, a couple of years early. So, obviously, some of these prognoses from forecasters like Bloomberg can prove to be dramatically wrong.

What we have heard through these estimates hearings from those who are engaged with investors in this space is that there is an ongoing high level of investment activity based on the policy settings that are currently laid out.

Senator URQUHART: I take it that's a no, that you haven't provided advice to the government?

Mr Pratt : Senator, I don't want to be unhelpful, but there are two things I'd like to comment on—

Senator URQUHART: I'm not trying to be unhelpful either. I just would like to know whether or not you've provided advice.

Mr Pratt : It's quite likely I'll be unhelpful here. There are two things. One is that when you ask us whether or not we have concerns with something, I think that falls into the category of providing an opinion. I can say, 'No, I don't agree with that,' based on my gut feel that renewables are going to increase, but that's just an opinion; it doesn't stand for much. Likewise, when we talk about whether or not we've provided advice to the minister, we do need to be very careful that we don't actually get into the territory of what advice we have actually provided to the minister, which is confidential between the department and the minister.

Senator URQUHART: No, I asked specifically, 'Have you provided advice to the government about the renewable energy investment impact of a low-ambition NEG?' That was the question.

Mr Pratt : Well, the answer is no.

Senator URQUHART: Yes, that's what I thought. I was just trying to clarify that.

Mr Pratt : I'm just cautioning. Again, apologies if I'm been unhelpful.

Senator URQUHART: No, you're not, Mr Pratt. I was just trying to get to whether or not you had. I wasn't painting you into a corner; I actually asked a specific question.

Senator Birmingham: However, without going to the content of advice, the department, of course, has provided much advice to the government about the design of the NEG, its interaction with the Paris targets and how it is we ensure that they are met, but not the type of description that you've quoted in that regard.

Senator URQUHART: Oliver Yates, former CEO of the CEFC has been quoted as saying:

But if the government is not prepared to change the emission reduction target from 26 per cent, then that is woeful, and it locks that inaction in place, and it locks our industry out of place - and that is not acceptable.”

Does the department think these are justified concerns by the renewable energy industry?

Senator Birmingham: That's clearly asking for an opinion, Senator Urquhart.

Senator URQUHART: Okay. Thank you. Do you want to go?

Senator KENEALLY: Thank you.

Senator URQUHART: I could spend another 10 minutes listening to Senator Birmingham—

CHAIR: Asking for opinions.

Senator URQUHART: but I thought it was easier just to concede.

Senator KENEALLY: I'd like to speak about the NEG—its reliability standard and its emissions reduction process. First of all, the reliability standard—is it correct to describe that as 0.002 per cent of unserved energy?

Mr Chisholm : There are two things relevant here. There is a reliability standard that exists in the National Electricity Law that relates to unserved energy. I think that's what you're referring to.

Senator KENEALLY: Yes.

Mr Chisholm : There is also a reliability component of the National Energy Guarantee. So are you asking about the—

Senator KENEALLY: What will the reliability standard, or the reliability requirement, be under the National Energy Guarantee?

Mr Chisholm : That will depend entirely on the forecast provided by AEMO of what level of dispatchable energy is needed throughout the NEM.

Senator KENEALLY: Will retailers only have to worry about the reliability obligation if AEMO forecasts that the reliability standard might not be met, starting from ten years out?

Mr Chisholm : The reliability standard and the level of dispatchable energy that AEMO requires may be different things, depending on the level of dispatchable energy that AEMO believes is needed in the system. The reliability standard is not breached very often. In fact, Mr O'Toole might have statistics on when the standard has been breached.

Mr O'Toole : It was breached twice in the last decade or so, once in South Australia and once in Victoria.

Senator KENEALLY: Is it the case then that retailers and energy users will have seven years to fill the gap voluntarily before the reliability obligation can be triggered?

Mr Chisholm : I don't think we've got a specific time frame on when the reliability standard, or the reliability requirement, might need to be triggered. That will depend entirely on what AEMO determines is necessary within a given period of time. I don't think we're being too specific at this stage.

Mr White : The Energy Security Board has set out in its advice—it's talking about an initial 10-year forecast. At a three-year period, the reliability obligation might be triggered, but it's possible that at one year out the gap may no longer exist, at which point there wouldn't be a compliance obligation.

Senator KENEALLY: That three-years-out-from-the-forecast breach—would AEMO need to get a green light from the AER or from the Australian Energy Market Commission's Reliability Panel?

Mr White : The Energy Security Board is still designing this mechanism. The Energy Security Board said, in its high-level design, that an independent entity should approve a request from AEMO to trigger the reliability component on retailers, but they haven't specified who that independent entity will be. It's also possible that they might change that between the high-level design they provided and the final design they provide, subject to the consultation they'll be doing over the next two months or so.

Senator KENEALLY: As you say, though, in practice the reliability obligation has rarely been triggered.

Mr Heferen : The reliability standard that exists in the NEM—that's rarely been triggered. What we're talking about with the reliability guarantee is not necessarily aligned with the reliability standard. I think what's—

Senator KENEALLY: The assumption amongst many in the media and I think in the sector has been that it will be essentially picking up the NEM's reliability trigger and dropping it into the NEG.

Mr Heferen : I think the assumption in the industry, for those who have followed the debate, is more that because the reliability standard—there's not the mechanism now to look at facts a certain distance out to be able to send a clear enough message for either a supply- or demand-side response to be enabled. That is maybe something that needs to be built. The system hasn't had to do that for a long time because of the inbuilt over-capacity for many years. What's being flagged here by the ESB is looking at it slightly differently: rather than waiting till there's a problem and saying the reliability standard was breached, trying to have a guarantee in the system so the reliability standard never gets breached—in a situation with the best forecasting they can do, saying, 'We think there might be a problem out there; we need someone to come along and fix it.' Then the calibration gets sharper and sharper until it's at the point where maybe nothing is being built because people don't think there's going to be a problem, because they think other generation is going to come online. It might not. Something might happen with a spike in demand or whatever, and AEMO might in the end have to take some more short-term action.

So, the standard and the guarantee are conceptually different things. But, as Mr White said—having said all that, I've probably done the wrong thing, because the process is still going on with the ESB, so by its nature a lot of what we've discussed at the moment is hypothetical; it's speculation. It's pretty informed speculation because it's on the basis of a design paper that they have put out. But it would be the case that, until they go through this last bit of consultation to really firm up their plans of what they propose to put to council, I suspect what we're saying is that it could be a fraction preliminary.

Senator KENEALLY: I think there is also some confusion in the community about the NEG more broadly, and that's understandable because it's being designed and defined in real time at the moment. Earlier we had a conversation about reliability being one component and emissions reduction being another component and that they both come together under this one National Energy Guarantee, but the reality is there are being developed two different processes to ensure that we meet both the reliability and the emissions reduction under this one National Energy Guarantee—correct?

Mr Heferen : It's one process, but there are two arms to that process. I wouldn't like to think there's an emissions discussion over here and a reliability discussion over there and they never really come together except in name. The essence of this thing is to actually bring those together so one is not pursued without the other.

Senator KENEALLY: That's fair enough, Mr Heferen. I can accept that characterisation. What I'm trying to get to is the idea that, when we're talking about emissions reduction, it's not being sought to be achieved under the reliability standard; it's being sought to be achieved by putting an obligation on retailers to comply.

Mr Heferen : Both operate by putting an obligation on retailers to comply. The reliability one is by its nature more difficult, I think, because with reliability you've got the profound impact of what happens on the demand side, whereas—well, I guess on the emissions there is as well, with energy efficiency, but I think the structure of the reliability one seems to be more complex. The point is they need to be done jointly. In the past we've seen reliability and emissions being done separately. There's no better example than the Large-scale Renewable Energy Target, which was done separately, without regard for the reliability of the system. Part of this was to try to bring them together to make sure everything was done in lock step.

Senator KENEALLY: According to the Energy Security Board, some government agency—maybe the Clean Energy Regulator; I'm not sure yet—will run a clearing house to support the emissions obligation under the NEG. How is that clearing house going to work? What will it be clearing?

Mr Heferen : I think we'd have to wait for the final design.

Senator KENEALLY: We have to wait for the final design to know what it's actually going to be doing?

Mr Heferen : I think they've flagged that something might occur. Whether it occurs and how it occurs—the first thing is: what will occur? There's an idea they've put out, but there's still the question: is that still going to be the case? And, more importantly, what's the mechanism by which that's to occur? I think they're matters for the board. The ESB is working on it at the moment, going through its thorough consultation, applying its considerable intellect to those issues and hopefully coming up with an answer that the council will accept.

Senator KENEALLY: From the department's point of view, how would you describe the emission obligation of the NEG? How would it practically work?

Mr Heferen : Sorry—how would it work?

Senator KENEALLY: How does it work? How does the NEG deliver an emissions reduction?

Senator Birmingham: How does the NEG deliver emissions reductions?

Mr Heferen : The obligation will be placed on the retailer.

Senator Birmingham: Yes.

Mr Chisholm : A target will be set, and it's been expressed as applying as part of a trajectory, consistent with that target. As you will have seen in the consultation paper—there are two consultation papers: there's the Commonwealth consultation paper, which talks about the level of the target, and there's the ESB's consultation paper, which talks about the registry and how the registry would work whereby retailers can nominate generators to appear in that registry. Then there would be a process of, I guess, reconciliation against NGER's data, which is available to give an indication of emissions for generators and test that the retailer has had the relevant contracting to meet the emissions obligation that's been set in the target.

Senator KENEALLY: Would it be correct to say that liable entities will contract and exchange assets between each other, and generators, to meet a specified intensity target determined by the government?

Mr Chisholm : Yes.

Mr Heferen : The registry that's recording transactions is similar to the NGER's database or the NGER's process. I think you mentioned the clearing house. I think where the ESB is going it is talking about a registry to record material. I don't think they've gone as far in their paper to talk about a clearing house. I confess, I may be mistaken but I don't recall that to be the case.

Mr Chisholm : Senator, you may be referencing exchange trade and OTC arrangements in relation to the reliability guarantee, that's different—

Senator KENEALLY: No, I'm not.

Mr Chisholm : The ESB has talked about a registry in the context of the emissions obligation, and it's outlined in the paper that they've provided and how that would work.

Senator Birmingham: The contracts that retailers have, essentially in the public, are part of the registry, which would identify how they have contracted either with wholesalers or with one another to ensure that in totality they're meeting their obligations.

Senator KENEALLY: Minister, would you describe that most like a clean energy target, a cap and trade scheme, an emissions intensity scheme, a carbon tax or something else?

Senator Birmingham: No. I would describe it as a contracting arrangement between energy retailers in which those energy retailers meet certain obligations that are laid down by the National Energy Guarantee. I wouldn't describe it as being any of the types of things you've outlined, most of which involve some form of payment to the government, or the like, and this doesn't involve any form of tax or payment to government. This involves retailers—

Senator KENEALLY: No. It's a market mechanism, isn't it?

Senator Birmingham: This involves retailers contracting as they currently contract but with some further obligations.

Senator KENEALLY: It's a transparent market mechanism, isn't it?

Senator Birmingham: I'm pleased you are so supportive, Senator Keneally, by the sounds of it.

Senator KENEALLY: Minister, you'll find I have been long supportive of a market mechanism to deal with climate change.

Senator Birmingham: Perhaps you can clarify—

Senator KENEALLY: Unlike your government.

Senator Birmingham: Perhaps you can clarify the federal opposition's position on the NEG for us if you're that supportive?

Senator KENEALLY: When you have one, let us know and then we will pass comment on it.

Senator Birmingham: The government's making great progress on the NEG.

Senator KENEALLY: Minister, basically I take that—

CHAIR: Senator Keneally, we might move to the Greens for a period of time.

Senator KENEALLY: I'm always happy to give the Greens an opportunity—

CHAIR: We will come back to you.

Senator KENEALLY: as long as, Senator, when we come back before we—

CHAIR: Yes, we will have time.

Senator DI NATALE: I would like to go to reports this morning that the Energy Security Board is seeking secondments from energy companies to effectively write the changes to the energy market rules. Are those reports correct?

Mr Chisholm : They're questions that you would have to put to the ESB. The arrangements that they enter into with other parties are really matters for the ESB.

Mr Heferen : We've been very active in providing secondees to the ESB. We requested the Australian Energy Market Operator, the Australian Energy Market Commission, the Australian industry regulator—so the three market bodies—the Clean Energy Regulator and the department, so we've been active in assisting them with secondments.

Senator DI NATALE: You have—

Mr Heferen : Yes.

Senator DI NATALE: But reports today indicate that groups like the Business Council of Australia, the Australia Industry Group and, indeed, Origin Energy, have all been approached to be seconded, and to have their salaries paid to write the rules for the energy market.

Mr Chisholm : I do know that the ESB is conducting technical working groups with stakeholders.

Senator DI NATALE: No, this is different. This sits outside that.

Mr Heferen : As I think Mr Chisholm originally said, on what the ESB is doing, it's probably best to take it up with the ESB.

Senator DI NATALE: In what forum?

Mr Heferen : I'm sure that if you asked them to come along they would come along. But we could take that on notice and follow that up.

Senator DI NATALE: These are reports. I'm sure you've seen the reports from this morning.

Mr Heferen : I read a lot of things in the newspaper, Senator. Just because it's there, I don't take it to be the case.

Senator DI NATALE: So you're saying those reports aren't accurate?

Mr Heferen : No, that's not what I said. I said, if I can remember, that I read a lot of things in the newspaper, and I wouldn't take them all to be the case. Some may be but not all.

Senator DI NATALE: I understand why the Energy Security Board would be approaching the department, seeking advice. But the quote we have here is that—

Senator Birmingham: The quote from whom?

Senator DI NATALE: This is a quote from Ms Savage, who herself is a former member, I'm assuming, of the Business Council.

Mr Heferen : She's the Deputy Chair of the ESB.

Senator DI NATALE: That's right. So there's a quote from her which says very clearly, 'We would welcome nominations to the Energy Security Board to help with this task,' in reference to seeking staff to work with the secretariat on the 'preparation of issues papers, working papers and final guaranteed design document and the development of legislation'—so we've got Origin Energy staff members being asked to come and write the legislation that will be presented before the parliament. Minister, do you see that as a conflict of interest?

Senator Birmingham: Senator Di Natale, that characterisation is incorrect in terms of what will occur. The ESB will make a recommendation to the COAG Energy Council. That will be a recommendation of the members of the ESB, which consists of the head of three market bodies and the chair and the deputy chair. It will be their recommendation. The COAG Energy Council will determine its position based on the recommendation of the ESB. Legislation that comes from the government to the parliament will go through the usual drafting processes of government in terms of resources of government and then be introduced in the usual way.

Senator DI NATALE: But the policy that's going to be presented and voted on by state and territory governments this year, if this report is correct, will be written by members of the Business Council or employees of Origin Energy, the Australian Industry Group—are there any other energy companies that have been approached?

Senator Birmingham: Senator Di Natale, as you've heard, if you want to ask ESB who they're consulting with—

Senator DI NATALE: Not consulting with; looking to employ.

Senator Birmingham: or who they're employing or who they're getting advice from, then those are questions for the ESB. However, the ESB, as an independent body comprising the five individuals I mentioned before, will be the one that ultimately makes its recommendation to the COAG Energy Council, and then the COAG Energy Council will be the one to determine the final construct of the NEG before any legislation hits the parliament.

Senator DI NATALE: Minister, would you be concerned if employees of Origin Energy were seconded and paid to work for the ESB to draft a policy that Origin themselves would be a significant beneficiary of? Do you have concerns about that?

Senator Birmingham: You're asking me to comment on a hypothetical, which I won't do.

Senator DI NATALE: No, it's a report in the paper. There is nothing hypothetical about it.

Senator Birmingham: What I would expect is that the ESB will secure whatever skills are necessary in terms of designing the NEG in a way that ensures it meets its expectations of reliability and emissions reductions at the lowest cost and that, in designing that, it will need to draw on expertise from energy market operators who understand how retail energy contracts are drawn, to make sure that it does effectively meet those policy expectations.

Senator DI NATALE: Do you believe it's a conflict of interest if a staff member of Origin Energy is employed by the ESB to write the policy that would have a direct impact on Origin themselves as one of the large—

Senator Birmingham: I have confidence that the ESB—

Senator DI NATALE: I have asked you if there's a conflict.

Senator Birmingham: I have confidence that the ESB will effectively manage any conflicts that are presented to it as it undertakes its work; that it will effectively get the best possible skill set to draft the NEG in the most effective way possible to meet the policy objectives; and that the members of the ESB will act, as they have to date, with absolute integrity in terms of presenting free, fair and frank policy advice to the COAG Energy Council.

Senator DI NATALE: Minister, Origin Energy have donated $255,000 to the Liberal Party. Do you have concerns that having the ESB employ somebody from Origin Energy creates a particularly concerning perception about a favour being returned to them?

Senator Birmingham: I think you should cease trying to impugn the reputation of the members of the ESB, Senator Di Natale.

Senator DI NATALE: Minister, given that the ESB is already well represented by the Business Council—as we said, Ms Savage herself is a member of the Business Council—why do we need to have further representation from the Business Council, indeed through an official employment contract, represented within the ESB?

Senator Birmingham: You're making assertions with which I don't necessarily agree or concur and which I certainly cannot confirm. What I would expect is that the ESB will access the skill sets that it needs to deliver the best possible designed NEG to achieve the policy objectives of emissions reduction and reliability done at the lowest cost.

Senator DI NATALE: But, in this report, this isn't about requiring specific expertise.

Senator Birmingham: Senator, if you have an allegation to make, why don't you make it?

Senator DI NATALE: ESB deputy chairwoman Clare Savage said that she required 'significant additional resources' to deliver the detailed design of the guarantee by August. Has the ESB got the current available resources necessary to implement this without needing to second additional staff?

Senator Birmingham: A couple of points. Ms Savage is not an employee of the Business Council.

Senator DI NATALE: She's a former member.

Senator Birmingham: The next point I'd make is that, if you wish to make an allegation that the five members of the ESB will, in the advice they present to the COAG Energy Council, be somehow compromised in that advice, go ahead and make the allegation. I'd suggest—

Senator DI NATALE: I'm not making the allegation.

Senator Birmingham: That seems to be what you're implying.

Senator DI NATALE: I'm not making the allegation. I'm saying that there are energy retailers who not only have been invited but will be paid as staff members of the ESB, when they themselves are the people who will directly benefit from the rules written. We talk about corporations writing the rules for government; this is taking it to a new level.

Senator Birmingham: No, Senator Di Natale. Australian energy consumers will benefit from the rules that are written, because the modelling shows that electricity prices will be lower under the NEG. Australia will benefit in national policy terms because the NEG will help to meet our emissions reduction obligations whilst achieving reliability in the market and do so at the lowest cost, which is good for our economy, good for the climate and good ultimately for households and businesses. They're the people who stand to gain from the rules that are written for the NEG. As I say, the government has confidence that the ESB will act with the type of independence and integrity that they have shown to date in providing free and frank policy advice to the COAG Energy Council and that they will draw upon the best possible skills to make sure that the rules are written to achieve the policy objectives.

Now, if you believe that those five members are not going to present free, frank, independent policy advice to the COAG Energy Council, you're free to make that allegation or assertion. But don't do it by trying to run a sort of dodgy little smearing here. Have the guts to actually say so if that's what you think. Otherwise, cut the questioning along these lines and get on with something substantial.

Senator DI NATALE: Minister, there's nothing indirect about what I'm saying. I'm being very clear. The Energy Security Board have written to a number of bodies, including Origin Energy, a significant donor to the Liberal Party, and have asked them—

Senator Birmingham: That's irrelevant.

Senator DI NATALE: to provide staff—

Senator Birmingham: That's just part of your smear.

Senator DI NATALE: who will write this policy, a policy from which they benefit. There's nothing indirect about what I'm saying. I'm being very direct. I'm asking you whether you think that's an appropriate position for the ESB to take and whether you think it's appropriate that somebody from one of the major energy retailers should be employed. We're not talking about consultation—

Senator Birmingham: You seem to misunderstand—

Senator DI NATALE: Hang on. I'm asking a question. We're not talking about consultation; we're talking about somebody employed within the ESB to write this policy.

Senator Birmingham: You misunderstand the fact that the NEG places new obligations and responsibilities upon retailers. It's not written for the benefit of retailers. It's written for the benefit of the nation—

Senator DI NATALE: Oh, really?

Senator Birmingham: in meeting the policy obligations and settings of the government and, indeed, of governments across the Federation, and it's made ultimately to put us in a position where we can have the lowest possible energy prices whilst meeting our other obligations. That's what the obligations on the ESB are—to come up with the design principles and settings for that—and the government would expect them to draw upon the most skilled and knowledgeable individuals in terms of the way in which retail contracts are written, to make sure that we have a NEG designed that achieves its policy settings and obligations.

Senator DI NATALE: What conflict of interest policy does the ESB have?

Senator Birmingham: I'll take that on notice, if we are able to source that from them.

Senator DI NATALE: Would it be the standard departmental conflict of interest policy?

Senator Birmingham: The ESB is not a part of the department.

Senator DI NATALE: No, but would they have adopted the same conflict of interest rules as the department?

Senator Birmingham: I have taken it on notice.

Senator DI NATALE: Perhaps this might be directed at one of the officials: given that the deputy chairwoman, Ms Savage, indicated that she believed the ESB required significant additional resources—her words, not mine—do you believe that the ESB has been resourced appropriately to do the task that's required of it?

Mr Heferen : Yes.

Senator DI NATALE: Why, then, would the deputy chairwoman of the ESB state—and I quote—that they did require 'significant additional resources' to deliver the detailed design of the guarantee by August and to bring it into law by the end of the year?

Mr Heferen : I don't know.

Senator DI NATALE: Is that something you intend to take any further action on or make inquiries into?

Mr Heferen : I have regular contact with Ms Savage.

Senator DI NATALE: Her version seems to be at odds with what you've just said.

Mr Heferen : I suspect that our versions aren't at odds. I suspect it's the reporting.

Senator DI NATALE: Right.

Mr Heferen : I suspect our versions are completely aligned. I have a weekly phone call with Ms Savage. I had one yesterday.

Senator DI NATALE: So you think Mark Ludlow, the journalist who wrote this piece, has attributed that quote inaccurately to Ms Savage?

Mr Heferen : I have no idea.

Senator Birmingham: It might be your interpretation, Senator Di Natale.

Mr Heferen : All I can say—

Senator DI NATALE: I know I might have a—

Senator Birmingham: A bias, yes.

Senator DI NATALE: No, my grasp of the English language might not be as sophisticated as yours, Minister, but I can read.

Mr Heferen : My recollection is—

Senator DI NATALE: And I am reading a—

Mr Heferen : Senator, you did ask me a question.

Senator DI NATALE: Oh, Mr Heferen, please finish your answer.

Mr Heferen : I had have a conversation with her yesterday. We've discussed resources. It may be a time frame issue.

Senator DI NATALE: So you did discuss resources with her?

Mr Heferen : Yes, clearly. This is a very important issue for the government, for the council, and making sure the ESB is adequately resourced—

Senator DI NATALE: So it might be a time frame issue?

Mr Heferen : And also what is meant by resources. I would take 'resources' to mean the money.

Senator DI NATALE: To employ people?

Mr Heferen : To get the work done.

Mr Pratt : There's a difference between money and skills; they're quite different things.

Senator DI NATALE: I've had some pretty circular conversations in this place, but that's right up there with them. We're talking about the resources to get the job done?

Mr Heferen : Yes.

Senator DI NATALE: Which involves the funding to employ the people to do the job.

Mr Heferen : Yes. And you asked me the question: do I think they have sufficient resources to get the job done? You said, 'Do you think they need more?' and I said no, or you asked me, 'Do they have enough?' and I said yes. I can't recall which one it was.

Senator DI NATALE: And then you did say it was a time frame issue.

Mr Heferen : No. What I meant was that you were saying, 'Would that person who wrote that article be wrong?' I'm not saying that at all. It may be the conversation he's reporting is a different conversation to the one that I've had recently with Ms Savage.

Senator DI NATALE: Is part of the problem that there have been so many years of cuts to the department that you just haven't given the ESB the resources it needs to do the job?

Senator Birmingham: The ESB is not an entity of the department or the Commonwealth government. It's an entity of the COAG Energy Council. The COAG Energy Council, I believe, has given additional resources to the ESB, but the ESB also draws upon resources from a range of other stakeholders, be they consumer groups, renewables companies or others in the energy space, to ensure that it has the best expertise at its disposal to then present the model to the COAG Energy Council.

Senator DI NATALE: I might put some further questions in on notice. Thank you.

Senator ABETZ: If I understand the budget papers correctly, there are 1,993 employees in the Department of the Environment and Energy.

Mr Pratt : That's our expected ASL cap for the next financial year.

Senator ABETZ: That is 13 more than the previous year?

Mr Pratt : That's 13 more than the estimated actual for this financial year.

Senator ABETZ: Within the portfolio, are you able to tell us how many staff or officials are working on emissions target policy?

Mr Pratt : I imagine we could. I'd have to take it on notice.

Senator ABETZ: All right, but we have quite a cohort working on that as a specific policy area?

Mr Pratt : We have a subset of people who are working on, for example, the emissions guarantee element of the National Energy Guarantee.

Senator ABETZ: Right. Do we have officials working on reliability targets?

Mr Pratt : Likewise.

Senator ABETZ: Likewise. Similarly, could you take that on notice for me. Do we have a cohort or a subset of people in the department working on the issue of price for energy and a price target for energy?

Mr Pratt : Certainly we have people who would be advising the minister on energy prices. I wouldn't characterise that as working on a price target.

Senator ABETZ: No. It seems to me that we've got a subset of people working on a specific emissions target and we've got a subset of people working on a reliability target, but what seems to be missing is—

Mr Pratt : Can I just clarify: they're working on policy around an emissions guarantee and a reliability guarantee.

Senator ABETZ: That's right. We've got a reliability guarantee and an emissions guarantee. How about a price guarantee? That is ultimately, I think, what the vast bulk of the Australian people are actually concerned about—price and affordability—and we don't have a special subset in the department for that.

Mr Pratt : We certainly have a lot of people working on pricing issues.

Senator ABETZ: Yes, but not a specific subset, and there is no price guarantee that is being worked towards.

Senator Birmingham: The mission of those two bodies of work is to achieve the lowest price possible whilst dealing with those two issues. That's not the only pricing work that the department has been doing or that is occurring across government. The ACCC has been undertaking a substantial review in relation to retail pricing. As you know and have heard, wholesale prices are some 30-plus per cent lower now than they were 12 months ago, and the government expects that that ought to be reflected in retail pricing. The ACCC's work will be an important input, if we aren't seeing that in retail pricing, into what changes are necessary to make sure those savings are passed on to consumers. That, of course, comes on top of other work, such as the abolition of the limited merits review, the work in relation to gas markets and so on, to also achieve price. So the lowest price possible is an objective not just in those areas but across all of the areas of energy policy.

Mr Pratt : I've just consulted with Mr Heferen, and we will detail this on notice, but our judgement is that we have more people working on price than we have on reliability and emissions.

Senator ABETZ: I'll be very interested to see that when we've got a specific subset working on emissions and on reliability but we don't on price. It's all undoubtedly within the ether within the department, but I will look forward to the imaginative answer.

Mr Pratt : We have a lot of people very focused on it.

Senator ABETZ: I will look forward to the imaginative answer. Is anybody working on nuclear options in the department?

Senator DI NATALE: Tony Abbott!

Senator KENEALLY: I presume you mean nuclear energy!

Mr Pratt : I don't believe so.

Senator ABETZ: Right. Is anybody in the department working on HELE—high-efficiency, low-emissions—coal options? No.

Mr Pratt : When you say 'working on', there's no dedicated area that works on high-efficiency, low-emissions coal-fired power stations. Obviously, when issues come up, the minister may want a briefing, and the job of the department—

Senator ABETZ: Yes, but there's no specific node of people seeking to enhance the possibility of HELE or, indeed, nuclear as energy options for Australia? No.

Senator Birmingham: Nor within the department, I suspect.

Senator ABETZ: Mr Heferen was just shaking his head. That doesn't get recorded on Hansard. So the answer is no?

Mr Heferen : The answer is no.

Senator ABETZ: Thank you.

Senator Birmingham: I was just saying, Senator: nor, I suspect, is anybody particularly working in the department on any particular area of specific generation capability.

Mr Heferen : No. That's right.

Senator ABETZ: But are the people in the department busily working on providing subsidies for renewable energy and setting renewable energy targets?

Senator Birmingham: No. The government's policy is that the current Renewable Energy Target, which ends in 2020, as we discussed with the Clean Energy Regulator earlier, is the end of the Renewable Energy Target, and that there is no need for such subsidies in future.

Senator ABETZ: And there's nobody working on the administration of those targets—whether they're going to be achieved or not achieved, what needs to be done to achieve them?

Mr Heferen : The vast bulk of the work on the administration of the target is with the Clean Energy Regulator.

Senator ABETZ: Right—still funded by the taxpayer but in a different area of the total portfolio?

Mr Heferen : Sorry, are you asking whether the Clean Energy Regulator is funded by the taxpayer?

Senator ABETZ: Yes.

Mr Heferen : Yes.

Senator ABETZ: And that's in a different area that's still within the umbrella of the portfolio, Minister?

Mr Pratt : It's a separate agency but it's in the portfolio, yes.

Senator ABETZ: Yes. Good. Thank you. Do we know what the average retail power bills for households are, state by state?

Mr Heferen : Yes. Mr O'Toole can outline them.

Mr O'Toole : The average residential electricity bills are recorded by the AEMC in their retail pricing reviews, which are released every year. The last one, unfortunately, was for 2016-17, so we've got only estimates for 2017-18. Would you like the average bill or the average cents per kilowatt?

Senator ABETZ: Take that on notice. I don't want to delay the committee too long—

Mr O'Toole : Happy to provide that.

Senator ABETZ: by reading that list out. If you could please provide that—what it was for 2016-17 and what it is anticipated to be for 2017-18—that would be very helpful.

Mr O'Toole : No problems.

Senator ABETZ: The federal opposition has a policy for a 50 per cent Renewable Energy Target by 2030. Has any work been done as to the impact of that on pricing?

Mr O'Toole : No.

Senator ABETZ: All right. Have we done any work at all as a department on the impact of a 26 to 28 per cent Renewable Energy Target?

Mr Heferen : On price?

Senator ABETZ: Yes.

Mr Heferen : The definitive work, as far as we're concerned, is the work commissioned by the ESB. They got Frontier Economics—

Senator Birmingham: Which was not on our renewable energy target.

Mr Heferen : to do the work. That's on the 26 to 28 per cent reduction in line with the Paris Agreement.

Senator ABETZ: Yes, thank you, Minister.

Mr Heferen : Sorry, Senator. When you said that, I just took that meaning. The work done by Frontier for the ESB suggested that the price reductions compared to today would be, on average, $400 a year from 2020 to 2030.

Senator ABETZ: If that were to be increased, has any work been done as to if it were higher or if it were lower, or any other figures?

Mr Heferen : The department hasn't done any, and I don't know if Frontier did.

Senator ABETZ: If the department hasn't then that's fine, that's what I'm asking about. Are you able to advise what level of intermittent renewable generation the NEM grid is designed for?

Mr O'Toole : I don't know that it was designed for a particular level of intermittent generation but, I think, South Australia is an example of where things start getting a little unstable with the penetration.

Senator ABETZ: What cost will be associated with potentially needing to upgrade the grid for potential increased intermittent supply of energy?

Mr Heferen : At what level?

Senator ABETZ: If the amount of renewable intermittent energy is increased, one assumes that the problems to which Mr O'Toole refers to in South Australia might also be increased unless there is some greater investment in the grid to protect against that.

Mr Chisholm : This is exactly what the National Energy Guarantee is designed to address, to ensure that we have sufficient levels of firm dispatchable capacity in the market, to meet the reliability requirements that AEMO has determined region by region and then—

Senator ABETZ: Yes, but will that require an upgrade of the grid?

Mr Chisholm : The guarantee would help owners of assets, including thermal assets, to make decisions about upgrading their generation, and to make long-term decisions about investing in firm capacity.

Senator ABETZ: What about the grid? Will the grid need to be upgraded?

Mr Heferen : The Australian Energy Market Operator was commissioned with doing what's called an integrated system plan—often abbreviated to the ISP—and they're publishing that at the end of June. They've gone through extensive consultation with the transmission network providers. The point of that is to say in a future where there may be increasing proportions of intermittent renewable energy, what might be needed for the grid to enhance transmission to ensure security and reliability of supply? Because they're looking into the future, in essence it's genuine forecasting—given the future is unknowable—but they'll do their best guess, or best estimate, of saying, as there's more in large scale solar coming in what does that mean for the optimal transmission lines?

Senator ABETZ: Tell us what's in the report.

Mr Heferen : I'd love to know but I'm not—

Senator ABETZ: I will have to await an answer for that for when the report is released next month.

Mr Heferen : It's scheduled to be in June and, hopefully, it will be on time.

Senator ABETZ: And on budget. Thank you very much.

Senator URQUHART: Is the department aware of the policy advice to a government assistant marked 'another analysis AEMO has performed on the impacts of the closure of the Liddell power station'?

Mr Heferen : Yes.

Senator URQUHART: Does AEMO, in any of its advice or analysis, call for the extension of the Liddell power plant?

Mr Chisholm : AEMO's focus in that analysis is on the implications of the exit of that amount of generation from the NEM. They're focused on what sort of replacement capacity would be needed should that amount of generation capacity be withdrawn, as proposed by AGL. They have looked at what has already been committed, as of March when that report was provided, and what might be proposed longer term. Their focus is, as was requested by the government, on what are the implications of withdrawing that amount of generation capacity from the grid. They've been informed also by more recent withdrawals of large thermal capacity from the grid, including Hazelwood.

Senator URQUHART: Does AEMO in any of its advice call for the public acquisition of Liddell power station?

Mr Chisholm : Not that I'm aware of, no.

Senator URQUHART: What does AEMO recommend the federal government do regarding the closure of Liddell?

Mr Chisholm : AEMO's consistent advice or view has been that we need appropriate mechanisms in place to ensure that signals are given to investors to invest in dispatchable flexible capacity to replace capacity that is withdrawing from the market. Of course, AEMO is a member of the Energy Security Board and is involved in designing the guarantee, which, particularly with respect to the reliability component, is designed to help address that. But, in addition to that, there are additional mechanisms, many of which were outlined in the Finkel review on the future security of the National Electricity Market, such as the need for a strategic reserve and greater use of demand response mechanisms to meet the needs of the system.

Senator URQUHART: Does AEMO point to any other risks regarding electricity reliability in its advice to government?

Mr Chisholm : I think so, yes.

Senator URQUHART: What are they?

Mr Chisholm : This goes to the question of the sort of benefits that having that capacity in the system provides and is related to the points made earlier that, when the grid becomes more reliant on larger amounts of variable renewable energy, you need some sort of capacity to meet the peaking challenges that are increasingly characteristic of the grid and of the system. Again, as I said earlier, AEMO's advice has been that, without the replacement capacity to meet that need, you're running the risk that you'll have more unserved energy in the system.

Senator KENEALLY: Hasn't AEMO said that all three stages of AGL's plan would deliver sufficient dispatchable resources to fill the identified 850-megawatt resource gap?

Mr Chisholm : If committed. At the point of the advice that AEMO provided, I think only 100 megawatts had been committed. Is that right, Mr O'Toole?

Mr O'Toole : Yes, that's right. They committed to the 100-megawatt expansion of the Bayswater power plant, and they've just recently committed to the 250-megawatt gas turbine in Newcastle, so two parts.

Senator Birmingham: But that still leaves a significant gap.

Mr O'Toole : It does.

Senator KENEALLY: But AEMO hasn't called for the public acquisition of the Liddell power station as a way to fill that gap?

Mr Chisholm : No. AEMO's task was to focus on what would be needed if that capacity left the system—left the market.

Senator Birmingham: That's what would be needed in terms of replacement capacity, not necessarily the actual generation capability that delivers that replacement capacity.

Senator KENEALLY: Has AEMO also said the best thing the government can do to mitigate any reliability risks from Liddell would be to implement a credible energy policy to support investment in the sector?

Senator Birmingham: I trust you're not pretending that that's a direct quote from AEMO, Senator Keneally.

Senator KENEALLY: No, I'm not. I'm just saying that they have said the best thing the government could do—

Mr Pratt : I think they are agreeing with the National Energy Guarantee.

Senator Birmingham: Yes, indeed. Given the head of AEMO is a member of the Energy Security Board, who recommended the National Energy Guarantee, which the government has adopted as policy and is working to implement, we believe AEMO is supportive of our continued work in that regard.

Senator KENEALLY: Thus, there isn't a need for a public acquisition of Liddell Power Station, is there?

Senator Birmingham: AEMO has identified that there is a shortfall created by the closure of Liddell. Whilst AGL have outlined a plan that they say they will implement, they are not yet fully financially committed to that plan. The government's been clear that, if AGL are not going to entertain the sale of Liddell, they ought to commit fully to that plan, and fully commit financially to that plan, to provide the type of energy security and reliability that is required. The government does find it passing strange that AGL can ascribe a zero value to the site yet refuse to sell it for $250 million plus on-costs, but that is a commercial decision that they have to justify to their shareholders.

Senator KENEALLY: It sounds like you're concerned, Minister, that AGL may not commit to the plan that it's outlined to AEMO.

Senator Birmingham: AGL has taken a decision not only to say it is closing the plant but, although having floated the idea of potentially selling it, now to refuse to entertain an offer that appears to be above the book value that they ascribe to the site. That is, as I say, a commercial decision of theirs. The government's expectation is that energy security and reliability be achieved, and the government has been very clear that, through our policy settings and steps that we've taken, we will not allow any shortfall in the domestic energy market to be realised from 2022 onwards.

Senator KENEALLY: So you're confident that the NEG and other government policy settings will help ensure that any potential shortfall may be met even if AGL doesn't follow through on its plan?

Senator Birmingham: We call on AGL to do the right thing and to financially commit to all aspects of its plan which it is using to justify and explain how it is that security and certainty can be brought to the market notwithstanding the analysis of AEMO.

Senator KENEALLY: AEMO seems to accept that AGL can deliver the capacity that is needed.

Senator Birmingham: No, that would be verballing AEMO.

Senator KENEALLY: In fact, I just read their quote where they made clear that the capacity is there.

Senator Birmingham: AEMO has identified a potential shortfall. If AGL's full plan is implemented, that would eliminate the potential shortfall, but of course we're yet to see the full financial commitment from AGL to deliver on that full plan.

Senator KENEALLY: Let me quote AEMO's advice to government on the Liddell closure. This is publicly available advice:

We noted that in all scenarios of this analysis AGL's proposed plan (which also includes the addition of other proponents' generation that have reached committed status), the economic planning standard is forecast to be met.

Then they go on to say:

In its entirety, all three stages of AGL's plan would deliver sufficient dispatchable resources to fill the identified 850 MW resource gap.

And then they go on even further to say:

The Commonwealth's request and AEMO's assessment of a reliability gap represent the type of challenge that the National Energy Guarantee is intended to solve.

Mr O'Toole : Senator, if you look earlier in the letter, AEMO's advice highlights that under scenario 1, which is where AGL has only committed to the first stage of their plan—I just remind you they've only committed two parts of the first stage so far—'there remains a resource gap of around 590 megawatts, exposing the power system to a higher risk of involuntary low shedding'.

Senator KENEALLY: Minister, given that this gap exists and you don't appear to be confident that AGL will meet it, is the government prepared to support directly a coal-fired power station?

Senator Birmingham: No, it's not the intention of the government to get further into the energy generation business beyond the areas that are currently publicly owned—Snowy Hydro. It is the government's expectation, though, that generators will meet their responsibility. In this case, AGL has made certain commitments in terms of how it believes shortfall will be met, and the government expects AGL to act on those commitments and, as quickly as possible, to bring certainty to the market in terms of the financial commitment that it needs to make to see through those plans.

Senator KENEALLY: Thank you.

Senator URQUHART: I want to go back to the advice that AEMO provided, which states:

… the capability of the power system to meet reliability requirements in all periods of the future are still subject to the risks inherent of our aging generation fleet …

In addition, yesterday analysis was released by the Australia Institute which states:

During the February 10 heatwave day in NSW in 2017—

Senator Birmingham: The Australia Institute?

Senator URQUHART: Yes.

Senator Birmingham: I've got a bag of salt with me.

Senator URQUHART: Sorry?

Senator Birmingham: I said I've got a bag of salt with me, not just a grain.

Senator URQUHART: It states:

During the February 10 heatwave day in NSW in 2017, extreme temperatures led to very high demand and a series of breakdowns at coal and gas power plants. In all, 20% of gas and coal power plants in New South Wales were unable to deliver power at the critical peak interval leading to load shedding at the Tomago Aluminum Plant.

On that day two 500 MW generators at Liddell were out of action due to boiler tube leaks, a problem associated with old … coal power plants. This made Liddell the largest single contributor to the load shedding at Tomago Aluminum plant.

So it is the case that the reliability of ageing coal power stations, especially during heatwaves, is a major risk to the reliability of supply in the national energy market?

Mr Chisholm : Under conditions of extreme heat in particular, the operator will use every tool at its disposal to minimise the risk of load shedding, and those challenges arise for all forms of generation during those conditions. As I think I might have alluded to earlier, the really important thing we need to do is get the policy settings clear, which is what the guarantee is focused on, to ensure that owners of those assets have certainty and can invest in sufficient upgrades and improvements to keep those assets operating when we need them and to ensure that the right replacement capacity is being invested in as we go forward.

Senator URQUHART: But, in terms of reliability of supply in the national energy market, is it a reasonable argument to say that ageing coal power stations during heatwaves, particularly when the pressure's on, are a risk to that reliability?

Mr Chisholm : They can be, but again you might have a very hot day and very low wind conditions, at which point all of your wind generation is not going to be helpful either. Likewise, you might have challenging weather conditions but very small amounts of solar energy available. So the challenge for the operator is to co-optimise all forms of generation available, including demand response, which is something they do through their reliability and reserve trader mechanism. We have ageing infrastructure and ageing assets. We need to replace assets as they leave the market. We have that challenge now with the exit of Hazelwood. It's had a very significant impact on the capacity of the market to meet challenging conditions. So AEMO's been very focused on the lessons that we've learned from seeing such a large amount of generation capacity leave the market so quickly. So getting the investment settings right so that we can invest in upgrades to those assets and replace those assets is the key policy challenge for energy at the moment.

Senator URQUHART: Given that statement that you've just made, can you explain how extending the life of ageing and increasingly unreliable coal power stations is a better approach to addressing reliability risks than their replacement with the latest generation technology? Isn't that approach akin to improving the reliability of transport by servicing, say, a 1968 model car rather than replacing it with a modern alternative?

Mr Chisholm : We have a transition underway in the energy system all around the world at the moment. Larger amounts of variable renewable energy are being invested in. It varies across different regions and different parts of the world. Some areas have large amounts of solar. Some have wind. Some have biomass. But we also have lots of thermal energy. In Australia in particular, we have a very large amount of thermal energy. We are very reliant on that energy, particularly coal. We don't have a lot of choices. We don't have nuclear generation. We don't have very large amounts of hydro like other countries. We have large amounts of coal, both black coal and brown. We have large amounts of rooftop solar and increasingly large amounts of wind, and as we go forward we'll see more grid-scale solar as well.

We need to make the best use of the generation capacity that we have available to us. The rapid exit of any of those forms of generation from the system, particularly large synchronous thermal generation provided by coal or gas, creates incredible problems for the operator. As it exits the system, if it's not planned and not coordinated, you would see larger instances of load shedding throughout the system because those forms of generation provide, as I said, synchronous generation and reliable generation for the operator, particularly at times when the variable generation isn't as reliable, such as in conditions of low wind or later in the day, as the sun goes down, when you can't rely so much on solar generation.

Mr Pratt : I don't think it's an either/or situation. There is a case where you can extend ageing infrastructure for a further period as new investment comes in, and for us that would be particularly useful in the transition to when Snowy 2.0 becomes available.

Senator URQUHART: I'm being wound up, but I've just got one quick one to finish off this group. AEMO and others have identified the older, unreliable coal power stations as a reliability risk. You've talked about thermal energy and solar. What is the government doing to support the replacement of those increasingly unreliable, old coal power stations?

Senator Birmingham: There's a broad number of reliability risks that occur from time to time in the energy generation market. Mr Chisholm took you through some of the range of variables that can impact on wind, solar and thermal generation options. At a macro level, what the government is doing is pursuing the National Energy Guarantee, with the reliability guarantee as the core component of that, to ensure that there is reliability and dispatchable energy for Australian households and businesses when they need it. In terms of other variable individual areas of support, you've heard from the CEFC and ARENA about some of the different projects that they're supporting, which are all on the public record.

Senator URQUHART: So, the macro level is the NEG, effectively?

Senator Birmingham: The government's policy is to implement the NEG. This is the first time that an Australian government has sought to implement a policy that brings together outcomes to ensure reliability as well as meeting emissions obligations and to do that in a mechanism that achieves the lowest possible price.

CHAIR: Senator Keneally has one question, and then we will break.

Senator KENEALLY: I just wanted to go back to this identified gap the minister has highlighted that could exist if AGL does not commit to the three stages of its plan. In terms of the reliability standard under the NEM—that has not been triggered, has it, as a result of AGL's closure of Liddell?

Mr Chisholm : It hasn't closed yet.

Senator KENEALLY: Their forecast closure.

Senator Birmingham: And it isn't scheduled to for another four to five years.

Senator KENEALLY: Yes, but the reliability standard goes out 10 years, correct? We discussed this earlier—a 10-year forecast.

Mr O'Toole : The reliability standard is basically 0.002 per cent of delivered energy, so it's done on a year-by-year basis. It's effectively two megawatt hours per 100,000 megawatt hours delivered. Because that power hasn't been delivered yet, we won't know if it's breached.

Senator KENEALLY: But there is a 10-year forecast, or a ten-year time line, that the NEM considers in relation to the reliability standard, yes?

Mr O'Toole : That they forecast—yes.

Senator KENEALLY: Has there been any change to that forecast as a result of the forecast closure of Liddell?

Mr O'Toole : We'd have to take that on notice. I'd have to check that.

Senator KENEALLY: Thank you.

CHAIR: Excellent. We will suspend for 15 minutes and return at five past four to continue with energy.

Pr oceedings suspended from 15:49 to 16:06

CHAIR: We're continuing on with 4.1, Energy.

Senator RICE: I want to ask some questions about Minister Frydenberg's announcement that the government will be assessing Australia's liquid fuel security, with the review to be completed by the end of the year. Start up with some details about what this review is going to look like.

Mr Sullivan : The government's committed, as part of the budget, $12.8 million over the next six years to undertake national energy security assessments. These will look at both liquid fuel and electricity and gas in an integrated fashion. The first of those is due mid next year.

Senator RICE: Sorry, what's due mid next year?

Mr Sullivan : The national energy security assessment. Ahead of that the government's announced that, by the end of this year, there will be a liquid fuel security assessment, and that's basically bringing that a little bit more up to speed in terms of the amount of work that's being done on gas and electricity. Obviously that's been a key focus over the last two years. So the liquid fuel assessment will be an interim product by the end of the year, and then mid next year we'll look at liquid fuel, energy, electricity and gas together.

In terms of the liquid fuel assessment, that will be looking at trying to do two things. Basically, it will look to identify whether the government should take further steps to ensure Australia's domestic fuel supply is reliable. Secondly, it will also help inform Australia's plan to return to compliance with our International Energy Agency obligation by 2026.

Senator RICE: What are the terms of reference for the inquiry?

Mr Sullivan : As the funding for that process is being made available in the budget, we're just kicking that off. In terms of how that will be undertaken and also the process, we've just created an internal project board to help steer that. The first meeting of an interdepartmental committee will happen over the coming weeks. The elements of what will be inside the body of that security assessment will then be worked through in terms of advice to the government and agreeing that. But the funding becomes available from 1 July.

Senator RICE: How much funding is specifically on the review for this six-month period?

Mr Sullivan : I can give you the 2018-19 total expenditure, which is $3.8 million, but that will include both the liquid fuel assessment and the first energy security assessment.

Senator RICE: What proportion of that is expected to be the liquid fuel assessment?

Mr Sullivan : There's some flexibility with that. I'm not trying to obfuscate. That will depend in part—the liquid fuel assessment will set the frame for how the national energy security assessment will be set out as well, so a lot of that is about acquiring data, technical advice, consultancies, undertaking the consultation process, staffing and resourcing. We're currently staffing that up at the moment. In terms of the relative splits, I'll have to take that on notice. We've got some detail on that, but there will be some flexibility as well in terms of how much is spent in the first six months versus how much is spent over the second—

Senator RICE: What's the structure expected to be? Will it have a chair? Will it have an independent panel running it?

Mr Sullivan : I understand your question, and that's still being worked through. That also will be subject of our advice back to the minister, so I don't want to get ahead of the minister and the government. But our early thinking on that is that we'll need to have targeted consultation and get technical expertise around the liquid fuel security component. Where there's an independent panel overseeing that, it may be that that probably will be in place for the energy security assessment—the broader assessment that's due mid next year—but, again, that's still subject to our advice to the minister. I don't really want to go into any more detail than that.

Senator RICE: In terms of consultation, you were saying targeted consultation? Is there the expectation that there will be broad, open consultation?

Mr Sullivan : The expectation around the energy security assessment will be open consultation. But in terms of the targeted liquid fuel security assessment, given the time frames, there will consultation but the degree to which that is broad-scale public consultation is yet to be determined.

Senator RICE: And whether you'll be calling for submissions—is yet to be determined?

Mr Sullivan : That's right. As I said, we're in the early stages. We've got a design phase and we've got an announcement in terms of the budget and confirmation of funding. We're now going through those more detailed planning phases with respect to how that will be rolled out.

Senator RICE: What's the time line when you're expected to have completed the design phase and be able to answer these questions about the structure?

Mr Sullivan : Perhaps Ms Bennett will be able to help in terms of the steps we have got ahead of us.

Ms Bennett : In terms of the time frames, we're scoping within the next month or so. As Mr Sullivan mentioned, we are planning on targeted consultation. We have, however, via our website set up a link for those that may be interested in contributing to the study. We've set up an inbox, so there is an opportunity to make sure that stakeholders that have an interest in the liquid fuel assessment are able to contact us.

Senator RICE: If you've set that up, will submissions that people make be publicly available?

Ms Bennett : We're still working through that. So because of the time frames involved, we're still yet to decide whether or not there will be sort of a discussion paper followed by a consultation, because it's quite a condensed time frame. It's more likely that we will develop something and have targeted consultation with those that are interested.

Senator RICE: If you're calling for submissions and the submissions are to be public, you'll need to be informing people of that if they contribute.

Ms Bennett : Yes, that's exactly right. If they were to be public we would make sure that that's known.

Senator RICE: But you are actually accepting submissions if you've set up a link on your website already.

Ms Bennett : We've asked for those that may have an interest in the assessment to contact us. We haven't set up a formal submission process.

Senator RICE: Okay. So the terms of reference are still in flux as to exactly what the breadth is going to be?

Mr Sullivan : That's correct. This is a process that involved multiple agencies across the government, and so we expect to bed those down over the coming weeks.

Senator RICE: Do expect it to be looking primarily at the opportunities for increasing fuel stocks, or will it be considering demand reduction for liquid fuels or substitution of renewable fuels for fossil fuels?

Mr Sullivan : I think that, if you're pursuing me on the anticipated scope of the review, it's a review that is looking ahead. It's not solving an immediate crisis; it's looking ahead in terms of our security. So it will take into account electric vehicle penetration and a whole range of things.

Senator RICE: So it is expected then. That's essentially substitution of different fuels compared to our current fuels, and you expect to take that into account.

Mr Sullivan : Yes.

Senator RICE: How will the review interact with the work that's being done on vehicle efficiency standards given that the introduction of vehicle efficiency standards will result in the reduction of fuel use when we have more efficient vehicles?

Mr Sullivan : That will figure prominently in terms of being part of the input to the liquid fuels security review by the end of the year.

Senator RICE: At the moment, the vehicle efficiency standards work seems to have hit a road block. We haven't heard anything of it for the last nine months since the government's draft model went out to stakeholders. Is it expected that, in terms of the final report of this review, you'd need to have a final understanding of what the government's vehicle efficiency standards are going to be as well?

Mr Sullivan : It will take into account what's been decided and whether there's policy certainty around that.

Senator RICE: But what if that hasn't been decided? That's the point that I'm making. Certainly asking about vehicle efficiency standards in the rural and regional affairs and transport committee, it was very unclear when government is expecting to make a decision on those vehicle efficiency standards.

Mr Sullivan : Again, I won't hypothecate as to the time frame for that, but obviously fuel efficiency standards have an impact on the amount of fuel that will be required in our future. Ideally, you want as much information as possible in terms of what the outlook looks like, particularly for those things that will affect demand.

Senator RICE: So it would be helpful for your review to have a decision made on vehicle efficiency standards by the government within the period of time of the review.

Mr Sullivan : But it's not going to drive that.

Senator RICE: No. But you agree it would be helpful.

Mr Sullivan : There is a whole range of things that would be really helpful in terms of getting clarity. There is a range of projections around electric vehicle penetration. It's going to be difficult to—

Senator RICE: Exactly. We don't know what the electric vehicle penetration will be. It depends a lot on government mechanisms that are put in place. But certainly that's something that's under government's control in terms of when a decision is made on the vehicle efficiency standards. It sounds to me—and I'm seeing whether you agree—that it would be useful for your review in fuel efficiency to know where the government has landed on vehicle efficiency standards?

Mr Sullivan : As I said, I'm not driving an outcome that will give you a sense that that's critical to the fuel security review. Sure, as I said, the more things where we have a sense of narrowing down what the range is in terms of potential future demand options are, the better off we'll be.

Senator RICE: Do you expect to be doing economic assessment and economic modelling of the mutual benefits and co-benefits of fuel demand reduction compared with increasing supply?

Mr Sullivan : That will be a matter for the scope. I think part of that, as Ms Bennett said, is that we've got a limited time frame and we're trying to set up a way of doing energy security assessments, road testing that through the liquid fuel assessment and then taking that through to the broader energy security assessment. It may be that we have an interim product around the liquid fuel security as well given that it is an interim step in the broader package of our energy security assessment task.

Senator RICE: Within the terms of reference, are you going looking in an integrated way at the potential benefits of not only increasing fuel security but reducing our carbon pollution from transport?

Mr Sullivan : I think it's not the potential benefits. I think we're talking here about what Australia's reliability outlook is with respect to fuel security. So the potential economic modelling you talked about is really what the cost is around necessary stocks for Australia and the stocks that we held domestically. That comes with an impost and a cost, and we're looking at what the best way is to position Australia to have a secure and reliable stockholding of fuel stocks?

Senator RICE: Yes, but is it going to consider in an integrated way? It's clearly connected. You've got the opportunity to have the mutually beneficial aim of also reducing our carbon pollution from transport given that transport is now 20 per cent of our carbon emissions. It is a commitment from government to be reducing our carbon pollution in line with our Paris targets. Is transport going to be required to play its role as a sector in those 26 per cent to 28 per cent reductions?

Senator Birmingham: The government will, over the period of time all the way through to 2030, be taking policy decisions to make sure that Australia meets its targets. You're right in relation to transport energy that, of course, there is a process underway. You've just been questioning where the most recent RIS in that space was released—I believe that was earlier this year. And the government is working through some of those issues with relevant stakeholders.

Senator RICE: But that was only about fuel efficiency. There's a range of ways to reduce our carbon pollution from transport which interact a lot with fuel security, and so it would seem to me that it would be an opportunity to be doing both of those at once.

Senator Birmingham: Indeed, there are a number of ways. Vehicle emissions are just one. Investment in more efficient infrastructure that reduces congestion is also one way.

Senator RICE: Will the review be looking at issues of mode shift in reducing demand? Is that expected?

Mr Sullivan : I think I could answer that, in part, by saying that using electric vehicles is an example.

Senator RICE: Yes, that's one example, but in terms of the other way of reducing mode shift away from single occupant—fossil fuelled vehicles to public transport to active transport. Is that getting to be within the range of things being considered by the review?

Mr Sullivan : Where there are policies in place they will be taken into account, noting that this won't make recommendations around climate impacts or mode shift. In the first instance it's really about our fuel security.

Senator RICE: But they're totally integrated!

Mr Sullivan : And parts of those, in terms of mode shifting and trends that are currently occurring with that, will be taken into account, rather than I think where you're leading me to, which is: will it make recommendations around the benefits of changes with respect to transport policy and modal transport regimes? That's not the intention of the scope of the review. The scope of the review is still, given the time frame, very broad and a challenge in its current form.

Senator RICE: With all respect, it seems that it's actually quite narrow if it's not going to consider the potential of improving our fuel security through reducing demand there.

Mr Sullivan : I think that's not what I said. I think that where there are—

Mr Pratt : Can I summarise? I think where we've got to is that we've not quite landed the terms of reference yet so we don't even know exactly how the assessment is going to play out. We certainly don't know what the outcome of it will be at this stage. But your point about demand reduction potentially having the dual benefits of increasing security if we need less, and at the same time having emissions benefits, is quite correct. So it's quite possible that the outcome of the assessment could touch on those things. We just don't know yet.

Senator RICE: Okay, thank you.

Senator URQUHART: Can you tell me when the decision was made that the electricity sector's share of the government's 26 per cent emission reduction target would be a pro rata share of 26 per cent?

Mr Pratt : I believe that was when the National Energy Guarantee was announced last year.

Senator URQUHART: Was a pro rata sectoral division of emission reduction targets the orthodox approach to setting sectoral emission reduction goals prior to this decision?

Senator Birmingham: I'm not sure what you would define as an 'orthodox' approach there, Senator?

Senator URQUHART: Well, the normal approach. Was pro rata sectoral division to setting sectoral emission reduction goals the process prior to this decision?

Senator Birmingham: A number of different policy responses have been used to meet both Australia's Kyoto 1 and Kyoto 2 emissions reduction targets. Those policy responses have brought together a range of actions that haven't necessarily started with the type of target setting, the nature of which you have suggested we'd do would be the case.

Senator URQUHART: Okay. So I take it that it's not the usual method?

Senator Birmingham: No, I think you're pretending—

Senator URQUHART: I don't want to put—

Senator Birmingham: The false premise of your question is that there is some orthodox and consistent approach in meeting the emission reduction targets. To meet Kyoto 1 targets, a number of different policies were applied across different parts of the economy; to meet Kyoto 2 targets, a different set of policy responses have been applied; and to meet the new Paris targets, the government is building an appropriate set of policy responses to ensure that they are met.

Senator URQUHART: Okay. I take that as 'no'.

Senator Birmingham: You take it however you want to, Senator. My words are on the Hansard record, and I stand by my words rather than how you take it.

Senator URQUHART: But basically you're saying there hasn't been an orthodox approach to setting sectoral emissions? You said it varied.

Senator Birmingham: It has varied over time. It obviously varied when the previous Labor government sought to put in place a carbon tax. There have been a lot of variations.

Mr Pratt : Senator, perhaps we could also explore that this evening under outcome 2.1?

Senator URQUHART: Sure.

Senator Birmingham: Good point.

Senator URQUHART: Did the department perform any whole-of-economy analysis to inform the decision about a pro rata emission reduction obligation for electricity? Sorry, but I'm not sure who to look at.

Senator Birmingham: Now you're almost definitely straying into 2.1, in terms of the total task of meeting the Paris targets.

Senator URQUHART: This comes under 2.1, does it?

Senator Birmingham: Yes.

Senator URQUHART: Right. I'll keep going, and just let me know if I end up in 2.1. Have emissions in the electricity sector fallen or risen since 2005, which was the base year for the 26 per cent target?

Mr Pratt : I think 2.1 is the best place to deal with that outcome.

Senator URQUHART: Okay. Just let me have a look. I'll flick off a few questions to 2.1, but I've got a couple more in this section. I'll just go through them and you can tell me if they're in 2.1. What policies does the government have in place to lower transport and manufacturing sector emissions?

Mr Pratt : 2.1.

Senator URQUHART: I have some questions around Snowy Hydro. Did the government recently acquire a 100 per cent stake in Snowy Hydro?

Mr Pratt : Not yet.

Senator URQUHART: Not yet? Is the transaction now complete?

Mr Pratt : We expect it to be complete by the end of the financial year.

Senator URQUHART: Okay. Has the department performed any analysis or advice on options to partially or fully privatise Snowy Hydro?

Mr Pratt : The minister answered that question earlier today. No.

Senator URQUHART: Okay. Has the department performed any analysis of any price impacts of the full Commonwealth acquisition of Snowy Hydro?

Mr Heferen : The department hasn't, but Snowy Hydro itself has. It spoke at length this morning about the work done by its consultants to inform its feasibility and, in that, there was work done on the estimated effect.

Senator URQUHART: But the department hasn't done any?

Senator Birmingham: That relates to the feasibility and pricing as it relates the implementation of Snowy 2.0. The Commonwealth acquisition of Snowy Hydro would not be expected to have any price implications. Snowy Hydro will continue to operate as a government business enterprise, just with one owner rather than three.

Senator URQUHART: Yes, but I think Mr Heferen said the department hasn't performed any analysis but Snowy Hydro has.

Mr Heferen : That's right.

Senator Birmingham: Well, depending on what you're actually asking.

Senator KENEALLY: I have some questions about network companies overcharging for tax liabilities. Is this the correct area to ask those questions?

Mr Pratt : Yes.

Senator KENEALLY: It recently came to light that network companies may have been overcharging customers for their tax liabilities by up to $400 million per year. When did the department become aware of this issue?

Mr Heferen : Just in relation to the overcharging—it's quite a complicated story, so maybe if I start and then I'm sure Mr Chisholm or Mr O'Toole will fill in the gaps. At the moment the revenue that the distribution transmission companies can collect from their customers, there's a pretty complex way of determining it. The AER—the Australian Energy Regulator—will look at the asset base and look at the return on capital; they will then provide an allowance for the corporate tax that they would pay. They then provide an appropriate adjustment for the value of imputation credit for the shareholder. As it turns out, since the tax affairs of corporations have become a matter of public record, we've been able to get people to have a look at the tax paid, and it appears that the tax paid is at odds with what the tax allowance would provide. But that tax allowance is not something that's self-assessed by the company; it's something that's determined in the law and the rules both for electricity company transmission distribution and for gas company transmission distribution. So when people had a look and asked, 'Does this match up?' they found it didn't.

Senator KENEALLY: When did that transparency mechanism come into place?

Mr Heferen : The transparency mechanism?

Senator KENEALLY: For corporate tax.

Mr Heferen : I don't recall the actual year. That's probably best directed to folk in the Treasury. But on the basis of that, we had a look and could see the discrepancy. We discussed it with our colleagues at the Australian Energy Regulator, and then went through the process of trying to clarify with the tax office what the actual amount paid would be for a range of companies. This is a very complicated thing, because sometimes the tax-paying entity, and particularly a consolidated group, is not necessarily the company that is having the determination done for the transmission and distribution revenues. It seems fairly clear that there is a difference, and hence the announcement by the government—or the letter from the minister to the regulator, the AER—to request it to look closely at this and determine what that difference might be, and report to the council. If there is this difference, then the question would be: what should the council do to rectify that to ensure that the money recovered from customers doesn't reflect the cost that people thought the transmission distribution companies were carrying but in fact weren't.

Senator KENEALLY: Have you finished Mr Heferen?

Mr Heferen : I think so. I could go on!

Senator KENEALLY: It did end rather abruptly, so I wanted to check. I understand that both the Victorian and the South Australian governments wrote to the federal government about a possible overcharging of this type at least two years ago, and that the minister at the time, Minister Macfarlane, responded. Would the department have advised the minister in responding to these states at that time?

Mr Heferen : I think the sequence was the Victorians were actually asking about the tax treatment of grants provided. So it wasn't actually on point. My understanding is Mr Koutsantonis, the then South Australian minister, wrote on point two years ago. I think the council asked a working group to have a look at the issue, and that was led by Victoria. My understanding is that nothing came forward out of that, and there was a lapse of a period of time. When some new officers happened to move into the relevant roles, being the person to my right and some to my left—not the secretary, but Mr Chisholm—and then we quite by accident came across the issue and decided to pursue it further.

Senator KENEALLY: Let me see if I can understand that. The letter that was on point, to use your phrase, from South Australia was sent on 6 March in 2015.

Mr Heferen : Correct.

Senator KENEALLY: It was a response undated from Minister Macfarlane, though he does thank Minister Koutsantonis for his letter of 26 February 2016. That response essentially says, 'This is not my responsibility,' and points the minister to the Australian government's tax and review process, with the release of its tax discussion paper in March 2015. So nothing was done by the minister at that time. You're saying now that—

Mr O'Toole : Senator, can I draw your attention to the second paragraph there. As Mr Heferen said, it says, 'I understand officials will investigate this issue further on behalf of the Energy Council.' That was the working group Mr Heferen referred to.

Senator KENEALLY: Which letter are you referring to?

Mr O'Toole : This is the response to Mr Koutsantonis.

Senator KENEALLY: Which sentence are you pointing to?

Mr O'Toole : The second paragraph and the last line, 'I understand officials will investigate this issue further'.

Senator KENEALLY: We must have different letters. Could you table that?

Mr Heferen : We have one dated 4 June 2015 signed by—

Mr O'Toole : Certainly.

Senator KENEALLY: I have a letter here that is from Ian Macfarlane and on COAG Energy Council letterhead, and it does not contain that sentence.

Mr Heferen : This one does, and it's underlined.

Senator KENEALLY: Is it possible to table that letter?

Mr Pratt : Sure, it's on public record.

Senator KENEALLY: That would be most useful.

Senator Birmingham: That's fine. Senator, I'm advised that in this process, as you heard, Minister Macfarlane was written to in his capacity as chair of the COAG Energy Council. As part of the council's work, as is not unusual in a COAG process, Victorian officials, on behalf of the council, undertook the work. However, mid-last year, at Minister Frydenberg's request, this department began to look further into some of the related issues, given some of the lack of progress Victoria had made.

Senator KENEALLY: Minister, I'm not disputing that Minister Frydenberg's review is underway. I'm trying to understand why the matter wasn't acted upon when it was raised in 2015. It seems we have some confusion about what Minister Macfarlane may or may have not written back to Minister Koutsantonis. I look forward to receiving that document. Perhaps once I have I will return to this line of questioning either here or on notice through that process.

CHAIR: You're okay? Excellent.

Senator KENEALLY: I didn't say that, Senator. I am content to end my questioning at this time.

CHAIR: I interpreted the silence as acceptance in the eyes of the law. Senator Stoker?

Senator STOKER: I have a question about AGL's plans to close Liddell Power Station and the potential impact of that on the network. AGL has indicated that it plans to close Liddell Power Station and replace it with a mix of a small 200-megawatt heating gas plant and renewables. In so replacing, does any risk exist to the stability and the overall operation of the network?

Senator Birmingham: We have canvassed some of these issues. We can go back over aspects of them.

Senator STOKER: I beg your pardon, having missed most of it.

Senator Birmingham: AEMO, as officials have outlined, have undertaken work that identified a potential shortfall from the closure of Liddell and that it would be necessary for all of the commitments AEMO have made to be actually delivered and financially committed to, which they have not done yet, to bridge that shortfall. Obviously, the government's work in terms of development of the National Energy Guarantee and the reliability guarantee aspect is in part designed to drive the market to ensure that that shortfall isn't realised. Mr Chisholm may wish to add further on some of the points that were made earlier.

Mr Chisholm : Just to reinforce that, as we discussed earlier and as the minister has outlined, AEMO's advice is focused on the risks associated with the exit of I think a thousand megawatts of capacity associated with AGL. The focus of their advice has been on the gap left from those investments that haven't been committed yet. So, at the time of AEMO's advice, only the Bayswater upgrade had been committed, which was a hundred megawatts. Since that time AGL has also committed to a gas peaker plant, which I think is an additional 250 megawatts. Hence the focus now is on ensuring that the remainder is also met through the replacement capacity that's been committed to by AGL. So that's the focus.

Senator STOKER: Thank you very much.

CHAIR: Did you have anything, Senator Keneally?

Senator KENEALLY: At this time I'm going to wait until I can put some questions on notice.

[16:42]

CHAIR: That concludes our consideration of program 4.1, Energy. We will move to program 1.4, Conservation of Australia's heritage and environment. Welcome officers. We will get straight into questions, starting with Senator Urquhart, who has a brief bracket, followed by Senator Dodson, and then Senator Rice.

Senator URQUHART: Will the department detail the main expenditure plans for the new funding committed to heritage conservation in the federal budget?

Mr Oxley : I assume you are referring to the establishment of the new heritage grants program that was created through the amalgamation of the former Protecting National Historic Sites program and the other stream of funding that had previously gone to the Australian Council of National Trusts. In broad terms, we are now at the point where, the government having made the decision to establish this new grants program, we move into the process of developing the guidelines for the program.

Senator URQUHART: Sorry, I missed that last bit.

Mr Oxley : We are now embarking on the process of developing the guidelines for the program, and at some time in the new financial year, there will be a public call for applications for grants under that program.

Senator URQUHART: So you don't have the details of the main expenditure plans at the moment?

Mr Oxley : No. We didn't have a decision or a program until the budget process concluded. So we will now be scoping the delivery of that grants program, which has a value of approximately $5.3 million a year.

Senator URQUHART: Will the department detail the changes to heritage listings for the next financial year as a result of that budget, or can you not do that either—or can you?

Mr Williams : That funding is proposed to go to national heritage listed sites. So it won't directly affect the listing of sites. It goes to all sites that are on the National Heritage List. Unlike in the past, when the funding went to historic listed sites, it will be available to all sites on the National Heritage List.

Senator URQUHART: So that's effectively what the change is?

Mr Williams : Yes.

Senator URQUHART: Can you update us on the heritage status of the Murray-Darling Basin. When was the listing submitted?

Mr Williams : The Murray-Darling Basin isn't a national heritage listed site and has not been nominated.

Senator URQUHART: I note that the minister has listed Melbourne's domain parkland and memorial precinct. Of course it is worthy. How long was that site on the list?

Mr Williams : That site has been on the list since February this year. It was emergency listed by the minister in February 2017. During that 12-month listing, consistent with the statutory provisions, it was assessed by the Australian Heritage Council. A recommendation was made to the minister and he decided in February to keep that listing on the National Heritage List as a permanent feature.

Mr Oxley : I might briefly elaborate on the point that Mr Williams has made. That precinct was included on the National Heritage List at the beginning of last year under the emergency listing provisions of the EPBC Act.

Senator URQUHART: That was February 2017?

Mr Oxley : Yes. And then we went through the process that Mr Williams outlined, which confirmed its place on the list.

Senator URQUHART: Can I go back to the Murray-Darling Basin. I was talking about the ecological communities in the Murray-Darling Basin, so apologies for that.

Mr Richardson : Senator, could you repeat the question.

Senator URQUHART: Could you update us on the heritage status of the ecological communities in the Murray-Darling Basin?

Mr Richardson : There were ecological communities listed in 2013. They weren't listed as heritage places, though, so I'm not sure of your question.

Senator URQUHART: So not listed as heritage?

Mr Richardson : No.

Senator URQUHART: Can you give me an update on the Burrup. We had the Burrup inquiry some time ago and we haven't yet got a report. I would just like to know whether there has been consultation with traditional owners.

Mr Oxley : Senator, it would help the department if you were able to be a little bit more specific in your question. Certainly, Mr Williams can give you a current snapshot. But there are a lot of issues at play on the Burrup Peninsula, so if there is something specific it would be helpful.

Senator URQUHART: We had an inquiry into the rock art on the Burrup Peninsula.

Mr Oxley : Mr Williams can address that question.

Mr Williams : The committee has reported on the Burrup inquiry. We are currently working through a government response on that matter. If you are referring to consultation with traditional owners on the potential world heritage listing of the Burrup, which was the subject of a number of the recommendations from the committee, we have been consulting with traditional owners for some time now about whether they wish to proceed with the work necessary for a nomination for world heritage listing. We have also been working with our Western Australian government colleagues to the same end. Under the intergovernmental agreement on world heritage, the states and territories have primary responsibility for leading the work on nominations. It is clear in that intergovernmental agreement, and in the way that the Commonwealth approaches this matter, that traditional owners are front and centre in relation to permission for undertaking work relating to world heritage nomination. We will be consulting with traditional owners from Murujuga in August this year, again, and we do so on a very regular basis.

Senator URQUHART: Thank you. Can you just give me some numbers of staffing within the cultural heritage department?

Mr Williams : Do you mean in the heritage branch?

Senator URQUHART: Yes.

Mr Williams : I don't have the numbers here with me—off the top of my head, it's in the order of 32 staff.

Senator URQUHART: And it is that full-time equivalents?

Mr Williams : Yes, it is.

Senator URQUHART: And how has that varied from last year?

Mr Oxley : It's about the same. In addition to the number of staff that Mr Williams has identified in heritage branch, we also have an international heritage section that looks after our engagement with the World Heritage Committee, and there's approximately another six staff in that area.

Senator URQUHART: Is that the same as last year?

Mr Oxley : That has increased slightly, given Australia's new responsibilities as a member of the World Committee, but overall numbers are stable.

Senator URQUHART: Reasonably static. Could you use more staff?

Mr Oxley : Always, Senator.

Senator URQUHART: Sorry, Mr Pratt: you nearly stroked. I woke you up; I apologise. Did you give me an answer then, Minister? I think Mr Pratt was going to say something—he leapt out of his chair.

Mr Pratt : No, Senator, apologies, for my reaction there.

Senator URQUHART: Don't apologise.

Mr Pratt : I suspect, over the decades, any time a bureaucrat is asked whether or not they could have more staff, they would probably be—

Senator URQUHART: They would have a reaction such as yours.

Mr Pratt : They would be delighted at that offer, if it were made possible.

Senator URQUHART: Great; thank you.

Senator DODSON: I've some questions also in relation to the Burrup which may sound the same but are slightly different. I'm interested in what level of support there is from the traditional owners for the process of proceeding with the World Heritage listings?

Mr Williams : Thank you for the question. During the course of our interaction with local traditional owners, we've had a variety of expressions of support in relation to the process. They've raised with us a number of important issues that they wish to work through with us about how to go about a nomination, the importance of traditional owners telling their story as part of the nomination. So they are part of a wide-ranging set of consultations that we've been undertaking with traditional owners in the area.

Senator DODSON: And what support are you providing to those traditional owners in these consultations?

Mr Williams : It depends on what sort of support you're referring to.

Senator DODSON: They've raised a number of matters that they have concerns about. Are you providing information? Are you providing logistic supports for people to get to meetings and other sorts of information that may be useful?

Mr Williams : Yes. We certainly provide them with information. They attend the meetings with us as part of the arrangements that we have under the conservation agreements with industry on the Burrup Peninsula. Western Australia have the main lead in supporting the nomination process, including consultation with traditional owners, but we participate fully in that consultation process.

Senator DODSON: You mention there were some varying views amongst the traditional owners. Are they significant in variance, or are they on matters of common subject?

Mr Williams : I think it's fair to say that they have a lot of common ground on where they're coming from. They have a high degree of interest in the benefits that may flow from a World Heritage nomination and what it would mean in terms of protection of the area. But a lot of their questions also go to the Western Australian government about support by the Western Australian government for the nomination process and implications for protection for the Burrup.

Senator DODSON: Have there been questions raised with you in relation to the impact of the pollutants and their impact upon the petroglyphs on the rock and so forth? There has been some controversy about that. Have they raised those issues with you?

Mr Williams : The traditional owners have not raised those issues with us directly. We know that they've spoken to the Western Australian government about those issues. In our consultation with traditional owners and the Murujuga Aboriginal Corporation, they've been talking about what sorts of opportunities there are for their land and sea rangers unit to be undertaking monitoring work in relation to emissions and to the effect on the artwork of the area.

Mr Knudson : Senator, if I may add, the Office of Compliance, which has been heavily involved in the issue that you're talking about, let me know that back in late 2017 we varied the conditions for the approval holder in that space, which is Yara Pilbara Nitrates. That was done specifically to try to strengthen the protections for the rock art and to make monitoring available for public scrutiny. The varying conditions that have been put in place are there to ensure that there's early detection if there are any impacts on the rock art; to limit the amounts and of types of emissions released from the plant; and also to require, as I mentioned, all that monitoring data to be published.

They also allow the minister to request a review of the operations and to limit the operations of the facility if the monitoring shows that the action is having an adverse impact on the rock art. That is a bit of context behind your question.

Senator DODSON: Is there any analysis of the emissions coming from the shipping as opposed to what comes out of the treatment plant?

Mr Knudson : For our purposes, we can only regulate what we have approved. Therefore, under the EPBC Act, the only facility that we have a regulatory role over is that Yara Pilbara Nitrates facility. That being said, the Western Australian government is looking at the full peninsula.

Senator DODSON: So, the use of the fuel ships is not in your purview?

Mr Knudson : That's correct.

Senator DODSON: Okay. Maybe some of my colleagues might know more about that than I do. On a related matter: what works have informed the determination of costs that are related to the maintenance of world heritage areas or precincts? What informs the cost of maintaining these places?

Mr Oxley : That's a really good question, Senator. The first point I'd make is that, generally, it would be the manager of the place that would have responsibility for bearing those costs. If it were a place—a state national park, for example—it would be the state government that had responsibility for those costs, although the Commonwealth does provide financial support for the management of a number of world heritage sites. It provides the most resources for sites where the Commonwealth was, essentially, the initiator of the world heritage listing of those places, such as the wet tropics of Far North Queensland and the Tasmanian Wilderness World Heritage Area.

In terms of identifying the cost of management, that's something that would be worked through in quite some detail by the responsible authority. If you want to bring it to the specific case of the Burrup Peninsula: if we fast forward to a future place where there is the free and prior informed consent of the traditional owners of the Burrup Peninsula, a nomination was then made to the World Heritage Committee and that nomination was in the process of being considered, then three things would have to be demonstrated. Firstly, that the place has outstanding universal value. Secondly, that it has integrity and authenticity—the authenticity where you're talking of cultural values. Thirdly, that there are effective management arrangements in place.

As part of the process of developing a world heritage nomination there would have to be work done, in the case of the Burrup, by the Western Australian government—in consultation with the traditional owners and with the advice of the Commonwealth—on what is necessary to effectively manage that place. I assume that in that process they would quantify the cost of that management. There would need to be a process that engaged with the stakeholders and with the traditional owners.

Senator DODSON: In the qualification of the cost, does that involve Commonwealth contributions or not?

Mr Oxley : There is that potential but that potential is limited by Commonwealth budget constraints. It would have to be considered in a normal budget cycle.

Senator DODSON: In the budget cycle this year did you get an increase in your commitments to maintain other world heritage listed places or did you not?

Mr Oxley : We're working on a stable budget for world heritage management.

Senator DODSON: When you say stable, what does that mean?

Mr Oxley : If you set aside the Great Barrier Reef, which has had a very significant increase in funding—as was discussed at length in this chamber yesterday—the amount of resources available through the National Landcare Program for world heritage has been sustained at the same level next year, and for the following four years, as is available this year, so no change in the budget.

Senator DODSON: And no provision for if the Burrup was to proceed?

Mr Oxley : No. That would be quite some time down the track. If there is consensus around the nomination of the Burrup Peninsula for inclusion on the world heritage list it then must be put on to Australia's tentative list, which is lodged with the world heritage committee. A place must be on the tentative list for 12 months before it can be brought forward for consideration by the world heritage committee. It is a multiyear process and in that multiyear process the fastest a listing could happen is approximately 2½ years. As part of our candidacy for the world heritage committee, we've also given an undertaking—because there's an expectation of members of the world heritage committee that during our time on the committee, which is for the next four years—that we won't bring forward any new nominations for world heritage places for consideration during the period that we're on the committee, with one exception. The one exception is the Budj Bim Cultural Landscape in Victoria, which has gone forward and it's in the assessment process at the moment. We're expecting to have a monitoring mission come from the world heritage centre, or from the International Council on Monuments and Sites—which is the technical advisor on cultural matters to the World Heritage Committee—later this year. It's been a nomination process that's been led by the Gunditjmara people. We're very excited about that proposal, but it's the only one that we would be seeking to have considered during our time on the committee.

Senator DODSON: Is the Heritage Council doing any work in the Burrup?

Mr Williams : The Heritage Council is part of the listing of the Burrup, and the department is working closely with the Murujuga Aboriginal Corporation in relation to the work undertaken under the two conservation agreements that have been in place for over 10 years now. Those agreements are with Rio Tinto and Woodside, where the Commonwealth has worked with those companies and the MAC, the Murujuga Aboriginal Corporation, to undertake quite a bit of work on the Burrup in terms of identification of sites, archaeological work on the conservation of the artwork that is on the Burrup Peninsula and compliance work, and that's how the land and sea rangers are currently funded.

Mr Oxley : Just to crystallise the answer to your question, to my knowledge, there isn't any current body of work being undertaken by the Australian Heritage Council—I think that's the council you're referring to—in relation to the Burrup.

Senator DODSON: That's right.

Mr Oxley : From time to time, the Heritage Council looks at the effectiveness of management arrangements for National Heritage List places and, of course, the Burrup rock art is on the National Heritage list, but there isn't any active consideration at this point in time.

Senator DODSON: Thank you.

Senator RICE: I'd like to start with a few threatened species to kick us off, beginning with Leadbeater's possums and what the current status of the Leadbeater's possum recovery plan process is.

Mr Richardson : The Leadbeater's possum recovery plan is still in draft form. At the time late last year in 2017 when it was agreed that the Leadbeater's possum status would be reassessed to take account of new information that had been collected largely by the state government of Victoria—

Senator RICE: By VicForests, yes.

Mr Richardson : By VicForests and also by the Arthur Rylah Institute—that's right. The minister also asked the Threatened Species Scientific Committee, in their reconsideration of the assessment of that species' status and new information, about whether that new information had any bearing on the recovery plan that they had been drafting. The current time frame for the recovery plan is to be finalised in December 2018, so the end of this year.

Senator RICE: I understand the Threatened Species Scientific Committee met to discuss the new data. Can you tell me exactly when that meeting was?

Mr Richardson : It was exactly on the day of the last estimates hearing.

Senator RICE: Yes.

Mr Richardson : It was in February.

Senator RICE: Yes, it was February. So has there been any feedback to government about what their findings from that meeting were?

Mr Richardson : That meeting was attended by all of the members of the Threatened Species Scientific Committee, but it was also attended by officers within the department who are responsible for conducting that reassessment. It also had a list of stakeholders, and I think I went through those at the last estimates hearing. The assessment of the species is going to be considered by the Threatened Species Scientific Committee. So the assessment was then updated taking account of information gathered at that workshop and will be looked at by the Threatened Species Scientific Committee in the first week of June at their next meeting. So they were participating in that meeting, but they didn't consider the Leadbeater's possum assessment at that meeting; it was in the same week as the workshop.

Senator RICE: From that workshop, do you have any feedback about their response to the data, the so-called new data from VicForests that was being provided to them, and whether they were also looking at the latest of the peer-reviewed science about what the threatening processes to the Leadbeater's possum are?

Mr Richardson : They were certainly looking at all science that was available, both peer reviewed and not yet peer reviewed. I can't—

Senator RICE: The Victorian government internal reports—yes.

Mr Richardson : And published information. There is information on the Victorian government website as well for the Department of Environment, Land, Water and Planning. But, in terms of the assessment and, if you like, the committee's position on that new information or where they see that as landing, that will be what will be discussed in a few weeks time at their next meeting.

Senator RICE: So they've got that meeting in June to discuss that, and then they will make some recommendations to government. What's the expectation on the time after that meeting?

Mr Richardson : The act requires that a draft assessment must be released for public comment for a period of no fewer than 30 days. Following that meeting, I anticipate that the draft assessment will be released for its statutory public comment process.

Senator RICE: So fairly shortly after that meeting, you would expect?

Mr Richardson : The deadline for the assessment is in November, so it would have to be reasonably soon thereafter—yes.

Senator RICE: Do you have any response to the recent listing by the Zoological Society of London which listed Leadbeater's possum at No. 10 on its EDGE list of mammals on the brink of extinction, right up there with species like the black rhino?

Mr Richardson : Sorry, what was the start of your question—do I have a reaction to it?

Senator RICE: Yes. What's the government's response to this international focus on the fact we've got critically endangered Leadbeater's possum and, meanwhile, we've got these processes that are just going on and on and on, all while logging is continuing to occur in its habitat?

Mr Richardson : I guess I'd say that the species is under assessment at the moment by the Threatened Species Scientific Committee, which is a group of experts who are looking at what its current status is. It's currently listed as critically endangered, as you're well aware. It's got pretty comprehensive conservation advice that guides efforts to recover the species. But, as you're also aware, it's found within the area of a regional forestry agreement and it is subject to prescriptions that are enacted by the Victorian government.

Senator RICE: Does the government think that it's acceptable, then, that it was 2015 when your own threatened species strategy identified the Leadbeater's possum as requiring emergency intervention? At that stage the revised recovery plan was promised by mid-2016—that's over two years ago. Three years ago, emergency intervention was recommended and two years since the revised recovery plan. How can this delayed response, this ongoing process, be justified when the possum is on the brink?

Mr Knudson : I think that Mr Richardson is laying out the fact that—

Senator RICE: But, meanwhile, logging is continuing.

Mr Knudson : Right. But we want to make sure that we're making a well informed and appropriate decision, and that's what Mr Richardson has laid out.

Senator RICE: Monitoring the Leadbeater's possum to extinction, essentially? You have logging continuing while these processes continue, and the science is clear.

Mr Knudson : Mr Richardson's also laid out a number of the prescriptions that the Victorian government has put in place to protect the species. We're looking at those, along with the latest science to make sure that we're making as informed a decision as possible.

Senator RICE: Do you accept that the community and people concerned about the status of critically endangered animals like the Leadbeater's possum have a right to be frustrated at the amount of time the development of this recovery plan is taking?

Mr Knudson : I can understand that concern. All I'm saying is there are honest reasons as to why it's taking the time that it is and we're trying to make sure that we make an informed decision. We're obviously seized with the importance of the species. We wouldn't have looked at it twice in the last three years if it weren't for that.

Senator RICE: Thank you. I'll move on to greater gliders. I asked a question on notice about whether there were actions being taken about the impact of logging on greater gliders, given that's now been listed as a vulnerable species. I was told that there's a National Environmental Science Program project which is looking at 'existing long-term monitoring data and new field based experimental research and radio tracking to strengthen the scientific evidence base of strategies to secure the long-term conservation of these and other species dependent on these forests'. Can you tell me some more about what the time line of this study is going to be?

Mr Richardson : Sorry, Senator, I'm just trying to locate my question on notice. I apologise. Could you repeat that question?

Senator RICE: My question on notice—I was told that there was a project under the National Environmental Science Program's Threatened Species Recovery Hub: project 3.2.2. It outlines a project to analyse 'existing long-term monitoring data and new field based experimental research and radio tracking to strengthen the scientific evidence base of strategies to secure the long-term conservation of these and other species dependent on these forests'. I want to know some more details about that strategy and, in particular, the time line. And when will we get some results from that strategy, which would then feed into the protection of the greater gliders? Meanwhile, greater gliders go from vulnerable to endangered, and probably to critically endangered, while this research is undertaken.

Ms Jonasson : I think we would need to go back to the threatened species hub and get an update on the timetable and the work they're doing on that. I'm happy to come back to you after I've spoken to the scientists about where they're at with that work.

Senator RICE: Do you accept that it's important that this work is undertaken and that action is taken in the interim period? Otherwise we're going to see these animals, just like the Leadbeater's possum, on this trajectory, hurtling towards extinction. We know what the threatening processes are.

Ms Jonasson : We do accept it's important, and that's why the project is happening. As I said, I'd really like to get some advice from the scientists that are doing the work on the time frames and come back to you with that. We can also outline some funding that we have also put into the greater glider. There's a whole range of things happening in relation to that. Since 2014, a $200,000 threatened species targeted project has been funded to deliver habitat improvement by restoring traditional fire regimes and feral animal and plant controls throughout the Mount Lewis, Mount Sturgeon and Mount Windsor national parks. This project has been delivered in partnership with the Queensland Parks and Wildlife Service and the Australian Wildlife Conservancy.

Senator RICE: I'm particularly interested in the southern population of the greater glider where they are impacted by clear fell logging. Since we were last here, in Victoria there's been a high population density hot spot—the highest population density of greater gliders—being logged by VicForests under the regional forest agreement.

Ms Jonasson : There have also been a number of 20 Million Trees projects that have been funded. These include projects in the Strzelecki Ranges. Something in the order of $1.6 million was put into that. Overall we have around about eight projects that total around $3.5 million that have gone to support work on the greater glider. If I can get to the scientists that are doing the work under this program I can get an update for you.

Senator RICE: Are you aware of the logging of this very high population density hot spot in the logging areas, the Barjarg Flat areas of forest, in the Strathbogie Ranges?

Ms Jonasson : That's a level of detail I'd be happy to take more information on.

Senator RICE: Is the department aware or is anyone at the table aware of what's going on there?

Mr Richardson : Yes, we've seen the press reports. That's being managed through our RFA area. Our officers who are associated with that were here yesterday. We don't believe they're here today.

Senator RICE: Has there been a response by the federal government? Has the federal government said, 'This is an EPBC listed species—there's logging going on of one of the highest population density hot spots for the greater glider'?

Ms Jonasson : I think the response by the federal government is the significant funding, the $3.5 million that's been put into—

Senator RICE: Meanwhile they keep logging it.

Ms Jonasson : The arrangements are set out through the RFA arrangements and ensuring that the work that is happening is consistent with the EPBC Act. It is around $3.5 million, as I mentioned.

Senator RICE: Has there been any federal response? Has there been any communication between the federal government and the Victorian government about the logging that's occurring in this hot spot for greater gliders?

Ms Jonasson : I'd have to take that on notice.

Mr Knudson : As I think we said yesterday, obviously for the regional forestry agreements the lead Commonwealth agency is the Department of Agriculture and Water Resources. We're happy to take—

Senator RICE: I'll be asking questions of the Department of Agriculture and Water Resources over the coming days.

Mr Knudson : We're happy to also raise this with the Department of Agriculture and Water Resources to ensure they're aware of it.

Senator RICE: But you are responsible for the Environment Protection and Biodiversity Conservation Act, and this is a threatened animal under your act.

Mr Knudson : Understood, and that's why I'm saying I'm happy to raise it with the Department of Agriculture and Water Resources as well.

Senator RICE: Okay. Moving on to the western ring-tailed possum, which has just been uplisted to critically endangered. I know my colleague Senator Siewert was asking some questions about that yesterday. What's going to be the reaction from the federal government in response to that uplisting to critically endangered?

Mr Richardson : When you say response, the federal government was the one that uplisted it to critically endangered.

Senator RICE: Is there going to be any change to what's going to be happening to the recommendations for management by the federal government?

Mr Richardson : There is an updated conservation advice that was released when the species was uplisted. That was early this year or late last year—I'll find that out. But there was also a West Australian government prepared recovery plan that was adopted by the federal government in August 2017, so pretty recently. That would have essentially taken account of the new information available on the species as at that time. In terms of what we will do to respond, it is a species that is listed as threatened. It is a matter of national environmental significance, so it triggers all the governmental responses that any other MNES species triggers, which is to say that it becomes part of the regulatory process we manage. As a matter of NES, it also becomes a target in our funding programs. It becomes a species that will be targeted by our program or its predecessors.

Senator RICE: What does the recovery plan recommend in terms of addressing the ongoing logging of habitat of the western ring-tailed possum? Since it has become critically endangered, have you raised this issue with the West Australian government, who are the people who are undertaking that logging?

Mr Richardson : And the people that prepared the recovery plan. I don't believe we've raised it directly with them since the recovery plan was put in place. But it is their recovery plan, in a sense. I'd have to take on notice whether there's been any correspondence.

Senator RICE: Does the Commonwealth have a role, given that it's now critically endangered under your listings, to actually have a proactive response with the Western Australia government, or is it just leaving it to them?

Ms Jonasson : What I can highlight for you is that we've mobilised about $4.1 million for 19 projects that are supporting outcomes for the western ring-tailed possum. That includes a $1.7 million investment in Western Shield, which is to include feral cat baiting into the state-wide conservation program. The federal government is contributing significant funds to efforts to protect the western ring tailed possum.

Senator RICE: Are there any programs to deal with the impact of logging on the western ring-tailed possum's habitat? I understand the critical importance of addressing feral animals and their predation, but is there any funding towards programs to address the impacts of logging on western ring-tailed possum habitat?

Ms Jonasson : I don't have a breakdown of the 19 projects under the $4.1 million, but I can get further information for you on that.

Senator RICE: I have a general question about recovery plans. My understanding is that the department's usual practice is to review recovery plans every 10 years. Is that the case?

Mr Richardson : Recovery plans are reviewed periodically. There's no usual time frame that we do that on. They're certainly reviewed at the time a species assessment category is reassessed. A lot of the recovery plans that we have in place were originally prepared by state governments and subsequently adopted under the Environment Protection and Biodiversity Conservation Act. As new information comes to bear, state governments will also prepare new plans, which are then considered for adoption subsequently.

Senator RICE: My understanding of the EPBC Act obligations is that the recovery plan should be reviewed every five years. Is that the standard practice for the review timeline?

Mr Richardson : It's not. We don't meet that requirement of the act. We review recovery plans as new information is available and as resources allow.

Senator RICE: So when reporting on whether you're meeting the obligations under the EPBC act, you report that you're not meeting that requirement?

Mr Richardson : Correct.

Senator RICE: Moving on to the Threatened Species Scientific Committee generally, I understand that the minister has the discretion to accept the advice of the Threatened Species Scientific Committee on which species, threatening processes or ecological communities should be considered for listing under the Environment Protection and Biodiversity Conservation Act. I am interested to know on how many occasions in the past five years has the environment minister rejected the advice of the Threatened Species Scientific Committee?

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

Senator RICE: Could you take that on notice: where and how often, any instances in the last five years of rejecting the advice whether to place on the priority assessment list a nomination for a key threatening process, a threatened species or a threatened ecological community.

Mr Richardson : I'll take that on notice.

Senator RICE: Moving on to other threats to Australia's biodiversity, changing fire regimes is one of the leading threats. What is the status of the key threatening process nomination for fire regimes that cause biodiversity loss?

Mr Richardson : That's a nomination that is on our priority list and is still on our priority list. It has not yet been listed. It's one that we are planning to refresh later this year, assuming the Threatened Species Scientific Committee is willing to do so, but it has not yet been finalised and it's not yet listed as key threatening process.

Senator RICE: When is a decision expected as to whether it's a key threatening process?

Mr Richardson : I can't give you that time line at this point. I'll have to take it on notice.

Senator RICE: Novel biota was listed as a key threatening process under the EPBC Act in 2013. Has the listing of novel biota as a key threatening process resulted in any particular abatement action or conservation benefit?

Mr Murphy : The novel biota key threatening process is a bit like an umbrella that fits over all our invasive species. There are existing threat abatement plans in place that cover invasive species. That process also allows the consideration of new biota that comes through our biosecurity system and establishes into Australia's environment. Probably the two most recent examples would be myrtle rust and invasive ants, which are an ongoing problem for Australia. Instead of adopting a threat abatement plan we're drafting with agriculture and under the guidance of the Threatened Species Scientific Committee a joint plan between our two departments, which can look over the border at all the preborder issues with ants, and also look at recommended management actions and research for ants that are already a problem in Australia's environment.

Senator RICE: With regard to myrtle rust, if there haven't been any abatement actions that have taken place because of the key threatening process of novel biota, what's the reason? I understand there's been a rejection of nomination of further key threatening processes, such as for myrtle rust, under the understanding it would be covered by novel biota, but having novel biota as a key threatening process hasn't actually resulted in anything.

Mr Murphy : I'll go to myrtle rust, but I'll highlight that what I explained for the ants is that that's an example of a response under the novel biota process. That is exactly what was envisaged by the Threatened Species Scientific Committee. They're trying to get away from a template process of always going to a threat abatement plan or a threat abatement advice. In the case of myrtle rust, under the National Environmental Science Program there are two projects being funded. One of them is preparation of an action plan. The Threatened Species Scientific Committee has asked for those actions to be developed into a threat abatement advice.

Senator HANSON-YOUNG: Can I pick up on some of the questions that you had to Senator Dodson. You mentioned that as part because the Australian government is now a member of the World Heritage Committee out of UNESCO, you've said that you'll not seek to have anything listed while Australia is on that committee. When does that period end?

Mr Oxley : We were elected to the World Heritage Committee in mid-November last year, and we will be on for four meeting cycles. The first meeting we'll be attending as a committee member is in Bahrain from 24 June to 4 July this year. Then we will attend or be members of the committee for the meetings in 2019, 2020 and 2021, and our term will conclude in the end of 2021.

Senator HANSON-YOUNG: You've said that you've made an undertaking not to seek to have anything else listed while Australia is on the committee. Surely that doesn't preclude having new sites put on the tentative list?

Mr Oxley : No, of course not, Senator. New sites can be entered on the tentative list. There's a process that we go through with the Meeting of Environment Ministers. Recently, the last meeting of the environment ministers, they were briefed on progress by the South Australian government in pursuing the World Heritage listing of the Flinders Ranges, as an example. That work is ongoing. We would expect that, if that preliminary assessment work demonstrates that the area is of potential outstanding universal value, we would add that place to the tentative list for Australia. That would enable us in the intervening period to go on and for the South Australian government to do the necessary work to prepare a nomination dossier, but we would not lodge the nomination dossier and ask for it to be assessed.

Senator HANSON-YOUNG: That's a nice deadline to work towards.

Mr Oxley : It is.

Senator HANSON-YOUNG: Has there been any preliminary assessment or work done on whether the Great Australian Bight would meet World Heritage status?

Mr Oxley : I'm not aware of any such work having been done. Senator, we would generally leave the nomination responsibility to the jurisdiction responsible, noting that in large part we would be the jurisdiction in relation to the Great Australian Bight. But no work has been done. I'm aware of public interest in that prospect.

Senator HANSON-YOUNG: Yes. One public issue of concern is whether the potential of oil and gas drilling in the Great Australian Bight may jeopardise a future listing. Do you have any advice on that?

Mr Oxley : No, I don't have any advice on that.

Senator HANSON-YOUNG: Would you be able to take that on notice for me?

Mr Oxley : Yes, of course.

Senator HANSON-YOUNG: That would be great, thank you. Obviously one of the criteria for World Heritage listing is that the site already has some type of management plan in place. Would you be able to inform us as to what would be appropriate for the Great Australian Bight in order to fulfil that criteria?

Mr Oxley : I'll take that one on notice, Senator. In broad terms it would be looking at what are the overall management arrangements in place for the management of that place. As you well understand, the Commonwealth marine area is a complex system of management with many different sectoral arrangements in place. Oil and gas exploration and development are managed by NOPSEMA; fisheries are largely managed by the Australian Fisheries Management Authority, though some fisheries are managed by the South Australian government under the offshore constitutional settlement, and ditto for Western Australia; and Parks Australia has responsibility for managing the marine parks that sit within the Great Australian Bight. So in looking at the management arrangements we would be looking at whether that suite of management arrangements was adequate to meet any obligations under the World Heritage convention, should the place be found to have outstanding universal value and should it be listed.

Senator HANSON-YOUNG: As a very proud South Australian, I think it absolutely deserves World Heritage listing. I hope that the minister also agrees.

Senator Birmingham: Senator, the government will rightly consider proper process and merits of the case.

Senator HANSON-YOUNG: Thank you. Has there been any work done by the department to understand the positive impacts of World Heritage listing on the local economy and tourism? Has there been any analysis done on the impact of World Heritage listing of Australian sites and the flow-on effects of that?

Mr Oxley : There's been some analysis done. I can't bring to front of mind whether there's been a report prepared by the government over a long period of time around the economic benefits flowing from the World Heritage listing of a place specifically. It is a question that is of enduring interest to local communities, because they are always looking to find opportunities to grow local economies and sustain jobs. A good example is: we have had, in recent times, quite a large amount of analysis done in relation to the Great Barrier Reef Marine Park and the World Heritage area, where the economic benefits associated with tourism in particular coming from that site add tens of billions of dollars to the Australian economy each year, and tens of thousands of jobs are created through tourism opportunities in the Great Barrier Reef.

Senator HANSON-YOUNG: Great. Thank you. Has there been any work or analysis done to measure the impact on conservation and protection outcomes of World Heritage listing—

Mr Oxley : I'm not aware.

Senator HANSON-YOUNG: as opposed to the economic outcomes?

Mr Oxley : I do understand the question. I can't give you specific examples of studies.

Senator HANSON-YOUNG: So the department has never undertaken that sort of cost-benefit analysis?

Mr Oxley : I can't give you a the-department-has-never-done answer. We may well have done such—

Senator HANSON-YOUNG: Would you be able to take that on notice?

Mr Oxley : We'll have a look back and see if there's anything in there.

Senator HANSON-YOUNG: That would be great. Thank you very much.

Senator BARTLETT: I have a couple of things, following up from the last estimates in February, about the spectacled flying fox. The decision on its status has been extended to June. I know we're not in June yet, but I just thought I'd check with Mr Richardson, who answered last time, where that's at. Has a decision been made and I haven't noticed? Can we get a guarantee it's not going to go past 8 June?

Mr Richardson : A decision hasn't been made. As you rightly point out, the current date is 8 June 2018.

Senator BARTLETT: I saw the answers on notice from last time in terms of how long this has already taken. Will we have a decision by 8 June?

Mr Richardson : That's a matter for the minister. That's the deadline that's currently set. It's a statutory deadline.

Senator BARTLETT: It's a statutory deadline that's already been extended a couple of times. Can we be confident it won't be extended again? Is there any proposal or request that you're aware of for it to be extended again?

Mr Richardson : I'm not aware of any such proposal.

Senator BARTLETT: Is there a final thing sitting on the minister's desk waiting for his signature, given it's only a couple of weeks away?

Mr Richardson : We can't comment on that.

Ms Jonasson : We've got the deadline of 8 June. We don't have any more information than that at this stage.

Senator BARTLETT: I appreciate that. I'm not trying to be unreasonable or whatever. But, presumably, to get a decision by 8 June, all you folks must have done a bunch of work to get it to the very hardworking minister in time for him to properly consider these things. Have you done your bit, or are you still working on it?

Ms Jonasson : We can't comment on that. But I guess what we can say is that we have been working on it—

Senator BARTLETT: That's a good start.

Ms Jonasson : for some months. But we can't presume the minister's decision for him. That's a decision for him. We can, hopefully, give you an update after 8 June.

Mr Richardson : The published reason for the minister's extension to 8 June was because the minister required further time to consider information provided by the Threatened Species Scientific Committee.

Senator BARTLETT: Okay. The minister's been doing a lot of considering, by the sounds of it.

Senator Birmingham: We received further information and are taking further time to consider that further information.

Senator BARTLETT: I guess we can say it be a very well-considered decision when it appears.

Senator Birmingham: I'm sure it will be.

Senator BARTLETT: Excellent. We heard some of the previous questions about possible world heritage nominations et cetera, and I heard all of those answers. I know over many years there's been a lot of talk of the possibility of Cape York being considered for World Heritage listing, on cultural as well as environmental grounds. Is there any movement on that at the moment? Is that one of those things in the pile of possibilities?

Mr Oxley : It's one that's in the hands of the Queensland government. My understanding is that in recent times they have been turning their minds to progressing its consideration in consultation with traditional owner groups on Cape York.

Senator BARTLETT: So there's been some actual action in that area?

Mr Oxley : I can't give any more information than that. I'm happy to take that on notice. If the Queensland government has any further advice, we are happy to pass that on.

Senator BARTLETT: Thank you. That would be good. I'm not trying to get state secrets, obviously, although if you have any feel free to give them!

CHAIR: Table them now, if you could!

Senator BARTLETT: Details about what action has been happening would be very helpful. I know I asked this last night, and I'm sure you all followed it very closely—because I'm sure that's what you like to do, listen to estimates—around the Toondah Harbour area issue, in the Redlands area just east of Brisbane on Moreton Bay, the Ramsar area there. In regard to the focus on this section, you provide advice on referrals—that's part of what you do, as I understand it. Did any of the areas represented here provide advice on the Toondah Harbour referral, either the 2015 or 2017 version?

Mr Knudson : I can that say we would have consulted with every area that would've been implicated. For example, we had the Commonwealth Environmental Water Office here earlier on. They would have provided advice on the Ramsar wetland impacts as well as threatened species. We would have been looking at the impacts on migratory birds from that proposal both in the original referral and the current referral.

Senator BARTLETT: You would have provided advice to the minister, including in the original referral?

Mr Knudson : That would have informed the other area that was here last night in terms of them providing their integrated advice on behalf of the department to the minister in both cases.

Senator BARTLETT: Did you ever advise at any point that either the 2015 or 2017 referral may have impacts that would be inconsistent with our international obligations?

Mr Knudson : I think we went over this in pretty exhaustive detail last night. Not having the assessment officers who actually prepared the briefing here, I don't want to risk misleading you. The answers by Mr Barker last night went into a fair amount of detail on the process that we followed both in 2015 and this year.

Senator BARTLETT: I thought it was just preliminary; I didn't feel it was exhaustive at all. I was just getting started. I thought I would do a revisit in regard to that. Apologies if it should have been asked last night, but it was suggested to me that this was the area: in Far North Queensland, in regard to the KUR-World development, around Kuranda adjoining the wet tropics—does that mean anything to anybody? You can take it on notice if it doesn't. It's whether the department—and, again, the same officers—has considered the potential World Heritage impacts of the KUR-World development.

Mr Knudson : That would absolutely be the environmental regulation area. We can definitely take that on notice and come back to you and give you clarification of whether we have a referral with respect to that property, and, if we do, what sort of consultation we've done on that within the department.

Senator BARTLETT: That would be good. Throw in some state secrets on that one as well if you'd like!

Senator WHISH-WILSON: I'd like to ask a few questions on the threat abatement plan for marine debris. I've read the draft plan, Mr Murphy; it looks really good. What's the next step?

Mr Murphy : You will recall that the Threatened Species Scientific Committee considered the draft plan in November. They requested further editing of the plan to make the document more user friendly. We've completed those edits and the committee have agreed that the draft plan should be provided to the minister for his consideration, and we are preparing that advice for the minister.

Senator WHISH-WILSON: So the minister checks it off, makes changes or rejects it, and then it becomes an official threat abatement plan. Is there any time frame—generally, how long does that take?

Mr Murphy : Firstly, the department will prepare the advice. Yes, if the minister agrees to the plan, then it will become a new threat abatement plan.

Senator WHISH-WILSON: I wasn't aware that the minister has to okay it, because it's an updated version of the original plan. It still needs to be checked off?

Mr Murphy : That's right. The minister makes a formal decision under the EPBC Act to—

Senator WHISH-WILSON: At his discretion.

Mr Murphy : Yes.

Senator WHISH-WILSON: Minister Birmingham, could I ask you about plastics in the ocean, one of the biggest threats to a whole range of different marine creatures and a very serious issue? Any idea of whether the minister will prioritise a threat abatement plan?

Senator Birmingham: No, Senator, but I'm happy to take that on notice.

Senator WHISH-WILSON: Thank you. In relation to this committee's report Toxic tide, on marine plastics, has the department prepared a response on behalf of the government? Will the government be responding to that Senate report?

Mr Murphy : The department has drafted a response to Toxic tide: the threat of marine plastic pollution in Australia. That is being considered within government. If agreed, it will be released as a response to those recommendations.

Senator WHISH-WILSON: In relation to white sharks: in answer to question on notice No. 59, on why the minister was able to publicise shark population numbers for the west coast before the report was released, the answer was:

Dr Larry Marshall, Chief Executive of CSIRO, provided an informal briefing on the project status to Minister Frydenberg on 7 December 2017, including the preliminary population estimates that were undergoing peer review. Given the status of the estimates, Minister Frydenberg's 23 December 2017 media release noted they were undergoing peer review.

Can I ask a few more questions about this meeting with Larry Marshall, the chief executive of CSIRO? Was he meeting the minister solely on this issue?

Ms Jonasson : My understanding is that it was an informal telephone conversation.

Senator WHISH-WILSON: Did the minister request this conversation with Mr Marshall?

Ms Jonasson : Senator, I'm not sure that we can answer these questions.

Senator WHISH-WILSON: Why not?

Mr Whitfort : We can't assume or advise on what the minister's intent was.

Mr Pratt : These are questions for the minister directly. We're happy to take them on notice, but we don't have visibility of his telephone calls or meetings necessarily.

Senator WHISH-WILSON: Did the department see any requests from the minister in relation to a briefing from CSIRO on this subject?

Mr Pratt : I would have to take that on notice.

Senator WHISH-WILSON: Could you take that on notice, and whether the department was involved in facilitating any briefing from the chief executive of CSIRO? On the record: I think it's quite extraordinary that someone like Larry Marshall would have a briefing on something like this for the minister, considering all the other things he has to do as head of CSIRO. I would like to know why that meeting was set up and if there was any departmental involvement in it at all. Was there a record, or was anyone from the department with the minister when this phone call took place? Was it a conference call, or was it a private phone call?

Mr Pratt : Senator, this is very much a matter for the minister. We will take those questions and see how he wishes to respond.

Senator WHISH-WILSON: Okay. Secretary, what are my options here? Should I write directly to the minister as well?

Senator Birmingham: The department has taken those questions on notice.

Senator WHISH-WILSON: They've taken them on notice, but you said I should contact the minister.

Mr Pratt : No, I'm just saying that the department can't answer for the minister. Only the minister can answer questions about his activities and his meetings and telephone calls. In fact, in some ways it would be a breach of his privacy for us to get into that sort of stuff, even if we knew. We certainly now have the Hansard on this. We will put that to the minister and see how he wishes to respond. Certainly it is open to you, of course, Senator, to separately write to the minister, but I don't know that it's necessary.

Senator WHISH-WILSON: Okay. Is the department aware of any other times when ministers have spoken to the head of CSIRO about a scientific report on a threatened species population?

Mr Pratt : Not specifically on Dr Marshall, but I am aware that the minister talks often with lots of experts in lots of different sectors about his responsibilities. He's a very, very effective and rigorous consulter of experts in his areas of responsibility.

Senator WHISH-WILSON: I would hope so. But, specifically in relation to Dr Marshall, do you think that it's unusual that the minister would speak to him about a research report?

Senator Birmingham: Based on Minister Frydenberg's outreach practices, I don't think it's unusual at all for him to engage with anybody. He's prolific in his engagement.

CHAIR: I can vouch for that.

Senator WHISH-WILSON: Is it an acceptable thing to do to release information into the public domain from a report that hasn't been published yet? Is that a normal thing for a minister to do?

Senator Birmingham: I think that depends on a range of circumstances in terms of the nature of the sharing of the information. So, without being privy to those conversations and the context, I couldn't say.

Senator WHISH-WILSON: Did the department help the minister or assist the minister in any way with his media release two days before Christmas, which released the population?

Mr Pratt : That would go to the nature of our advice to the minister. Again, as a general answer to your question, we quite often liaise with the minister's office around media releases and the like.

Senator WHISH-WILSON: But, in relation to advice to the minister, you have to provide a reason to the Senate as to why it's not in the public interest for you to tell me whether you did or didn't provide that advice and what that advice was. Can you advise me what the public interest is for not disclosing this?

Mr Pratt : No, I'm not suggesting I have a public interest immunity claim here. What I'm saying is—and this is standard practice and, I believe, has been understood by successive governments—that the nature and content of our advice to ministers is not shared with Senate committees. Certainly we are prepared to give you general information about the fact that we provide advice to ministers around these sorts of things, including on white sharks and many other things.

Senator WHISH-WILSON: Minister Birmingham, this committee had a very long inquiry into white sharks and mitigation. It was quite an extensive report. I'm quite proud of the work that was done by the committee. We were trying to get access to that report for at least 12 months and were told it wasn't available. Within a week of our report being released, the minister had had a private briefing with Larry Marshall, the head of CSIRO, on the same report, and, not longer than a week after that, he'd put out a media release, releasing numbers before that report was published. Do you find that unusual?

Senator Birmingham: Senator, aside from your outlining there of the sequence of events, I don't have my own information about exactly how all such matters transpired. If you want to have a conversation with CSIRO about the timing of the release of information that they've undertaken and how it was released, then CSIRO estimates are the place to do so.

Senator WHISH-WILSON: I'll certainly put it to Dr Marshall and see what his account of that conversation is. Can I ask some questions on threatened species now. Ms Jonasson and Mr Richardson, after our discussion yesterday about the King Island brown thornbill and the King Island scrubtit, have you been able to go away and update yourselves on those two birds specifically, and could you tell me what recovery plan interventions have been carried out?

Ms Jonasson : No, I'm sorry; we haven't done any further work on that since last night. I'm happy to take it on notice and come back to you on that.

Senator WHISH-WILSON: Could you take it specifically on notice. My understanding is that your recovery plan called for comprehensive surveys and a decision as to whether intervention such as captive breeding or translocation was required. I can't find whether that decision's been made or those surveys have been done. Can you specifically follow that up for me?

Ms Jonasson : I'm happy to.

Senator WHISH-WILSON: Is your Threatened Species Strategy flexible enough to respond to emergencies if they should occur? And, if I could just frame this up from yesterday, these birds are the No. 1 species in the scientific report we referred to yesterday, the first two of the three birds they said are most likely to be extinct. I've gone back and found many media releases and newspaper articles about these birds, so I'm interested in what kind of flexibility you have, if you make the decision that they need an intervention.

Dr Box : Our Threatened Species Strategy absolutely is flexible to respond to emergency interventions that might be required for certain threatened species, and there have been a number of emergency interventions funded through programs like the Threatened Species Recovery Fund. We will certainly follow up with the Tasmanian government to find out where they are at with implementing their recovery actions on this particular species and ask them if there are any emergency interventions that they see might be necessary to protect that species.

Senator WHISH-WILSON: Thank you. We spoke this afternoon to the community on King Island, the group that have been working with the state government. Their feedback to us was that the King Island brown thornbill hasn't been sighted since 2015. I'd be interested if you want to check on the same thing yourself. And their observation was that the scrubtit has also declined in numbers. So, yes, I would very much appreciate it if you could look into this and if you could let me know if you think that at least surveys, if not an intervention, are required.

I've also got a media release here from a previous Liberal environment minister, Dr David Kemp, talking about conservation measures, including spending on the King Island scrubtit—this is going back way before your time—in 2002. He also talks about the listing of critical habitat for albatross species. My question is: given that the King Island birds are highly restricted—this is a similar line of questioning to what Senator Rice mentioned earlier—and there are a small number of swamps where they live, would you consider listing the areas where they live as critical habitat? Could that be part of an intervention?

Ms Jonasson : As the commissioner has mentioned, we'll have a chat with the Tassie government in the first instance to see where they're at. In terms of any listing, the process is open for nomination. Many people can nominate. But I think what we'd like to do in the first instance is have a chat with the Tasmanian government and find out where things are at from their perspective.

Senator WHISH-WILSON: I'm just wondering: would you have any record of whether the King Island community have been in touch with the department seeking resources or assistance—

Ms Jonasson : I'm not aware of it.

Senator WHISH-WILSON: in relation to surveys, or would they go through the Tasmanian government?

Ms Jonasson : I guess it depends on the nature of the requests, but I'm not aware of any requests from the King Island community. They may have applied to the Tasmanian government.

Senator WHISH-WILSON: I also want to highlight that the King Island brown thornbill, at least from my investigation, is still listed as 'endangered' rather than 'critically endangered', despite it not showing up in surveys for a number of years and the report I referenced yesterday. Is the department aware of why it hasn't been uplisted to 'critically endangered', or is my information incorrect?

Dr Box : My understanding is that the King Island brown thornbill is listed as critically endangered under the EPBC Act, but I can confirm that.

Senator WHISH-WILSON: You're saying it is critically endangered?

Dr Box : That's my understanding, but I can double-check that.

Senator WHISH-WILSON: Thank you. I have just a couple of questions on feral horses. I understand that the New South Wales government is pushing ahead with the listing of the feral horse as a heritage matter, and that's being debated in the New South Wales parliament in the next few days. I presume that this listing would limit the ability for the park to be properly managed. Have the New South Wales government consulted with the federal department on this issue?

Ms Jonasson : I'm not aware of any conversations, Senator, but I think I'd like to take that on notice just to double-check for you.

Senator WHISH-WILSON: Have you reached out to them in any way? You wouldn't need to take that on notice.

Ms Jonasson : Yes, we'll take that on notice.

Senator WHISH-WILSON: No, I don't think you would need to take that on notice.

Ms Jonasson : I haven't personally reached out to them, no. But, in terms of the department or anyone in the department, if I could take that on notice, that would be great.

Senator WHISH-WILSON: Okay. Are they obliged to consult with you? I am just thinking about the EPBC framework.

Ms Jonasson : There's no requirement for them to consult with us.

Senator WHISH-WILSON: Okay.

Senator BIRMINGHAM: I do note, Senator Whish-Wilson, that I believe the minister was asked about this today and may have expressed some concern about the environmental impact of brumbies in the alpine regions and indicated that he was likely to speak with New South Wales ministerial counterparts.

Senator WHISH-WILSON: He said that today, did he?

Senator Birmingham: I believe so.

Senator WHISH-WILSON: Has anyone or any group ever put up feral horses to be listed as a threatening process under EPBC law?

Mr Richardson : I'm not aware of it, Senator. I can take on notice if they've ever been nominated.

Senator WHISH-WILSON: That would be good. Technically, what is the role of the federal environment department in the management and conservation of natural values somewhere like the Australian Alps? Is there any jurisdiction there at all?

Mr Knudson : It would depend if it were a matter of national environmental significance. That would mean it would have to be a national heritage or a World Heritage site, in effect. I'm not sure whether the Alps—

Senator WHISH-WILSON: That was going to be my next question: are there any matters of particular national environmental significance, such as threatened species, and do we know whether they are impacted by feral horses?

Mr Oxley : The Alps are on the National Heritage List, so they are a matter of national environmental significance in that way, but it's one of those scenarios where, if there's an action proposed to be taken that would have a significant impact on the protected matter—so the national heritage value of the place—then that would need to be referred for assessment under the EPBC Act. But we don't have an active management role. The framework of the legislation is that, when there's a proposed action with a significant impact, it needs to be referred and assessed under the EPBC Act.

Senator WHISH-WILSON: Just to be clear, then: are you aware of any natural values or threatened species in the alpine national parks that may be impacted by feral horses? I wasn't quite sure if I got that in your answer.

Mr Knudson : This is a different circumstance in the sense that, normally, we're looking at someone proposing to do something. This is almost someone proposing not to do something. So—

Senator WHISH-WILSON: If you're doing work on recovering certain species in your plan, and this kind of thing has been considered as an impact—I'll give you a couple of examples. The corroboree frog and the mountain pygmy possum are in your plan.

Mr Knudson : I'm sure that there are species that could potentially be impacted by the brumbies. What I'm trying to point out, though, is that this is unique in the sense that it's a state government saying they're not going to do something, not that they're actively going to do something. If they were coming in and saying, 'We're going to cull a species,' and that was going to have an impact on matters of national environmental significance, that would be more traditional. This is the state government saying they're not going to do something. For legal reasons, because of the uniqueness of this, I'd want to take a look at this in a little bit more detail and come back to you on it.

Senator WHISH-WILSON: If you could, that would be great. This question may already have been asked. It's a general question on threatened species recovery plan listings. Why are your recovery plans reviewed every 10 years rather than every five years, as is dictated by—

Mr Knudson : It was asked by one of our colleagues earlier on.

Senator WHISH-WILSON: Thank you. That's it for me, Chair.

[18:05]

CHAIR: That then covers us off for program 1.4. Thank you very much, officers. We'll now go to program 1.6, Management of hazardous wastes, substances and pollutants. Welcome, officers. We'll start with questions from Senator Keneally.

Senator KENEALLY: Thank you to officials for attending this evening. I'd like to ask some questions about waste and recycling. Let's start with the recent announcement by the Chinese that they would ban certain types of recycling material. I also reference the British government's announcement to ban plastic straws, cotton buds and drink stirrers. I understand the Prime Minister has rejected that proposal as a policy matter for Australia. He said that the British ban on single-use plastics, such as straws, may increase pollution. Could banning some plastics increase pollution?

Mr Pratt : I'm sorry but I'm not sure what you are referencing. I've not seen this or heard it.

Senator KENEALLY: It was put to the Prime Minister that Australia could adopt the proposal by the British government to ban plastic straws, cotton buds and drink stirrers, and he said:

It's not a simple matter because it can impose additional costs and can create additional pollution.

He added:

It's largely a matter of state regulation.

These were his comments at a media conference. That's the preface. My question is: could banning plastics increase pollution in Australia?

Senator Birmingham: It would depend upon what the substitution was. I'm not entirely sure what the substitution for swizzle sticks may be.

Senator KENEALLY: Wood? Metal? I don't know, Minister. I'm just trying to understand how, if we banned plastics which are creating pollution, we would also create pollution.

Senator Birmingham: As I said, I think it does depend on what the alternatives are. Simply banning the use of one thing without contemplating fully the impacts could have unseen effects that may actually mean that the replacement goods are goods that have a longer lifespan or have less potential for reuse or the like. That would be a generic answer to your generic question.

Senator KENEALLY: Well, indeed, Minister, I'm willing to grant you that line of argument. Perhaps the Prime Minister spoke pre-emptively then? Perhaps there are solutions to plastic straws, plastic stirrers and plastic earbuds that would reduce pollution?

Senator Birmingham: Well, I think the Prime Minister was certainly accurate in noting that if there were to be bans applied to plastic straws, or stirrers, or swizzle sticks, or earbuds or whatever—and I'm starting to feel like I could do with something that entailed a swizzle stick right now!—if parts of Australia were to entertain that then, just as has been the case with plastic bags, they of course would rightly be policy matters for individual states and territories.

Senator KENEALLY: Does the government have any further plans to consider how to reduce plastics in the environment?

Ms Farrant : Yes, the government does have plans to deal with plastic, and in fact made some announcements via the meeting of environment ministers just a few weeks ago in April. For example, ministers announced that governments will work with the Australian Packaging Covenant Organisation to deliver a target of 100 per cent of Australian packaging being recyclable, compostable or reusable by 2025 or earlier. They've announced that targets will be developed and then monitored for the use of recycled content in packaging. And I guess that supporting those fairly specific announcements that deal with plastic are a range of other announcements around waste-reduction strategies through greater consumer awareness and so forth, so that people are better informed about the swizzle sticks, the straws and the whatever types of plastics they're using now and can make informed choices about whether or not to purchase and use those things.

Senator KENEALLY: I believe you're referring to an announcement made on 27 April 2018—

Ms Farrant : That's correct.

Senator KENEALLY: Did that also include a review of the National Waste Policy?

Ms Farrant : Yes, it did. In fact, that's the 2009 waste policy. That is still in force, so ministers agreed to bring forward that review and to have that review completed by the end of this calendar year. That, of course, is a great opportunity to look at updating that policy and suiting it to the contemporary issues that we're facing, including dealing with plastics.

Senator KENEALLY: This is a genuine question—I'm trying to understand the reasoning around some of the elements of that announcement. Why did the federal government make a packaging commitment while this review is underway? Why was that particular issue chosen?

Mr Knudson : I think, Senator, it's a recognition by all the ministers in that meeting that this is an urgent issue. They wanted to focus a significant part of that agenda on waste issues. The approach they took was that they knew they had to cut the supply of waste coming into the country; they knew they had to increase or to look at what the existing capacity was to deal with recycled waste; and they knew that they needed to look at ways to increase the demand for recycled products so that there's an end use for them. So they tried to look at the full range of things, starting from what sorts of targets and what sorts of signals are being sent to the market in terms of packaging.

Senator KENEALLY: What does the government's commit to 100 per cent recyclable packaging mean in terms of a substantive change to its current balance of output of recyclable and non-recyclable waste? How are we likely to see that change?

Mr Tregurtha : If I understand your question, you're asking about the commitment to 100 per cent of packaging being recyclable, reusable or compostable and how that changes the current situation?

Senator KENEALLY: Yes. Currently, what is the balance between recyclable and non-recyclable waste, and how will that change?

Mr Tregurtha : I don't have the exact figure of non-recyclable versus recyclable with me, but I can take that on notice. I can tell you that on average approximately 65 per cent of packaging materials are recycled in Australia at the moment. So the more we are able to ensure that those materials are able to be recycled or reused or composted is a key factor in helping that 65 per cent rate get lifted through the efforts of government with the Australian Packaging Covenant Organisations, as Mr Knudson said, in terms of recycling that product into markets, be they overseas or domestic markets, for recycled products.

Senator KENEALLY: As you've just said, no doubt increasing to 100 per cent recyclable packaging will lead to an increase in domestic recyclable waste. So what specific measures are being taken by the government to cope with that increase?

Mr Tregurtha : As Mr Knudson said, through that meeting of environment ministers there were the three elements. If you look at the middle of those elements, which is the capacity factors, the meeting determined, basically, to commission some work to be done to bring together information held mainly by states and territories and to ensure that we have a clear understanding about the infrastructure capacity in Australia to manage and process that waste. That's everything from your kerbside recycling and pick-up services all the way through to material recovery facilities and how those are managed and operating and the locations that those areas are in. Ministers were very conscious of the fact that, with the change to China's policy, there is likely, certainly in the short-term, to be a deficit in capacity in our existing infrastructure, and we need to understand that before we jump straight into it—understanding where the gaps are and where governments might usefully support industry to ensure that the capacity does exist to process 100 per cent of those materials.

Senator KENEALLY: Is the department aware of the report produced by the Australian Council of Recycling and its recommendations to maintain the sustainability of the Australian recycling industry?

Mr Tregurtha : We are, Senator.

Senator KENEALLY: Does the department intend on implementing any of the following recommendations: for example, an increase in factories producing paper pulp and plastic pellets?

Mr Tregurtha : As I just said, the first step in taking that action is to understand where action is best focused to deal with those gaps and elements.

Senator KENEALLY: So that's part of the review?

Mr Tregurtha : That will form an input, I think, to the review. But once ministers and governments have that information—if I can reflect on the discussions ministers had in April—there was a clear commitment that action needed to be taken. Beyond this step, there's clearly a consequential consideration for all governments to make. As the minister pointed out, a lot of the facilities and infrastructure around waste is a state and territory responsibility, so certainly there'll be a conversation around where those gaps are and, again, where government might best focus its efforts in terms of helping this problem to be resolved.

Senator KENEALLY: Given that, as the Prime Minister has pointed out, this is largely a matter for state regulation, how does the department understand the role of national government in addressing this waste crisis?

Mr Pratt : The Commonwealth government would work very closely with the states and the territories and local government to jointly have a national response to these challenges. That is the position of the Commonwealth government.

Mr Tregurtha : I would just add that the 2009 national waste strategy was a strategy that was agreed to by all governments. It was drafted in consultation across all governments and was, I think, agreed to at COAG. Certainly in the review and recasting of a redeveloped or a rejuvenated national waste strategy and policy we would expect to go along the same pathway.

Senator KENEALLY: I note that the Senate currently has an inquiry underway on this very issue. Some of the testimony we've heard would suggest that we are rapidly running out of storage space for this waste. At the moment, I understand we've got 1.3 million tonnes of surplus waste previously sent to China. Do you have any sense of how long we can continue to hold this waste before we get to a national strategy or some concrete actions that will help us—whether it's upgrading sorting centres, moving towards recycled as opposed to virgin material? All of these suggestions that have been put forward don't particularly help as we've got waste building up in councils across the country.

Mr Knudson : One of the things that can became very clear to us, even in our initial discussions with some of the states and territories, is they're already working with their local councils and looking at, quite frankly, their regulatory position with respect to stockpiling. They're making sure that the stockpiles, if they do need to be increased—and, obviously, the impact of the China decision is going to impact on the amount of waste staying in the country, so 1.3 million tonnes out of the 64 million tonnes of waste produced each year is going to be here versus going to China. So the states and territories are very focused on making sure that they take a look at their stockpiling approaches and that, if they are going to be increased, they're increased in a way that is safe for communities.

Senator KENEALLY: Is that a matter that is, in your view, largely one for states and territories?

Mr Knudson : Yes.

Ms Farrant : Senator, if I could just add: the states that have been most affected to date have announced, as I'm sure you're aware, a range of financial packages. New South Wales has announced a $47 million package, $12.4 million by South Australia, and $13 million by Victoria—a first step towards addressing the issues around dealing with waste prices.

Senator KENEALLY: One of the issues we've heard in this inquiry is that land use planning doesn't often take into account the need for waste disposal—land to be set aside for waste disposal or waste disposal facilities—when planning new population areas or increased density of pollution. Is that something that has come through in your discussions with state and territories, or does the Commonwealth have any leadership role when it comes to encouraging? I understand that land use planning is largely a matter for states but, given that there is an emphasis from the Turnbull government on cities planning, I'm wondering if that is an element of this conversation that's come through in your consultation with the states and territories.

Mr Knudson : It hasn't been a significant point of focus to date but, as you rightly point out, the fact that the Commonwealth was also involved in discussions with states and territories and local governments on City Deals, we do have one connection into that. Under the EPBC Act, we do strategic assessments which are often focused on large urban development and trying to make sure that's done in as comprehensive a way possible. I think what you're pointing to might be one of the things, quite frankly, that gets considered a little bit more comprehensively in the review of the policy and whether there's a connection there. But it hasn't come through as a strong message thus far.

Mr Tregurtha : If I could just add to that answer: the other part of that is, in the review of the policy, as Mr Knudson alluded to, there would be clearly actions that states and territories would need to undertake, as opposed to the Commonwealth government, and land use planning would clearly fall into that category.

Senator WHISH-WILSON: On the same subject—just to be clear—Mr Tregurtha, did you say 65 per cent of plastic is currently recycled or recyclable?

Mr Tregurtha : No. I said 65 per cent of packaging, on average, is currently recycled in Australia.

Senator WHISH-WILSON: Packaging? Okay.

Mr Tregurtha : So that would be all packaging—wood, plastic, cardboard—

Senator WHISH-WILSON: The whole kit and caboodle.

Mr Tregurtha : That's an average figure, Senator, of course. It would vary across different categories and types.

Senator WHISH-WILSON: Firstly, definitions: is there an accepted definition for, for example, compostable and reusable packaging?

Mr Tregurtha : The meeting of environment ministers undertook to work with the Australian Packaging Covenant Organisation. The initial part of that work will be ensuring—you're absolutely right, we need to ensure that the definitions are clear, and we will have to work towards doing that, particularly in relation to 'reusable'. There are a range of potential different definitions that we're aware of in work that's particularly been done in, say, North America and Europe. So part of the initial work towards that target will be to ensure there's clarity around exactly what is meant.

Senator WHISH-WILSON: I just highlight what you probably already know: this issue was raised and is in the 16-point plan from 2009, and your own department actually put out a report in 2012 looking at this issue. So it would be good to get that standardisation across the board, because I think it's going to be very difficult to meet these targets until you actually do that, or even know what your baseline is and what you're dealing with.

Mr Tregurtha : Indeed. As I was saying before, another of the elements from the minister's meeting was to commission that work around the information base of our capacities and what's being recycled at the moment. Part of that is to understand the data and information so that, as you say, we can set a baseline, so we understand what we're talking about.

Senator WHISH-WILSON: You may have to take this on notice, but if you know now it would be good. In terms of the scope of the target—the hundred per cent recyclable—does it include municipal or household packaging? I presume it does.

Mr Tregurtha : It includes all packaging.

Senator WHISH-WILSON: That includes commercial and industrial packaging, presumably?

Mr Tregurtha : Yes.

Senator WHISH-WILSON: Imported items, imported packaging?

Mr Tregurtha : I'd probably have to take that on notice, to be clear around that.

Senator WHISH-WILSON: Yes. And it would include packaging for things such as e-waste—TVs, that kind of thing—as well as polystyrene containers at home?

Mr Tregurtha : Yes, all consumer goods.

Senator WHISH-WILSON: It was my understanding that the packaging industry had already committed to this target previously, a hundred per cent, prior to this meeting. Is that correct?

Mr Tregurtha : I'd have to take that on notice. I'm not aware, personally, of that precise commitment or where it's been made.

Senator WHISH-WILSON: Okay. My understanding was it had already been made, so it was nothing new.

Mr Tregurtha : It may well also depend on who made it. There are a range of groups involved in that sector. So I think I'd prefer to take that on notice to be accurate about our answer.

Senator WHISH-WILSON: Okay. But this statement was from the environment ministers themselves, correct?

Mr Tregurtha : The statement in April, absolutely.

Senator WHISH-WILSON: That would be matching—hopefully, if it's true—what the packaging industry has already said. One thing the committee's found out on our travels and in evidence is it's not so much the fact that the products themselves are recyclable or reusable or compostable; it's that they're not being recycled. And, if they are being recycled, their quality is not good enough that they can actually be properly recycled and sold at a profit. So can you tell me what was in the agreements from the ministers to actually solve the recycling crisis itself?

Ms Farrant : I guess, as I alluded to earlier, one of the key things will be around encouraging waste reduction strategies through greater consumer awareness. Clearly, if people are more informed about what it is that they can recycle, what they need to do in terms of reducing contamination at that sort of very starting point of sorting their waste, then that will clearly assist.

Mr Knudson : I think it goes back, in a lot of ways, to the earlier comment I made. This is a pretty complex issue to try and deal with, and you would have undoubtedly heard that in your hearings. So that is why we're trying to look at not only engaging states and territories but also the recycling industry to figure out how you cut the supply, how you increase the processing and how you increase the demand. The actions that ministers have taken I think are absolutely all directed at those three main elements, but there's much more to be done, and that's what we'll be looking at over the coming time with ministers.

Senator WHISH-WILSON: At the risk of appearing arrogant, I would like to correct something you said there, because it's quite important: the 'actions taken by ministers' at this stage are just words, unless you can point to specific actions they've taken. My understanding is they've made pledges to do a series of things, but the problem is this was discussed in 2009 and a lot of action hasn't been taken on this issue.

Mr Tregurtha : I would respectfully disagree. For example, on microbeads, ministers recognised at the meeting that their actions in terms of working with industry—

Senator WHISH-WILSON: A voluntary ban?

Mr Tregurtha : Not just the voluntary ban. The fact that governments were prepared to stand behind that ban, with a regulatory intent if required, has led to a significant achievement in relation to microbeads. If you look back at the 2009 strategy, a lot of the work in that strategy was aimed at product stewardship. The government has put in place a Product Stewardship Act. We have the National Television and Computer Recycling Scheme which goes to hazardous waste.

Senator WHISH-WILSON: I am certainly very aware of the e-waste scheme.

Mr Tregurtha : I guess what I'm saying is that it's a mischaracterisation to say nothing has happened, but there have been a number of things that have transpired over the last decade that have advanced the situation.

Senator WHISH-WILSON: I acknowledge that. We have certainly looked at those schemes—the ones that have been done—and there are some that haven't been done so well.

Mr Tregurtha : Indeed. I do not disagree with you.

Senator WHISH-WILSON: Quite a few! But I thought you were talking about the statement made by the ministers. You said 'actions' and I was challenging the assertion that they were actions.

Mr Knudson : And I would disagree; I think there are a number of actions. Indeed, I can point to the waste energy investments that have already been made by the government. These are outlined in the statement, so I'm not going to go into the details. But there are a number of things that are tangible and happening right now. There are pieces that are about setting up future steps by governments and by industry. So I acknowledge that it is not that we are doing everything straightaway. But there are a number of pieces put in place, and some of those are absolutely happening on the ground. Mr Tregurtha talked about microbeads. It is quite remarkable that we have had that reduction in microbeads in such a short period of time. It doesn't mean the job is done, but it is significant progress in a short period of time.

Senator WHISH-WILSON: We have seen similar things overseas. But how are you going to get rid of that last six per cent? Are you monitoring why there are still any microbeads going into the ocean at the moment?

Mr Tregurtha : Yes. With that last six per cent, we are talking about personal care and cosmetic products. That is largely wipe-off products rather than rinsable products. Many of the big manufacturers have clearly changed their processes, so a lot of those products will be at the more rudimentary end of the market if I can call it that. Certainly, in conjunction with our state and territory colleagues, we are considering how best to continue to work with the industry to focus on getting that last six per cent. We are not pretending that will be an easy ask, but that is what ministers have directed us to do.

Senator WHISH-WILSON: I look forward to keeping in touch with you on that. I do not have it in front of me, but one of the large waste companies put out a media release today. I think it was Cleanaway.

Mr Tregurtha : That's correct.

Senator WHISH-WILSON: I read the press release. What interests me is that they are calling for a national CDL scheme—and we have heard this from other witnesses in our inquiry. We obviously have a number of state based schemes. I am aware of where they are all at. But, in terms of the Product Stewardship Act and the Product Stewardship Scheme, has the department looked at the possibility of a national CDL scheme if this is what industry is asking for?

Mr Knudson : The reality is that almost every state and territory has a container deposit scheme in place.

Senator WHISH-WILSON: I will correct you again. Sadly, we do not have one in my and Senator Duniam's state; we are lagging behind.

Mr Knudson : I said 'almost'. So we either have a scheme in place or committed to be in place in a short period of time. I think what we are focused on is making sure that we do work towards national coverage. But because containers are fundamentally a local issue it is best dealt with by state governments. We are making very good progress in that space and we want to continue that to get to a place where ideally we have national coverage.

Mr Tregurtha : The Commonwealth, in focusing on product stewardship schemes, historically—we continue to think about which of the waste streams pose the most risk, and that goes to hazardous wastes as well. As Mr Knudson said, the dealing of those containers can happen at a local level whereas, when you are talking about things like batteries, photovoltaics, TVs and computers, there is more likely to be hazardous waste involved, and that is something that I think the Commonwealth pays particular interest to.

Senator WHISH-WILSON: I will highlight to both of you that one thing the Senate's been hearing about is that industry wants standardisation across states. It makes sense. I've been to South Australia and the Northern Territory and I've had a look at all the schemes over many years. It just seems to me that a national scheme that is standardised would be a lot easier for everyone.

Senator Birmingham: I suspect that states will be hearing those messages too and that perhaps over time the drive towards greater consistency in the programs will become stronger.

Senator WHISH-WILSON: Okay. You mentioned waste to energy. I asked the Clean Energy Finance Corporation today if they had heard from the minister and the minister had written to them and said, 'Look at all options.' The statement reads:

Explore opportunities to advance waste-to-energy and waste-to-biofuels projects, as part of a broader suite of industry growth initiatives, recognising the reduction, reuse and recycling of waste is a priority, consistent with the waste hierarchy. This will include support from the Clean Energy Finance Corporation and the Australian Renewable Energy Agency.

In relation to that comment about the waste hierarchy, is it your understanding that that statement is referring to incineration projects, especially of soft plastics and other non-recyclable materials?

Mr Knudson : My understanding of what that's referring to is: if you think about 'Reduce, re-use, recycle,' there's a hierarchy there, and waste to energy is pretty much right at the end of the full cycle, and that's what that's referring to.

Senator WHISH-WILSON: So it's not a value judgement that it should be considered as a solution to landfill?

Mr Knudson : I don't think anyone's suggesting that waste energy is going to solve the country's recycled waste issue single-handedly, but it is part of the solution.

Senator WHISH-WILSON: I'm glad to hear you say that. I'll put my other questions on notice for now.

Senator MOORE: I want to go back to the review of the waste management plan that came out of the meeting of environment ministers. I saw the statement that came out, but it didn't go into a lot of detail about how the review would operate. We heard that the Commonwealth government is going to be working very closely with the states on it. At this stage, has there been a plan put in place for how that review is going to operate, over what time frame and how it's going to be conducted?

Ms Farrant : At this stage, the ministers are reconvening in mid-June to discuss progress, and I guess our intention is to present them with some detail for them to consider about how that review would play out. What is clear from the ministers' statement that they made in April is that the review is to be completed by the end of this calendar year.

Senator MOORE: But, in terms of the process, that is yet to be agreed? You're waiting for a model to be put up to the next meeting of ministers?

Ms Farrant : That's right, which is in just a couple of weeks, mid-June.

Senator MOORE: What's the current model for the ministers meeting? Is that regulated by the previous plan? Do they have a regular schedule of meetings around this issue?

Mr Pratt : It is agreed to by ministers, essentially.

Senator MOORE: Is there a set program? Do the environment ministers, or the ministers in each state with the responsibility for waste management, have a regular schedule of meetings that is put into the diary, and this is the only topic they talk about? I don't think there is, but I'm just trying to find out whether there is or not.

Mr Knudson : I don't believe so. For the meeting of environment ministers, it's an agreed-to agenda that's established before each meeting.

Senator MOORE: This is the standard meeting of environment ministers, where they could be talking about anything? Waste is not necessarily on the agenda.

Mr Knudson : That's correct. They deal with whatever is the priority at that time.

Senator MOORE: My understanding of the last meeting was that, because of a range of issues that had come up around many states, this was more or less an extraordinary meeting. Certainly my own minister in Queensland felt that this particular meeting had a great focus on the issues around waste management.

Mr Tregurtha : It was certainly a large focus on the waste issue, but I think it's fair to say that at most meetings of environment ministers, certainly in my experience, the issues around waste have appeared, at greater or lesser degrees of issues. For example, I talked about microbeads before. That's been on the agenda for the last three or four meetings of environment ministers, going back a couple of years, because of the action they've been taking. So, waste issues do appear.

Mr Pratt : Certainly, the June meeting that's coming up is focussed entirely on waste.

Senator MOORE: Which is a meeting that was exactly put in place because of the April meeting, so that was an extraordinary meeting.

Mr Pratt : That's right.

Senator MOORE: The process—and certainly it's one of the things that has caused a lot of discussion in Queensland recently—is the whole issue around waste. The state minister has put in place a process of talking with communities across Queensland about their concerns, because a lot of it comes to local government; a lot of the issues go back to that level. Is there any potential in the plan you've got for public consultation around the review of the new plan? I'm not tying you down. All of this is subject to the meeting of the ministers. But I'm just looking at that issue.

Ms Farrant : I guess I'd say in a general sense, when the Commonwealth consults on policies, reviews or updates, it is usual to include a broadbased public consultation process.

Senator MOORE: If the plan of it will be determined by the June meeting but have to be completed by the end of the calendar year, that gives you a time frame of no more than four months to complete the task. Is that how you see it?

Ms Farrant : I guess we'll have between June and whenever the next environment ministers meeting is after that, which—

Mr Pratt : I was giving us six months.

Ms Farrant : Yes, indeed; I'm guessing it would be around the end of the year-ish.

Senator MOORE: But in terms of the process, the month of December and getting the ministers together, if you're looking at the end of the calendar year to have a public agreed position, which is my understanding of what people are seeking in this, because there's a degree of community concern and engagement in this, it's around a four- to five-month process to have the review. Is the review intended to be done by the federal government? Or is it that even who is going to be doing it hasn't been determined yet?

Ms Farrant : I think it's probably fair to say that the federal government will lead the review, in consultation with states and territories.

Senator MOORE: Using a kind of team consultation?

Ms Farrant : Yes. We'll bring in a broadbased consultation process with community, industry and other key stakeholders that will have an interest.

Senator MOORE: In terms of any costing of the process—where does that funding come from?

Ms Farrant : At this stage, I'd have to take that on notice.

Senator MOORE: We've agreed now at the national COAG level that there's going to be this process, which is good. I'm interested in where the budget would come from. You can take that on notice.

Ms Farrant : Thank you.

Senator WHISH-WILSON: I have a couple of questions to finish off from the last few minutes of what Senator Moore was saying. When the committee spoke to you in Canberra, not long ago, you said there'd been a bit of an acceleration in meeting with industry stakeholders; you'd had a few informal—I can't remember the language you used. Have there been more meetings with industry stakeholders since we last spoke?

Mr Tregurtha : I'd say certainly there's been significant contact with a range of industry groups.

Senator WHISH-WILSON: Because they did give us the impression they were trying to knock down your door to meet with you to discuss this. It sounds like you've had a lot more activity. If it wasn't too much work—and I'm happy to have a chat with you after this session—the 2009 waste policy, the national plan, about which industry keeps saying, 'That's a good starting point; get on with that'—you've put the assertion up tonight that you have done things in this space, and that is true. Would it be possible to go through the 16-point plan and list for us what you think you have done and whether it's been achieved, for example the definitions and standards. It'd be good to—

Mr Tregurtha : I might take that on notice.

Senator WHISH-WILSON: Would that be a lot of work?

Mr Tregurtha : I'd say we undertook a review of the national waste strategy in 2012. We'd use that as a starting point.

Senator WHISH-WILSON: That was six years ago, so you could go back and look what's—

Mr Tregurtha : I'll take on notice, I think, how we might best respond to that. I'm conscious that I don't want to divert our resources.

Senator WHISH-WILSON: No, and I know there's probably a lot of work involved. But the committee will be releasing our report in June.

Mr Tregurtha : I understand that. We'll try to be as helpful as we can in terms of giving you an update on where each of those 16 commitments are up to.

Senator WHISH-WILSON: Great, thank you.

Mr Knudson : I think it's a fair statement though that, in terms of developing the new strategy, the key thing to understand is where we've been and where we're trying to get to.

Mr Tregurtha : And, Mr Knudson, we have heard that from industry as well—that the validity is still there for a number of those.

Senator WHISH-WILSON: That's what they keep saying to us: go back and get started on that. I'm not undermining what Senator Moore said about consultation, but I think they want to see some things happening.

CHAIR: That then concludes our examination of program 1.6. We'll break now for dinner and we'll return at 7.45 with program 2.1, reducing Australia's greenhouse gas emissions.

Proceedings suspended from 18:44 to 19:46

CHAIR: Welcome back. We'll now commence examining program 2.1: 'Reducing Australia's greenhouse gas emissions'.

Senator URQUHART: When did the department last publish an update of Australia's national greenhouse accounts?

Mr Archer : We recently published our December quarter inventory update. In fact, we republished it on 18 May to correct a minor edit.

Senator URQUHART: Sorry, when was that?

Mr Archer : On 18 May we republished that to correct a minor edit.

Senator URQUHART: Did you say 'republish'? What does that mean?

Mr Archer : Yes. We found some minor things that we needed to correct in the original version that we published.

Senator URQUHART: When was the original one published?

Mr Archer : I'll get back to you on that. I don't think I have the date in front of me. Also this year, we published our latest annual National inventory report, which we've also submitted to the UNFCCC. Again, I don't quite have a date for that, but that was published I think last month.

Senator URQUHART: Thank you. Did the minister put out a press release announcing that the data was now available on the website?

Mr Archer : I'm not aware that he did, Senator.

Senator URQUHART: Did the department draft a media statement announcing the release of the latest emissions data?

Mr Archer : No, I don't believe we did.

Senator URQUHART: So you didn't draft a media release at all?

Mr Archer : Are we talking about the quarterly or the annual?

Senator URQUHART: The release of the latest emissions data?

Mr Archer : I'll probably take that on notice, just because I don't want to mislead you and, again, I'm not sure whether we're referring to the quarterly report or to the annual report.

Senator URQUHART: I'm talking about the Australia's National Greenhouse Accounts, and then there was a press release saying that it was on the website. But you don't think the minister put one of them out?

Mr Archer : If there was a press release, it would have been the minister who put it out.

Senator URQUHART: But you don't know that?

Mr Archer : I'll have to check, I'm sorry. Again, I'm still not entirely certain of the report we're talking about.

Senator Birmingham: I'm sure all of the minister's press releases are on his website, if you'd care to take a look, Senator.

Senator URQUHART: Yes, but I'm asking whether the department drafted a media release, because I haven't seen one. That's why I'm asking, Minister.

Senator Birmingham: Bring the government down.

Senator URQUHART: Sorry?

Senator Birmingham: Don't worry.

Senator URQUHART: For the year to December 2017, what was the annual change in emissions?

Mr Archer : It was a 1.5 per cent increase.

Senator URQUHART: So carbon emissions rose last year?

Mr Archer : Yes. In the 12 months to December 2017, compared with the—

Senator URQUHART: Sorry—that was December, Mr Archer?

Mr Archer : Yes.

Senator URQUHART: Did they rise in 2016?

Mr Archer : Yes, they did.

Senator URQUHART: Do you know what that figure was? Don't worry if you can't put your hand on it; you can provide that on notice.

Mr Archer : We will do that.

Senator URQUHART: Thank you. Did they rise in 2015

Mr Archer : Yes, that's my understanding.

Senator URQUHART: So carbon emissions have risen over the past three years by how much of a percentage?

Mr Archer : I don't have the figure in front of me.

Senator URQUHART: Is there someone that can get that?

Mr Archer : We should be able to get that for you.

Senator URQUHART: Thank you. Do you expect emissions to rise in 2018?

Mr Archer : That sort of goes to a question around our projections. I don't have an annual series of our projections in front of me.

Senator WHISH-WILSON: Do you have other figures?

Ms H Wilson : We do have the emissions projections that we published Back in December 2017.

Senator WHISH-WILSON: For what period of time?

Ms H Wilson : They go out to 2030.

Senator URQUHART: Are they expected to rise in 2018?

Ms H Wilson : I don't have the annual series in front of me, so I'll take that on notice.

Senator URQUHART: Are you able to come back to me?

Ms H Wilson : Yes.

Senator URQUHART: Thank you.

Senator WHISH-WILSON: On that point: will you adjust that 2017 projection based on real-time data as it comes in? Do you back test or look at sensitivity of your forecasts?

Ms H Wilson : We will look to update the 2017 projections again towards the end of 2018.

Senator WHISH-WILSON: Okay, thank you.

Senator URQUHART: I've got a couple of other questions that come off that question about the emissions in 2018, so I'll wait till you provide that then come back to that. Can you tell me how the government is planning to reach its 26-28 per cent cut in emissions on 2005 levels by 2030?

Mr Archer : Yes. I refer you to the 2017 review of climate change policies, but, to give a brief snapshot of that: the government has a range of policies in place which are already reducing emissions both towards our 2020 target and our 2030 target. That includes the Emissions Reduction Fund, the Renewable Energy Target and the phase down of ozone gases. The 2017 review also points out that there are processes in place to further develop policies. Chief among those would be the National Energy Guarantee and the examination of motor vehicle standards and fuel efficiency standards through the ministerial forum—just looking at those issues. The review also explains that the government will adopt a review-and-refine approach in line with the Paris Agreement commitments so that the policies will remain under review and be refined as required as we move towards 2030.

Senator URQUHART: Thank you. You mentioned the emissions reductions fund, but that did not receive any extra funding in the budget, did it?

Mr Archer : That's correct.

Senator URQUHART: So how much longer will the ERF run for?

Ms H Wilson : I know you asked that question of David Parker, head of the Clean Energy Regulator. That depends on a range of factors.

Senator URQUHART: What are those factors?

Ms H Wilson : It depends on the demand that comes into the auctions. The Clean Energy Regulator said yesterday they'll hold an auction on 6 and 7 June, but I think Mr Parker's exact words were that the $265 million that is remaining could last several years, but it does depend on the number of new projects that come in to bid in future auctions.

Senator URQUHART: Okay. Once the ERF has run its course, what will be the main policy driver to lower emissions in the Australian economy?

Ms H Wilson : As Mr Archer has said, there are a range of other policies currently under development such as the National Energy Guarantee and the Ministerial Forum on Emission Vehicles. We also have the safeguard mechanism. I would make the point that the government is not the only purchaser of Australian carbon credit units. Under the Emissions Reduction Fund we also have the private sector that does make purchases, sometimes voluntarily, of those Australian carbon credit units.

Senator URQUHART: In relation to the Emissions Reduction Fund, will it run to 2030 under any realistic scenario?

Mr Archer : There are a range of realistic scenarios under which the ERF could run to 2030, but underpinning all of them would be that the government decided to continue to use it.

Senator URQUHART: So what would be some of the scenarios where it could run out to 2030?

Mr Archer : I think the principal scenario is that there is a decision by the government to continue to use the fund.

Senator URQUHART: Considering annual emissions from transport over the year to December 2017 increased by 3.4 per cent when compared with the previous year, what's the plan to reduce emissions in the transport sector?

Mr Archer : I did refer earlier to the work of the ministerial forum, which is looking at motor vehicle fuel efficiency standards, fuel quality and also noxious emissions. So that is certainly a key element of the government's approach to pursuing emissions reductions over time in the transport sector. I think we've also heard or I'm certainly aware of the fact that bodies like the CEFC are supporting work in relation to electric vehicles. I think we also heard today and I would back up the fact that there's early-stage work being done to explore the opportunities in relation to hydrogen as a fuel as well.

Senator URQUHART: Can you just step me through some of the things the ministerial forum might be looking at?

Mr Archer : I might refer to my colleague Ms Milnes on that question.

Ms Milnes : You touched on the issues that the Ministerial Forum on Vehicle Emissions is looking at. The first is that the government is considering the introduction of a fuel efficiency standard. This would apply to new light vehicles. The second issue it's focused on is strengthening noxious emissions standards, and the third is around strengthening fuel quality. More generally, the forum is looking at ways that you could encourage or promote the uptake of low-emissions vehicles.

Senator URQUHART: Thank you. So the ministerial forum is looking into the implementation of vehicle emissions standards?

Ms Milnes : Yes, with respect to both noxious emissions and also greenhouse gas emissions.

Senator URQUHART: Would the government implement vehicle emission standards?

Ms Milnes : That's what's being considered by the forum.

Senator URQUHART: But it is just at a consideration stage at this point?

Ms Milnes : That's right.

Senator URQUHART: Minister, do you want to add anything there?

Senator Birmingham: No. The advice from officials is correct. The government's working through a process in that regard.

Senator URQUHART: Thank you. Under the proposed National Energy Guarantee, the government is assuming the electricity sector only does its pro-rata share of emissions reductions, 26-to-28 per cent target. If the electricity sector only does its pro rata share of emissions reductions under the 26-to-28 per cent emissions reduction target, will the other sectors be able to match their pro rata share in reducing their emission? For example, will agriculture, transport and manufacturing be able to reduce emissions in their sectors by 26 per cent of 2005 levels by 2030?

Ms H Wilson : As I think the Climate Change Authority made the point yesterday, we don't accept the proposition that there needs to be a direct sector share for every sector. The 2017 sector review by the government did made it clear that there's a tool kit of policies in every sector. You are correct in saying that the government has said through the guarantee that the electricity sector would do a 26 per cent reduction, but in the other sectors there are different opportunities and challenges with reducing emissions, and we take a sector-by-sector approach.

Senator URQUHART: Those sectors could be able to reduce their sector by less. Is that what you are saying?

Ms H Wilson : No, that is not what I'm saying. I'm saying that there are a range of policies in place across every sector of the economy, and depending on the challenges and opportunities of reducing emissions in individual sectors that's how the policies will work. The government's made it clear that it will meet the 2030 target.

Senator URQUHART: Given that most sectors are not like electricity, in that their emissions have risen since 2005 rather than fall, isn't it the case that a pro rata sectoral distribution of a national abatement target of 26 per cent actually means that electricity will need to do less than 26 per cent from today's emissions while other sectors will need to do more?

Ms H Wilson : Senator, I might correct something that I think I heard you say, so please tell me if I'm wrong. It's not quite the case that every sector's emissions have risen over the past few years. I know emissions in the land and agricultural sectors have been coming down over time, so it's not the case that emissions have been rising in every single sector—

Senator URQUHART: No, I didn't say every; I said most sectors are not like electricity.

Ms H Wilson : If you could repeat the second part of your question, please?`

Senator URQUHART: The second part was: given that the emissions have risen since 2005 rather than fallen, which they have in the electricity sector, isn't the case that a pro rata sectoral distribution of a national abatement target of 26 per cent actually means electricity will need to do less than 26 per cent from today's emissions while other sectors will need to do more?

Ms H Wilson : I'm not quite sure I understand the question. I think the government was quite clear when it set that 26 per cent share for the electricity sector that what it was doing was striking the right balance between needing to look at energy affordability, energy reliability and reducing emissions. No, it doesn't necessarily translate that other sectors need to do more. The future is inherently uncertainly. The emissions projections keep coming down. Again, the government has said that every sector will play a role in meeting the target. It depends on a whole range of factors. What happens over the next 12 years, as I said, is very uncertain. So, no, it doesn't necessarily translate that other sectors will either do 26 per cent or do more. It will depend on the circumstances in each sector and the policies in place in each sector.

Senator URQUHART: If electricity does 26 per cent on 2005 levels, does this mean other sectors taken together must do at least 26 per cent on the 2005 levels too?

Ms H Wilson : No, as I said, it really depends on what happens over the decade with our overall emissions and the challenge that we have to meet the 2030 target. It's emissions over time that matter; not at a point in time.

Senator URQUHART: Did you provide advice to government about the sectoral abatement task implications that a pro rata allocation of the national abatement task would mean prior to the government adopting this policy of sectoral pro rata abatement allocations?

Senator Birmingham: I think that goes a little directly to the nature of advice to government.

Senator URQUHART: Sorry?

Senator Birmingham: That goes rather directly to the nature of advice to government, which Mr Pratt has addressed already today, and the longstanding convention practiced at estimates hearings that departments don't reveal the nature of advice to government.

Senator URQUHART: Do you compare Australia's carbons emissions data with comparable countries?

Ms H Wilson : Yes.

Senator URQUHART: What are those countries?

Mr Archer : We might have to take that question on notice. There could easily be 10 or 15 countries, I think, which have roughly the same emissions as Australia. I don't think we have the details here with us to run through that.

Senator URQUHART: So you don't have—

Ms Milnes : The point is that we would routinely look at where Australia sits and look at how we're performing relative to others. We don't have a set set of countries, if you like, but we would ordinarily look at other G20 countries, for example.

Senator URQUHART: I will go back to the previous question. I'm not going to ask about the provided advice, but was advice provided about the sectoral abatement task implications of the pro rata allocation? I'm not asking you what the advice was; I'm asking: did you provide advice? I don't think you could—

Senator Birmingham: You're asking in a very specific topic area.

Senator URQUHART: I'm just asking if advice was provided.

Senator Birmingham: If you ask, 'Does the department provide advice about meeting Australia's emissions reductions targets?' Yes, of course the department does. That's a core part of its function—business and advice to government.

Senator URQUHART: Yes, but I'm asking whether or not advice was provided.

Senator Birmingham: You're asking for something that more directly goes to the nature and content of the advice.

Senator WHISH-WILSON: Why can't you answer that? It's an important matter of public interest.

Senator Birmingham: It's also an important matter of public interest that departments provide free and frank advice to governments, hence the longstanding practice in the extent to which departmental advice is questioned.

Senator URQUHART: Minister, every time I ask any other department whether or not advice was provided, I usually get an answer. It's not a difficult question. I'm not going to the nature of the advice. I'm asking about whether advice was provided.

Mr Pratt : But you have asked whether or not we've provided advice on sectoral targets. We certainly have provided a great deal of advice around sectoral emissions levels, so yes to that.

Senator URQUHART: Good. I want to go back to the countries.

Ms Munro : Can I clarify the question and exactly what you're after?

Senator URQUHART: The question was: do you compare Australia's carbon emissions data with comparable countries? If so, what are those countries?

Ms Munro : There was a lot of analysis undertaken at the time Australia put forward its intended nationally determined target. As part of that, we looked at how our target compared to developed countries and major emitters. In terms of comparable countries, but also when you look at emissions, countries like Canada, South Korea and the UK are more or less one or less than two per cent of global emissions, which is similar to Australia.

Senator URQUHART: That was South Korea, UK and—what was the other one, sorry?

Ms Munro : It was Canada.

Senator URQUHART: Are those countries also seeing an upward trend in carbon emissions?

Ms Munro : There's variability in what's happening year-on-year in different countries.

Senator URQUHART: Do you have any other information that you can provide?

Ms Munro : For example—and this is based on differences between 2013 and 2014 emissions, which is the last comparable year of being able to compare emissions—Canada's emissions in 2013 were 738 million tonnes of CO2 equivalent. In 2014, they increased to 745 million tonnes of CO2. We usually look at the EU as a bloc, considering that they put forward targets collectively. For example, the EU's emissions were 4.225 million tonnes in 2013, and in 2014 it was 4,054 million tonnes.

Senator URQUHART: So your figures only go to 2014. You can't give me the past three years.

Ms Munro : That's the last comparable global assessment that we actually have. That's one of the things that we're looking at under the Paris Agreement: how we get more regular, up-to-date emissions.

Senator WHISH-WILSON: What was Australia's annual tonnage?

Ms Munro : In that scenario, Australia's emissions were 580 million tonnes in 2013 and they increased to 589 tonnes in 2014.

Senator URQUHART: What about South Korea?

Ms Munro : South Korea was at 673 million tonnes in 2013 and 671 million tonnes in 2014.

Senator URQUHART: Has the department provided advice on implications for other sectors of the electricity sector having a pro rata abatement target?

Mr Pratt : That's almost identical to the question we were discussing a few minutes ago. We have certainly provided a great deal of advice around sectoral emissions levels but, beyond that, we're getting into the nature and content of our advice to the Minister.

Mr Archer : Sorry, Senator, I did have an answer to one of your earlier questions. You were asking about the growth rate in emissions.

Senator URQUHART: Yes.

Mr Archer : This is based on the information that we have on page 36 of our last quarterly update, which includes a table of annual emissions. In 2014-15, emissions were 517.2 million tonnes. In 2016-17, emissions were 530.8 million tonnes. Based on my calculation, that's an increase of 1.88 per cent.

Ms H Wilson : I also have an answer. You asked about emissions in 2018.

Senator URQUHART: Yes.

Ms H Wilson : Emissions in 2018 are projected to fall by five million tonnes to 549 million tonnes.

Senator URQUHART: Thank you.

Senator WHISH-WILSON: I will ask you about the Gorgon carbon and capture storage project, which was approved under EPBC Reference: 2003/1294. I understand that Chevron has been unable to store the 80 per cent of CO2 emissions from their LNG processing for the Gorgon gas project, as required under their licence conditions. The media has reported on this in the last two weeks. I understand the Commonwealth has also indemnified the project by the WA government. This is listed in the statement of risks. I was wondering if the WA government or Gorgon has provided the department with an update as to when this project is expected to be able to capture and store some of its CO2.

Ms H Wilson : Not that I'm aware of, but that might have been a question better put to some of my colleagues in earlier outcomes.

Senator WHISH-WILSON: Which ones? I was advised by the committee that this is the appropriate place to ask these questions.

Mr Archer : From the point of view of tracking Australia's emissions, we certainly have an interest in the efforts of the project to store carbon. I would have to take on notice whether we've received a formal update from the company on the outlook for the commencement of storage. I have in the back of my mind that we have somehow come across information from the company that indicated that that might commence early next calendar year. As I said, we'll take that on notice and confirm what information we do have.

Senator WHISH-WILSON: Can you add whether you've received any advice from either stakeholder as to whether the project's likely to be successful, per se. My understanding is that the project releases about five million tonnes of carbon dioxide into the atmosphere annually. That would've been captured and stored had this proposition worked. Are you factoring that into your emissions projections? Is that five million tonnes currently in our emissions or was it assumed that this would have worked by now?

Mr Pratt : How many tonnes did you say were being released?

Senator WHISH-WILSON: Five million per annum. So about one per cent of the number I was just given—substantial in the perspective of the 1.8 per cent annual increase we saw.

Mr Archer : Certainly, in relation to the greenhouse gas inventory, we take information from the national greenhouse energy and reporting system—the information that companies report on their emissions through that system. So my understanding is that we would be picking it up. In fact, yes, we are picking it up. In relation to what we're reporting as our estimates of actual emissions, that would be being reflected in those.

Senator WHISH-WILSON: Could you take that on notice just to be 100 per cent sure of that?

Mr Archer : Yes. I'm quite sure we're happy to come back and confirm that.

Senator WHISH-WILSON: In that respect, has the government investigated CO2 emissions from flaring over the past three years by that operator?

Mr Archer : I wouldn't say that we've investigated it, but, again, there are obligations on companies to report their emissions.

Senator WHISH-WILSON: So, if they've been flaring the gas and putting that CO2 into the atmosphere, they would be reporting that, and you're confident about that.

Mr Archer : That's my understanding, Senator.

Senator WHISH-WILSON: And that would be included in the accounts. So, of the CO2 emissions from flaring, have you any idea what proportion of that would be subject to requirements to store CO2 under that particular EPBC referral?

Mr Archer : No, I'd have to take that on notice. Even the proposition that that was a requirement, I would have to check.

Senator WHISH-WILSON: It was indeed, yes. I can't really ask you much more if you don't have that information. But if you could just check that that's 100 per cent watertight, that would be appreciated.

Mr Archer : Yes, Senator.

Senator WHISH-WILSON: There is just one thing that I would be interested in as well. Under that same referral, the minimum requirement of 80 per cent is calculated as a five-year rolling average, but, if the amount fell significantly below 80 per cent, Chevron had to report this and take steps to offset these emissions. Could you check whether there's been any attempt to offset those emissions?

Mr Archer : Yes, certainly.

Senator WHISH-WILSON: We know they have flared this gas for three years now without capturing it and storing it.

Mr Archer : The matter of the EPBC Act referral does relate to another part of the department, so we'll have to check.

Senator WHISH-WILSON: Okay. But, yes, it would be about one per cent of the nation's annual current emissions, so I think that's significant.

CHAIR: Senator Urquhart.

Senator URQUHART: I'm just going to go back to the ones that I asked earlier, and you directed me back to 2.1, on the pro rata emissions targets. When was the decision made that the electricity sector's share of the government's 26 per cent emissions reduction target would be a pro rata share of 26 per cent?

Mr Pratt : Senator, I thought I answered that earlier this evening. It was late last year, with the announcement of the National Energy Guarantee.

Senator URQUHART: Yes, you did. I just wanted to check that you were going to give me the same answer.

Mr Pratt : I'm glad to say my memory lasted that long.

Senator URQUHART: Very well, I think you get 10 out of 10 for that. Was a pro rata sectoral division of emission reductions targets the orthodox approach of setting sectoral emission reduction goals prior to this decision?

Senator Birmingham: I think you asked that question before.

Senator URQUHART: I did.

Senator Birmingham: And I answered it at the time by explaining that different approaches in meeting Kyoto 1 targets and Kyoto 2 targets have been taken by various governments of the day, and I'm not sure you could ascribe anything as being an orthodox approach in that sense.

Senator URQUHART: And I think I wrote down 'No', so nothing's changed. So I think this is where I got sent off to 2.1. Did the department perform any whole-of-economy analysis to inform the decision about a pro rata emission reduction obligation for electricity?

Ms H Wilson : No, Senator, we didn't do any whole-of-economy modelling. But, through the 2017 review of climate change policies, as I said, we took a sector-by-sector approach and looked at the different opportunities and challenges of reducing emissions in each sector.

Senator URQUHART: Yes, okay.

Senator WHISH-WILSON: Sorry to be rude, but, so I can leave, could I just ask one more question on notice that I forgot to ask?

Senator URQUHART: Yes, but I'm halfway through this. Can I just finish this one?

Senator WHISH-WILSON: Sure.

Senator URQUHART: Ms Wilson, just to be clear, the decision was taken without any regard for the impacts on other sectors of the economy, most of which have no readily available emission reduction options at hand, unlike electricity?

Ms H Wilson : That's not what I said. The government took the decision with respect to the target for the electricity sector. I said that through the 2017 review of climate change policies we looked at every sector of the economy and the different opportunities and challenges of reducing emissions in each of those sectors.

Senator WHISH-WILSON: Just in relation to my last line of questioning around Gorgon, could I ask, Ms Wilson, about those projections you talked about earlier that you'll re-adjust in 2018? Given that this is the biggest resources project in the country, and it's five million tonnes per annum, could you also take on notice whether it's currently in your projected forecasts that it would have been captured and stored and, if not, whether it will change your projections?

Ms H Wilson : Sure.

Senator WHISH-WILSON: Thank you.

Senator URQUHART: Have emissions in the electricity sector fallen or risen since 2005, which was the base year for the 26 per cent target?

Mr Archer : Electricity sector emissions for 2004-05 were 197 million tonnes. In 2015-16—a comparable financial year basis—they were 195 million tonnes, which is two million tonnes lower. Not directly comparable but for the year ending December 2017, electricity sector emissions were 184.5 million tonnes.

Senator URQUHART: Yes. So they've fallen.

Mr Archer : Yes.

Senator URQUHART: Have emissions in the transport and industrial sectors fallen or risen over the same time period?

Mr Archer : My understanding is that they have risen over that period. I can check that for you. Transport emissions in 2004-05 were 82 million tonnes. In 2015-16 they were 97 million tonnes. So, yes. Sorry, what was the other sector you were asking about?

Senator URQUHART: Industrial sectors.

Mr Archer : For industrial processes in 2004-05 it was 32 million tonnes. In 2015-16 it was a little bit higher, at 34 million tonnes.

Senator URQUHART: So, they've risen. What policies does the government have in place to lower transport and manufacturing sector emissions?

Mr Archer : I think we've talked about transport already.

Senator URQUHART: Yes.

Ms H Wilson : And in the industrial sector we have the safeguard mechanism.

Ms Milnes : And you can do emissions reduction projects with respect to both the industrial sector and the transport sector under the emissions reduction fund.

Senator URQUHART: Thank you. Is the department confident that these policies will deliver a 26 per cent emission reduction in these sectors on 2005 levels by 2030? Or do you think other policies will be needed?

Ms H Wilson : Senator, I think you keep going back to asking whether each sector will do a 26 per cent reduction, and I keep saying that that's not how this is necessarily going to work. The government has been clear that the 2030 target will be met and that they have a suite of policies in place that can be adjusted over time, if required, to make sure that the Australia-wide 26 per cent reduction by 2030 is met.

Mr Pratt : And if I can jump back to the transport and industry emissions levels, they have gone up in absolute terms over that period, as Mr Archer has run through. And I'll correct this on notice if it is wrong, but I believe that, if you were to look at it on a per capita basis and compare the size of the transport fleet between 2004-05 and 2016-17 and ditto the size of the industry then and now, then in fact emissions levels on a per capita basis will have come down.

Senator URQUHART: Okay. Can you just step me through what policies are actually in place in transport and industrials?

Ms H Wilson : In the transport sector, as Ms Milnes has said, there are one or two methods under the Emissions Reduction Fund. There are a range of ways that the Clean Energy Finance Corporation and the Australian Renewable Energy Agency are supporting emissions reductions in the transport sector, and the Ministerial Forum on Vehicle Emissions is considering the policy, as Ms Milnes said.

In the industrial sector, we have the safeguard mechanism which places emissions limits, known as baselines, on Australia's largest emitters.

Senator URQUHART: Right. Can I just step you back to transport, because I asked what policies are actually in place? My understanding is that some of those ones that you talked about before are still under discussion?

Ms H Wilson : That's right. That is the Ministerial Vehicle Emissions Forum work, looking at fuel efficiency standards.

Senator URQUHART: Yes.

Ms H Wilson : That is still under consideration.

Senator URQUHART: Right. Can the department provide the sectorial emission reduction required by each sector of the economy over the 2020s, using projected emissions in 2020 as a base in order to meet the pro rata allocation of the national 26 per cent emission reduction target? I'm happy for you to take that on notice.

Ms H Wilson : Sure.

Senator DI NATALE: I'm not sure if I've missed this, but, first up, can the department please take on notice to provide the 2005 sector-by-sector emissions currently reported in the quarterly accounts? That's given that we have now changed the baseline from 2000. I just want to make sure that we get that on the public record to see what we're measuring against. Are you able to do that?

Mr Archer : Yes.

Senator DI NATALE: Thank you. I'm interested in talking about the very significant change that occurred in our greenhouse accounts between June 2017 and the next quarterly account in September 2017. There was a very significant shift in that quarter. To what do you attribute that shift?

Mr Archer : I'd really have to look at the numbers to see exactly what you're referring to there.

Senator DI NATALE: Okay. Perhaps I can just point you to the fact that what we've seen is that all the data to date had shown that pollution was going up. But what we saw in that quarter was that despite the fact our pollution was increasing, we were significantly closer to reaching our emission reduction targets. How do you account for that?

Mr Archer : Without being able to look at the precise numbers that you're referring to, I'm not really able to respond to that question.

Senator DI NATALE: Well, perhaps, let me be very explicit. Has there been a change in the way that emissions have been calculated between the June 2017 and September 2017 quarters?

Mr Archer : We are often refining our methodologies to improve our estimates—

Senator DI NATALE: Refining?

Mr Archer : of Australia's—

Senator DI NATALE: Is that the word you used? Refining?

Mr Archer : Yes. Refining our methodologies to improve the estimates of Australia's emissions. I don't recall that we made any substantial changes in our approach between those two quarters. When I look at the national inventory totals reported between June and September, they're quite similar numbers. So, again, without being able to look at exactly what you're referring to, I—

Senator DI NATALE: In the June figures it says that we were 9.1 per cent below emissions in 2005. That's under data table 2. Then in the September 2017 figures, it says that we were 12 per cent below emissions in 2005—a very significant drop in our targets, and yet an increase in emissions. I don't understand how that's possible.

Mr Archer : I'll have to take that on notice to look exactly at the tables that you're referring to, if you're able to provide that to me today.

Senator DI NATALE: I just don't understand how emissions can go up and we can be significantly closer to meeting our Paris targets.

Mr Archer : As I said, I'd have to look at the numbers.

Senator DI NATALE: If you have a look at the graph, if you look at figure 23—

Mr Archer : I'm sorry, Senator, which report are you actually referring to?

Senator DI NATALE: The Quarterly update of Australia's national greenhouse gas inventory: June 2017.

Mr Archer : I don't have that in front of me. I've got the most recent report. I don't have the series—

Senator DI NATALE: And then I have the September one, and I'm comparing the two graphs. In the first graph, in the June 2017 quarter, what we saw was a year-on-year increase in emissions, yet in the September 2017 report, what we see is a decrease in emissions from 2013 to 2015.

CHAIR: Should we provide a copy of that to the witness?

Senator DI NATALE: Yes, I'm happy to. Perhaps that might be an easier way. Are we able to provide that information? Thank you. What I'm getting at is that you say that you're constantly refining, but that looks like more than just refining the way emissions are calculated; it looks like a very significant change.

Mr Archer : I would have to go away and have a closer look behind the numbers here. One thing I would need to check, I think, is whether we've switched to reporting on a financial year basis as opposed to reporting for the 12 months to the particular quarter in question.

Senator DI NATALE: Isn't it because of the LULUCF changes?

Mr Archer : I beg your pardon?

Senator DI NATALE: I thought it was to do with the LULUCF changes.

Mr Archer : The numbers in the tables both include the land sector. So you're suggesting that we've revised it? Just looking at the two tables, my strong inclination is that we're looking at figures that aren't comparable because they're comparing 12 months to different quarters, if you can follow that.

Senator DI NATALE: No, I can't.

Mr Archer : For the June 2017 publication, what could be happening is that the annual figures there are the 12 months to June in each year reported, whereas in the other table they're the 12 months to September, which would result in a difference in the figures.

Senator DI NATALE: Are you suggesting that it's got nothing to do with the changes to the way that you're accounting and it's simply changing the time period?

Mr Archer : I'll take this on notice, but I don't recall that we've made a methodological change that would result in such a significant change in the emissions. I could be mistaken, which is why I want to take that on notice.

Senator DI NATALE: I think it's really important because I can't understand how in that quarter you can see that bigger jump. Your explanation doesn't make sense because if you have a look at the graphs, the graphs show over a period of two or three years—I haven't got them in front of me now. In the June 2017 period, you've got emissions going up every single year, whereas in the September graph you've actually got a decrease for a period of time in emissions.

Mr Archer : Yes, I certainly understand your question and your consternation, so we will look into that for you.

Senator DI NATALE: It's pretty significant. You get what I'm saying, don't you? It's a very significant shift in the figures. What I can't understand is how we can have greenhouse reporting figures where pollution's going up, and yet we're getting closer to achieving our Paris targets; we've made a there per cent gain on our emissions reductions target despite the fact that pollution is going up.

CHAIR: I think the witnesses have said that they'll take that on notice.

Senator DI NATALE: Okay. I suppose we're probably going to have to leave that bit of questioning there. Minister, you stand up and talk about how we are on track to meet our emission reduction targets that we set in Paris. How are we to take that seriously when we've seen emissions go up and yet a reduction in the targets that can only be accounted for by a change in the way that the numbers are counted rather than any material change?

Ms H Wilson : Senator, I might just make one point. Certainly when it comes to meeting our 2020 target two of the reasons are that we've seen in the past little while higher levels of carbon stores in forests than previously estimated and we've also had lower projected emissions from mining and manufacturing, so it's not entirely due to some sort of methodological change.

Senator DI NATALE: Hang on; I want to just get to the forest question. Forest and land use went from a 400,000 tonnes source of emissions to a 22 million tonne sink.

Ms H Wilson : As we said, we'll take that on notice.

Senator DI NATALE: No, you just mentioned forest—

Ms H Wilson : I did with respect to meeting the 2020 target going forward. You were asking about meeting our 2020 target, so about looking forward. That's one of the reasons going forward to 2020. When it comes to the past inventory we've taken that on notice. I have already texted an expert so hopefully we can—

Senator DI NATALE: We've gone from forests being a big source of emissions, nearly half a million tonnes, to suddenly becoming a sink and that is when there has been a fivefold increase in land clearing in Queensland. How does that happen?

Mr Archer : The story around land sector clearing and land sector emissions is quite complex, including in Queensland. We have seen some increases in primary forest clearing in Queensland. We've actually seen a greater increase in clearing of what we classify not as forests—the technical term has escaped me; it's not dense forest cover but more shrubs. The emissions associated with clearing that class of land are much lower than they are with primary forests. The other factor here is that we are reporting net emissions and there have been significant amounts of regrowth in Queensland. That's a big part of the explanation of why we are seeing a net outcome which is the land sector being a sink.

Senator DI NATALE: Are you saying that, even though there has been a fivefold increase in land clearing, there have been gains in regrowth not just to cover that fivefold increase in land clearing but to make a 44 times increase in the net benefit from those regrowth forests? It's gone from half a million tonnes source of emissions to a 22 million tonnes sink. That defies belief. That's in the context of a fivefold increase in land clearing.

Mr Archer : Sorry, Senator, what are the time periods that you're comparing? The two figures that you're referring to are—

Senator DI NATALE: You've got my graph there. I'd need to go back and have a look at it.

Mr Archer : Since 2004-05 at least net land sector emissions have declined by 106 million tonnes. In 2015-16 net emissions were down by 3.8 million tonnes. Certainly Queensland is the largest source of forest clearing emissions, contributing half of the national total in 2015-16. As I've explained, a significant proportion of that is clearing of forest regrowth, so it's land that has been previously cleared, or clearing of what we call sparse or subforest woody vegetation, which is reported under the grasslands category. Generally there are very negligible net emissions associated with the clearing of that type of land. The outcomes that we're reporting are the net outcomes of all of these factors.

Senator DI NATALE: Do you monitor emissions from land clearing projects that have been approved?

Mr Archer : The 'projects' you're referring to are—

Senator DI NATALE: Some people might call them projects—from any land clearing that's occurred. Do you monitor emissions from those areas that would otherwise be potentially counted as a sink?

Mr Archer : We use geospatial information from satellite data to monitor changes in land cover right across Australia.

Senator DI NATALE: So, if land is cleared, that's accounted for?

Mr Archer : Correct.

Senator DI NATALE: So that fivefold increase in land clearing would be accounted for?

Mr Archer : Yes. Without accepting that figure, because I'm not sure where it comes from, we do our very best to account for land clearing right across Australia. But we don't look at it on a project-by-project basis.

Senator DI NATALE: Can I ask what the emissions from land clearing have been since the government was elected in 2013?

Mr Archer : I'd have to look that up. I don't have that figure in front of me at the moment.

Senator DI NATALE: Could you take on notice all land clearing emissions from 2013.

Mr Archer : Certainly.

Senator DI NATALE: I'm not sure if you've got any more information on that other area; I suppose we might just have to wait until we get that on notice. A quick question: what's the goal of the proposed changes to the safeguard mechanism?

Ms H Wilson : I'm not quite sure what you mean by 'goal'. Let me just start by saying the government is currently consulting on a proposal to make the safeguard mechanism fairer and simpler, and no decisions have yet been taken.

Senator DI NATALE: What's the timetable for that consultation?

Ms H Wilson : As I think my colleague Mr Archer said yesterday, the government released a consultation paper earlier in the year. Consultation on that paper closed on 30 March. The government is considering the submissions it received on the consultation paper and will be consulting on draft legislation in the middle of the year with a view to having any changes take place from the 2018-19 compliance year.

Senator DI NATALE: So you don't have anything more to add in terms of the middle of the year? You haven't got a more specific date?

Ms H Wilson : No, sorry. As I said, the government is still considering all the submissions that we received. The government will then take a decision on the sort of draft legislation, and we'll consult on that draft legislation.

Senator DI NATALE: So at this stage it's looking like we're going to move away from a baseline that's calculated on absolute emissions. Is that right?

Ms H Wilson : What happens at the moment is that baselines are set using historical emissions, and the proposal that we're looking at is that baselines could then be set based on a company's forecast of production. That is, I should note, actually allowed under the current framework. Under the current approach, baselines, as I said, are set with reference to historical emissions. But companies under the current framework also have the ability to apply for a calculated baseline, which, as I said, is based on a forecast of its production.

Senator DI NATALE: So why do you need to change it? Why would it need to change?

Ms H Wilson : Through the 2017 review, we heard from a lot of people that, while the safeguard mechanism is working relatively well, there was an opportunity to make it fairer and simpler. So, what's on the table and what's being proposed is allowing everybody to move to this calculated baseline.

Senator DI NATALE: To be really clear, because it's quite a technical area, what you're doing is proposing to move away from a model where there's an absolute emission to giving a particular industry, if they're projecting growth, the capacity to actually increase the level of total pollution?

Ms H Wilson : As I said, what we're proposing is to allow people to transition to this calculated baseline, allowing them to do a forecast of their production.

Senator DI NATALE: Isn't the whole point to try to uncouple emissions from growth? Isn't that the whole point here?

You basically say, 'You know what, you guys are going to produce a little bit more, so we're going to allow you to increase your emissions profile.' That's ultimately what the outcome of this is, isn't it?

Ms H Wilson : Not necessarily, Senator.

Senator DI NATALE: What other outcome is there? If somebody adjusts their calculated baseline based on projections of future growth, that allows them to pollute more.

Ms H Wilson : Not necessarily, Senator. That's not what we said. Not necessarily. Production of a company can go up and down based on a whole range of factors, and economic circumstances are one.

Senator DI NATALE: Why would you apply to have this in the current setting or in the new setting and relax the rules around it if it's not to increase your absolute emissions?

Ms H Wilson : One of the objectives that the government set for the safeguard mechanism is that baselines would allow businesses to continue normal operations.

Senator DI NATALE: Yes, but you're making it easier for them to increase their absolute emissions.

Ms H Wilson : That's not what I said.

Senator DI NATALE: But isn't that what this change does?

Ms H Wilson : No, Senator. What we're proposing and what we're out consulting on is that baselines are currently set with reference to historical emissions, and the proposal is to transition everyone to a calculated baseline, with the production varying with economic conditions.

Senator DI NATALE: I know you're very reluctant to address what is a very direct question, but isn't the effect of this change to make it easier for industry to increase their absolute emissions under the safeguard mechanism?

Ms H Wilson : Not necessarily. It will depend on companies' forecasts of their production.

Senator DI NATALE: And if their forecast of their production is an increase, will it make it easier for those companies to increase their emissions?

Ms H Wilson : It will allow companies to have a baseline that will be set with reference to their forecasts of their production.

Senator DI NATALE: So if the forecast of their production is higher the baseline is higher and therefore the emissions are higher. Is that correct?

Mr Pryor : Senator—

Senator DI NATALE: Sorry, you were prepared to answer previous questions, and now you're turning to your colleague?

Ms H Wilson : He's the expert. I'm happy to keep answering.

CHAIR: He's had two words out of his mouth; let's let him get a sentence out.

Senator Birmingham: Officials are able to defer questions to each other in the normal process of estimates.

Mr Pryor : Just to be clear, under the current arrangements businesses and facilities under certain circumstances are actually able to apply—

Senator DI NATALE: Yes, we've had that.

Mr Pryor : Because it's a factor of production and emissions per unit of that production, it is a factor of the economic conditions. I'm not quite sure what your—

Senator DI NATALE: What I'm saying is that you're making a change to make it easier. If I'm company X and I say I'm going to produce more and I want to revise my baseline, the impact of that is that I will be polluting more. I mean, it's an obvious point. I just want someone to acknowledge that.

Mr Pryor : There are three elements in the consultation paper. The first element is essentially transitioning all facilities to a calculated baseline—moving away from historical baselines to all facilities being on a calculated baseline basis.

Senator DI NATALE: So if you've grown, you can revise your baseline based on that?

Mr Pryor : It's independent of what you're projected to do; it's transitioning all facilities to a calculated baseline basis, regardless of whether you're projected to increase or decrease your production.

Senator DI NATALE: And you can have your baseline revised up if you anticipate growth. Is that correct?

Mr Pryor : It's a factor of site-specific circumstances, so yes, it's a matter linked to that production.

Senator DI NATALE: It's linked to production. If you're going to produce more, you can revise your baseline up.

Mr Pryor : And the opposite is correct as well.

Senator DI NATALE: Given that we've had projections of growth, we would expect, overall, there to be more growth than in the reverse direction. Therefore, we would expect to see more pollution.

Senator Birmingham: Not necessarily. That depends on a whole range of different business practices.

Senator DI NATALE: Such as?

Mr Pratt : If your technology is more efficient so you then emit less.

Senator DI NATALE: So we're making a change to make it easier to revise the baseline upwards because we expect businesses to apply to have it revised downwards?

Senator Birmingham: Businesses have a range of incentives in terms of the cost of production—

Senator DI NATALE: It's parallel universe stuff.

Senator Birmingham: that can also encourage them to be reducing their emissions at the same time.

Senator DI NATALE: Do you hear yourself?

CHAIR: We're going to have to move on shortly, Senator Di Natale.

Senator DI NATALE: I'm done.

CHAIR: Are there any further questions for program 2.1? No takers? All right.

[20:50]

CHAIR: We'll now move to program 2.2, Adapting to climate change. It's probably the same officers! Senator Keneally.

Senator KENEALLY: I'd like to start with the funding for and the work that has been undertaken by the department in terms of adapting to climate change. Can you tell me what programs or reports you're currently working on?

Ms H Wilson : I'd like to start by saying that the department leads the Australian government Disaster and Climate Resilience Reference Group jointly with the home affairs department, and that reference group is working to ensure climate-related risks are considered in government policies, programs and assets.

Senator KENEALLY: Is there anything else?

Ms H Wilson : Yes. Also, under that resilience reference group, we're looking at mapping disaster and climate risks. We're developing guidance and support materials for climate risk management in the Australian Public Service. Other examples of things that we're working on include: working with the Department of Home Affairs' National Resilience Taskforce and working with the Department of Agriculture and Water Resources as they prepare a paper on climate change adaptation in agriculture.

Senator KENEALLY: Are any of those going to lead to reports that will be published?

Ms H Wilson : That's a good question. I would hope that some of the work that we're going to do jointly with the Department of Agriculture and Water Resources would, yes. There are, I suspect, a range of other products that we're working on with the CSIRO and the Bureau of Meteorology that I would hope would be published, yes.

Senator KENEALLY: Is there any time line on any of those?

Ms H Wilson : No. As I said, what we're doing is working right across all the departments in the Australian Public Service to think about how we do take into account the risks and opportunities of a changing climate, so some of the reports will be tailored to particular agencies. But what I'd also like to say is we are working on a more high-level document with the CSIRO on exactly how a department would approach the question, taking into account the risks and opportunities of a change in climate—what would you do? Where would you find the information? It's those more high-level products that I would hope to be published too.

Senator KENEALLY: In 2015 you released a National Climate Resilience and Adaptation Strategy. In it there were four priorities for national engagement. Could you update us on the work you're doing to meet each priority—for example, priority 1 was 'Understand and communicate'.

Ms H Wilson : I think what I talked about with the Australian government Disaster and Climate Resilience Reference Group would absolutely fall under that category, as would some of the business-as-usual work that we're doing with the CSIRO and the bureau to better understand some of the risks and opportunities of a changing climate and how we get that information out.

Senator KENEALLY: Are there any strategies to get that information out?

Ms H Wilson : There are things like the CoastAdapt website, which is a very useful tool that the Australian government funded through the National Climate Change Adaptation Research Facility. That's a good example. I might ask my colleague Chris Johnston to give you more detail.

Mr Johnston : We had about ten years of funding for our NCCARF, the National Climate Change Adaptation Research Facility. That produced a lot of public documents, the final one of which was CoastAdapt.

In the past 12 months, our focus has been working with Australian government departments and agencies on understanding their climate risk and starting to think through how they actually go about mapping it and working out strategies. That's the document that Ms Wilson was referring to that has been put together with CSIRO. So we are sort of less in the phase of publishing information now but more in the phase of working with our counterparts across the APS to actually help them to understand and manage climate risk, noting that adaptation is one of those things where whoever holds the risk has the primary role in managing the risk. A lot of those risks are held by other departments or states, so really helping them is a significant part of our work.

Ms H Wilson : I've saved the best until last. I would like to note, in the 2018 budget, the department was allocated $6.1 million over three years to improve weather information to support the security and resilience of Australia's energy infrastructure. That comes about following a recommendation by Dr Alan Finkel.

Senator KENEALLY: Back to the National Climate Resilience and Adaptation Strategies, priority 2 was 'plan and act'. Is there anything different to what you've already told us that fits under priority 2, 'plan and act'?

Mr Johnston : I think it's fair to say that all of our planning and acting is with our Commonwealth fellow departments at this stage.

Senator KENEALLY: I apologise, I couldn't hear you.

Mr Johnston : I think it's fair to say a lot of our planning and acting is involved with working with our fellow departments at this point.

Senator KENEALLY: So nothing particularly specific beyond what you've already mentioned?

Mr Johnston : No. It's one of those ones where the work is really about those departments doing their business better, so it doesn't lead to big announceables; it doesn't lead to publications but it's very significant and important work nonetheless.

Senator KENEALLY: And priority 3 is 'check and reassess'. How is that priority being progressed under the National Climate Resilience and Adaptation Strategy?

Ms H Wilson : I think the new money we've been allocated to look specifically at the energy sector is a good example of how we do have to constantly make sure that we've got the right information as we look to improve the sort of weather and extreme weather event information both now and into the future—again, working with CSIRO and BOM to make sure we can continually improve the information that we have on extreme weather events, such as heatwaves, wind and maximum temperature thresholds that might be breached and how that would affect the energy sector.

Senator KENEALLY: And perhaps not surprisingly, I will ask about priority 4, the last one under the National Climate Resilience and Adaptation Strategy, 'collaborate and learn'. Are there any particular activities that you haven't outlined that fall under that priority?

Mr Johnston : Yes. Those priorities, they're effectively describing the process that we are going through with our agencies. We are collaborating with them. We're checking and learning. So in terms of what we're doing with other agencies, we're following those four priority steps as we work through with them.

Senator KENEALLY: How do you measure your success in meeting each priority?

Mr Johnston : We don't have a good metric for adaptation risk management. I mean, the way that you could do it is basically assess your climate risk then you come back later, you look at what the risk is at that point and then you see whether your strategies are effective in mitigating it. It's very similar to any kind of risk management plan: you identify the risk, put in your controls, see what the residual risk is and then come back again and revise your controls as necessary.

Senator KENEALLY: Sure, but has that work been done under this strategy?

Mr Johnston : In terms of doing our own work, we haven't got a single climate risk metric .The climate risks are embedded in the risk strategies of each of the areas of the department. This is relatively new outreach work we've been doing with the departments. We don't have that kind of formal tracking of that at this stage with them.

Senator KENEALLY: Do you have any type of formal tracking of—not climate risk per se, but even just tracking the activities or the KPIs or targets that you will have? Say, department X will have identified their risks by this time, or department X will have developed an action plan by this date. Is there anything like that, that falls out of these four priorities?

Ms H Wilson : I might jump in here. The resilience reference group does have a work plan, and certainly for me one of the key KPIs, if you like is: are we having these conversations? Are we building the capability of others to take into account the risk and opportunities of a changing climate? Are we able to help others better understand how they take this risk into account? It's just a risk like any other—like a cybersecurity risk. And for me it's very clear that by having this resilience reference group and by having these regular meetings and these regular conversations and finding out what other departments are doing—and departments are in fact doing an awful lot; a lot of departments are already doing this, in a range of ways—it is around building that capability, of everyone's ability to understand and adapt to climate change. I think that through this reference group we've done a lot of great work.

Proceedings suspended from 21 : 01 to 21 : 15

Senator KENEALLY: I'd like to ask a few more questions about the National Climate Resilience and Adaptation Strategy. Forgive my confusion. I've listened carefully to the answers, and it does seem that much of the work that's going on, at least as I've heard you describe it, is about helping various government departments prepare and adapt for climate change. The strategy website, on 2 December 2015, says the strategy sets out how Australia is managing climate risks for the benefit of the community, economy and environment and identifies a set of principles to guide effective adaptation practice and resilience building and outlines the government's vision for the future. Have I misunderstood your answers? Is the strategy bigger than just the government adapting to climate change? Is it about all of Australia adapting to climate change? Local communities, the economy—

Ms H Wilson : Yes, it is, and I apologise. I might have misheard your question. I thought you asked about what the department was currently doing at the moment. When it comes to the community and industry and helping everybody adapt to the changing climate, I might again point to the National Climate Change Adaptation Research Facility that has existed since 2007 and the enormous wealth of information and research that they've pulled together that is all available publicly. They have done an enormous amount of work with the community, business, state governments and, in fact, the Commonwealth government. All that information and research that has been done since 2007 is available. Again, I might point to the fact that the CSIRO and the Bureau of Meteorology make a lot of information publicly available. There's the climate projections in Australia website, and they're doing a lot of outreach and engagement through organisations such as the NFF with farmers and across every sector of the economy. There are a range of other things that are happening. We meet regularly with state and territory governments, too, to share information and see what programs and policies they also have in place.

Senator KENEALLY: The strategy does have these four priorities for national engagement. That would presume not just talking to government departments but to the nation—local communities, stakeholders, various industry groups, local government et cetera. The priorities are to (1) understand and communicate, (2) plan and act, (3) check and assess and (4) collaborate and learn. Given that this strategy was released in 2015, is there any plan to measure success in meeting each of these priorities since we're now three years on?

Ms H Wilson : We don't have key performance indicators that will measure—because, again, how we go about measuring all those things is quite subjective. Certainly, when it comes to sharing information, there is a lot out there, and there is a lot that the CSIRO and the Bureau of Meteorology continue to do. But, no, we don't have specific KPIs for each of those. It just depends on the priorities and, again, how we'd continue to work right across not only the Commonwealth government but also with states and territories and, as you say, with the community and business.

Senator KENEALLY: It leaves me wondering if the National Climate Resilience and Adaptation Strategy is a four-page brochure but not much else. If we can't measure whether or not we're achieving against the priorities, how do we know if it's actually being effective?

Mr Johnston : I think on that one you could have read the strategy not as one of those strategies that have very specific measures and actions that you implement, but rather that it is a framework that then underpins the actual—

Senator KENEALLY: The mission statement?

Mr Johnston : It's a bit more than a mission statement, but it's not, say, a strategy with like ten concrete actions that you report against. It's the guiding document that underpins—

Senator KENEALLY: It does say 'guiding principles'. You're correct.

Mr Johnston : Exactly. For example, when it comes to priority 1 and understanding climate risks, all the work we do with the science agencies about communicating climate risk and science is underpinned by that strategy. On the plan and act, when we deal with our state counterparts and our Commonwealth colleagues, it's all based around that strategy of coordinated responses to climate risk, where appropriate. Again, under priority 3, when we review plans and actions, we work a lot with the government departments on how they're implementing that within their own plans and actions. Similarly, on collaborating and learning we spend a lot of time assessing how our work within different work units who are managing climate risk is going, what we learn and what to do differently.

Senator KENEALLY: That does help clarify a bit how we should interpret the strategy. A few times now there's been mention of the National Climate Change Adaptation Research Facility and the work it is doing with the CSIRO, but in 2017 the federal budget cut funding to that facility. It went from $50 million in 2008 to just under $9 million in 2014 and then in 2017-18 a mere $600,000 will be spread between CSIRO and the research facility. And as I understand it, from 2018 funding is axed entirely.

Mr Johnston : The facility is still operational and it will as part of our—

Senator KENEALLY: Without any funding?

Mr Johnston : Part of the recent funding contract—it will continue to host the CoastAdapt site on its website until the middle of next year—30 June 2019—and through that partnership with NCCARF and CSIRO we've been working with them to identify other projects that they could undertake for adaptation as additional revenue streams. We're hopeful that that will finalise some of those next financial year.

Senator KENEALLY: Can you repeat that. You were helping them look at projects they could undertake—did you say 'to develop revenue streams'?

Mr Johnston : Yes, so basically—

Senator KENEALLY: Is that to be self-funding?

Mr Johnston : Basically, if people are looking at how to manage their climate risk—and we've been working to develop proposals where NCCARF and CSIRO could bring their collective expertise in to help to understand their climate risk and write management plans. We've been talking with some potential funders over the last couple of months.

Senator KENEALLY: Like a fee-for-service thing?

Mr Johnston : Yes, essentially kind of contract work where—

Senator KENEALLY: What types of bodies would you imagine would be interested in purchasing that service from NCCARF and CSIRO?

Mr Johnston : We've had one through a private sector provider. We have one potential we're discussing with some people in government. NCCARF has done some work in a similar vein in Queensland.

Senator KENEALLY: Did you say that potentially a government—a state government, for example—might, or private sector entities?

Mr Johnston : Yes. For example, NCCARF has been doing some work for the Queensland government on some of their climate risk. It's those sorts of projects that we are trying to help the partnership to finalise.

Senator KENEALLY: Has there been interest from local governments at the frontline of managing climate impacts?

Mr Johnston : NCCARF has done a lot of work with local governments over the years. In the context of our discussions through the partnership, I don't believe we've had specific proposals from local governments but NCCARF has done a lot of work with local councils over the year. They continue to work with councils with part of the funds that they've been receiving from the Commonwealth.

Senator KENEALLY: I've heard a lot about the discussions that are happening. Is there any evidence of activities that are happening on the ground as a result of all these conversations and all of this research? Are sea walls being built to guard against sea level rise? Are there changes to water management coming in to better guard against drought? Are there changes in heatwave emergency procedures, for example? Are there any examples of concrete work that are happening on the ground that can help actual communities mitigate the risk of climate change?

Ms H Wilson : I'm sure there are. Why don't we take that on notice for you. I know there are very tangible examples on the NCCARF website and I'm sure we can collate a whole range of examples for you.

Senator KENEALLY: Thank you. That would be most useful and I would appreciate that. Just before I hand over to Senator Urquhart, who I think may want to ask some questions about CoastAdapt, I would like to ask one. Did you just say that the CoastAdapt website will be with the National Climate Change Adaptation Research Facility until 30 June 2019?

Mr Johnston : Yes, they will continue to host it until 30 June 2019.

Senator KENEALLY: Then what will happen?

Mr Johnston : We've had discussions with Griffith University, who are the parent of NCCARF, about that. They haven't taken decisions but will continue those conversations over the coming year.

Senator KENEALLY: Is there an intention that CoastAdapt will continue to live somewhere?

Mr Johnston : That would be our hope, but we have to continue to work with Griffith on the options. We've done a lot of work with them on different business models for CoastAdapt. That hasn't finalised in a new funding stream yet, but we've certainly over the past 12 months done a lot of work with NCCARF and with Griffith and we'll continue to work with them.

Senator KENEALLY: Thank you. I think Senator Urquhart has more questions about CoastAdapt.

Senator URQUHART: Yes, thank you. Can you tell me how many people access the website?

Mr Johnston : Not off the top of our heads. NCCARF have those numbers. We can get them for you.

Senator URQUHART: It would be great if you could. Can you tell me how much its ongoing costs are?

Mr Johnston : That is embedded in the contracts that we signed with them. We'd have to distinguish between the cost of the build versus maintaining. We'll come back to you on that.

Senator URQUHART: I guess ongoing costs would be the maintenance?

Mr Johnston : Yes, that's right. We will have a look and see if we can pick out that number.

Senator URQUHART: How many staff are responsible for its upkeep?

Mr Johnston : Again, we would have to talk to Griffith University, because they host it. My understanding is it is in the order of a couple of people, but we will come back to you with an answer.

Senator URQUHART: Is there any promotion that you do for the tool? What, if any, work do you do promoting the tool, the website?

Mr Johnston : We certainly, when we deal with other government agencies, talk about CoastAdapt. When, through the partnership, we have discussions with potential funders or people interested in using the services of the partnership, an NCCARF representative comes down and gives a presentation to them on CoastAdapt specifically and on the other things that NCCARF can do.

Senator URQUHART: What about social media? Do you do anything on social media?

Mr Johnston : Our department? I'd have to check. That comes out of another part. I'd have to look at that. NCCARF does a lot of its own promotion as well.

Senator URQUHART: How often are the datasets and maps updated for the section on sea level rise and future climate information for coastal councils?

Mr Johnston : That is a technical level. I don't have that off the top of my head. I'll come back to you on that one.

Senator URQUHART: Okay. I think, from my looking at it, the data maps were last updated in 2016. You don't know when they'll be updated?

Mr Johnston : Again, it will depend on how often the data is available. The answer might be slightly more complicated, so it's probably best to go back, take some advice and come back to you out of session.

Senator URQUHART: Okay. What feedback have you received from local councils about the tool?

Ms H Wilson : I've received great feedback, and I'd like to add that I'm out and about talking a lot to stakeholders at conferences and just in regular meetings, and I certainly do mention CoastAdapt quite a lot. Of the local councils that I've spoken to in, say, the past 18 months, they find it very valuable.

Senator URQUHART: Can you give me your definition of 'great' and 'valuable', because I'm interested in what the feedback is?

Ms H Wilson : I think what they find most useful is not just the geospatial data, but they find it incredibly useful that there is a step-by-step guide to the sorts of questions that they should be asking themselves in order to do something differently. It's no good having a lot of information just on sea level rise. Sometimes with local councils and others in the area—a fish and chip shop owner, for example—it's stepping them through, taking that data and doing something differently. That's what they find most valuable.

Senator URQUHART: So it's the steps and the—

Ms H Wilson : Yes. The step-by-step visual guide on how to identify, engage with and manage those climate change risks.

Senator URQUHART: Are you continuing to work with local councils?

Ms H Wilson : Yes. As I said, I meet regularly with a whole range of stakeholders, and local councils are one of them.

Senator URQUHART: What are you working on?

Ms H Wilson : I think we're just working on understanding what information they'd like to continue to receive and in what format. It's often around the future data—so what are the projections, not just in terms of time scale but also geospatial. Every local council will have different needs and different requirements and different challenges. As your colleague Senator Keneally said, often it really is local, so we've got to understand the different needs of each local council.

Senator URQUHART: What are the different needs? Do they vary significantly?

Ms H Wilson : They absolutely vary. If you've got someone in Wagga Wagga versus someone on the seaboard, they absolutely vary.

Senator URQUHART: Just give me some examples of the varying sorts of things for councils.

Ms H Wilson : I'll try and think of a particular council I've met with. Certainly if we are looking at someone who's in Wagga Wagga, in an agricultural community, they want to better understand how the changing climate might affect rainfall, might affect crops, whereas someone who is on the eastern seaboard wants to better understand sea level rise, coastal erosion and that sort of thing.

Senator URQUHART: That's all I have for CoastAdapt. Thank you.

Senator KENEALLY: I think we are completed on this subject.

CHAIR: So 2.2 is now done. Will move to program 2.3, Renewable Energy Technology Development.

[21:33]

Senator URQUHART: I haven't got a lot in this area, so I will try and move through them as quickly as I can. There's been a lot made of the falling cost of renewable energy recently. Can you provide an outline on what the trends have been and what you expect to happen in the future with respect to the costs of onshore wind, offshore wind, large-scale solar, small-scale solar, solar thermal and batteries?

Senator Birmingham: You haven't got a lot of questions, but that's quite a big one!

Mr Archer : It's going to be very difficult to get into the specifics of each technology, and I don't have detailed cost information or projections for them in front of me. Certainly that information is available and is often used as assumptions into inputs for modelling of trends in the electricity sector. But clearly the overwhelming trend, pretty much across all of those technologies, has been declining costs over time. Generally, the fall in costs tends to accelerate in the earlier stage of development, and then, as each technology matures, the decline in costs tends to taper off.

If we took wind turbine technology, generally what we've seen are improvements in the efficiency of the design of wind turbines but also an increase in size of turbines, so, over time, they've definitely become more efficient. Similarly, with solar PV panels, again, R&D has led to efficiency improvements in the rate at which the sunlight is converted into electricity. More recently, particularly in the Northern Hemisphere, we've seen costs decline in relation to offshore wind farms and offshore wind technologies, and, again, a key part of that has been the deployment of larger turbines over time. In relation to battery technologies, we're probably at an earlier stage in the life cycle of the development of battery technologies, so they tend to be quite expensive at the present time. I guess it's not too bold a prediction to suggest that those costs will come down both as production ramps up, as a simple matter of economies of scale, and as a result of improvements in technology as more research is done into them.

Senator URQUHART: You mentioned declining costs. I suppose in each of those areas it's variable—as you've said, batteries are a bit slower. Do you see the trend continuing down in the future?

Mr Archer : Certainly, my general understanding is that we could expect further falls in the costs of those technologies. Again, the rate of falling costs will depend on the maturity of each of those technologies. You can sort of imagine a kind of curve as those costs come down; the declines do tend to level off as the technologies mature. Most of the work that I'm familiar with suggests that we would continue to expect declines across the range of those technologies.

Senator URQUHART: I think you said at the start that you didn't have a lot of detailed information with you, but are you able to provide that to us?

Mr Archer : There'd be a lot of information, but certainly we could provide a representative sample of that on notice, I would imagine.

Senator URQUHART: That'd be great, thank you. Can you give us a quick outline of what you consider to be the most exciting technologies that you're currently working on and what makes them particularly exciting.

Mr Archer : I'm not sure my personal views on the extent to which certain technologies are exciting—

Senator URQUHART: Not particularly you, but the department. You might get excited about other things that the department doesn't, but maybe you could give us a departmental sort of overview.

Mr Archer : Maybe the way I'd put it is that certainly there are technologies that are more on the frontier in terms of their development and deployment that we're working on. I won't attempt to ascribe any degree of excitement to them. We've heard in earlier sessions about hydrogen technology. Certainly, there does seem to be a good prospect that that will have applications both domestically and potentially as an export industry. We're involved in a number of streams of work in relation to research and development on hydrogen, working with both the CSIRO and the Chief Scientist and also working under the banner of the Mission Innovation international initiative, which just this week—I'm not sure if it's happened yet—should be announcing the adoption of a new hydrogen mission innovation challenge, which we've been working on with a number of other countries, which will allow for collaboration at the international level and, hopefully, create further opportunities in relation to our work on hydrogen.

There are other technologies that we're involved with. The government in the last budget announced support for a concentrated solar thermal plant in Port Augusta—that's a budget measure from last year's budget—which we're continuing to work on. Leaving aside the specifics of any particular project, concentrating on solar thermal is interesting from the point of view that it is renewable but it also has storage as an inherent component of the project. In that sense, it mitigates some of those concerns around the intermittency of renewables. Those are two examples I would offer.

Senator URQUHART: If you've got any others tucked away you might want to give them to us on notice—that would be great. Are technologies being developed that can already address some of the perceived weaknesses of renewable energy—in particular, lack of synchronicity, frequency control and intermittency?

Mr Archer : Yes. I'm not a scientist, but I will do my best to cover off a couple of those technologies. We have had an ARENA project that's looked into how wind turbines could potentially provide some of those so-called ancillary services to the electricity market—frequency control and those sorts of things. There are other technologies which are being developed, but I'm not sure if they're deployed yet in Australia. Synchronous condensers would fall into that category of a technology that could provide those services which are currently being provided by coal- or gas-fired generators, which have the large amount of inertia, spinning inertia, which enables them to help keep the electricity network secure. Battery technologies have a lot of potential in this area because of their ability to respond very rapidly when called upon, and that's certainly something that we have seen in relation to South Australia and the implementation of a grid sized battery there. In a country like the UK, they have had tender processes where batteries have been successful in winning contracts to provide those ancillary services to the market there.

Senator URQUHART: What are the greatest challenges facing the renewable energy industry in maximising its possible contributions to the Australian economy as well as lowering carbon emissions?

Mr Archer : That might be a question that's better directed to the industry. From my point of view, the prospects of the industry look pretty strong. We are seeing that currently, with the boom in investment as we approach and surpass the current Large-scale Renewable Energy Target. I've mentioned a range of technologies at different stages of development, and for all of them the prospects, I would have thought, are strong. That's against the backdrop of the Paris Agreement and countries all around the world adopting policies to reduce emissions and committing to increase ambition over time. Generally speaking, I would have thought the outlook for the renewables sector is quite positive.

Senator ABETZ: I have questions in relation to the big battery at the Hornsdale Wind Farm. What is the average wholesale electricity price that the big battery at the Hornsdale Wind Farm dispatches at?

Mr Archer : I would have to take that on notice.

Senator ABETZ: Alright.

Mr Archer : I will also make the general observation that I'm not especially familiar with the specifics of the operation of the battery, so if there are further questions that go in that direction we might have to take those on notice as well.

Senator ABETZ: That's fair enough, and then we can all go home early! How many homes can the big battery at the Hornsdale Wind Farm power, and for how long?

Mr Archer : Generally speaking, battery technologies are not providing services that go to the reliability of the electricity supply, which means that there is power when people want to use it. Typically speaking, batteries at the present time are deployed across short time frames to ensure the security of electricity supply. The distinction is that things can impact on the electricity grid that affect the voltage of the system. For example, if you have a large source of generation and you have to exit, for whatever reason, batteries are good at coming in very quickly and potentially supplying reasonable amounts of power for a short period of time to allow the grid to continue to operate safely and securely while other technologies, which take more time to come online, can be employed to provide a continuous supply of electricity. The question of how many houses a battery could supply doesn't really go to how they're being deployed at the present time.

Mr Pratt : We will attempt to answer your question on notice.

Senator ABETZ: Thank you, Mr Pratt. I was going to say, with respect, Mr Archer, that all of that was very interesting but went nowhere near answering the question. I want to know, at full capacity, how long could that battery provide energy to how many houses? One house for 100 years or 100 houses for one year? I want to know the capacity of the battery in terms of average household usage. You can take that on notice. Thank you for that, Mr Pratt. Do you agree with AEMO that houses should have smart thermostats to remotely control household power? Have you turned your mind to that?

Mr Archer : No, Senator. I'm not familiar with that particular statement or suggestion by AEMO or the analysis that sits behind it.

Senator ABETZ: All right. Thank you. On 30 November—and I hope I have the dates right—2017 and 18 January 2018, did AEMO use the Reliability and Emergency Reserve Trader where 14 big industrial users help generate power or cut their usage?

Mr Pratt : That is a question for outcome 4, but we'll take that on notice as well.

Senator ABETZ: Thank you. And what was the cost of that exercise on those two days? I believe it may have been $15 million.

Mr Pratt : We'll take that on notice.

Senator ABETZ: Thank you. As we head toward more renewables in the grid, will this happen more or less often in the future—the requirement to use the Reliability and Emergency Reserve Trader?

Mr Archer : That would really depend on a range of factors. Under the National Energy Guarantee, which has both emissions components and a reliability component, the idea is that you would avoid issues around the reliability of electricity supply through the operation of the mechanism under that policy.

Senator ABETZ: Well, we hope to, and we'll see how that works out. You talked about reliability. What do you think the appropriate energy bill should be for an average Australian household in the NEM?

Senator Birmingham: Senator Abetz, the government's position would be: as low as possible. Obviously, the modelling undertaken in relation to the NEG projects an average reduction of $400 per household, if my memory is correct at this time of night. I'm not sure whether officials can say what they think an average bill should be. Officials are working on the policies to give effect to price reductions.

Senator ABETZ: As we heard earlier, that's more about emission reduction and maintaining reliability, but the price area, which I personally think is the most important aspect, is the one that is often neglected. We shall see how it all turns out.

Senator Birmingham: As I highlighted earlier, there's equally the work that we asked the ACCC to do in relation to retail pricing to help ensure that we can have confidence that reductions in wholesale price are realised in terms of benefits to households and businesses, as one other area of example. Obviously we did canvass some of those others—

Senator ABETZ: We shall see.

Senator Birmingham: Indeed.

Senator ABETZ: Thank you, Minister.

CHAIR: I can't contain my smile. That's it; we're done. That concludes the examination of the Environment and Energy portfolio. Senators are reminded that written questions on notice should be provided to the secretary by close of business on Tuesday, 5 June. I thank the minister and officers for their attendance today and for their patience with us. Tomorrow we will commence examination of the Communications and the Arts portfolio.

Committee adjourned 21:50