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Thursday, 27 March 1980
Page: 1091


Senator SCOTT (New South WalesMinister for Special Trade Representations) - The Senate is discussing the following matter of public importance:

The Government's suppression of the Auditor-General's Reports on Asia Dairy Industries ( Hong Kong) Ltd.

We have listened to Senator Walsh's comments on this matter which he has raised in the Senate. I will not enter into a discussion which revolves around allegations, unproven to this point, about individuals. I will not relate my remarks to those matters. I believe that an investigation is still being carried out, and it is improper to make allegations and suggestions until the final result of that investigation is common knowledge and the Minister for Primary Industry (Mr Nixon) is in a position to comment on the investigation which he has sought.

I propose to go as briefly as I can through the matters surrounding Asia Dairy Industries (Hong Kong) Ltd, which matters have brought this matter of public importance here for discussion this morning. Asia Dairy Industries is a wholly owned subsidiary of the Australian Dairy Corporation. It was established in 1964 under Hong Kong law. Its objective was to provide technical and management expertise to the ADC's joint venture recombined dairy products plants in Asia. In Asia they were to be found in Indonesia, the Philippines, Thailand and Hong Kong, coupled with the supply of raw materials to the recombining plants, to provide a stable long term outlet for surplus Australian dairy produce. Two major aspects of the operations of ADI prompted suggestions for a restructuring of the future role of the company. One of those aspects was the declining export availability of Australian skim milk powder and qualifications placed on ADI's sphere of activity by the Australian Dairy Produce Act 1924, restricting very considerably the capacity of ADI to diversify its activities.

In August 1979 the Minister for Primary Industry received a proposal from the Corporation for a new charter for its wholly owned subsidiary company ADI. The Government has received also proposals and suggestions for restructuring the ADI from dairy industry organisations, including the Australian Dairy Farmers Federation. The Minister for Primary Industry also requested that an inspection and audit of the accounts and records of ADI be carried by the Auditor-General under section 63p of the Audit Act 1901. This seems perfectly proper. The purpose of requesting this report on the activities of ADI was that the information made available from the audit would be of considerable assistance to the Government in making a decision on the various options available in respect of the future structure and activities of the company. This seemed to be a proper prerequisite in coming to that decision. The audit examination pointed to various deficiencies in the management and operation of the company and its dealings with the Australian Dairy Corporation.

Honourable senators will be aware that the Auditor-General in his supplementary report tabled in the Parliament on 13 November 1979 itemised the principal matters arising from the audit inspection. In general his report indicated that remedial action was required to improve management control over the company and to strengthen accountability. After considering the reports of the Auditor-General the then Minister for Primary Industry wrote to the ADC to ascertain what corrective action was proposed. The

ADC established a management committee consisting of the General Manager of the Corporation, the General Manager of the ADI, the Cor.poration's financial controller and a representative of the Department of Primary Industry to examine all aspects of the AuditorGeneral 's report and observations.

The management committee completed its report in October 1979 and made detailed recommendations for alterations to ADI's operations and procedures in respect of all aspects reported on by the Auditor. The management committee's recommendations were endorsed by the board of the Corporation and action has been taken for the implementation of the committee's recommendations to overcome the deficiencies in managerial and financial control. There still remain, however, some aspects of past expenditure which need further investigation. At this stage, of course, those aspects are confidential. In this connection, the Minister for Primary Industry has written to the Corporation requesting that a detailed examination be carried out in regard to this expenditure and, again, that seems to be a quite proper and appropriate line of action to take. It would not be appropriate or proper to itemise the matters at this stage. All sorts of wild and probably unfounded allegations may be the result. With respect to the honourable senator's request that the AuditorGeneral's reports to the Minister be tabled, I point out that such reports to Ministers on inspections of accounts and records as distinct from reports on financial statements by the AuditorGeneral are made on a confidential basis.

The inspection and audit of the accounts and records of the ADI were carried out under section 63p of the Audit Act 1 90 1 . Under the legislation the Auditor-General is required to report to the Minister; there is no requirement for tabling of reports by the Minister in the Parliament. As I have mentioned, steps have been taken by the Minister for Primary Industry and the ADC to remedy certain deficiencies in the managerial and financial control of ADI. However, as some aspects of the report are still under consideration, the Government is firmly of the opinion that the question of tabling the AuditorGeneral's reports should not arise until all aspects have been properly considered by the relevant bodies. That such an investigation is going on and that the action is proposed seem to be quite proper.

In addition, certain of the matters referred to in the Auditor-General's reports on ADI are of a commercially confidential nature and could prejudice the company's competitive position in the event that the reports were publicly available. As I have indicated, the ADC has action well in hand to rectify the deficiencies outlined by the Auditor-General in respect of the. operations of ADI. The Senate can be assured that the Minister for Primary Industry will ensure that all matters are satisfactorily resolved. The Minister will make appropriate comments when all these matters have finally been resolved and when all the queries for which he has been basically and properly responsible have been answered.

I emphasise two or three points. The matters raised in the Audit report to the Minister are confidential. Investigations on some aspects of the Audit report are still being undertaken. It is appropriate that in these circumstances allegations should be kept to a minimum and that the report should be finalised and then proper examination and comments will be made, and proper action will be taken. At the appropriate time the Minister will be saying something about this report. The Minister will clarify the position that has been quite properly investigated at his promotion.

I do not think it is necessary for me to say a great deal more than I have said already. I have briefly outlined the history of the ADI and its involvement in its various exploits. I have outlined the quite proper moves by the Government and in particular by the Minister for Primary Industry to have examined reports of various alleged and reported deficiencies. I have indicated that it is quite improper to be giving some sort of a view on these matters when the matters have not in fact been resolved.

I do not propose to comment on the problems that Senator Walsh has with Mr Anderson, the economist. I assume that is a matter for Senator Walsh to involve himself with. As I said at the beginning of my remarks, personal assaults really do not have any place in the context of this chamber or this sort of debate. We are discussing this morning the circumstances surrounding Asia Dairy Industries. We are discussing the circumstances that surround certain allegations of deficiencies in some of its operations-


Senator Walsh - What about the findings?


Senator SCOTT -And indeed, the final investigation of any of those findings that have made it necessary in the view of the Minister for Primary Industry to carry out a continuing or a deeper investigation. Rather than the Government, the Minister and honourable senators concerning themselves with the following-up of allegations, we should concern ourselves, as we have throughout the course of this matter, with establishing the truth relative to the matter that we are discussing. It is important that the truth be established and revealed. That has been the clear objective of the whole process of the Asia Dairy Industries investigation. I believe that it is unnecessary to take the matter further than it has been taken today. Senator Walsh has made various personal allegations. They are matters for him to live with and for him to solve. He has listened to what I have said referable to the history of this matter. The final parts of the matter are under close examination. When there has been a complete and proper revelation the results of that revelation will of course be made known. I move:

That the business ofthe day be called on.


Senator McLaren - Mr Deputy President,I raise a point of order. Today's Order of Business paper shows, as it did yesterday, that the time set down for debates on matters of public importance is two hours. Now the Government has moved that the business ofthe day be called on. In this instance we have been debating the matter for only 35 minutes. So we are many minutes short of the time allowed for the debate. I wanted to speak on the matter. Now we find that the Minister for Special Trade Representations (Senator Scott) is running away from the issue and has moved that the business of the day be called on. I strongly object to the tactics adopted by the Government.

The DEPUTY PRESIDENT (Senator Maunsell)- There is no substance to the point of order. The time limit set is two hours but the business of the day can be called on at any time. By arrangement with the Whips that procedure was adopted.

Question resolved in the affirmative.







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