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Senate Legislative and General Purpose Standing Committees—Consolidated reports on Additional estimates—2015-16, March 2016


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Australian Senate

Senate Legislation Committees

Reports on Additional estimates 2015-16

2016

© Parliament of the Commonwealth of Australia 2016

ISSN 1834-4038

This document was printed by the Printing Unit, Department of the Senate, Parliament House, Canberra.

TABLE OF CONTENTS

Resolutions of the Senate relating to estimates ......................................................i

Community Affairs Committee

· Additional estimates 2015-16 report, dated April 2016 ....................................... 1

Economics Committee

· Additional estimates 2015-16 report, dated March 2016 .................................. 27

Education and Employment Committee

· Additional estimates 2015-16 report, dated March 2016 .................................. 67

Environment and Communications Committee

· Additional estimates 2015-16 report, dated March 2016 .................................. 99

Finance and Public Administration Committee

· Additional estimates 2015-16 report, dated March 2016 ................................ 129

Foreign Affairs, Defence and Trade Committee

· Additional estimates 2015-16 report, dated March 2016 ................................ 155

Legal and Constitutional Affairs Committee

· Additional estimates 2015-16 report, dated March 2016 ................................ 173

Rural and Regional Affairs and Transport Committee

· Additional estimates 2015-16 report, dated March 2016 ................................ 207

21 PARTICULARS OF PROPOSED ADDITIONAL EXPENDITURE—2015-16—DOCUMENTS1 The Minister for Communications (Senator Fifield) tabled the following documents: Particulars of proposed additional expenditure in respect of the year ending on 30 June 2016 [Appropriation Bill (No. 3) 2015-2016].

Particulars of certain proposed additional expenditure in respect of the year ending on 30 June 2016 [Appropriation Bill (No. 4) 2015-2016]. Senator Fifield, by leave, moved—That the documents, together with the final budget outcome 2014-15 (see entry no. 2, 12 October 2015), be referred to committees for examination and report. Question put and passed.

32 LEGISLATION COMMITTEES—ESTIMATES HEARINGS2 The Minister for Communications (Senator Fifield), pursuant to notice of motion not objected to as a formal motion, moved government business notice of motion no. 2— (1) That estimates hearings by legislation committees for 2016 be scheduled as follows: 2015-16 additional estimates:

Monday, 8 February and Tuesday, 9 February (Group A) Wednesday, 10 February and Thursday, 11 February (Group B). 2016-17 Budget estimates: Monday, 23 May to Thursday, 26 May, and, if required, Friday, 27 May (Group A)

Monday, 30 May to Thursday, 2 June, and, if required, Friday, 3 June (Group B) Monday, 17 October and Tuesday, 18 October (supplementary hearings—Group A) Wednesday, 19 October and Thursday, 20 October (supplementary hearings—Group B). (2) That pursuant to the orders of the Senate of 26 August 2008 and 23 June 2015, cross portfolio

estimates hearings on Indigenous matters be scheduled for Friday, 12 February, Friday, 27 May and Friday, 21 October, but not restricted to these days. (3) That the committees consider the proposed expenditure in accordance with the allocation of departments and agencies to committees agreed to by the Senate. (4) That committees meet in the following groups: Group A:

Environment and Communications Finance and Public Administration Legal and Constitutional Affairs Rural and Regional Affairs and Transport Group B:

Community Affairs Economics Education and Employment Foreign Affairs, Defence and Trade. (5) That the committees report to the Senate on the following dates: (a) Tuesday, 1 March 2016 in respect of the 2015-16 additional estimates; and (b) Tuesday, 28 June 2016 in respect of the 2016-17 Budget estimates. Question put and passed

1 Journals of the Senate, no. 137, 4 February 2016 2 Journals of the Senate, no. 124, 10 November 2015

22 LEGISLATION COMMITTEES—ESTIMATES HEARINGS (EXTRACT)3 Legislation committees—Estimates hearings—Additional hearings No. 301— (1) That, for the purposes of any order setting out a schedule of estimates hearings by legislation

committees:

(a) if the order provides for hearings, if required, on a designated Friday, an additional hearing of a committee is taken to be required on that Friday if any 3 members of the committee notify the chair in writing of a requirement for the committee to meet, including for a specified period of time;

(b) if the order does not provide for hearings, if required, on a designated Friday, an additional hearing of a committee is taken to be required on a relevant Friday if any 3 members of the committee notify the chair in writing of a requirement for the committee to meet, including for a specified period of time. (2) For the purposes of paragraph (1), a relevant Friday means any of the following, as the case

requires:

(a) for additional estimates hearings, the Friday of a week in which committees in Groups A and B are scheduled to meet; (b) for Budget estimates hearings, the Friday of a week in which committees in Group A are scheduled to meet; (c) for Budget estimates hearings, the Friday of a week in which committees in Group B are

scheduled to meet;

(d) for supplementary Budget estimates hearings, the Friday of a week in which committees in Groups A and B are scheduled to meet. (3) The operation of this order is subject to the restriction in standing order 26(3) that not more than 4 committees shall hear evidence on the estimates simultaneously. (4) This order is of continuing effect. No. 302— (1) That an additional hearing of a legislation committee considering estimates is taken to be required if

any 3 members of the committee notify the chair in writing of a requirement for the committee to meet for that purpose, including for a specified period of time. (2) For the purposes of paragraph (1), an additional hearing means a hearing in addition to any hearing required by, or pursuant to, an order of the Senate setting out days for legislation committees to meet

to consider estimates or providing for such meetings to be held on spill-over days. (3) The operation of this order is subject to the restriction in standing order 26(3) that not more than 4 committees shall hear evidence on the estimates simultaneously. (4) This order is of continuing effect. Legislation committees—Estimates hearings—Hours of meeting No. 303—That the order of the Senate of 4 December 2013, as amended on 13 February 2014, providing for estimates hearings for 2014, be further amended as follows:

After paragraph (2), insert: (2A) On the specified Mondays to Thursdays, committees shall meet from 9 am till 11 pm unless a committee completes its examination of items of proposed expenditure earlier and no senator has further explanations to seek.

3 Journals of the Senate, no. 36, 25 June 2014

6 STANDING ORDERS—AMENDMENT—COMMITTEES—ALLOCATION OF DEPARTMENTS4 The Assistant Minister for Social Services (Senator Fifield), pursuant to notice, moved government business notice of motion no. 4— (1) That standing order 25(1) be amended as follows:

Omit ‘Education, Employment and Workplace Relations’ Substitute ‘Education and Employment’. (2) That departments and agencies be allocated to legislative and general purpose standing committees as follows: Community Affairs

Health Social Services, including Human Services Economics

Industry Treasury

Education and Employment Education Employment Environment and Communications

Communications Environment

Finance and Public Administration Finance Parliament Prime Minister and Cabinet

Foreign Affairs, Defence and Trade Defence, including Veterans’ Affairs Foreign Affairs and Trade Legal and Constitutional Affairs

Attorney-General Immigration and Border Protection Rural and Regional Affairs and Transport Agriculture

Infrastructure and Regional Development. Question put and passed.

20 EDUCATION AND EMPLOYMENT LEGISLATION COMMITTEE—ESTIMATES HEARINGS—ATTENDANCE OF WITNESS5 Senator Marshall, pursuant to notice of motion not objected to as a formal motion, moved general business notice of motion no. 9—That the Senate modifies the order of 28 October 2009 relating to Fair Work Australia and estimates hearings to read as follows:

When the Education and Employment Legislation Committee meets to consider estimates in relation to Fair Work Australia (now the Fair Work Commission), the Senate expects that the President will appear before the committee to answer questions should his or her presence be required by the committee. Question put and passed.

4 Journals of the Senate, no. 2, 13 November 2013 5 Journals of the Senate, no. 2, 13 November 2013

13 EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS LEGISLATION COMMITTEE—ESTIMATES HEARINGS—WITNESS6 Senator Fisher, pursuant to notice of motion not objected to as a formal motion, moved general business notice of motion no. 596—That— (a) when the Education, Employment and Workplace Relations Legislation Committee meets to consider

additional estimates in 2010: (i) the committee further examine Fair Work Australia, and (ii) the President of Fair Work Australia appear before the committee to answer questions; and (b) on each subsequent occasion on which the Education, Employment and Workplace Relations

Legislation Committee meets to consider estimates in relation to Fair Work Australia, the President of Fair Work Australia appear before the committee to answer questions. Senator Siewert, by leave, moved the following amendment: Omit paragraph (b). Question—That the amendment be agreed to—put and negatived. Statements by leave: Senator Fisher, the Leader of the Australian Greens (Senator Bob Brown) and Senator Marshall, by leave, made statements relating to the motion. Leave refused: Senator Collins sought leave to make a statement, relating to the motion. An objection was raised and leave was not granted. Main question put. Question agreed to.

21 COMMUNITY AFFAIRS—STANDING COMMITTEE—REPORT—2008-09 BUDGET ESTIMATES— ENDORSEMENT OF RECOMMENDATION7 Senator O’Brien, at the request of the Chair of the Community Affairs Committee (Senator Moore) and pursuant to notice of motion not objected to as a formal motion, moved general business notice of motion no. 144—That the Senate endorse the recommendation contained in paragraph 1.10 of the Community Affairs Committee report on the 2008-09 Budget estimates that:

Future estimates hearing programs include a separate time to conduct an estimates hearing on Indigenous matters that would include all the portfolios with budget expenditure or responsibility for Indigenous issues. Question put and passed.

6 Journals of the Senate, no. 95, 28 October 2009 7 Journals of the Senate, no. 22, 26 August 2008

The Senate

Community Affairs

Legislation Committee

Additional estimates 2015-16

April 2016

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© Commonwealth of Australia 2016

ISBN 978-1-76010-356-9

Secretariat Ms Jeanette Radcliffe Committee Secretary Ms Megan Jones Research Officer Ms Carol Stewart Administration Officer

PO Box 6100

Parliament House Canberra ACT 2600

Phone: 02 6277 3516

Fax: 02 6277 5829

Email: community.affairs.sen@aph.gov.au Internet: www.aph.gov.au/senate_ca

This document was prepared by the Senate Community Affairs Legislation Committee and printed by the Senate Printing Unit, Parliament House, Canberra.

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License.

The details of this licence are available on the Creative Commons website:

http://creativecommons.org/licenses/by-nc-nd/3.0/au/.

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Membership of the Committee

44th Parliament

Members

Senator Zed Seselja, Chair LP, Australian Capital Territory

Senator Rachel Siewert, Deputy Chair AG, Western Australia

Senator Carol Brown ALP, Tasmania

Senator Katy Gallagher (from 12/11/2015)

ALP, Australian Capital Territory

Senator Bill Heffernan (4/2/2016 - 15/3/2016) LP, New South Wales

Senator David Johnston (4/2/2016 - 23/2/2016) LP, Western Australia

Senator Jo Lindgren (15/6/2015 - 4/2/2016 then from 23/2/2016 LP, Queensland

Senator James Paterson (from 15/3/2016) LP, Victoria

Substitute Members

Senator Jo Lindgren (10/2/2016 - 11/2/2016)

LP, Queensland

Senator Claire Moore (11 February 2016) ALP, Queensland

Senators in attendance

Senator Zed Seselja (Chair), Senator Rachel Siewert (Deputy Chair), Senator Carol Brown, Senator Katy Gallagher, Senator Bill Heffernan, Senator Dean Smith, Senator the Hon. Doug Cameron, Senator the Hon. Concetta Fierravanti-Wells, Senator Richard Di Natale, Senator the Hon. Mitch Fifield, Senator Jacqui Lambie, Senator David Leyonhjelm, Senator Joanna Lindgren, Senator Scott Ludlam, Senator John Madigan, Senator Gavin Marshall, Senator Claire Moore, Senator the Hon. Fiona Nash, Senator the Hon. Marise Payne, Senator Nova Peris, Senator Helen Polley, Senator Deborah O'Neill, Senator Linda Reynolds, Senator Lee Rhiannon, Senator Janet Rice, Senator Robert Simms, Senator Dean Smith, Senator Nick Xenophon.

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Chapter 1 Introduction

1.1 On 12 May 2015, the Senate referred the following documents to the committee for examination and report:

• particulars of proposed expenditure in respect of the year ending on 30

June 2016;

• particulars of certain proposed expenditure in respect of the year ending

on 30 June 2016;

• particulars of proposed expenditure in relation to the parliamentary

departments in respect of the year ending on 30 June 2016;

• particulars of proposed additional expenditure in respect of the year ending on 30 June 2015; and

• particulars of certain proposed additional expenditure in respect of the year ending on 30 June 2015.

1.2 The committee is responsible for the examination of the following portfolios:

• Health;

• Social Services; and

• Human Services.

Details of hearings 1.3 The hearings were conducted as follows:

• 10 February 2016 — Health portfolio;

• 11 February 2016 — Social Services portfolio (including Human Services);

• 3 March 2016 — Health portfolio additional hearing; and

• 16 March 2016 — Health portfolio additional hearing.

1.4 The committee heard evidence from the following Senators:

• Senator the Hon. Fiona Nash, Assistant Minister for Health (and

representing the Minister for Health);

• Senator the Hon. Marise Payne, Minister for Defence (and representing the Minister for Human Services);

• Senator the Hon. Mitch Fifield, Assistant Minister for Social Services (representing the Minister for Social Services); and

• Senator the Hon. Concetta Fierravanti-Wells, Parliamentary Secretary to the Minister for Social Services (representing the Minister for Social Services).

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1.5 Evidence was also provided by the following:

• Mr Martin Bowles PSM, Secretary of the Department of Health;

• Ms Kathryn Campbell, Secretary of the Department of Human Services;

• Mr Finn Pratt, Secretary of the Department of Social Services; and

• officers representing the departments and agencies covered by the estimates before the committee.

Questions on notice 1.6 In accordance with Standing Order 26(9)(a), the committee agreed that the date for the return of answers in response to questions placed on notice at the 10 and 11 February hearings would be 4 April, for 3 March would be 14 April and for 16 march would be 27 April 2016.

1.7 Answers to questions on notice and tabled documents may be accessed via the committee's website: http://www.aph.gov.au/senate_ca.

Hansard transcripts 1.8 Hansard transcripts of the estimates proceedings are accessible on the committee’s website.

1.9 An index of topics covered by Hansard page number is available at Appendix 2.

1.10 References to the Hansard transcript are to the proof Hansard; page numbers may vary between the proof and the official Hansard transcript.

Changes in the PAES

Health Portfolio

1.11 In the Administrative Arrangement Orders of 21 September 2015 and 30 September 2015, the government announced the following changes to portfolio responsibilities:

• Ageing and aged care functions were transferred from the Department of Social Services to the Department of Health.

• The statutory officer of the Aged Care Commissioner and the Aged Care Pricing Commissioner were transferred to the Department of Health.

• The Medicare Provider Compliance for the Medicare Benefits Schedule and Pharmaceutical Benefits Schedule and allied health services were transferred to the Department of Health from the Department of Human Services.1

• Child care policy and programs and coordination of early childhood development policy to the Department of Education and Training.2

1 Portfolio Additional Budget Statements 2015-16 Health Portfolio, p. 3.

2 Portfolio Additional Budget Statements 2015-16 Social Services Portfolio, p. 3.

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Chapter 2 Health Portfolio

Department of Health 2.1 This chapter outlines key issues discussed during the 2015-2016 additional estimates hearings for the Health portfolio.

2.2 Areas of the portfolio and agencies were called in the following order:

• Whole of Portfolio/Corporate Matters

• Australian Institute of Health and Welfare

• Access to Medical and Dental Services

• Primary Health Care

• National Mental Health Commission

• Medicare Locals transitioning to Primary Health Networks (PHNs)

• Ageing and Aged Care

• Private Health

• Access to Pharmaceutical Services

• Health System Capacity and Quality

• Organ and Tissue Authority

• Therapeutic Goods Administration

• National Industrial Chemicals Notification and Assessment Scheme (NICNAS)

• Population Health

• National Health and Medical Research Council

• Acute Care

• Sports and Recreation

• Australian Sports Commission (ASC)

• Australian Sports Anti-Doping Authority (ASADA)

• Food Standards Australia New Zealand (FSANZ)

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Whole of Portfolio/Corporate Matters

2.3 Proceedings commenced with questions regarding a report in the West Australian newspaper that the Department of Health (department) is undertaking analysis around the payment systems of Medicare and aged care. The department confirmed that it is undertaking work into improving the payments system and that it has 'gone to market to engage consultants'.1

Outcome 3 Access to Medical and Dental Services

2.4 The committee sought clarification on the work the department is undertaking in reviewing bulk-billing incentives for diagnostic imaging and pathology. The department told the committee it does not expect to see a significant change in the costs of pathology tests as a result of changes to bulk billing. Mr Andrew Stuart, Deputy Secretary said:

[O]ur understanding is that bulk-billing rates tend to be driven in a significant degree by work force supply and by competition. Pathology and diagnostics are both highly competitive sectors with good supply in the marketplace. In particular, in pathology the bulk-billing rates, if you don't include the in-hospital services, have been in the high 90 per cents for a considerable period of time. There was no discernible effect at the time the bulk-billing incentive was implemented. We, therefore, don't see the likelihood of any significant movement in the bulk-billing rate from the removal of what is actually a relatively minor payment in the grand scheme of things for pathology.2

2.5 Senator Gallagher asked the department whether there would be a difference in impact between metropolitan and regional areas. The department said there is no basis for expecting a marked difference and noted that in rural areas most testing is undertaken by the regional public hospital and is commonly provided free of charge.3

Outcome 5 Primary Health Care

2.6 The department was asked to provide the committee with an update on the transition from Medicare Locals to PHNs. The committee heard that the total cost for closing the Medicare Locals was $44 million and that all the contracts are now in place for the 31 PHNs, which are funded for three years.4 The department also outlined the main difference in the role of the PHN to the former Medicare Locals:

The main difference is that they undertake a commissioning role. The former Medicare Locals undertook a range of contracting functions and they also undertook direct service delivery. Many of the former Medicare Locals, in addition to their overarching kind of coordinating planning and integrating role with the primary healthcare sector, actually ran and

1 Proof Committee Hansard, 10 February 2016, p. 14.

2 Proof Committee Hansard, 10 February 2016, p. 29.

3 Proof Committee Hansard, 10 February 2016, pp 29-30.

4 Proof Committee Hansard, 10 February 2016, pp 58-59.

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delivered services. Under the new arrangements that direct service delivery function ceases and they become commissioners. I guess commissioning is really a more strategic approach to procurement, and so the PHNs need to do a very detailed needs assessment population health planning. They need to do a detailed market analysis and then they are required to go out to the market to test the market for the particular services that they will be commissioning. That is quite a different feature to the role undertaken by the Medicare Locals.5

Outcome 11 Ageing and Aged Care

2.7 Senators sought clarification about the $472 million measure designed to address non-compliance related to the Aged Care Funding Instrument. The department said that the measure is not a cut to funding, and that funding continues to grow for that Instrument.6 Mr Nick Hartland, First Assistant Secretary, Aged Care Policy and Reform Group, explained how the measure will work:

The $472 million measure changes the way in which the instrument that providers use to assess needs works, so it makes the criteria to get to a higher level of funding more stringent and it responds to the fact that we have seen growth in one area of the needs assessment instrument that did not appear to us to be caused by an underlying increase in need. That helps moderate the growth that we are seeing in the outlays. In addition, at the same time, the government announced some measures to increase its scrutiny and compliance and the scrutiny of those scoring processes in order to make sure that they were being properly administered by aged-care providers.7

Outcome 2 Access to Pharmaceutical Services

2.8 The committee discussed the delisting of medicines that are available both over-the-counter and through a Pharmaceutical Benefits Scheme (PBS) prescription as part of a savings measure estimated to save $513 million over the five years of the agreement.8 The department explained the analysis behind the delisting savings measure:

As part of implementing that measure, the departments and the government sought advice from the Pharmaceutical Benefits Advisory Committee about any clinical issues that were associated with delisting any of the over-the-counter medicines. So the Pharmaceutical Benefits Advisory Committee developed some principles which were considered at its July meeting. That is where it recommended that over-the-counter medicine should remain available for certain patient groups like Aboriginals and Torres Strait Islanders; in some cases, palliative care patients; quadriplegics; and paraplegics. Another principle it recommended was not delisting medicines

5 Proof Committee Hansard, 10 February 2016, p. 60.

6 Proof Committee Hansard, 10 February 2016, p. 90.

7 Proof Committee Hansard, 10 February 2016, p. 89.

8 Proof Committee Hansard, 10 February 2016, p. 109.

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that were available over the counter or considered available over the counter because they were not scheduled by states and territories as scheduled poisons, but generally they were provided in hospitals, so intravenous drugs and things like that, and also drugs that were primarily used in emergency situations, like adrenalin and Ventolin.

The other principle that the PBAC advised is that drugs should only be delisted if access would be unlikely to change appreciably in the absence of a PBS subsidy.9

2.9 Senator Gallagher sought clarification as to whether the measure was intended to reduce the cost of some medicines for patients. Ms Penny Shakespeare, First Assistant Secretary, Pharmaceutical Benefits Division said:

I do not think that the case was ever that the PBAC advised that medicines should only be delisted if no patient was ever going to pay any more. In terms of what they considered affordable, they referred to the ex- manufacturer price for over-the-counter drugs and advised that where the ex- manufacturer price—which is not the price paid by the patient; it is the manufacturer selling to wholesalers or retailers—was below the concessional patient co-payment, which at the time was $6.10, then those were medicines that were suitable to be delisted.10

2.10 The committee heard that in some cases, administration, handling and dispensing fees were leading to a situation where the medicine, if purchased with a PBS script, cost the government and the patient more money than if it was purchased over-the-counter. The department gave the example of aspirin 100 milligram tablets:

For a concessional payment patient we would pay a total cost of $11.68 under the PBS. That includes a $6.20 co-payment from the patient and $5.48 payment by the Commonwealth for things like dispensing and the administration by the pharmacists. Over the counter, usually those medicines would cost about $3 or $4.11

Outcome 7 Health System Capacity and Quality

2.11 The Therapeutic Goods Administration (TGA) was asked questions on the reclassification of codeine and medicinal cannabis. The committee heard that the TGA has commenced a review into the scheduling of codeine to consider giving it a higher classification. The TGA also confirmed that the government announcement on 10 February 2016 about the framework to facilitate access to medicinal marijuana is focussed on production and manufacturing and that rescheduling the drug is another matter.12

9 Proof Committee Hansard, 10 February 2016, pp 109-110.

10 Proof Committee Hansard, 10 February 2016, p. 110.

11 Proof Committee Hansard, 10 February 2016, p. 111.

12 Proof Committee Hansard, 10 February 2016, pp 115-117.

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Outcome 1 Population Health

2.12 Senators inquired into the recommendations of the Ice Task Force and the programs that are being rolled out as a result. The department told the committee that the Ice Task Force's recommendations include an expansion of funding for drug and alcohol services more broadly, acknowledging that people engage in polydrug use. The committee heard that of the $300 million in funding, $241.5 million will be allocated to PHNs from 1 July 2016 and that implementation work is underway to develop program guidelines for PHNs in relation to service funding.13 Dr Wendy Southern PSM, Deputy Secretary told the committee:

There will be a set of program guidelines around what the funding is intended to do. The PHNs are doing their needs analyses at the moment and you would expect that depending on the population needs of a particular PHN there might be variation in the services they are delivering. But as long as they are within those broad program guidelines and they are meeting the needs of their target populations then you would expect there would be some variation. But we want to be flexible in how it is rolled out.14

2.13 Food Standards Australia New Zealand (FSANZ) was asked to clarify answers provided at the Budget Estimates regarding potential conflict of interest of members of the expert panel on New Plant Breeding Techniques workshop. FSANZ told the committee they take conflict of interest very seriously but also that all experts engaged have 'some connection or involvement with research work and scientific work in this area'.15

2.14 The findings of the report produced by the New Plant Breeding Techniques workshop were also discussed. FSANZ told the committee that the findings were that 'some techniques do not produce that result and therefore are not the subject of the code at present and the subject of the framework for dealing with [genetically modified] foods, while other techniques are likely to result in that'.16

Outcome 4 Acute Care

2.15 The department was asked to provide an update on the funding arrangements beyond the current agreement for Mersey Hospital in Tasmania. The committee heard that funding expires on 30 June 2017 and that no formal discussions have commenced. However, the department indicated that if the Tasmanian Government wished to make changes to the current agreement in order to align the hospital with their state-wide strategy, then the Commonwealth is willing to accommodate sensible changes within the existing policy.17

13 Proof Committee Hansard, 10 February 2016, pp 124-126.

14 Proof Committee Hansard, 10 February 2016, p. 126.

15 Proof Committee Hansard, 16 March 2016, p. 4.

16 Proof Committee Hansard, 16 March 2016, pp 6-7.

17 Proof Committee Hansard, 10 February 2016, pp 6-7.

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Outcome 10 Sports and Recreation

2.16 A number of senators asked questions of the Australian Sports Anti-Doping Authority (ASADA) regarding ASADA’s involvement in court and tribunal decisions in relation to the imposition of bans on current and former Essendon Football Club (Essendon) players for the use of a prohibited substance. In January 2016, 34 players were found guilty of taking the banned substance thymosin beta-4 during the 2012 season as the Court of Arbitration for Sport upheld the appeal lodged by the World Anti-Doping Agency. The committee heard that all 34 players said they received injections and signed a consent form for various substances including thymosin beta-4.18 When asked whether the players were told that the substance was legal, Mr Ben McDevitt, Chief Executive Officer of ASADA, gave the following response:

There have been various accounts about exactly what players were or were not told…ultimately the onus rests always on the individual. If they were unsure then they should have sought advice from their doctor. Their doctor gave evidence to say that none of them did.19

2.17 Mr McDevitt said he made the decision to refer the matter to the World Anti-Doping Agency to initiate an appeal to the Court of Arbitration for Sport because it would save almost $1 million of Commonwealth funds.20 The committee heard that the total cost of Operation Cobia, the investigation into the taking of banned substances which resulted in show cause notices being issued to the Essendon players as well as 19 National Rugby League players, has been $5.947 million. This included the Federal Court cases and appeals by Mr James Hird (former senior coach of Essendon) and Essendon. However, ASADA has recovered $1.26 million of those costs from Mr Hird and Essendon.21

18 Proof Committee Hansard, 3 March 2016, p. 22.

19 Proof Committee Hansard, 3 March 2016, p. 22.

20 Proof Committee Hansard, 3 March 2016, p. 19.

21 Proof Committee Hansard, 3 March 2016, p. 25.

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Chapter 3

Social Services Portfolio (including Human Services) Department of Social Services 3.1 This section outlines key issues discussed during the 2015-2016 additional estimates hearings for the Social Services Portfolio.

3.2 Areas of the portfolio were called in the following order:

• Cross Outcomes/Corporate Matters/Grant Programs

• Social Security

• Disability and Carers

• National Disability Insurance Agency

• Families and Communities

• Australian Institute of Family Studies

• Housing

Cross Outcomes/Corporate Matters/Grant Programs

3.3 The Department of Social Services (department) grant tendering process was discussed. The department was asked whether it has a process in place to gauge community feedback of service gaps arising from the grants tendering process. The committee heard that the data exchange reporting system will provide information on the client footprint and client outcomes and that the department intends to build a client survey into the system. The department said all service providers with grant agreements have signed up to the data exchange and that an activity work plan is attached to all grant agreements. The work plans set out agreed performance indicators as part of ongoing reporting that will feed into a holistic understanding of the service system.1

3.4 Senator Moore inquired into advertising campaigns the department has run since the 2013 election. The department said there are currently two campaigns in the development stage. One is for the prevention of violence against women, which is a COAG campaign, and the other is for the National Disability Insurance Scheme (NDIS). The Commonwealth is contributing $16.7 million to the prevention of violence against women campaign over three years and is spending $14.2 million over two years for the NDIS campaign.2

Outcome 1 Social Security

3.5 The committee sought an update on the actuarial valuation of the lifetime liability of Australia's welfare system, examining both longitudinal data and future

1 Proof Estimates Hansard, 11 February 2016, pp 10-11.

2 Proof Estimates Hansard, 11 February 2016, pp 14-15.

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projections. The department has engaged PricewaterhouseCoopers to produce four valuations—a baseline valuation and three subsequent valuations, to provide three additional development modules, and to facilitate knowledge transfer to the department. The contract is worth $9.4 million over four years. The department has been provided with a final draft evaluation.3

3.6 The committee inquired into trends and projections of social welfare payments and heard that social welfare expenditure overall is growing and that the key growth area is care services. The NDIS is one of the key drivers of growth in expenditure. The department confirmed that working age payments are in decline as a result of a number of factors, including overall population growth, fertility rates, migration, population ageing, wages, prices, and economic growth.4

Outcome 5 Disability and Carers

3.1 The committee sought an update on the rollout of the NDIS. The committee heard that as a result of the bilateral agreements that have been made with New South Wales, Victoria, South Australia, Tasmania and the Australian Capital Territory, 64 per cent of the eligible population for NDIS in Australia is now covered. The Commonwealth is currently negotiating with Queensland and the Northern Territory.5 The Chair asked the department how the bilateral agreements will mitigate the Commonwealth's financial risk. The department explained that the current bilateral agreements are more detailed than the trial agreements and that specific numbers of participants and financial contributions have been agreed based on more analysis into disaggregated costs.6 The bilateral agreements are based on the Productivity Commission's estimates for participants. Ms McDevitt, Group Manager, NDIS, gave the following explanation:

The Productivity Commission said that at full scheme there would be around 460,000 people in the NDIS. So we are working on those scheme estimates. You may recall that in 2017 the Productivity Commission will be undertaking a review of all their cost estimates for the scheme. So we are still working on the original estimates. For example, in New South Wales, I said their estimate was for 140,000 people. In South Australia, it is for 32½ thousand people. That is what we have reflected in the bilateral agreements.7

Outcome 2 Families and Communities

3.2 Proposed changes to eligibility for paid parental leave (PPL) announced in the Mid-Year Economic Fiscal Outlook were discussed. The measure will allow for primary carers who receive employer paid parental leave to be eligible for a top up

3 Proof Estimates Hansard, 11 February 2016, pp 26-28.

4 Proof Estimates Hansard, 11 February 2016, pp 31-32.

5 Proof Estimates Hansard, 11 February 2016, p. 52.

6 Proof Estimates Hansard, 11 February 2016, p. 53.

7 Proof Estimates Hansard, 11 February 2016, p. 53.

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payment, paid at the national minimum wage, for the difference in weeks between the employer scheme and the 18 weeks provided by Government.8 This replaces the Budget measure titled Removing Double-Dipping from Parental Leave Pay that proposed a similar top up scheme, up to a capped amount of $11,640 instead of a number of weeks.9 The department said that the proposed measure will result in 7,000 carers, or four per cent of mothers, not receiving any PPL due to having an employer scheme of at least 18 weeks, as opposed to 34,000 carers under the Budget measure.10

Outcome 4 Housing

3.3 The committee asked for comment about delays to payments under the National Rental Affordability Scheme. The department explained that it has 'processed every application for an incentive that is compliant with the regulations for last year, 2014-14'. There are still 4,443 applications which are either non-compliant or for which the department requires additional information. The main reasons for non-compliance were identified as market rent valuations being incorrect, or late, or not in respect of a relevant period, as well as overcharging of rent.11

Department of Human Services 3.4 This section contains key issues discussed during the 2015-2016 additional hearing for the Human Services portfolio.

3.5 Areas of the portfolio and agencies were called in the following order:

• Australian Hearing

• Whole of Department—Corporate Matters

Australian Hearing

3.6 Senator Cameron commenced with a series of questions about the services that Australian Hearing provide. The committee was told that last financial year Australian Hearing provided 510,000 services to 161,000 active clients and that 10 per cent of their clients, roughly 16,000, are returned veterans.12 In response to questions from Senator Cameron, Australian Hearing indicated that they have had no discussions with the Minister's office in relation to the scoping study; that they continued to meet their KPI's; and that they were profitable and could compete with any provider.13

3.7 Clarification was sought regarding the five per cent reduction to the community service obligation budget of Australian Hearing—currently $65.5

8 Mid-Year Economic Fiscal Outlook 2015-16, 'Appendix A: Policy decisions taken since the 2015-16 Budget', p. 216.

9 Proof Estimates Hansard, 11 February 2016, p. 76.

10 Proof Estimates Hansard, 11 February 2016, pp 76-77.

11 Proof Estimates Hansard, 11 February 2016, p. 94.

12 Proof Estimates Hansard, 11 February 2016, p. 98.

13 Proof Estimates Hansard, 11 February 2016, pp 98-102.

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million—and whether this would lead to greater efficiency. Australian Hearing told the committee that they believe they are operating at a 'reasonably effective level' presently and that the saving will 'probably' mean fewer people will receive services.14

Department of Human Services

3.8 The committee asked the Department of Human Services (DHS) about issues with the Centrelink payment system and the Centrelink website. The committee heard that DHS had incorrectly issued debt statements to 73,000 families in January when it was rolling out the No Jab, No Pay measures. DHS told the committee the incorrect statements were the result of a 'computer glitch', which had been rectified quickly. DHS advised the committee that no one was out of pocket as a result of the error.15

3.9 The committee inquired into the usability of the MyGov website. DHS told the committee that the number of transactions on the MyGov website had increased from 138 million in September 2015 to 234 million in December 2015 and that users experienced an error rate of 0.13 per cent.16 DHS also detailed past and proposed changes to the process for logging into the website to improve usability while maintaining the security of the website. DHS is investigating options to allow users more choice in determining their user identification. DHS also informed the committee that is it taking the lead on a whole-of-government project called Digital ID, which will allow people to prove their identity through an online Document Verification Service.17

3.10 The committee discussed wait times of the Centrelink phone line and the availability of the call-back service. Discussion revealed that the call-back service is currently unavailable due to some technological issues that have been ongoing since July 2015. DHS advised that it has addressed an issue in the telecommunications system which had resulted in incorrect approximate wait times being given to customers.18

14 Proof Estimates Hansard, 11 February 2016, p. 100.

15 Proof Estimates Hansard, 11 February 2016, pp 105-106.

16 Proof Estimates Hansard, 11 February 2016, p. 106.

17 Proof Estimates Hansard, 11 February 2016, pp 108-109.

18 Proof Estimates Hansard, 11 February 2016, p. 127.

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3.11 The committee heard that DHS is currently testing a new telecommunications system and that the new system will feature a mechanism to analyse the reasons for people's calls in order to customise pre-emptive actions such as messages on the website and on social media advising people about answers to frequently asked questions.19 DHS also said that as part of the Welfare Payment Infrastructure Transformation program, it is building an application to reduce the number of phone calls. Ms Kathryn Campbell, Secretary, DHS, told the committee:

…as part of WPIT tranche 1, we are building an application which will give people an insight into where we are up to with processing their claim."20

3.12 Senator Cameron also raised concerns about the following issues:

• complaints from staff in relation to filling permanent positions and

recruitment processes;21

• Centrelink being in a position to tender for continued delivery of the Medicare

payments with a new Medicare Payment System;22 and

• consumer leases.

23

3.13 DHS was asked about the decision to close the Centrelink-Medicare service centre in Kingston, Tasmania. DHS told the committee that the Centrelink component at the Kingston service centre was a service for small claims only and that people with complex claims were redirected to Hobart. DHS said that simple Centrelink claims and tasks are now mostly processed over the phone or internet and, as a result, there has been a reduction in the number of people visiting Medicare offices. DHS confirmed that the centre will be closed on 4 March 2016.24

Senator Zed Seselja

Chair

19 Proof Estimates Hansard, 11 February 2016, pp 122-123.

20 Proof Estimates Hansard, 11 February 2016, p. 123.

21 Proof Estimates Hansard, 11 February 2016, p. 130.

22 Proof Estimates Hansard, 11 February 2016, p. 115.

23 Proof Estimates Hansard, 11 February 2016, p. 135.

24 Proof Estimates Hansard, 11 February 2016, pp 120-121

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18

Appendix 1

Departments, entities and companies that appeared before the Committee1

Health Portfolio • Department of Health

• Australian Institute of Health and Welfare

• Australian Organ and Tissue Authority

• Australian Sports Anti-Doping Authority

• Australian Sports Commission

• Food Standards Australia New Zealand

• National Health and Medical Research Council

• National Industrial Chemicals Notification and Assessment Scheme

• National Mental Health Commission

• Therapeutic Goods Administration

Social Services Portfolio (including Human Services) • Department of Social Services

• Australian Institute of Family Studies

• National Disability Insurance Agency

• Department of Human Services

• Australian Hearing

1 This document has been prepared based on the Department of Finance's Flipchart of Commonwealth entities and companies under the Public Governance, Performance and Accountability Act 2013 as at 30 September 2015, http://www.finance.gov.au/sites/default/files/pgpa_flipchart.pdf?v=2 (accessed 22 February 2016)

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20

Appendix 2

Index to Hansard Transcripts1

Page no.

Wednesday, 10 February 2016

Health Portfolio

Whole of Portfolio/Corporate Matters ............................................................ 5

Medicare and aged care payment systems - report in media of plans to outsource payments and the digitisation of payments ......................................... 5

LGBTI Health Alliance - funding of program ceased ...................................... 17

AHPRA and the therapeutic guidelines around Lyme disease and restrictions placed on general practitioners on treating Lyme-like illness ........................... 18

Health expenditure figures ................................................................................ 21

flexible funds ..................................................................................................... 22

redesigning of 24 health programs .................................................................... 27

Medicare rebate changes for pathology tests .................................................... 28

Bulk billing changes .......................................................................................... 28

Government responses to Senate inquiries - speech pathology inquiry ........... 37

Australian Institute of Health and Welfare’s appropriation share; work on ..... 39 adoption; clients of AIHW ....................................................................................

Outcome 3: Access to medical and dental services ....................................... 41

Update on dental services - Child Dental Benefits Schedule ........................... 41

Medicare Benefits Scheme review taskforce update ......................................... 44

Scoping study of the privatisation of Australian Hearing ................................. 57

Outcome 5: Primary Health Care .................................................................. 58

Cost of closing down the Medicare Locals and update on the opening of PHNs, and details relating to indigenous services and KPIs for mental health ............ 58

1 Hansard page numbers referred to in this appendix are based on proof Hansards. Page numbers may vary slightly in the final official Hansard transcripts.

21

18

Funding for Aboriginal and Torres Strait Islander health funding .................... 64

Engagement with roll-out of NDIS in relation to mental health programs ....... 65

Mental health streamlining savings ................................................................... 65

Update on the new Mental Health Gateway and the one-stop phoneline ......... 68

Funding for mental health programs ................................................................. 70

Government response to National Mental Health Commission Report Contributing Lives, Thriving Communities - Review of Mental Health Programs and Services ...................................................................................... 73

National Mental Health Planning Framework................................................... 74

Perinatal mental health, Partners in Recovery and Primary Health Network (PHN) funding ................................................................................................... 74

Fifth National Mental Health Plan .................................................................... 75

Mental Health Australia review of mental health programs ............................. 79

National Mental Health Commission annual work plan ................................... 80

National maternity services plan ....................................................................... 81

Staff arrangements for breastfeeding ................................................................ 81

Insurance coverage for midwives - including transitional arrangements ......... 81

Outcome 11: Ageing and Aged Care ............................................................. 87

Aged care subsidies and aged care providers allegedly engaging in fraudulent claims for subsidies ........................................................................................... 87

Improved compliance measures in aged care .................................................... 88

Care delivery services for LGBTI and CALD .................................................. 95

Aged care workforce strategy ............................................................................ 96

My Aged Care website and call centres ............................................................ 98

Outcome 6: Private Health ........................................................................... 102

Web survey for private health insurance ......................................................... 102

Private health insurance rebate means testing ................................................. 105

Outcome 2: Access to Pharmaceutical Services.......................................... 107

Pharmacy co-payment and safety net changes and specifically on Closing the Gap measure and Panadol Osteo ..................................................................... 109

Outcome 7: Health Infrastructure, Regulation, Safety and Quality ........ 113

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Pre-exposure prophylaxis for HIV availability in Australia ........................... 114

Post-market monitoring of medicine, specifically codeine ............................. 115

Medicinal cannabis .......................................................................................... 117

NICNAS - communications strategy, reforms affecting assessment of chemicals for use in cosmetics ........................................................................ 121

Outcome 1: Population Health ..................................................................... 124

Ice taskforce and alcohol and other drugs funding.................................... 62, 124

Research on ticks and Lyme disease testing diagnostic criteria in Australia .. 127

Plain packaging of tobacco .............................................................................. 129

National Health and Medical Research Council - NMCFS sufferers ............. 132

Thursday, 11 February 2016

Social Services Portfolio (including Human Services

Cross Outcomes/Corporate Matters/Grant Programs .................................. 5

The Department of Social Services (DSS) grants process .................................. 5

Commitment of funding over forward estimates ................................................ 6

Organisations that received grant funding including gap funding ...................... 6

Grant program feedback from individual clients and increased engagement with the sector .................................................................................................... 10

Building of Tuggeranong head office ............................................................... 16

Job seeker entitlements for income support for young people .......................... 18

Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2015. ............................................................. 19

Outcome 1: Social Security ............................................................................. 26

Actuarial research related to McClure report .................................................... 26

GST reform analysis .......................................................................................... 28

Disability support pension and claims in media of it being unsustainable ....... 31

Newstart and youth allowance .......................................................................... 33

Income support for people with disability - reassessment of individuals under 35 years old ........................................................................................................ 35

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Support for carers and the projective growth of the number of carers .............. 38

Changes to pension eligibility ........................................................................... 41

Family Tax Benefit Part A proposed changes ................................................... 44

Pension allowance reductions and cancellations ............................................... 46

Working age payments ...................................................................................... 50

Outcome 5: Disability and Carers ................................................................. 52

Delivery of National Disability Insurance Agency (NDIA) and negotiating with organisations ...................................................................................................... 52

The transition to roll out of the NDIS ......................................................... 58, 66

NDIA guided planning for participants entering the scheme ............................ 58

Young people in nursing homes report and the Government response............. 63

Supported accommodation under the NDIS in regards to best practice housing models ................................................................................................................ 64

Impact of staff turnover in the NDIA on clients ............................................... 66

Outcome 2: Families and Communities ........................................................ 70

Australian Institute of Family Studies70 Australian Institute of Family Studies (AFIS) work status on adoption ........................................................................ 71

AIFS Longitudinal study of Medicare in Victoria and AIFS study into carers 72

Paid parental leave ............................................................................................. 76

Additional Syrian refugee intake ....................................................................... 78

BasicsCard - cashless card for welfare recipients............................................. 81

Outcome 4: Housing ........................................................................................ 92

National Rental Affordability Scheme - number of dwellings constructed and ongoing costs ..................................................................................................... 93

Government’s homelessness targets .................................................................. 95

Emergency housing for women and families .................................................... 96

Human Services

Australian Hearing .......................................................................................... 98

The scoping study into Australian Hearing ....................................................... 98

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Australian Hearing staffing matters ................................................................ 102

Whole of Portfolio/Corporate Matters ........................................................ 105

IT Infrastructure and myGov website ............................................................. 105

Co-location of medicare and Centrelink services............................................ 120

Legal services for child support ...................................................................... 121

Waiting times for Centrelink call centre ......................................................... 122

The ‘dragon’s den’ and ‘hack the future’ innovation projects ........................ 130

Thursday, 3 March 2016

Health Portfolio

Outcome 4: Acute Care ..................................................................................... 3

Mersey Hospital in Tasmania and the status of funding arrangements beyond current .................................................................................................................. 3

North West Regional Hospital update on future funding .................................... 4

Draft strategic plan for 2015-16 related to Commonwealth funding of hospitals in Tasmania ......................................................................................................... 5

Functional and Efficiency Reviews ..................................................................... 7

COAG and negotiations with states and territories on hospital funding ............. 7

Media reports of ongoing health costs and restoring funding to states for health ............................................................................................................................. 7

Role of the Department of health in advising first ministers on future health budgets ................................................................................................................. 8

Modelling for health agreement funding indexation ......................................... 11

Work with PM&C and central agencies on funding of state health budgets .... 13

Work of minister on future health reforms ........................................................ 13

MBS-style hospital benefit policy ..................................................................... 13

Discussion on policy directions for health reform ............................................ 14

Breastfeeding policy of the department ............................................................. 16

Outcome 10: Sport and Recreation ............................................................... 16

Barry O’Farrell’s review into offshore sports betting ....................................... 16

Sporting Schools program update ..................................................................... 17

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22

Banned substances controversy of Essendon players in the Australia Football League and ASADA’s involvement and subsequent court and tribunal decisions ............................................................................................................ 18

Wednesday, 16 March 2016

Health Portfolio

Food Standards Australia New Zealand ......................................................... 2

Answers from QONs from Budget Estimates regarding potential conflict of interest of members of the expert panel on New Plant Breeding Techniques workshop ............................................................................................................. 2

The findings of the report produced by the New Plant Breeding Techniques workshop ............................................................................................................. 6

Changes to the application handbook, which reduces data compliance for particular GM crops ............................................................................................. 8

Plans for further consultation on the regulation of GM techniques .................... 8

26

The Senate

Economics

Legislation Committee

Additional estimates 2015-16

March 2016

27

ii

© Commonwealth of Australia 2015

978-1-76010-357-6

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License.

The details of this licence are available on the Creative Commons website: http://creativecommons.org/licenses/by-nc-nd/3.0/au/

Printed by the Senate Printing Unit, Parliament House, Canberra.

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Senate Economics Legislation Committee

Members

Senator Sean Edwards, Chair South Australia, LP

Senator Chris Ketter, Deputy Chair Queensland, ALP

Senator David Bushby Tasmania, LP

Senator Sam Dastyari New South Wales, ALP

Senator Matthew Canavan Queensland, LP

Senator Nick Xenophon South Australia, IND

Senators in attendance

Senator Cory Bernardi South Australia, LP

Senator David Bushby Tasmania, LP

Senator Matthew Canavan Tasmania, LP

Senator the Hon Kim Carr Victoria, ALP

Senator Sam Dastyari New South Wales, ALP

Senator Sean Edwards South Australia, LP

Senator the Hon Bill Heffernan New South Wales, LP

Senator Chris Ketter Queensland, ALP

Senator David Leyonhjelm New South Wales, LDP

Senator Scott Ludlam Western Australia, AG

Senator the Hon Ian MacDonald Queensland, LP

Senator John Madigan Victoria, IND

Senator Jennifer McAllister New South Wales, ALP

Senator Nick McKim Tasmania, AG

Senator the Hon Jan McLucas Queensland, ALP

Senator Deborah O'Neill New South Wales, ALP

Senator Lee Rhiannon New South Wales, AG

Senator Janet Rice Victoria, AG

Senator Rachel Siewert Western Australia, AG

Senator Glenn Sterle Western Australia, ALP

Senator Zhenya Wang Western Australia, PUP

Senator Peter Whish-Wilson Tasmania, AG

Senator John Williams New South Wales, NATS

Senator the Hon Penny Wong South Australia, ALP

Senator Nick Xenophon South Australia, IND

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Se

cre

tariat

Dr Kathleen Dermody, Secretary Ms Leonie Lam, Research Officer

PO Box 6100 Parliament House Canberra ACT 2600 Ph: 02 6277 3540 Fax: 02 6277 5719 E-mail: economics.sen@aph.gov.au Internet: www.aph.gov.au/senate_economics

30

TABLE OF CONTENTS

Abbreviations ....................................................................................................vii

Additional Budget Estimates 2015-16 .............................................................. 1

Report to the Senate ................................................................................................. 1

Introduction ............................................................................................................ 1

Portfolio structures and outcomes .......................................................................... 1

General comments .................................................................................................. 2

Questions on notice ................................................................................................ 3

Public interest immunity claims ............................................................................. 3

Record of proceedings ............................................................................................ 3

Matters raised—Treasury Portfolio ........................................................................ 4

Matters raised—Industry, Innovation and Science portfolio ............................... 15

Appendix 1 ......................................................................................................... 21

Index to proof Hansard transcripts ...................................................................... 21

Wednesday, 10 February 2016 ............................................................................. 21

Thursday, 11 February 2016................................................................................. 21

Appendix 2 ......................................................................................................... 23

Tabled documents ................................................................................................... 23

Wednesday, 10 February 2016 ............................................................................. 23

Thursday, 11 February 2016................................................................................. 23

Appendix 3 ......................................................................................................... 25

Industry, Innovation and Science outcome statement ........................................ 25

Appendix 4 ......................................................................................................... 27

Industry, Innovation and Science portfolio structure ......................................... 27

31

vi

Appendix 5 ......................................................................................................... 29

Treasury portfolio structure and outcomes ......................................................... 29

Appendix 6 ....................................................................................................... ..31

Department of the Treasury organisational structure ........................................ 31

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Abbreviations

AAO Administrative Arrangements Order

ADI Authorised deposit-taking institution

ADC Anti-Dumping Commission

ARENA Australian Renewable Energy Agency

ATS Automotive Transformation Scheme

CEFC Clean Energy Finance Corporation

CFFR Council on Federal Financial Relations

COAG Council of Australian Governments

MYEFO Mid-year Economic and Fiscal Outlook

FTA Free trade agreement

GDP Gross Domestic Product

GST Goods and Services Tax

MAAL Multinational anti-avoidance law

OECD Organisation for Economic Cooperation and Development

SES Senior Executive Service

WTO World Trade Organisation

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34

Additional Budget Estimates 2015-16 Report to the Senate

Introduction 1.1 On 4 February 2016, the Senate referred to the committee for examination and report the following documents in relation to the Industry, Innovation and Science, and Treasury portfolios:1

• Particulars of proposed additional expenditure in respect of the year ending on

30 June 2015 [Appropriation Bill (No. 3) 2015-2016];

• Particulars of certain proposed additional expenditure in respect of the year ending on 30 June 2015 [Appropriation Bill (No. 4) 2015-2016]; and

• Final budget outcome 2014-15. 2

1.2 The committee is required to report to the Senate on its consideration of 2015-16 Additional Budget Estimates (Additional Estimates) on

Tuesday, 1 March 2016.3

Portfolio structures and outcomes 1.3 Following the Administrative Arrangements Orders (AAOs) issued on 21 September 2015 and 30 September 2015, the Industry, Innovation and Science portfolio was established. As a result of these AAOs, the former Industry and Science portfolio's responsibility for the renewable energy technology development and the Australian Renewable Energy Agency (ARENA) were transferred to the Department of the Environment. The Industry, Innovation and Science portfolio incorporates elements of the former Industry and Science portfolio as well as responsibility for Northern Australia policy and coordination and national issues relating to the digital economy.4 Likewise, as a result of the AAOs in September 2015, the Treasury portfolio's responsibility for the Clean Energy Finance Corporation was transferred to the Department of the Environment.5

1 Journals of the Senate, No.137, 4 February 2016, p. 3720.

2 Journals of the Senate, No.119, 12 October 2015, p. 3165.

3 Journals of the Senate, No.124, 10 November 2015, p. 3336.

4 Industry, Innovation and Science Portfolio, Portfolio Additional Estimates Statements 2015-16, p. 3. See also Administrative Arrangements Order, 30 September 2015, p. 2 and Administrative Arrangements Order, 21 September 2015, p. 5.

5 Treasury Portfolio, Portfolio Additional Estimates Statements 2015-15, p. 3. See also Administrative Arrangements Order, 21 September 2015, p. 6.

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1.4 The Department of Industry, Innovation and Science continues to have one outcome, which is:

Enabling growth and productivity for globally competitive industries through supporting science and commercialisation, growing business investment and improving business capability and streamlining regulation.6

1.5 The complete structure and outcomes for each portfolio are summarised in the appendices as indicated below:

• Industry, Innovation and Science (Appendices 3 and 4); and

• Treasury (Appendices 5 and 6).

General comments 1.6 The committee conducted hearings over two days:

• 10 and 11 February 2016—Treasury portfolio; and

• 10 and 11 February 2016—Industry, Innovation and Science portfolio.

1.7 In total, the committee met for 21 hours and 50 minutes, excluding breaks.

1.8 The committee received evidence from the following ministers:

• Senator the Hon. Mathias Cormann, the Minister for Finance, representing the Minister for Industry, Innovation and Science during the Office of the Chief Scientist's appearance and the Treasurer;

• Senator the Hon. Arthur Sinodinos AO, Cabinet Secretary, representing the Minister for Industry, Innovation and Science and the Minister for Resources, Energy and Northern Australia;

• Senator the Hon. James McGrath, Assistant Minister to the Prime Minister,

representing the Treasurer; and

• Senator the Hon. Scott Ryan, Assistant Cabinet Secretary, representing the

Treasurer and the Minister for Industry, Innovation and Science and Minister for Resources, Energy and Northern Australia.

1.9 Evidence was also provided by:

• Mr John Fraser, Secretary, Department of the Treasury;

• Ms Glenys Beauchamp, Secretary, Department of Industry, Innovation and

Science; and

• officers from the Treasury and Industry, Innovation and Science portfolios.

1.10 The committee thanks the ministers and officers who attended the hearings for their assistance.

6 Industry, Innovation and Science Portfolio, Portfolio Additional Estimates Statements 2015-16, p. 23.

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Questions on notice 1.11 The committee draws the attention of all departments and agencies to the agreed deadline of Friday, 1 April 2016 for the receipt of answers to questions taken on notice from this round, in accordance with Standing Order 26.

1.12 As the committee is required to report before responses to questions are due, this report has been prepared without reference to any of these responses. Indices of questions taken on notice during and after the hearings are available at: http://www.aph.gov.au/Parliamentary_Business/Senate_Estimates/economicsctte/e stimates/add1516/index.

1.13 Answers to questions taken on notice are tabled in the Senate. They may be accessed from the committee's website.

1.14 For the 2015-16 Supplementary Budget Estimates round, answers to questions on notice were due to be provided to the committee by Friday, 4 December 2015 for both the Industry, Innovation and Science portfolio and the Treasury portfolio. The committee notes that:

• The Industry, Innovation and Science portfolio submitted all their answers before the commencement of the 2015-16 Additional Estimates hearings, however only 43 questions out of the total of 112 questions were answered by the deadline set by the committee; and

• For the Treasury portfolio—there were still answers outstanding during and after the Additional Estimates hearings, with no answers to the 2,560 questions placed on notice responded to by the due date. To date, there remained 11 responses outstanding. This performance was a marked deterioration on the previous additional estimates when questions were at least answered prior to the estimates hearings.

Public interest immunity claims 1.15 On 13 May 2009, the Senate passed an order relating to public interest immunity claims.7 The order, moved by Senator Cormann, set out the processes to be followed if a witness declined to answer a question. The full text of this order was provided to departments and agencies prior to the hearings and was also incorporated in the Chair's opening statements on both days of the Additional Estimates hearings.

Record of proceedings 1.16 This report does not attempt to analyse the evidence presented over the two days of hearings. However, it does include a brief list of the main issues that were traversed by the committee for the respective portfolios.

1.17 Copies of the Hansard transcripts, documents tabled at the hearings, and additional information received after the hearings (see Appendices 1 and 2) are tabled in the Senate and available on the committee's website.

7 Journals of the Senate, No. 68, 13 May 2009, p. 1941.

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1.18 Page numbers in brackets following the topics listed below refer to Proof Hansard transcripts. Page numbers in the Official Hansard transcripts, once they are produced, may differ from the page numbers in the Proofs.

Matters raised—Treasury Portfolio 1.19 On 10 and 11 February 2016, the committee examined the estimates for the:

• Treasury [Macroeconomic Group and Corporate Strategy and Services Group];

• Treasury [Fiscal Group];

• Treasury [Markets Group];

• Treasury [Revenue Group] with the Australian Charities and Not-for-profits Commission (ACNC) and the Australian Taxation Office (ATO);

• Australian Competition and Consumer Commission (ACCC);

• Australian Prudential Regulation Authority (APRA);

• Australian Securities and Investments Commission (ASIC); and

• Productivity Commission (PC).

Treasury [Macroeconomic Group and Corporate Strategy and Services Group]

1.20 The Secretary of the Department of the Treasury (the Treasury), Mr John Fraser, opened with a summary of economic developments. At the international level, he observed the volatility of the world economy, with no clear signal about its direction. He explained :

[T]here is not a clear path about growth. The United States is looking significantly better, but to call it 'sustained growth' at this stage might be a step too far. We have the issues in China…and that is a risk to the global economy and also particularly to Asia and to [Australia]…There is no clear path ahead, and…that has been reflected in a lack of confidence which is improbably impacting not only on financial markets but on the real economy. (pp. 14-15)

1.21 Mr Fraser elaborated:

We also have the uncertainties with the first of the interest rate increases in the United States prior to Christmas, but at the same time we are seeing divergent moves elsewhere, with Japan recently moving into negative interest rates. They join Denmark and Switzerland, who have negative interest rates—not negative real interest rates but negative interest rates. We shall see what that means for the world. We also have in Europe the monetary authorities sort of indicating that they would be willing to contemplate further monetary stimulus, were that to be required. More recently, we have seen the volatility in the equity markets. I have always been somewhat sceptical of the links between share markets and the real economy, but the volatility has been significant. Some would argue that the interest rate increase in the United States would be a factor in that. Others would argue that it is also heavily influenced by the uncertainties in China. Others, putting into the amalgam, would add in the weakness in commodity

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prices, which is far greater than people have been expecting—certainly than we have been expecting—over the past year. (p. 14)

1.22 Against this international backdrop of uncertain economic developments, the Secretary described the domestic economy more reassuringly as 'swimming against the tide'—the tide being the uncertainties at the global level.

1.23 At the state and territory level, Mr Fraser noted that most states and territories, with the exception of South Australia and Western Australia, are performing quite solidly:

…It is never perfect, but the reports from the state and territory under treasurers are that New South Wales and Victoria are doing well. Tasmania is doing very well in its tourist industry. That is, I think, very much related to the exchange rate depreciation. We are seeing the Northern Territory doing well…Queensland is interesting…[T]here is a sense that it is pretty much running as they expected. The adjustment coming out of the mining investment boom is pretty much as they expected, but they have seen some strength in building and confidence more generally. The weak points clearly remain South Australia…and I think that is a broader structural issue, but Western Australia, according to the state Treasurer and his people…is clearly doing worse than what was expected in the middle part of last year. That is showing up in a number of measures—payroll tax, activity in the CBD. They are also seeing house prices coming off probably the strongest falls around Australia. (p. 14)

1.24 In relation to the property sector, the Secretary observed that although it was too early to make any judgements, projects in the pipeline provided some confidence that construction and housing activities would not fall into a heap. (p. 14)

1.25 According to Mr Fraser, the labour market provided some space for optimism in that it fared far better than Treasury had forecast in the budget:

The strength in the labour market is encouraging. We have seen some falls, importantly, in youth unemployment. I met with the Statistician on Monday afternoon, and there were some technical issues to do with the rolling of the sample in October and November, which may have made the employment data look a little bit better than would otherwise be the case. That is because of the cohort that they roll in and out. The one they rolled in had a higher employment-to-population level. We shall see how that works out. Certainly the labour force data does seem consistent with what the states are telling us. (p. 14)

1.26 In line with his previous commentary, the Secretary identified a weak spot in the economy coming from external factors and this is reflected in the outlook and performance of non-mining investments. To reiterate the unpredictable nature of the economic environment, Mr Fraser reported:

We are getting decent confidence surveys, such as the NAB survey that came out yesterday pointing to higher levels of confidence. The trick is to translate that into actual investment spending. One would argue that lower interest rates, availability of credit, low-wage rates and still strong

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consumer demand should all make it propitious for major investments, but that is not translating through. (p. 15)

1.27 Other topics covered during the committee's examination of the Macroeconomic Group and Corporate Strategy and Services Group included:

• lower growth forecasted in MYEFO compared to growth forecasted at budget (p. 15);

• annual wage growth compared with average rate of growth, with wage growth lower than in earlier periods—with average wage growth about 3.4 per cent compared to the current 2.3 per cent (p. 17);

• Treasury modelling on a range of tax options, including changes to the goods

and services tax (GST) (pp. 17-20);

• Council on Federal Financial Relations (CFFR) and Council of Australian Governments (COAG) meetings in relation to the use of three models involving changes to the GST and the use of consultancy firms Independent Economics and KPMG (pp. 20-21 and 26);

• update on Treasury's work on the tax green paper and tax white paper—the personnel involved and the proposed timetable for their release (pp. 22-23);

• the role of the Macroeconomic Group in relation to whole-of-economy

modelling, including on how a set of policy changes might have a long-run effect on the level of real gross domestic product (GDP)—in contrast to the modelling undertaken by the Revenue Group to do costings and distributional analysis (p. 22);

• whether Treasury has been tasked to undertake modelling on reforms to negative gearing (p. 27);

• discussions about Australia's system of negative gearing and capital gains tax

exemptions relative to other Organisation for Economic Co-operation and Development (OECD) members (pp. 28-29);

• whether Australia's exposure to household debt at 123 per cent of GDP—the highest in the world—was a risk to the economy (pp. 29-30);

• the interrelationship between housing supply shortage and negative gearing—its effect on the availability of rents and how a change in policy may impact on rental yields (pp. 31-32);

• the value of the Australian dollar relative to other currencies and the effects of a low dollar flowing through the economy (pp. 33-35);

• Treasury's recruitment of 41 graduates in the current year—23 men and 18 women (p. 37); and

• the number and percentage of SES women at Treasury and whether Treasury will be able to reach its goal of 35 per cent by 2016 from its current 31 per cent (p. 37).

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Treasury [Revenue Group] with the Australian Charities and Not-for-profits Commission (ACNC) and the Australian Taxation Office (ATO)

Treasury [Revenue Group]

1.28 During the examination of the Treasury Revenue Group, the committee examined officers on the following matters:

• the ability to cap work deductions in Australia compared to New Zealand

(pp. 79-81);

• superannuation tax concessions and the Tax Expenditure Statement indicating

these concessions cost about $30 billion to the budget (p. 80);

• whether Treasury has modelled any options for changing or scaling back these concessions (p. 81);

• estimates of tobacco clearance data and the use of that data by the health department (p. 82);

• the reason for the lengthy delay in answering questions on notice (p. 83); and

• Treasury's engagement in the work of COAG to look at the costs and

distributional impacts of tax increases (p. 85).

Australian Charities and Not-for-profits Commission (ACNC)

1.29 During the Australian Charities and Not-for-profit Commission's (ACNC) examination, the Commissioner updated the committee on its work since its last appearance. Ms Pascoe reported:

…the key development has been increased momentum from the states and territories towards streamlining arrangements for charities and working towards harmonisation. If you think about the three areas where there is legislation, we are looking at the legal form of charities, incorporated associations or whatever. We are looking at the taxation arrangements at the state and territory and federal level and at fundraising. In each of those areas there have been developments. We have found that there is an enormous appetite in the states and territories, because we all share the same commitment to simplifying the work of charities and to reducing red tape. There are working parties in all those areas that [involve] the jurisdictions and the ACNC. The intent is that ultimately there be a single form of reporting for charities and that in addition to the statutory reporting, where there is currently additional reporting for fund raising, that that could be streamlined into the annual reporting that is done to the ACNC. They are the kinds of discussions that are underway…[T]hey are certainly… encouraging.

In addition to that, the state revenue commissioners, with the lead of one jurisdiction that has engaged with the ACNC, have now developed their own working party with the ACNC to work towards common arrangements in terms of registration, common understandings of the definition of charity. The result is reduced red tape for charities and significant administrative savings for them in the process. (pp. 40-41)

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1.30 In relation to the ACNC's work on building trust and confidence and strengthening the sector, Ms Pascoe advised that its register has played a central role as it provides the community with a useful tool they can use to 'assure themselves that

[a] charity is bona fide and to get up-to-date information to do their due diligence on whether they want to give money or time or support a charity in any way'. (pp. 41-42)

1.31 Ms Pascoe reported that there are currently 54,000 charities on the register. Of those, 8,000 had been registered since the ACNC's establishment in December 2012 and another 13,500 withdrawn in the same period for a range of reasons, including evidence indicating they were inoperative or were not meeting their reporting obligations. (p. 41)

1.32 Other matters canvassed during the ACNC's appearance included:

• the use of the Charity Passport at both the Commonwealth and state and territory levels to quality assure that charities are both bona fide and up to date with their governance and administrative requirements (p. 41);

• the ACNC's contribution of $9.8 million of annual deregulation savings in 2014

and $8.7 million in 2015 through measures such as accepting the state and territory reports (p. 41);

• a lot of work was undertaken by the ACNC in 2015 to ensure data in the register

was accurate, including engaging with the UNSW to undertake a rigorous data sweep—this corrected errors in 7,000 charities (p.41); and

• uncertainty about the status of the ACNC and its effect on the work of the ACNC (pp. 41 and 43).

Australian Taxation Office (ATO)

1.33 The Commissioner of Taxation, Mr Chris Jordan, opened the Australian Taxation Office's (ATO) appearance with a strongly worded message to companies operating in Australia:

[Y]ou must pay your fair share of tax on the profits you earn here. There is no getting around. There are no exceptions to be made. There is no weakness in our resolve to administer the tax system. (p. 46)

1.34 The Commissioner's message was in response to commentary that Australia's tax system was under fire from the actions of multinationals and large companies seeking to abuse it, to sidestep it, or to delay the ATO and to avoid paying tax in Australia. (p. 46)

1.35 The Commissioner noted while a majority of large corporates, especially Australian owned companies, do the right thing by paying the right amount of tax in Australia, there remains a minority of large corporates that do not and will try to avoid their obligations. (p. 46)

1.36 Mr Jordan furnished the committee with an update on progress made by the ATO in addressing tax avoidance domestically and globally:

Last financial year we completed around 50 audits and 250 reviews of large corporate groups raising $2.5 billion in liabilities, and we collected $1.6

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billion in cash over that year. Currently we have over 70 audits and 220 reviews of large businesses in play. We have 162 active advanced pricing arrangements, APAs, in place, with an additional 115 [in] progress and another 42 in early engagement stage. These APAs give certainty that revenue is being accounted for and that we have predictability about pricing structures. …

In December we issued risk assessment ratings to six large public groups, informing them that they were in our highest risk quadrant, Q1, reflecting our view of their tax behaviour. We remain actively focused on multinational enterprises. We have already written to 26 taxpayers who we have had under audit to tell them that they need to get their house in order. Last week, we approved letters to be issued to another 60 companies to say the same thing. There will be more put on notice in the coming months as we work our way through the pool of taxpayers who have an 'operate here and bill overseas' business model. Where these companies do not voluntarily comply with the new law, we will be commencing immediate reviews and audits. (p. 46)

1.37 Mr Jordan noted that while the ATO valued its positive engagements with large taxpayers through open and frank dialogue, he emphasised that this did not mean that the ATO would take a step back in commencing immediate reviews or audits if

companies did not voluntarily comply with the new multinational anti-avoidance law (MAAL). He reiterated that these are non-negotiable. (pp. 46 and 51)

1.38 The Commissioner added:

[W]e will [not] be afraid to take these discussions further, to investigate the evidence presented to us or to take firm action. Some of these cases have been going on for 12 months or more now. People have come to the table,

they have said all the right things and they have made promises, but, when push comes to shove, they do not deliver. We continue to negotiate back and forth with requests for information and more detail bit by bit. The excuses we sometimes hear from these companies are, frankly, over the top. How is it possible that companies known for their new-age technology and innovative products and services fail to be able to furnish us with basic reports showing their business structures, their profits, and how much tax they have paid and where? Their clear tactic is to delay and obstruct. They game the system. They even have the gall to complain that we are uncooperative and unreasonable, simply because we do not agree with them or their advisers on what are, at times, quite outlandish claims.

These companies have pushed the envelope on reasonableness. They play games. They string us along. They believe we can be stooged. However, enough is enough and no more of this. We will be reasonable with those that genuinely cooperate, but we will now take a much harder stance on those who do not. We will not be rolling over and giving further extensions of time. We are ruling the line under these protracted negotiations, proceeding immediately to raise assessments and creating liabilities in these cases, potentially taking them all the way to the court if necessary. We will continue to challenge the sharp tax practices in the courts. We have received positive court decisions in respect of Chevron and Orica. So the

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worm is turning. These decisions demonstrate without doubt that if these companies engage in tax avoidance behaviour, they can expect more than just a 'please explain' letter. Cases featuring the same types of rolled up loans and intracompany financing arrangements will now be aggressively pursued. I do expect significant assessments to tax as a result. The Orica case was worth about $40 million in tax to be paid and penalties plus interest, and there will be more cases to come forward on this topic this year. (pp. 46-47)

1.39 According to Mr Jordan, the ATO will not settle a dispute at any price, and has engaged a former Federal Court judge as an independent assurer to assist and to design and test the ATO's settlements through an independent assurance process. Mr Jordan added:

This independent examination of our settlements, including those with large business, ensures that the best outcome is likely to be achieved and that we are settling the right cases in the right way. (p. 47)

1.40 To ensure the ATO has the community's confidence in Australia's tax system, Mr Jordan reassured the committee that the ATO is 'resolutely' tackling tax avoidance. He outlined the ATO's work program and the level of resourcing set aside to the area:

Our work program this year will continue to focus upon implementation of the MAL and BEPS action plans, e-commerce, thin capitalisation manipulation, related party finance and offshore hubs. Where we see behaviours that do not meet the intentions of the law, we will be front and centre…

We now have over 150 people working in our Internationals team. This includes more than 20 new recruits who have specialist experience working in economics, transfer pricing and international risk. These complement the more than 1,000 people in our Public Groups area. I am absolutely confident of our skills, our resources and our resolve to pursue these important matters. (p. 47)

1.41 The ATO was examined on a range of other matters including:

• ATO working with the OECD in order to shape some of the outcomes in the areas of profit-shifting and multinational anti-avoidance law (pp. 48-49);

• international multilateral agreements which allow tax information to be exchanged among tax authorities in over 30 countries (p. 61);

• ATO office in Gosford and the process the ATO undertook to determine Gosford

was a suitable site for the transfer of 600 ATO staff and the cost of the ATO's lease in the Gosford site (pp. 62-64);

• update on the ATO's redundancy program (p. 70);

• small business instant asset write-off (pp. 72-74);

• update on the reported 195 investigations relating to possible breaches of foreign

investment rules for residential real estate (p. 74);

• update on Project Wickenby and its replacement—Serious Financial Crime

Taskforce—which is jointly chaired by the AFP and the ATO (p. 76);

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• tests used to assess whether an individual is an Australian taxpayer (pp. 76-77);

and

• tax transparency (pp. 77-78).

Treasury [Fiscal Group]

1.42 The main topics covered during the examination of the Fiscal Group included:

• changes to the government's fiscal strategy between the 2015-16 Budget and

2015-16 MYEFO—objective of returning to surplus of one per cent of GDP by 2023-24 updated to read 'as soon as possible' and a focus towards net debt as the key balance sheet measure (p. 89);

• the Charter of Budget Honesty Act and the process for changing the fiscal strategy (p. 90);

• changes to school funding (p.91); and

• the proposed industry code on superfund board governance—mandatory for

members but not enforceable by APRA (pp. 91-92).

Treasury [Markets Group]

1.43 During Treasury's Markets Group appearance, the following issues were canvassed:

• Harper Review and Treasury's consultations in relation to the proposed change to

section 46 of the Competition and Consumer Act (p. 98);

• two round tables held in Melbourne and Tamworth in January chaired by the

Minister for Small Business and Assistant Treasurer in relation to the misuse of market power provision—with a combination of representative groups and individual corporations and individual lawyers in attendance by invitation, including representation from small business interests (pp. 98-9);

• update on the work Treasury has undertaken in relation to 44 of the 56

recommendations that the government supported in the Harper Review (pp. 99-100);

• process undertaken to appoint the Small Business and Family Enterprise Ombudsman, the number of applicants and the makeup of the interview panel (pp. 101-102);

• the work and staffing of the National Contact Point for the OECD Guidelines for Multinational Enterprises administered from within the Foreign Investment and Trade Policy Division (pp. 102-103);

• an update on how the Foreign Acquisitions and Takeovers Legislation

Amendment Bill 2015 and related bills are working and if there were substantial changes as a result of these changes (pp. 104-105);

• the transfer of the real estate function to the ATO from Treasury and whether it

had been a smooth transition (p. 105);

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• division of responsibilities between the ATO and Foreign Investment Review

Board (FIRB)—with ATO looking after residential real estate and the FIRB continuing to have oversight of the remaining responsibilities, including investment in business and the commercial real estate sector and a policy role in relation to residential real estate (p. 105); and

• the FIRB's increased staffing from mid-30s to over 50 people and funding of

about $19.7 million over a four year period (p. 106).

Australian Competition and Consumer Commission (ACCC)

1.44 During the ACCC's appearance, the committee examined the following matters:

• petrol pricing from retailers (p. 109-110, 114-115);

• whether the ACCC has undertaken any consumer surveys to canvass people's understanding of the term 'free range' (p. 110);

• legislation extending the existing consumer unfair contract terms to small business and the transition period before the law comes into effect (p. 111);

• Treasury to provide guidance on issues that it believes large businesses should

direct their attention to and address during the transitional period, with focus on particular sectors—advertising services, telecommunication services, franchising, commercial leases and independent contracting (p. 111);

• unfair contract laws and its effect on how large businesses contract with smaller

businesses (pp. 111-112); and

• Sugar Industry (Real Choice in Marketing) Amendment Bill 2015 in

Queensland—the Queensland government used a provision of the ACCC's Act to exempt its law from the ACCC's jurisdiction and, under the Competition Principles Agreement, they notified the ACCC. The committee was informed that it then becomes a policy issue for the Treasurer as to whether the government wants to overturn the legislation through Parliament (pp. 111-113).

Australian Prudential Regulation Authority (APRA)

1.45 The committee questioned officers from the Australian Prudential Authority (APRA) on the following topics:

• APRA’s briefings to crossbench senators on the Superannuation Legislation Amendment (Trustee Governance) Bill 2015 and how they were initiated and by whom (pp. 124-125);

• The issuance of a banking licence and the criteria required to be met by an

authorised deposit institution to use the word 'bank' (pp. 125-126);

• allegations of rate rigging (pp. 126-127);

• APRA’s review into the governance, oversight and monitoring of all types of

superannuation funds across the board following from the work of the Royal Commission into Trade Union Governance and Corruption (pp. 127-128).

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Australian Securities and Investments Commission (ASIC)

1.46 During the Australian Securities and Investments Commission's (ASIC) appearance, ASIC was examined on the work it has undertaken in the life insurance industry. The committee referred to ASIC’s 2014 report into the life insurance industry where 37 per cent of advice was reported to be in breach of the law.

1.47 Deputy Commissioner, Mr Kell, informed the committee that a lot of work was undertaken to address the problem, some of which will be introduced over the next few years. These reforms included:

• a reform program announced by the industry, with significant input from ASIC,

primarily aimed at reducing the very high up-front commissions (i.e. conflicts of interest between the adviser and the consumer) which ASIC found correlated with poor-quality advice (p. 5);

• removal of volume-related conflicted remuneration from the industry (p. 5); and

• a requirement for insurers to be able to offer policies on a no-commission basis (p. 5).

1.48 Mr Kell noted that some of these reforms will require legislative changes to enable ASIC to impose an industry-wide limit on up-front commissions. He added that a review in 2018 will provide ASIC with feedback on whether the reforms have been sufficient (p. 5).

1.49 In relation to the collapse of Queensland Nickel, ASIC Commissioner, Mr Price, outlined the range of inquiries currently underway in relation to its collapse, political donations, unpaid employee entitlements, directorships and the like. He added:

In particular, we are working closely with the administrators of Queensland Nickel regarding the reasons for the collapse, whether there are any potential conflict issues with regard to senior officers of the company, and issues around corporate donations. We have liaised with relevant regulators responsible for unpaid employee entitlements. We are looking at allegations around shadow directorships. We are looking at some issues around security interests that were taken close to the time of insolvency. We are also looking at various issues around financial reporting.

The statutory obligation to investigate these issues rests initially with the administrators; and, if they identify offences, they must report those to ASIC as soon as practicable; but we are making some independent inquiries into various of those matters, I suppose just so that we are able to act quickly, depending on the final outcome of whatever the administrators report. (p. 16)

1.50 The committee also requested an update on the status of the robo-advice taskforce within an innovation hub ASIC is setting up to provide financial advice by digital means. Mr Price advised:

There are a number of different business models that are relevant to this provision of digital advice. Some advice is nearly around asset allocation and what appropriate holdings in, for example, diversified funds like ETFs

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might be, given a particular customer's risk profile, and some them are more sophisticated, with an end goal, for example, of providing quite holistic and sophisticated financial advice.

The business models vary depending on what the particular aims are, but typically they involve the entry of information through a website and then the making of various statements of opinion, recommendations or advice as a result of that information. That may be advice that is general in nature— so it does not take into account the particular client's own personal circumstances—or it may be very tailored to the information that has been entered into the website. The law as drafted at the moment is reasonably flexible in terms of recognising these sorts of business models, but there is some uncertainty in the market about how very important legal obligations might apply. For example, the future of financial advice reforms introduced an obligation for personal advice to make sure that the advice was in the best interests of the client. So how does that translate into a digital environment? These are some of the issues.

We are proposing to release a consultation document with draft guidance to the market in the not-too-distant future to try to deal with some of these issues. (pp. 14-15)

1.51 The other topics covered during the committee's examination of ASIC included:

• the financial advice industry's work on a voluntary code of conduct and whether

there should be a mandatory code (pp. 6-7);

• role of the Financial Ombudsman Service in dealing with individual complaints

and ASIC in monitoring whether complaints have increased and general trends, as well as talking to the insurance industry (p. 7);

• ASIC's role in providing guidance to the 237 employees who have lost their jobs

at Queensland Nickel as well as to the Australian Workers' Union representing many of these employees who may be affected by unpaid entitlements (p. 17);

• less proactive surveillance has been impacted by the 20 per cent reduction in

staff over the last 4 years—resulting in less enforcement actions taken by ASIC (p. 28);

• ASIC funding to improve financial literacy and financial advice (p. 29);

• update on the implementation and application of the new unfair contract

legislation passed in 2015 to extend consumer protections against unfair contracts to small businesses (pp. 32-33); and

• update of ASIC’s capability review (p. 33).

Productivity Commission (PC)

1.52 During the session with the Productivity Commission (PC), some of the following topics were examined:

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• update on several inquiries referred to the PC following the government's

response to the Financial System Inquiry and when the terms of reference will be issued (p. 38);

• the PC's previous inquiry into default superannuation funds in modern awards in

October in 2012 and the PC's active inquiries covering the superannuation sector (p. 39); and

• the PC's inquiry into the workplace relations system, and the PC's

recommendation to reduce the level of Sunday penalty rates in certain industries and its effect if the recommendation was implemented (p. 39).

Matters raised—Industry, Innovation and Science portfolio 1.53 On 10 and 11 February 2016, the committee examined the estimates for the:

• Office of the Chief Scientist;

• Australian Nuclear Science and Technology Organisation (ANSTO);

• Commonwealth Scientific and Industrial Research Organisation (CSIRO);

• Department of Industry, Innovation and Science [Cross-portfolio/ Corporate/

Programme 3: Programme support];

• Department of Industry, Innovation and Science [Programme 1: Supporting

Science and Commercialisation]; and

• Department of Industry, Innovation and Science [Programme 2: Growing

Business Investment and Improving Business Capability] with the Anti-Dumping Commission.

Office of the Chief Scientist

1.54 This was Dr Alan Finkel's first appearance at estimates as Chief Scientist. He opened the session by providing background with regard to his experience as an engineer, neuroscientist, entrepreneur, philanthropist and academic, prior to his current appointment (p. 2).

1.55 Dr Finkel furnished the committee with a general overview of his perceived key responsibilities:

I like to think of my responsibility as the Chief Scientist as being to look at knowledge. If you take the Latin route of 'science', it is 'scientia', broad knowledge. So, I am not just looking at the natural sciences; I am looking at our research capability, and I think of that as the latitudinal aspect of it. But given the interests of the nation in reaping maximum benefit from the excellent-quality science and an ongoing investment in excellent-quality science, I have a strong interest in looking at the translation capabilities of our nation of that scientific effort. And when I say 'translation' I mean translation not just for the commercial benefit but translation for societal and economic benefit. That, in the broadest spectrum is how I would see my responsibilities. (p. 4)

1.56 Other matters covered during the examination of the Office of the Chief Scientist included:

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• the direction of the Commonwealth Science Council (p.5);

• the review of the R&D tax incentive, its objective and the establishment of a

taskforce (pp. 5-6);

• the climate science research community in Australia and the CSIRO’s change of

strategic direction affecting climate science research (pp. 3 and 7-8);

• the importance of maintaining long-term data collections and climate modelling

capabilities in the context of the CSIRO possibly shedding 110 of its 130 climate scientists (pp. 3, 8-9); and

• the CSIRO’s contribution in the broader research community in climate science

and their capacity to conduct climate science research (pp. 9-10).

Australian Nuclear Science and Technology Organisation (ANSTO)

1.57 During the session with the Australian Nuclear Science and Technology Organisation (ANSTO), the committee examined the following topics:

• safety of nuclear waste repositories (p. 45-46);

• $520 million provided to ensure the long-term future of the Australian

Synchrotron as part of the National Innovation and Science Agenda (p. 44) and ANSTO's funding for synchrotron to 2025-26 (p. 52);

• one in two Australians who benefit from nuclear medicine in their lifetime

(p. 45);

• highlights of the research work undertaken at the Bragg Institute, a facility

attached to the OPAL reactor, and one of the top four or five neutron scattering facilities in the world today (pp. 46-47);

• reprocessing waste and spent fuel and agreements between Australia and other

partner countries, including the recent return of intermediate level or reprocessing waste repatriated from France and licence agreements with the UK government (p. 44-45, 49-50);

• ANSTO'S plan to upgrade its medical isotope production—currently in the

construction phase for the nuclear medicine facility, which will expand ANSTO's production to about 20 per cent of world supply (p. 51); and

• Australia's rating as number one in the world for nuclear security in the last three

surveys by the National Threat Initiative (p. 53).

Commonwealth Scientific and Industrial Research Organisation (CSIRO)

1.58 The Chief Executive, Dr Larry Marshall, commenced the committee's examination of the Commonwealth Science and Industrial Research Organisation (CSIRO) with an overview of the CSIRO Strategy 2020: Australia's Innovation Catalyst, which is in line with the organisation's strategic shift announced last year. Dr Marshall stated:

[W]e recognise that the Australian economy is in transition. We must respond. What carried us in the past cannot carry us into the future. The future will be defined by science-led innovation, which will reinvent

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existing industries and create new ones to maintain Australia's prosperity. CSIRO does research for a purpose. We are a big, mission-directed organisation created to deliver science and solutions to solve the biggest challenges facing Australia. On Thursday last week, I announced the outcomes of the latest review of our science investments in order to respond to our new innovation catalyst strategy. But it is more than just CSIRO's own strategy. It is responding to the nine national science and research priorities, which include a priority to build Australia's capacity to respond to environmental change and emigrate research outcomes from biological, physical, social and economic systems. (p. 54)

1.59 Dr Marshall also acknowledged that this strategic change will affect staff as management work through the details:

This change is a refresh and a redirection of capability and of CSIRO, not cuts to staffing levels. After this process over two financial years, the number of team members should be the same or slightly higher. The worst case is that up to 350 team members could be affected, and, if they cannot be redeployed or reskilled, they will leave. We are trying to be a more open organisation; that is why we crowdsourced our strategy. We communicated to our team as soon as we confirmed people's jobs could be affected. Because this affects people's lives, I respectfully ask you to be patient with us while we work through the detail to be fair to those affected. I must stress that this announcement marked the start of this journey. Moving from setting the high-level strategic science priorities as a first phase, to working out the detail of how to execute this with our staff and stakeholders in its second phase, and then executing the changes. We are currently in the second phase of this process, consulting with our staff and our stakeholders in order to resolve the details, a process which we are committed to undertaking. Until this is complete and the precise information is known, speculating on potential outcomes is not fair to our staff. (p. 54)

1.60 Other topics canvassed by the committee during the Commonwealth CSIRO's appearance included: (p. 54)

• reaction of the international science community to CSIRO’s shift away from

climate science research, in particular in the areas of measurement and modelling (pp. 55-56);

• number of staff reductions in CSIRO and the areas from where these reductions

will come from, including from the oceans and atmosphere team (p. 55);

• CSIRO’s shift in research priorities from measuring and modelling climate

change towards adaptation and mitigation of climate change and the effect of this shift on its capabilities (pp. 55-56);

• CSIRO’s funding and research into sharks (pp. 64-65); and

• whether CSIRO’s staff cuts will affect the work associated with Cape Grim and RV Investigator (pp. 56-57 and 70).

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Department of Industry, Innovation and Science [Cross-portfolio/ corporate/ Programme 3], [Programme 1: Supporting Science and Commercialisation], and [Programme 2: Growing Business Investment and Improving Business Capability]

1.61 During the Department of Industry, Innovation and Science's appearance, the following topics were examined:

• proposal from Punch International to take over General Motors Holden's plant in

Elizabeth and to continue manufacturing the Commodore platform in Australia (pp.84-85)

• the Minister's letter of support for the Punch corporation's investment in car

manufacturing in Australia (pp. 84-87);

• the Automotive Transformation Scheme (ATS) to continue as legislated until

2021 (p. 87);

• $8.1 million funding over four years in MYEFO for the new Office of

Innovation and Science Australia—to be established formally from 1 July but with interim arrangements to transfer the Innovation Australia board towards that date (p. 90-92);

• the composition of the board and one of a number of options available to the government to have the Office of Innovation and Science Australia underpinned by legislation (p. 90-94);

• review of the R&D tax incentive under the auspices of Innovation and Science

Australia (pp. 93-94);

• the department's review of the R&D tax incentive to feed into the tax white

paper and government policy to reduce the R&D tax incentive by 1.5 percentage points (pp. 94 and 102);

• Northern Australia white paper and the establishment of the Office of Northern

Australia and its work (pp. 100-102);

• Northern Australia infrastructure fund exposure draft (p. 103);

• gaps in the infrastructure financing market in Northern Australia, refinancing risks and perceptions of unattractive investment returns (pp. 103-104);

• duties imposed on imported tomatoes—in 2014, 103 of about 105 Italian

canneries were captured with duties for cooperative and non-cooperative exporters ranging between three per cent and 26 per cent, depending on their willingness to cooperate (p. 121);

• the anti-dumping regime strengthened with effective anti-circumvention powers

within the Customs Act, which includes the ability to award punitive or exemplary damages to discourage such predatory behaviours (pp. 121-122);

• whether the Anti-Dumping Commission (ADC) has had an opportunity to look

at the issue of exploited labour and the ADC's ability to verify evidence on site (p. 124);

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• whether the ADC participated in any of the dialogues on trade remedies between

Australia and China when both countries negotiated a free trade agreement (p. 125);

• section 15B of the Customs Act and the remedy it provides to Australian

manufacturers who have been found to have been materially injured through dumping or subsidisation practices from foreign exports (p. 126); and

• steel and aluminium—the two areas that constitute over 80 per cent of the ADC's workload—placing additional pressure on the Australian steel-making sector (p. 126).

Senator Sean Edwards

Chair

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Appendix 1

Index to proof Hansard transcripts Wednesday, 10 February 2016

Industry, Innovation and Science portfolio

Office of the Chief Scientist 2

Treasury portfolio

Treasury [Macroeconomic Group and Corporate Strategy and Services Group] 14

Treasury [Revenue Group] with Australian Taxation Office (ATO) and Australian Charities and Not-for-profits Commission (ACNC)

ACNC 40-46, ATO 46-78, Revenue Group 78-89

Treasury [Revenue Group with Foreign Investment Review Board] 92-109

Australian Competition and Consumer Commission (ACCC) 109-124

Australian Prudential Regulation Authority (APRA) 124-128

Thursday, 11 February 2015

Treasury portfolio (continued)

Australian Securities and Investments Commission (ASIC) 4-38

Productivity Commission 38-40

Industry, Innovation and Science portfolio (continued)

Australian Nuclear Science and Technology Organisation (ANSTO) 43-53

Commonwealth Scientific and Industrial Research Organisation (CSIRO) 53-84

Department of Industry and Science [Cross-portfolio/Programme 3, Programme 1 and Programme 2—Anti-Dumping Commission in Programme 2] 84-130

55

56

Appendix 2

Tabled documents

Treasury portfolio

1. Opening statement, received from Mr John Fraser, Secretary, Department of the Treasury, received on 10 February 2016;

2. Opening statement, received from Mr Chris Jordan, Tax Commissioner, Australian Taxation Office (ATO), on 10 February 2016;

3. Proposed Lease Terms in relation to the ATO, received from Senator Deborah O'Neill, on 10 February 2016;

4. Correspondence from Mr Justin Untersteiner, received from Senator Deborah O'Neill, on 10 February 2016;

5. Correspondence from Minister for Planning, received from Senator Deborah O'Neill, on 10 February 2016;

6. Opening statement, received from Mr Wayne Byres, Chairman, Australian Prudential Regulation Authority (APRA), on 10 February 2016.

7. ASIC staff survey on ASIC's leadership, received from Mr Greg Medcraft, Australian Securities and Investments Commission (ASIC), on 11 February 2016.

Industry, Innovation and Science portfolio

8. Opening statement, received from the Chief Scientist Dr Alan Finkel AO, Office of the Chief Scientist, on 10 February 2016.

9. Opening statement, received from Dr Adi Paterson, CEO, Australian Nuclear Science and Technology Organisation (ANSTO), on 11 February 2016.

10. Opening statement, received from Dr Larry Marshall, CEO, Commonwealth Scientific Industrial Research Organisation (CSIRO), on 11 February 2016.

11. Correspondence from the Minister for Industry, Innovation and Science, received from Senator the Hon Arthur Sinodinos AO, on 11 February 2016.

Additional information

12. Correspondence received clarifying evidence provided at the Additional Estimates 2015-16 hearing on 11 February 2016, received 26 February 2016.

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58

Appendix 3 - Industry, Innovation and Science Outcome Statement

Enabling growth and productivity for globally competitive industries through supporting science and commercialization, growing business investment and improving business capability and streamlining regulation

KEY

CBMS PROGRAMMES

• Activity funded from administered expenses, appropriated under the relevant programme  Activity funded from departmental expenses, appropriated under programme 3

Programme 1: Supporting Science and Commercialisation

1.1 SCIENCE AWARENESS, INFRASTRUCTURE AND INTERNATIONAL ENGAGEMENT

• Australian Astronomical Observatory • Australia-China Science and Research Fund • Australia-India Strategic Research Fund • Science for Australia’s Future - Inspiring Australia • Square Kilometre Array Radio Telescope Project  National Measurement Institute  Questacon

1.2 BUSINESS RESEARCH, DEVELOPMENT AND COMMERCIALISATION

• Cooperative Research Centres Programme • Early Stage Venture Capital Limited Partnerships (Revenue forgone) • Innovation Investment Follow-on Fund (Capital) • Pooled Development Funds (Capital) • Pro See Fund (Capital) • Research and Development Tax Incentive (Revenue forgone) • Venture Australia - extension and enhancement (Revenue forgone) • Venture Capital Limited Partnerships (Capital) • Digital Productivity

Programme 2: Growing Business Investment and Improving Business Capability

2.1 COMPETITIVE MARKETPLACE

• Australian Business Number and Business Names Registration System - Expansion

• Certain Inputs to Manufacture • Enhanced Project By-law Scheme • Space Concession • Support for Industry Service Organisations • Textile Clothing and Footwear - Register of Approved Occupational

Clothing • Tradex  Anti-Dumping Commission  Australian Building Codes Board  Business.gov.au/Single Business Service

2.2 BUSINESS AND MARKET DEVELOPMENT

• Asialink Business • Entrepreneurs’ Infrastructure Programme • Industry Growth Centres Initiative

2.3 ECONOMIC TRANSITION

• Australian Government Innovation and Investment Fund (Tasmania) • Automotive Diversification Programme • Automotive Transformation Scheme • Home Insulation Program Industry Payment Scheme • Manufacturing Transition Grants Programme • Next Generation Manufacturing Investment Programme • Regional Infrastructure Programme • Victorian Innovation and Investment Fund - Ford Assistance

2. 4 RESOURCES

• Carbon Capture and Storage Flagships • Low Emissions Technology Demonstration Fund • Maralinga Maintenance • National Low Emissions Coal Initiative • National Offshore Petroleum Titles Administrator • Northern Territory Royalty (Ranger Project Area) Administration

(including SPP) • Offshore Minerals Act 1994

• Petroleum Royalties Administration • Radioactive Waste Management • Royalty Payments WA - Offshore Petroleum and Greenhouse Gas Storage Act 2006 (SPP)

• Rum Jungle Mine Site - Environmental Rehabilitation (SPP) • Syntroleum Depreciation • Crude oil exercise condensate compensation (SPP

2. 5 ENERGY

• Energy Efficiency Programmes • Greenhouse and Energy Minimum Standards (GEMS) National Legislation Framework

2.6 NORTHERN AUSTRALIA INFRASTRUCTURE FACILITY

Programme 3: Programme Support

3.1 STREAMLINING REGULATION

 Portfolio Regulatory Reform

3.2 BUILDING A HIGH PERFORMANCE ORGANISATION

 Departmental Support Functions

Source: Received from the Department of Industry, Innovation and Science on 29 January 2016 .

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60

Australian Government

Department of Industry, Innovation and Science

Appendix 4 - Industry, Innovation and Science Portfolio Organisation Chart - Effective from 22 December, 2015

*ICT functions will remain in Corporate Division until 1 February 2016

Bill Ferris Innovation and Science Australia Office of Innovation and Science Australia

® Deputy Secretary -Dr Steven Kennedy Economic&

Energy Resources Analytical Services

Mark Cully

Margaret Sewell Bruce Wilson Chief Economist

Electricity Markets Offshore Resources & Geoff Whelan (Alg) Resources Energy Economics Demus King Ross Lambie

Onshore Gas & Coal & Minerals Industry Governance Productivity Economics Chris Locke Paul Trotman Tim Bradley

Energy Security Uranium & R&E Analytical Services Gino Grassia International Andrew Lalor Michael Sheldrick

Energy National Offshore Productivity Petroleum Titles Mark Weaver (Alg) Administrator Graeme Waters

Appliance Energy Efficiency Michelle Croker

Professor Ian Chubb Chief Scientist Office of the Chief Scientist

Portfolio

Strategic

Policy

Mike Lawson

Strategic Policy & Digital Economy Nathan Dal Bon

Strategic Engagement and Business Productivity

Sarah Clough

Trade & International Martin Squire

Business Tax & Finance Wayne Calder

® Deputy Secretary David Hazlehurst National Innovation and Science Agenda Delivery Unit

Garry Fleming & TBC

Sectoral Growth

Policy

Peter Chesworth

Food, Chemicals & Fibres

Terry Moore

Manufacturing & Services Policy

Anne Byrne

Growth Centres David Lawrence

Advanced Technologies Gary Richards

Australian Industry Participation * Gary Richards Interim AIP Officer

(n\ Minister for Industry, Innovation and Science '<.!::) The Hon Christopher Pyne MP

(n\ Minister for

Resources, Energy and Northern Australia '<.!::) The Hon Josh Frydenberg MP

Secretary -Glenys Beauchamp

Deputy Secretary -Sue Weston

Science & Questacon * Digital Strategy Corporate Commercialisation & Operations Policy Professor Graham Durant Vanessa Graham Neil Kinsella Jane Urquhart Kate Driver Chief Operating Officer Alg C/0Science Policy Finance ICT Operations Cameron S/atyer (Alg) NMI Brad Medland Scott Nilsen (Alg) Dr Peter Fisk CFO Bruce Warrington Commercialisation James Roberts Finance & Facilities ICT Development Policy Lindsey Mackay Robert Twomey Rebecca Lee (Alg) Lisa Schofield AAO Network Divisional SBSICT Science Agencies Professor Support Programme Governance Warrick Couch Sam White Clive Rossiter Ann Bray Neville Legg Communications SKA Project David Luchetti and Parliamentary Virginia Cook Legal, Audit & Assurance Margaret Tregurtha People & Planning Natalie Marsh

('R\ Assistant Minister for Science � The Hon Karen Andrews MP

®Assistant Minister for Innovation The Hon Wyatt Roy MP

John Ryan Associate Secretary Special Energy Envoy

®

International Energy Taskforce Helen Bennett

A/g Deputy Secretary -Michael Schwager

IAuslndustry I

Innovation Anti-Dumping

Programmes Business Services Commission

Nicola Morris (A/g) Chris Butler Dale Seymour Commissioner

Accelerating Programme Design Deputy Commercialisation & Business Grants Hub Commissioner & Innovation Lisa Peterson Paul Sexton Connections

Joanne Mulder CRC Programme & Operations Single Business Service TBA

Business Programme Management Steve Stirling Frank Tonkin (Alg) Structural Adjustment

Programmes

R&D Tax Incentive Jayne Facey David Wilson Community Energy

Defence Industries Programmes

Innovation Centre Gene McGlynn

Andrew Garth (Alg) Business Information Services Stafford Cooper (Alg)

Digital Transformation, VANguard & Agency Engagement

Office of Northern Australia Australian Building Codes Board Network Strategy MikeSibly

Mark Coffey Neil Savery

@

Fatima Beattie David Johnson

®Trent Rawlings

Deb Anton Andy Barnicoat

tan Goss

Patricia Kelly George Vuckovic Doug Pereira Dr Chris Pigram James Johnson

Rob Bollard Stuart Minchin

Director General Robyn Foster Celia Poole CEO Antony Stinziani Victor Porte/Ii IP Australia Jo Hart Geoscience Australia Gary Johnston (Alg) ©Department's Overseas Counsellor Network details are available � (hllp://icentral/About/OurDepartment/OrganisationalChart/) Portfolio Corporate

Commonwealth Entities under PGPA Act

& Projects Katherine Harman

National Offshore Petroleum

Safety & Environmental

Management Authority

(NOPSEMA)

Stuart Smith CEO

Commonwealth Scientific

& Industrial Research

Organisation (CSIRO)

Dr Larry Marshall Chief Executive

State Office Network VIC-Lisa Hind NSW-Aapo Skoru/is

Australian Institute of

Marine Science

(AIMS)

John Gunn CEO

Australian Nuclear Science

& Technology Organisation

(ANSTO)

Dr Adi Paterson CEO

61

62

Appendix 5

Treasury portfolio structure and outcomes 1.1

Portfolio Minister —Treasurer The Hon Scott Morrison MP

Minister for Small Business and Assistant Treasurer The Hon Kelly O'Dwyer MP

Assistant Minister to the Treasurer The Hon Alex Hawke MP

Department of the Treasury Secretary: Mr John Fraser

Informed decisions on the development and implementation of policies to improve the wellbeing of the Australian people, including by achieving strong, sustainable economic growth, through the provision of advice to government and the efficient administration of federal financial relations

Australian Bureau of Statistics Australian Statistician: Mr David Kalisch

Informed decisions, research and discussion within governments and the community by leading the collection, analysis and provision of high quality, objective and relevant statistical information

Australian Competition and Consumer Commission Chairman: Mr Rod Sims

Lawful competition, consumer protection, and regulated national infrastructure markets and services through regulation, including enforcement, education, price monitoring and determining the terms of access to infrastructure services.

Australian Office of Financial Management Chief Executive Officer: Mr Rob Nicholl

The advancement of macroeconomic growth and stability, and the effective operation of financial markets, through issuing debt, investing in financial assets and managing debt, investments and cash for the Australian Government.

Australian Prudential Regulation Authority Chairman: Mr Wayne Byres

Enhanced public confidence in Australia's financial institutions through a framework of prudential regulation which balances financial safety and efficiency, competition, contestability and competitive neutrality.

Australian Securities and Investments Commission Chairman: Mr Greg Medcraft

Improved confidence in Australia’s financial markets through promoting informed investors and financial consumers, facilitating fair and efficient markets and delivering efficient registry systems

Australian Taxation Office Commissioner: Mr Chris Jordan AO

Confidence in the administration of aspects of Australia's taxation and superannuation systems through helping people understand their rights and obligations, improving ease of compliance and access to benefits, and managing non-compliance with the law

63

Page 30

Commonwealth Grants Commission Secretary: Mr John Spasojevic

Informed Government decisions on fiscal equalisation between the States and Territories through advice and recommendations on the distribution of GST revenue and health care grants

Inspector-General of Taxation Inspector-General: Mr Ali Noroozi

Improved tax administration through community consultation, review and independent advice to Government

National Competition Council President: Mr David Crawford

Competition in markets that are dependent on access to nationally significant monopoly infrastructure, through recommendations and decisions promoting the efficient operation of, use of and investment in infrastructure

Office of the Auditing and Assurance Standards Board Chairman: Ms Merran Kelsall

The formulation and making of auditing and assurance standards that are used by auditors of Australian entity financial reports or for other auditing and assurance engagements

Office of the Australian Accounting Standards Board Chairman: Ms Kris Peach

The formulation and making of accounting standards that are used by Australian entities to prepare financial reports and enable users of these reports to make informed decisions

Productivity Commission Chairman: Mr Peter Harris

Well-informed policy decision-making and public understanding on matters relating to Australia’s productivity and living standards, based on independent and transparent analysis from a community- wide perspective

Royal Australian Mint Chief Executive Officer: Mr Ross MacDiarmid

The coinage needs of the Australian economy, collectors and foreign countries are met through the manufacture and sale of circulating coins, collector coins and other minted like products

Source: Portfolio Additional Budget Statements 2015-16, Treasury portfolio, pp. 4-5.

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Appendix 6 - Department of the Treasury organisational structure

Secretary John Fraser

Fiscal Group

Budget Policy Division

Division Head Matt Flavel

Principal Adviser Matt Crooke

Commonwealth-State Relations Division

Division Head Jonathon Rollings

Industries and Infrastructure Division

Division Head Paul Tilley

Chief Adviser Damien White

Principal Adviser Damien Dunn

Retirement Income Policy Division

Division Head Jenny Wilkinson

Principal Adviser Ian Beckett

Social Policy Division

Division Head Vicki Wilkinson

Principal Advisers Rob Raether Marty Robinson Emily Martin

Corporate Strategy and Services

Business Services Division

Division Head Peter Alexander

Principal Adviser Luke Hickey

Financial and Parliamentary Division

Division Head Matthew King

Organisational Strategy - People and Communications Division

Division Head Emma Greenwood

Head of Communications Jennifer Clark

Principal Adviser Melissa Cranfield

Macroeconomic Group

Australian Government Actuary Peter Martin Michael Burt Susan Antcliff

Financial System Division

Division Head Meghan Quinn

Principal Advisers Diane Brown Trevor Power James Kelly

Foreign Investment and Trade Policy Division

Division Head Robert Donelly

Principal Advisers Adam McKissack Trevor Thomas

Market and Competition Policy Division

Division Head Paul McCullough

Principal Adviser Ben Dolman

Small Business Policy Division

Division Head Patrick Boneham

Principal Adviser Anne Scott

Takeovers Panel Allan Bulman Alan Shaw

Markets Group

Board of Taxation Secretariat

Secretary Michael Atfield

Principal Adviser Alia Lum (Sydney)

Corporate and International Tax Division

Division Head Simon Duggan

Chief Adviser Caroline Edwards

Principal Adviser Kathryn Davy Jonathan Malone (Sydney)

Law Design Practice

Division Head Tom Reid

Principal Advisers Tony Regan

Individuals and Indirect Tax Division

Division Head Marisa Purvis-Smith

Principal Advisers Bede Fraser Murray Crowe

Tax Analysis Division

Division Head Steve French

Principal Advisers Anthony King Robert Ewing

Tax White Paper Task Force

Division Head Roger Brake

Principal Advisers Graeme Davis Gerry Antioch Kerstin Wijeyewardene

Revenue Group

Deputy Secretary Michael Brennan

Deputy Secretary Nigel Ray

Deputy Secretary John Lonsdale

Deputy Secretary Rob Heferen

Jakarta Jo Evans

Papua New Guinea Sarah Leeming

Solomon Islands Ruth Moore

Executive Officer James Chisholm

As at 23 February 2016

Sydney Office

Head of Sydney Office Christine Barron

Chief Adviser Rupert Jolley

Principal Advisers Alia Lum (BoT) Jonathan Malone (CITD) Kate Mills Warren Tease (MECD)

Melbourne Office

Overseas Operations

Office of the Australian Small Business Commissioner

Commissioner Mark Brennan

Deputy Commissioner Craig Latham

Overseas Posts

Chief Adviser Chris Legg

Chief Adviser - International HK Yu

International Policy and Engagement Division

Division Head Leesa Croke

Principal Adviser Jacky Rowbotham

Macroeconomic Conditions Division

Division Head Christine Barron (Sydney)

Principal Advisers David Drage Angelia Grant Nicholas Stoney Warren Tease (Sydney)

Macroeconomic Modelling and Policy Division

Division Head Matt Brine

Principal Adviser Michael Kouparitsas

COO Group

Chief Operating Officer Peter Robinson

Beijing David Woods

Jakarta Shaun Anthony

London Sam Reinhardt

New Delhi Hamish McDonald

Paris Sue Vroombout (until March 2016) Russ Campbell (from March 2016)

Tokyo Brenton Goldsworthy

Washington Hector Thompson

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66

The Senate

Education and Employment

Legislation Committee

Additional estimates 2015-16

March 2016

67

© Commonwealth of Australia 2016

ISBN: 978-1-76010-358-3

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License.

The details of this licence are available on the Creative Commons website:

http://creativecommons.org/licenses/by-nc-nd/3.0/au/.

This document was produced by the Senate Standing Committee on Education and Employment and printed by the Senate Printing Unit, Parliament House, Canberra.

68

iii

MEMBERSHIP OF THE COMMITTEE

Members

Senator Bridget McKenzie, Chair, NATS, VIC

Senator Sue Lines, Deputy Chair, ALP, WA

Senator the Hon David Johnston, LP, WA

Senator Deborah O'Neill, ALP, NSW

Senator Linda Reynolds, LP, WA

Senator Robert Simms, AG, SA

Secretariat

Ms Julia Agostino, Secretary

Dr Patrick Hodder, Principal Research Officer

Dr Joel Bateman, Acting Principal Research Officer

Ms Ashlee Hill, Research Officer

PO Box 6100 Ph: 02 6277 3521

Parliament House Fax: 02 6277 5706

Canberra ACT 2600 E-mail: eec.sen@aph.gov.au

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70

v

TABLE OF CONTENTS

Membership of the committee ......................................................................... iii

Recommendation ...............................................................................................vii

Chapter 1: Overview ........................................................................................... 1

Portfolio coverage .................................................................................................. 1

Portfolio Additional Estimates Statements (PAES) 2015-16 ................................ 1

Hearings .................................................................................................................. 1

The operation of Standing Order 26(4) .................................................................. 2

Public interest immunity claims ............................................................................. 3

Questions on notice ................................................................................................ 3

Note on Hansard page referencing ......................................................................... 4

Chapter 2: Education and Training portfolio .................................................. 5

Cross-portfolio ........................................................................................................ 5

Australian Curriculum Assessment and Reporting Authority (ACARA) .............. 6

Australian Institute for Teaching and School Leadership (AITSL) ....................... 7

Australian Research Council (ARC) ...................................................................... 8

Tertiary Education Quality and Standards Agency (TEQSA) ............................... 9

Australian Skills Quality Authority (ASQA) ......................................................... 9

Department of Education and Training - Outcome 2 ........................................... 10

Department of Education and Training - Outcome 1 ........................................... 11

Chapter 3: Employment portfolio ................................................................... 13

Cross-portfolio ...................................................................................................... 13

Department of Employment - Outcome 1 ............................................................ 14

Department of Employment - Outcome 2 ............................................................ 16

Workplace Gender Equality Agency (WGEA) .................................................... 17

Asbestos Safety and Eradication Agency (ASEA) ............................................... 17

Fair Work Commission (FWC) ............................................................................ 18

Office of the Fair Work Ombudsman (FWO) ...................................................... 18

Fair Work Building and Construction (FWBC) ................................................... 19

Appendix 1: Committee oversight of departments and agencies ................. 21

Appendix 2: Index to Proof Committee Hansard transcripts ...................... 23

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vii

RECOMMENDATION

Recommendation 1

1.22 The committee recommends that Standing Order 26(4) be referred to the Procedure Committee for consideration.

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Chapter 1 Overview

1.1 On 4 February 2016, the Senate referred the following documents to the committee for examination and report in relation to the Education and Training and Employment portfolios:

• Particulars of proposed additional expenditure in respect of the year ending on 30 June 2016 [Appropriation Bill (No. 3) 2015-2016];

• Particulars of certain proposed additional expenditure in respect of the year ending on 30 June 2016 [Appropriation Bill (No. 4) 2015-2016]; and

• Final budget outcome 2014-15—Report by the Treasurer (Mr Hockey) and the

Minister for Finance (Senator Cormann).1

1.2 Standing legislation committees are required to report to the Senate on 1 March 2016.2

Portfolio coverage 1.3 The committee has responsibility for examining the expenditure and outcomes of the Education and Training and Employment portfolios.3 Appendix 1 lists the departments and agencies under these portfolios.

Portfolio Additional Estimates Statements (PAES) 2015-16 1.4 The Portfolio Budget Statements (PBS) and the Portfolio Additional Estimates Statements (PAES) inform senators of the proposed allocation of funding to government outcomes by agencies within the portfolio. However, unlike the PBS, the PAES summarise only the changes in funding by outcome since the Budget. The PAES provides information on new measures and their impact on the financial and/or non-financial planned performance of programs supporting those outcomes.

1.5 Pursuant to the Administrative Arrangements Order of 21 September 2015, responsibility for child care and early childhood development has transferred from the Social Services portfolio to the Education and Training portfolio.4

Hearings 1.6 The committee held hearings on 10, 11 and 12 February 2016 to hear from the Department of Education and Training and the Department of Employment in relation to all outcomes as well as from relevant portfolio agencies.

1 Journals of the Senate, No. 137, 4 February 2016, p. 3720.

2 Journals of the Senate, No. 124, 10 November 2015, pp. 3335-3336.

3 Journals of the Senate, No. 1, 12 November 2013, pp. 15-16.

4 Portfolio Additional Estimates Statements 2015-16, Education and Training portfolio, p. 3.

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2

1.7 In line with the Senate Standing Order of continuing effect5 in relation to annual and additional estimates hearings, Senators Lines (Deputy Chair), O'Neill and Simms wrote to the Chair requesting the additional hearing be held on 12 February 2016 to hear from Fair Work Building and Construction (FWBC) under the Employment portfolio.

1.8 The following outcomes and agencies appeared before the committee for the Education and Training portfolio:

• Department of Education and Training—Outcomes 1 and 2;

• Australian Curriculum Assessment and Reporting Authority;

• Australian Institute for Teaching and School Leadership;

• Australian Research Council;

• Tertiary Education Quality and Standards Agency; and

• Australian Skills Quality Authority.

1.9 The following outcomes and agencies appeared before the committee for the Employment portfolio:

• Department of Employment—Outcomes 1 and 2;

• Workplace Gender Equality Agency;

• Asbestos Safety and Eradication Agency;

• Fair Work Commission;

• Office of the Fair Work Ombudsman; and

• Office of the Fair Work Building Industry Inspectorate (Fair Work Building and Construction).

The operation of Standing Order 26(4) 1.10 In the Budget Estimates report of 2015-16, the committee noted the approximate distribution of time by party. Labor and Greens senators were allocated the majority of the time available to examine both portfolios. During these Additional Estimates hearings, a similar breakdown is apparent, with the Proof Committee Hansard suggesting that most time was allocated to Labor Senators.

1.11 Senate Estimates is an important opportunity for Senators, including Opposition Senators, to ask questions of Government Departments. It is essential to the democratic process of our Parliament. It is therefore not unusual that the majority of the time would be allocated to Opposition Senators, who are present at Estimates for the entirety of the hearing. It is also important to note that there is no included comparison of questions asked by opposition Senators in Estimates periods of the 43rd Government.

5 The Senate, Standing Orders and other orders of the Senate, August 2015, SO 26.

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3

1.12 Whilst the Chair's report broadly notes the breakdown of questions by party, it does not include the number of interjections from Senators by party, or the time taken by such interjections.

1.13 In supporting the role that the estimates process plays in accountability, the committee is also mindful of the cost to the public purse for departmental and agency officers to attend, including the cost of their time, travel and other expenses.

1.14 The committee notes that senators are entitled to examine departments and agencies, but it is of some concern that the lack of hard markers during Estimates hearings can lead to many public servants waiting to appear, sometimes for many hours.

1.15 Whilst acknowledging the validity and purpose of Standing Order 26(4), it does require senators to exercise some discipline.

1.16 In its report of March 2015, the Procedure Committee noted that at the time, Standing Order 26(4) had been operating for two rounds of estimates hearings and that there were differing views on its effectiveness and value. The Procedure Committee also indicated that it would continue to monitor the operation of Standing Order 26(4) and report to the Senate as required.6

1.17 In its Budget Estimates report of 2015-16, the committee recommended that Standing Order 26(4) be referred to the Procedure Committee for consideration. The committee again recommends that Standing Order 26(4) be referred to the Procedure Committee for consideration and report back to the Senate on its effectiveness and value.

Public interest immunity claims 1.18 On 13 May 2009, the Senate passed an order relating to public interest immunity claims.7 The order sets out the processes to be followed if a witness declines to answer a question. The full text of this order has previously been provided to departments and agencies and was incorporated in the Chair's opening statement at the commencement of each hearing.

Questions on notice 1.19 In accordance with Standing Order 26, the committee has drawn the attention of the department and its agencies to the agreed deadline of Tuesday, 29 March 2016 for the receipt of answers to questions taken on notice from this round.

1.20 Responses to questions on notice and additional information provided to the committee are tabled in the Senate and uploaded to the committee's web page.

6 Procedure Committee, First report of 2015, March 2015, p. 4.

7 Journals of the Senate, No. 68, 13 May 2009, pp. 1941-1942.

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4

Note on Hansard page referencing 1.21 Hansard references throughout this report relate to proof Hansard page numbers. Please note page numbering may differ between the proof and final Hansard.

Recommendation 1

1.22 The committee recommends that Standing Order 26(4) be referred to the Procedure Committee for consideration.

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Chapter 2

Education and Training portfolio 2.1 This chapter summarises certain key areas of interest raised during the committee's consideration of additional estimates for the 2015-16 financial year for the Education and Training portfolio. This chapter of the report follows the order of proceedings and is an indicative, not exhaustive, account of issues examined.

2.2 On 10 February 2016, the committee heard evidence from Senator the Hon Simon Birmingham, Minister for Education and Training, along with officers from the Department of Education and Training (the Department) and agencies responsible for administering education and training policy, including:

• Australian Curriculum Assessment and Reporting Authority;

• Australian Institute for Teaching and School Leadership;

• Australian Research Council;

• Tertiary Education Quality and Standards Agency; and

• Australian Skills Quality Authority.

2.3 Senators present over the course of the day's hearing included Senator McKenzie (Chair), Senator Lines (Deputy Chair), Senators Carr, Dastyari, Johnston, McKim, O'Neill, Reynolds, Simms and Sterle.

Cross-portfolio

Departmental Secretary

2.4 Senators and Ministers opened proceedings by acknowledging the work of Ms Lisa Paul, who retired as Secretary of the Department as of the end of January 2016. Ms Paul was recognised as the second longest-serving Secretary in the federal

government, having first been appointed to the role in 2004.1

2.5 Mr Cook gave an overview of some of Ms Paul's achievements:

Lisa's career in the public service began as a graduate, and what followed was a career that focused on health, welfare, family services, housing, homelessness and education. In 2011, Lisa was recognised as an officer in the Order of Australia for her achievements in driving reform in education, employment and workforce relations. For her work in leading the domestic response to the Bali bombings, Lisa received a Public Service Medal in 2003.2

1 Estimates Hansard, 10 February 2016, pp. 2-3.

2 Mr Tony Cook, Acting Secretary, Department of Education and Training, Estimates Hansard, 10 February 2016, p. 3.

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6

Enterprise Bargaining

2.6 The committee sought information regarding the status of the Department's enterprise bargaining, including the removal of certain provisions from the most recent draft proposal and the intention to move these provisions into policy. Those provisions discussed included rights to consultation prior to decisions being made and personal leave requirements. Mr Cook advised that the draft proposal had been provided to staff within the Department as well as bargaining representatives and that feedback would be gathered prior to a final determination being made.3

2.7 The committee also discussed the Department's current position in relation to a pay offer for departmental staff. Mr Cook explained that, as a result of a number of machinery-of-government changes, the Department has had to review their budget in order to make an informed decision regarding a pay offer. He also advised that this process was in its final stages and that the Department will then work with the Australian Public Service Commission (APSC) to obtain approval on an agreement.4

Australian Curriculum Assessment and Reporting Authority (ACARA)

'Refocusing' of ACARA

2.8 The committee asked for clarification regarding the coalition's policy for schools which refers to a 'refocus' of ACARA in relation to curriculum development. Mr Cook advised that this refocussing of ACARA formed part of the recent review of the agency. Mr Cook further advised that, in line with the recommendations made in the review of ACARA, focus would be shifted to assessment and the utilisation of online assessments.5

2.9 Mr Cook also responded to questions relating to how the roles and responsibilities of ACARA are reviewed. He explained that, in addition to the recently completed review of ACARA, which was a legislated requirement, ACARA submits a work plan to the Education Council. The Commonwealth and state and territory governments then examine and amend that work plan if necessary before it is approved for implementation.6

Assessment of general capabilities

2.10 ACARA responded to questions regarding the assessment of general capabilities such as problem-solving skills and critical and creative thinking. Chief Executive Officer of ACARA, Mr Robert Randall noted that, while seven general capabilities are included in the approved curriculum, these are not yet being measured.7 Mr Randall commented:

3 Estimates Hansard, 10 February 2016, pp. 6-8

4 Estimates Hansard, 10 February 2016, pp. 8-9.

5 Estimates Hansard, 10 February 2016, p. 18.

6 Estimates Hansard, 10 February 2016, pp. 19-20.

7 Estimates Hansard, 10 February 2016, pp. 20-21.

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7

[W]e have ongoing discussion with the states and territories about how, expecting that young people are being taught and are learning those sorts of things, we might continue to adjust and improve our assessment program so that we can assess those.8

2.11 The committee also discussed the importance of general capabilities with regard to students' ability to perform well in areas such as specialist maths and science.9 Mr Randall acknowledged the challenge of broadening parents' focus from their children's literacy and numeracy abilities to encompass these general capabilities and noted that '[t]hose things go hand in hand, so, yes, that is why they are in the curriculum.'10

Students with disability

2.12 ACARA provided the committee with an update regarding their involvement in work to make the Australian curriculum more inclusive of students with disability. National agreement has not been reached on the matter. However, Mr Randall advised that, in line with a resolution of the Education Council, ACARA would provide access to relevant resources developed for teachers of students with disability through the Australian curriculum website.11

Australian Institute for Teaching and School Leadership (AITSL)

Literacy and numeracy testing for student teachers

2.13 The committee requested information about the AITSL's involvement in the development of literacy and numeracy tests for student teachers. Ms Margery Evans, Chief Executive Officer, advised that AITSL had collaborated with contracted experts and a steering committee in order to put the tests together. AITSL was also involved in initial pilot testing to determine the tests' validity, how long they took and the quality of the test items.12

2.14 Ms Evans also described the structure of the tests:

It is an online test. It is done in two parts…While the examples are relevant to schools, the test does not go to how you teach literacy or numeracy…The test is in two parts, the literacy part and numeracy part. They are multiple choice questions and they use the context of schooling, but equally they could use the context of anything else. They are actually about your personal levels of literacy and numeracy.13

8 Mr Robert Randall, Chief Executive Officer, Australian Curriculum Assessment and Reporting Authority, Estimates Hansard, 10 February 2016, p. 21.

9 Committee Hansard, 10 February 2016, p. 23.

10 Mr Robert Randall, Chief Executive Officer, Australian Curriculum Assessment and Reporting Authority, Estimates Hansard, 10 February 2016, p. 21.

11 Estimates Hansard, 10 February 2016, pp. 34-36.

12 Estimates Hansard, 10 February 2016, p. 38.

13 Ms Margery Evans, Chief Executive Officer, Australian Institute for Teaching and School Leadership, Estimates Hansard, 10 February 2016, p. 38.

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8

STEM capacity gap

2.15 The committee heard evidence from AITSL regarding how it has responded to the broadly identified capacity gap in the teaching of science, technology, engineering and mathematics (STEM). Ms Evans explained that these issues have in part been addressed through the implementation of new and strengthened standards and procedures around teacher accreditation. These new standards and procedures stipulate the prerequisites and amount of time graduates would be expected to have in relation to STEM subjects. Moreover, primary school teachers are now required to graduate with at least one subject specialisation.14

Involvement of teacher unions

2.16 Senator McKenzie raised questions about what efforts have been made by AITSL to include teacher unions in their work. Ms Evans noted that AITSL has invited teacher unions to participate in their expert standing committees, but that this offer has not been accepted. AITSL does, however, endeavour to keep teacher unions informed as to the agency's progress.15

Australian Research Council (ARC)

Budget savings

2.17 The committee asked the ARC to identify where savings are coming from as a result of delays in the implementation of higher education changes. Ms Leanne Harvey, Executive General Manager, informed the committee:

We have a delay of one year in the implementation of the 3.25 per cent efficiency dividend, which equates to $17.842 million over four years. We also had a delay in the commencement of the ongoing funding for the Future Fellowships scheme by one year. So for one year we are doing 50 future fellows and then we go to ongoing after that, of 100…We then had a reclassification of $6.887 million from the special appropriation to introduce and fund the continuous application process for the linkage scheme.16

Linkage Projects scheme

2.18 Professor Aidan Byrne, Chief Executive Officer, also responded to questions regarding the ARC's movement to a continuous application process for the Linkage Projects scheme. Professor Byrne explained the ARC would have to move from a process where a large number of applications are received and assessed at one time, allowing for applications to be scored and ranked. In moving to a continuous application process, the ARC has no control over what time an application is received. Consequently, the ARC will create a 'virtual pool' of grants that applications can be

14 Estimates Hansard, 10 February 2016, pp. 41-42.

15 Estimates Hansard, 10 February 2016, p. 52.

16 Ms Leanne Harvey, Executive General Manager, Australian Research Council, Estimates Hansard, 10 February 2016, p. 53.

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referenced against; assuring that the integrity and consistency of standards is maintained in the assessment process.17

Tertiary Education Quality and Standards Agency (TEQSA)

Staffing levels

2.19 Representatives from TEQSA responded to questions regarding the agency's staffing levels and the resignation of six senior management personnel. Professor Nicholas Saunders, Chief Commissioner, advised the committee that these staffing losses related to the corporate restructure carried out in response to budget constraints. Mr Anthony McClaran, Chief Executive Officer, further advised that TEQSA's staffing levels have reduced to approximately 60 staff as compared to 90 in 2014. However, the implications of further reductions to TEQSA's annual budget on staffing have yet to be determined.18

Entrance requirements

2.20 The committee also raised the issue of the transparency of entrance requirements in higher education. Professor Saunders explained that, when evaluating applications for course accreditation or re-registration, TEQSA assesses providers' ATAR admission processes as well as the accessibility of information regarding entrance requirements.19

2.21 Professor Saunders elaborated on what TEQSA has done to address the transparency of entrance requirements:

[W]e have done a number of things in recent months. First of all, we have met with the Universities Australia quality committee...We have had discussions with them around the issue of ATARs generally and the transparency of the arrangements that individual universities have in terms of using the ATAR. Secondly, as you know, the matter has been referred to the Higher Education Standards Panel, which is the panel that oversees TEQSA…Thirdly, we have obtained some information about ATARs from the department and done a review of provider websites, university websites.20

Australian Skills Quality Authority (ASQA)

Student complaints

2.22 Senator Robert Simms asked officers from ASQA about the proportion of complaints received from students and how these complaints are dealt with. Mr Christopher Robinson, Chief Commissioner, informed the committee that ASQA has received a total of 5783 complaints since it was established, with approximately 40

17 Estimates Hansard, 10 February 2016, p. 54.

18 Estimates Hansard, 10 February 2016, pp. 62-63.

19 Estimates Hansard, 10 February 2016, p. 66.

20 Professor Nicholas Saunders, Chief Commissioner, Tertiary Education Quality and Standards Agency, Estimates Hansard, 10 February 2016, p. 66.

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per cent of those coming from students. ASQA endeavours to use the information gathered through complaints and marketplace intelligence to prioritise which registered training organisations (RTOs) they investigate and to inform their future activity.21

2.23 ASQA also advised that the decision as to whether or not a complaint warrants further investigation is made by assessing the complaint against set of criteria. These criteria include the nature and degree of noncompliance against the standards, whether students were provided with misleading information, and the number of complaints received.22

2.24 The committee also discussed the issue of how students are informed about the complaints mechanisms and procedures available to them. ASQA noted that it is requirement under the standards that RTOs have a complaints policy in place, and that students are informed about the procedures available upon their enrolment. Mr Robinson stated:

I think this is an interesting issue in the VET sector, because most of the students are adults who are studying part-time in a vocational course and they do not have student associations and the same sorts of information channels that the university sector—particularly for the younger group of university students—has.23

Security industry review

2.25 The committee sought information from ASQA regarding its review of RTOs within the security industry. Mr Robinson gave an overview of ASQA's findings, noting that there are significant issues in relation to consistency across the industry. The review found that, while occupational licensing is recognised across state and territory boarders, training requirements are not nationally consistent.24 Mr Robinson further emphasised the issue by noting that ASQA 'looked at five different jobs in the security industry and we did not find the occupational licensing arrangements the same in any two jurisdictions.'25

Department of Education and Training - Outcome 2

Research Block Grants

2.26 The committee asked representatives from the Department for information regarding changes to Research Block Grants (RBG) in response to the recommendations of the Watt review and the implementation of the National Innovation and Science Agenda. The new RBG funding arrangements for universities

21 Estimates Hansard, 10 February 2016, pp. 75-76.

22 Estimates Hansard, 10 February 2016, p. 76.

23 Mr Christopher Robinson, Chief Commissioner, Australian Skills Quality Authority, Estimates Hansard, 10 February 2016, p. 77.

24 Estimates Hansard, 10 February 2016, p. 90.

25 Mr Christopher Robinson, Chief Commissioner, Australian Skills Quality Authority, Estimates Hansard, 10 February 2016, p. 90.

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will allocate a greater proportion of funds to collaborative industry research and deemphasise publications.26

2.27 The committee queried what work the Department had undertaken with regard to modelling the impact of the RBG changes. Mr Dom English, Group Manager— Research and Economic, advised:

[W]e have modelled the change in the funding outcomes that are possible with the new formulas for advising Dr Watt on the possible impact of his changes, but in terms of modelling the impact on the research behaviour of universities, that is a far more tenuous concept...The balance of judgement in the review by Dr Watt was that it would have a limited impact on the way universities prioritised the basic blue sky research, because there are strong incentives to maintain effort in those areas already. The expectation is that by elevating the importance of partnerships with external parties in the research endeavour that more of that activity would be done.27

HECS-HELP debt

2.28 Officers from the Department responded to questions regarding the HECS-HELP changes that will require Australians living overseas to repay their higher education debts. As of 30 June 2015, a total 2.223 million individuals had an outstanding HECS-HELP debt. It is estimated that between one and three per cent of those debtors, representing approximately 44 000 individuals, reside permanently overseas. The requirements come into effect from 1 July 2017. The Department will work with the Australian Taxation Office over the coming period to identify and communicate the requirements to existing debtors.28

Department of Education and Training - Outcome 1

School funding

2.29 The committee heard evidence from the Department regarding proposed changes to school funding whereby from 2018 funding will be based on the consumer price index (CPI) and student enrolments.29 The Department clarified that Commonwealth funding for schools will continue to grow year on year. When asked about how Commonwealth expenditure on school funding compares with state and territory expenditure, Mr Cook noted:

[O]ver the 10 year period between 2004-05 and 2013-14...Commonwealth funding has increased to government schools by 66 per cent, and state

26 Estimates Hansard, 10 February 2016, pp. 97-100.

27 Mr Dom English, Group Manager—Research and Economic, Department of Education and Training, Estimates Hansard, 10 February 2016, p. 97.

28 Estimates Hansard, 10 February 2016, pp. 106-108.

29 Estimates Hansard, 10 February 2016, pp. 111-119.

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funding has increased to government schools by 6.7 per cent. So almost a 10 times difference in relation particularly to government schools.30

NCCD data

2.30 The Department responded to concerns raised by the committee regarding the progress of the Nationally Consistent Collection of Data (NCCD) on school students with disability. Mr Cook advised that an independent quality assurance process is currently being undertaken to ensure data consistency and reliability across sectors, states and territories. Once the quality assurance process is complete, a data report will be submitted to the Education Council for consideration. It was noted that while the implementation of the NCCD is following the same time frame agreed by the previous government, delays in the release of the data have resulted from the need for further consultation and consistency between states and territories. 31

Child care reforms

2.31 The committee canvassed a number of issues relating to the child care reforms announced by the government in December 2015. The Department was asked to explain the particulars of claims that one million out of 1.2 million families will be better off as a result of the reforms.32

30 Mr Tony Cook, Acting Secretary, Department of Education and Training, Estimates Hansard, 10 February 2016, p. 118.

31 Estimates Hansard, 10 February 2016, pp. 120-123.

32 Estimates Hansard, 10 February 2016, pp. 129-147.

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Chapter 3 Employment portfolio

3.1 This chapter summarises certain key areas of interest raised during the committee's consideration of additional estimates for the 2015-16 financial year for the Employment portfolio. This chapter of the report follows the order of proceedings and is an indicative, not exhaustive, account of issues examined.

3.2 On 11 and 12 February 2016, the committee heard evidence from Senator the Hon Michaelia Cash, Minister for Employment, along with officers from the Department of Employment (the Department) and agencies responsible for administering employment policy, including:

• Workplace Gender Equality Agency;

• Asbestos Safety and Eradication Agency;

• Fair Work Commission;

• Office of the Fair Work Ombudsman; and

• Office of the Fair Work Building Industry Inspectorate (Fair Work Building and Construction).

3.3 Senators present over the course of the two days of hearings included Senator McKenzie (Chair), Senator Lines (Deputy Chair), Senators Cameron, Johnston, Lindgren, McLucas, Moore, Reynolds, Rice and Simms.

Cross-portfolio

Enterprise bargaining

3.4 The committee requested an update on the status of the enterprise bargaining process currently underway in the Department. Secretary of the Department, Ms Renée Leon, informed the committee that some minor changes had been made to the wording of the previous enterprise agreement that was voted down in December 2015. These changes aimed to clarify some matters of concern raised by staff in relation to consultation, flexible working arrangements, and graduate conditions. The amended agreement will be put out to a staff vote on 12 February 2016.1

3.5 The committee continued by asking what productivity savings the Department had identified in order to demonstrate the affordability of the proposed agreement to the Australian Public Service Commission. Ms Leon advised:

The main avenues in which we have demonstrated the productivity savings that pay for the agreement are in business process changes, in consolidating

1 Estimates Hansard, 11 February 2016, p. 4.

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accommodation, in increasing span of control and in the streamlining of the agreement.2

Breastfeeding policy

3.6 Representatives from the Department responded to concerns regarding the inclusion of breastfeeding conditions in departmental policy rather than the Department's enterprise agreement. Ms Leon clarified:

In the department, breastfeeding support for new mothers has always been in policy. We are very breastfeeding friendly and we ensure we have a smooth transition for mothers back to work. That has never been in the agreement; it does not need to be in the agreement; we do it because it is good management. It is good for our staff and that is what we want.3

3.7 In addition, the Department noted that, because of the nature of enterprise agreements, any procedure and detail included in an agreement is unable to be changed for the period that agreement is in place. In contrast, for matters included in departmental policy, there is capability to alter that policy should any problems or inflexibility be identified.4 Ms Leon emphasised this point with regard to the Department's breastfeeding policy:

Matters like what is best for new mothers to reintegrate back into the workforce are the kind of thing that I want to be open to input from the women's network in the department.5

IT systems

3.8 The committee asked officers about the Department's IT systems and the resources allocated to their operation. The Department explained that their operations are supported by two IT systems; SAP and the Employment Services System (ESS). The SAP system supports the Department's corporate functions such as those relating to human resources and financial management. The ESS is used by employment service providers in order to manage the activities undertaken in relation to job seekers.6

Department of Employment - Outcome 1

Jobactive

3.9 The committee began its examination of Outcome 1 by asking for an update on the current caseload of Jobactive and how this compares to that of its predecessor,

2 Ms Renée Leon, Secretary, Department of Employment, Estimates Hansard, 11 February 2016, p. 6.

3 Ms Renée Leon, Secretary, Department of Employment, Estimates Hansard, 11 February 2016, p. 17.

4 Estimates Hansard, 11 February 2016, p. 19.

5 Ms Renée Leon, Secretary, Department of Employment, Estimates Hansard, 11 February 2016, p. 19.

6 Estimates Hansard, 11 February 2016, pp. 25-29.

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Job Services Australia. The Department advised that, as of 9 February 2016, the Jobactive caseload was 786 559. This caseload is similar to that which was managed by Job Services Australia at comparable point in the programme's history. 7

3.10 However, as stated by the Deputy Secretary, Mr Martin Hehir, there is a significant difference between the two employment services programmes in terms of the sustained employment outcomes achieved. Under Jobactive, the Department has recorded 71 731 four-week outcomes as compared to 45 226 under Job Services Australia, representing a substantial difference of 59 per cent. Mr Hehir also noted that Jobactive places a greater emphasis on employment outcomes and on sustaining those outcomes.8

Wage subsidies

3.11 Senator the Hon Doug Cameron questioned officers from the Department on the amount of funding expended on the wage subsidies programme. Of the $1.2 billion allocated to the programme, $1.95 million had been expended as of 31 December 2015.9

3.12 Ms Leon explained that, of the 9418 job seeker placements currently under the wage subsidies programme, not all of those have reached the six-month payment milestone that was initially set when the programme was implemented. This payment milestone was changed on 1 November 2015 to allow employers to make subsidy claims at an early stage during a placement. The Department will assess whether this change increases the take-up of the programme.10

Work for the Dole

3.13 The Department responded to a number of questions regarding the Work for the Dole programme. Areas of discussion included the work health and safety protections for programme participants11, the processes and penalties for non-compliance12, and the potential transport limitations experienced by job seekers.13

3.14 Ms Leon advised the committee of how the Department responded to findings from the 12-month pilot of the programme before it was rolled out nationally on 1 July 2015.

One of the things that came to our attention as a result of the pilot program was that it took some time for the front-line staff in the 18 areas to understand what their obligations would be and what they needed to do in order to refer people to Work for the Dole. In response to that, we engaged

7 Estimates Hansard, 11 February 2016, p. 35.

8 Estimates Hansard, 11 February 2016, pp. 35-36.

9 Estimates Hansard, 11 February 2016, p. 39.

10 Estimates Hansard, 11 February 2016, pp. 39-40.

11 Estimates Hansard, 11 February 2016, pp. 54-56.

12 Estimates Hansard, 11 February 2016, pp. 64-65.

13 Estimates Hansard, 11 February 2016, p. 67.

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the Work for the Dole coordinators two months earlier than the commencement of Work for the Dole so that they would have time to source places for job seekers and to be ready to make those places available to job active providers.14

3.15 It is worth noting that the Department of Employment indicated the 12-month pilot of the programme 'sought to find out how best to implement Work for the Dole from 1 July and to assess the effect of participation on participants' employability.'15 The Department indicated that from the post-program monitoring survey conducted, 81 per cent of participants identified an increased desire to find work, but acknowledged that this did not reflect the number of people who actually found work.16

Department of Employment - Outcome 2

Ministerial working group

3.16 Senator the Hon Michaelia Cash, Minister for Employment, provided the committee with an overview of the purpose of the Ministerial Working Group to help protect vulnerable foreign workers:

[T]he ministerial working group was established in response to allegations of underpayment and exploitation of overseas workers, including international workers on working holiday visas. This ministerial working group acknowledges that a multiportfolio and jurisdictional approach is needed to ensure that strong action can be taken against employers who exploit visa holders. It is going to allow better protection of these vulnerable workers through a better coordinated and implemented approach across government.17

Wage growth

3.17 Officers from the department provided the committee with information regarding the latest wage growth figures and how these compare with previous years. In terms of the Wage Price Index (WPI), which is the preferred measure by the Australian Bureau of Statistics, wages across the Australian economy grew by 2.3 per cent in the year from September 2014. This represents the lowest wage growth figure since the WPI measure was introduced in 1997. However, as clarified by the Department, inflation over the same period was only at 1.5 per cent, meaning that there has been growth overall with regard to purchasing power.18

14 Ms Renée Leon, Secretary, Department of Employment, Estimates Hansard, 11 February 2016, p. 62.

15 Ms Renée Leon, Secretary, Department of Employment, Estimates Hansard, 11 February 2016, p. 50.

16 Estimates Hansard, 11 February 2016, p. 51.

17 Senator the Hon Michaelia Cash, Minister for Employment, Estimates Hansard, 11 February 2016, p. 115.

18 Estimates Hansard, 11 February 2016, pp. 129-132.

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Workplace Gender Equality Agency (WGEA)

Reporting changes

3.18 Senator Claire Moore asked officers from the WGEA to comment on the agency's preparation for the next round of reporting, particularly in relation to the recent changes to reporting requirements. Director of the WGEA, Ms Libby Lyons, explained that the reporting system is currently being tested to ensure that organisations can effectively respond to the new requirements. The WGEA has also conducted a number of webinars on the new reporting requirements in recent months, with more scheduled in 2016.19

3.19 With regard to the WGEA's reporting system, Ms Lyons also noted:

We are looking at, and are in the process of testing at the moment, pre-population of last year's questionnaire so that that can reduce the burden on employers as well. We have not gone live with that, but we are confident that we will have that available so that people who have reported previously can elect to, or elect not to, have some of the questions in their

questionnaire pre-populated.20

Asbestos Safety and Eradication Agency (ASEA)

ASEA's current work

3.20 The committee began its examination of ASEA by asking for an overview of what the agency is currently working on. Mr Peter Tighe, Chief Executive Officer, explained that the agency has completed a number of evidence based reports that have been circulated to the state and territory jurisdictions for consideration and comment. It is the intention that forums will be held to debate the issues covered in those reports.21

Budget constraints

3.21 ASEA informed the committee about the budget constraints that the agency is currently operating under. Mr Tighe explained that the agency encountered a number of difficulties at the time of its establishment. These difficulties, including machinery-of-government changes and recruitment limitations, resulted in implementation delays and a significant underspend of ASEA's budget by approximately $3 million.22

3.22 Mr Tighe further elaborated on this issue, stating:

[T]he operation of the agency costs around $2.6 million a year…That basically takes up the totality of the budget. The money that we had for implementation of the plan, unfortunately, has now been forgone because of that delay. Other than trying to monitor things and work with some of the

19 Estimates Hansard, 11 February 2016, p. 133.

20 Ms Libby Lyons, Director, Workplace Gender and Equality Agency, Committee Hansard, 11 February 2016, p. 134.

21 Estimates Hansard, 11 February 2016, p. 138.

22 Estimates Hansard, 11 February 2016, p. 138.

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jurisdictions to get them to move ahead, we really do not have the capacity to generate more research and to deal with and drill into some of the problems around all of the issues associated with asbestos.23

3.23 The Committee notes that the Asbestos Safety and Eradication Agency, the only Commonwealth body addressing asbestos management and safety, was established on 1 July 2013 to provide a national focus on asbestos issues which goes beyond workplace safety to encompass environmental and public health concerns. The agency aims to ensure asbestos issues receive the attention and focus needed to drive change across all levels of government, and was set up following the recommendations of a two-year review.

Fair Work Commission (FWC)

Right of entry permits

3.24 The committee asked representatives from the FWC about the right of entry permit application forms. In particular, the committee enquired as to whether the forms have been changed to require that an applicant outline the actions undertaken to verify that a union official is a fit and proper person. Mr Chris Enright, Director— Regulatory Compliance, advised that the forms have not been amended to include those details, but that the right of entry forms and process is currently under review. This review will also take into account the recommendations made by the Trade Union Royal Commission.24

FWC's current inquiries

3.25 Officers from the FWC responded to questions concerning the number and nature of inquiries being undertaken by the agency. Mr Enright informed the committee that there are currently nine non-formal inquiries and investigations underway. Of these, many are related to matters concerning the financial management of registered organisations. Mr Enright also noted that the Trade Union Royal Commission had made a number of referrals to the FWC in recent weeks.25

Office of the Fair Work Ombudsman (FWO)

Underpayment of wages

3.26 During its very brief appearance before the committee at 10.56pm, the FWO responded to questions regarding the proportion of the agency's work relating to the underpayment of wages. The Fair Work Ombudsman, Ms Natalie James, acknowledged that while underpayment of wages makes up part of the agency's work, she clarified that she would not characterise such issues as 'widespread'.26 Ms James elaborated on this assertion by stating:

23 Mr Peter Tighe, Chief Executive Officer, Asbestos Safety and Eradication Agency, Committee Hansard, 11 February 2016, p. 138.

24 Estimates Hansard, 11 February 2016, p. 141.

25 Estimates Hansard, 11 February 2016, pp. 142-143.

26 Estimates Hansard, 11 February 2016, p. 145.

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There is no doubt that there are a range of reasons why underpayments happen in this country. You talk in the terms of noncompliance, but not all noncompliance is equal. Many, many people make errors, inadvertent mistakes, so we work with people to correct those, and they manifest in underpayments. Most of the underpayments we recover are recovered through voluntary processes as well. So, when you talk about the systemic and deliberate noncompliance, that is at an extreme end of the spectrum.27

Fair Work Building and Construction (FWBC)

Bullying and harassment review

3.27 In his opening statement to the committee, Director of FWBC, Mr Nigel Hadgkiss, responded to recent allegations made regarding bullying and harassment within the agency. Mr Hadgkiss explained that, following his appointment to FWBC in October 2013, a survey was carried out by an independent consultant into the culture prevailing within the agency at that time.28

3.28 Mr Hadgkiss continued by stating that, as a result of the survey's findings:

I directed that an independent review into bullying and harassment be carried out. Following the review, a bullying and harassment plan was developed. Every month FWBC's executive team reviews progress against this plan. From November 2014 to January last year, face-to-face bullying and harassment awareness training was delivered to all staff, including management and the senior executive service. An online module has been developed which all staff are required to complete annually.29

3.29 In his evidence to the committee, Mr Hadgkiss referred to the latest Australian Public Service Commission survey, in which he indicated FWBC was found to score above the overall APS average across a range of categories in relation to staff satisfaction as well as staff understanding and commitment to APS values and code of conduct.30 In response to claims that FWBC 'operates under a culture of bullying and harassment', Mr Hadgkiss stated:

I have provided evidence that FWBC does not have a culture of bullying and harassment.31

FWBC Court proceedings

3.30 Representatives from FWBC detailed the amount of penalties issued as a result of court proceedings initiated by the agency. In the six months following 1 July

27 Ms Natalie James, Fair Work Ombudsman, Office of the Fair Work Ombudsman, 11 February 2016, Estimates Hansard, p. 146.

28 Estimates Hansard, 12 February 2016, p. 5.

29 Mr Nigel Hadgkiss, Director, Fair Work Building and Construction, 12 February 2016, Estimates Hansard, p. 5.

30 Estimates Hansard, 12 February 2016, p. 6.

31 Mr Nigel Hadgkiss, Director, Fair Work Building and Construction, 12 February 2016, Estimates Hansard, p. 6.

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2015, a total of $865 475 in penalties have been issued in respect of FWBC cases. Of these penalties, 94 per cent represent action taken against the Construction Forestry Mining Energy Union (CFMEU) and its officials.32

Royal Commission referrals

3.31 The committee sought information about the referrals made to FWBC from the Trade Union Royal Commission. Mr Hadgkiss confirmed that a number of matters had been referred to the agency and were under investigation by the Canberra office of FWBC. A working group has been established in order to provide a coordinated cross-agency response to deal with the civil referrals from the Royal Commission. While not all information will be able to be shared within the working group due to privacy and other considerations, it is hoped that this collaborative approach will achieve a more effective response.33

Senator Bridget McKenzie Chair

32 Estimates Hansard, 12 February 2016, p. 15.

33 Estimates Hansard, 12 February 2016, pp. 37-38.

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Appendix 1

Committee oversight of departments and agencies

Education and Training Portfolio

• Department of Education and Training

• Australian Research Council

• Australian Skills Quality Authority

• Tertiary Education Quality and Standards Agency

• Australian Curriculum, Assessment and Reporting Authority

• Australian Institute of Aboriginal and Torres Strait Studies

• Australian National University

• Australian Institute for Teaching and School Leadership

Employment portfolio

• Department of Employment

• Asbestos Safety and Eradication Agency

• Workplace Gender Equality Agency

• Fair Work Commission

• Office of the Fair Work Building Industry Inspectorate (Fair Work Building

and Construction)

• Office of the Fair Work Ombudsman

• Safe Work Australia

• Comcare, the Safety, Rehabilitation and Compensation Commission, and the Seafarers' Safety, Rehabilitation and Compensation Authority

• Coal Mining Industry (Long Service Leave Funding) Corporation

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Appendix 2

Index to Proof Committee Hansard transcripts

Wednesday, 10 February 2016 Page

Department of Education and Training: Cross-portfolio matters 2

Australian Curriculum Assessment and Reporting Authority 17

Australian Institute for Teaching and School Leadership 37

Australian Research Council 53

Tertiary Education Quality and Standards Agency 61

Australian Skills and Quality Authority 69

Department of Education and Training: Outcome 2 91

Department of Education and Training: Outcome 1 111

Thursday, 11 February 2016 Page

Department of Employment: Cross-portfolio matters 4

Department of Employment: Outcome 1 35

Department of Employment: Outcome 2 74

Workplace Gender Equality Agency 132

Asbestos Safety and Eradication Agency 138

Fair Work Commission 140

Office of the Fair Work Ombudsman 145

Friday, 12 February 2016 Page

Office of the Fair Work Building Industry Inspectorate 4

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The Senate

Environment and Communications

Legislation Committee

Additional estimates 2015-16

March 2016

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ii

© Commonwealth of Australia 2016 ISBN 978-1-76010-359-0

Committee address PO Box 6100 Parliament House Canberra ACT 2600 Tel: 02 6277 3526 Fax: 02 6277 5818 Email: ec.sen@aph.gov.au Internet: http://www.aph.gov.au/senate_ec

This work is licensed under the Creative Commons Attribution-NonCommercial- NoDerivs 3.0 Australia License.

The details of this licence are available on the Creative Commons website: http://creativecommons.org/licenses/by-nc-nd/3.0/au/.

This document was produced by the Senate Standing Committee on Environment and Communications and printed by the Senate Printing Unit, Parliament House, Canberra.

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Committee Membership

Committee members

Senator Linda Reynolds CSC, Chair LP, Western Australia

Senator Anne Urquhart, Deputy Chair ALP, Tasmania

Senator Chris Back LP, Western Australia

Senator the Hon Eric Abetz LP, Tasmania

Senator the Hon Lisa Singh ALP, Tasmania

Senator Larissa Waters AG, Queensland

Substitute members

Senator David Bushby (LP, Tasmania) for Senator Abetz on 8 and 9 February 2016 and Senator Sam Dastyari (ALP, NSW) for Senator Singh on 9 February 2016

Senators in attendance

Senator Catryna Bilyk ALP, Tasmania

Senator the Hon Doug Cameron ALP, NSW

Senator Matthew Canavan NATS, Queensland

Senator the Hon Stephen Conroy ALP, Victoria

Senator Katy Gallagher ALP, ACT

Senator Glenn Lazarus IND, Queensland

Senator David Leyonhjelm LDP, NSW

Senator Scott Ludlam AG, Western Australia

Senator John Madigan DLP, Victoria

Senator Gavin Marshall ALP, Victoria

Senator Bridget McKenzie NATS, Victoria

Senator Nick McKim AG, Tasmania

Senator Deborah O'Neill ALP, NSW

Senator Barry O'Sullivan NATS, Queensland

Senator Lee Rhiannon AG, NSW

Senator Janet Rice AG, Victoria

Senator Rachel Siewert AG, Western Australia

Senator Robert Simms AG, South Australia

Senator Dean Smith LP, Western Australia

Senator Zhenya Wang PUP, Western Australia

Senator Peter Whish-Wilson AG, Tasmania

Senator John Williams NATS, NSW

Senator Nick Xenophon IND, South Australia

Secretariat

Ms Christine McDonald, Secretary Ms Kirsty Cattanach, Research Officer

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Table of Contents

Committee Membership ................................................................................... iii

Chapter 1: Additional Estimates 2015-16 ........................................................ 1

Introduction ............................................................................................................ 1

Portfolio coverage .................................................................................................. 1

Hearings .................................................................................................................. 1

Questions on notice and Hansard transcript ........................................................... 2

Answers to questions on notice - Supplementary Budget Estimates 2015-16...... 2

Attendance of witnesses ......................................................................................... 5

Senators' guidance document ................................................................................. 6

Record of proceedings ............................................................................................ 6

Note on references and additional information ...................................................... 6

Chapter 2: Portfolio specific issues ................................................................... 7

Environment Portfolio ............................................................................................ 7

Communications and the Arts Portfolio ............................................................... 14

Appendix 1: Additional Estimates programs ................................................. 19

Appendix 2: Tabled documents ....................................................................... 23

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Chapter 1

Additional Estimates 2015-16

Introduction

1.1 On 4 February 2016, the Senate referred the following to the Senate Environment and Communications Legislation Committee (the committee):

• Particulars of proposed additional expenditure in respect of the year ending on

30 June 2016 [Appropriation Bill (No. 3) 2015-16];

• Particulars of certain proposed additional expenditure in respect of the year

ending on 30 June 2016 [Appropriation Bill (No. 4) 2015-16]; and

• Final Budget Outcome 2014-15. 1

1.2 A reporting date of 1 March 2016 was set for the committee's report on the 2015-16 Additional Estimates.2 On 29 February 2016, the Senate agreed to extend the tabling date to 16 March 2016 to allow the committee to complete its examination of the proposed additional expenditure and outcomes for the Environment portfolio.3

Portfolio coverage

1.3 The committee has responsibility for examining the expenditure and outcomes of the following:

• Environment Portfolio; and

• Communications and the Arts Portfolio. 4

Hearings

1.4 The committee's examination of the Environment Portfolio commenced on Monday, 8 February 2016. The committee agreed, pursuant to standing order 26(4), to hold a further hearing on Friday, 4 March 2016 to continue its examination of Program 1.5: Environment Regulation. The committee further agreed to examine the programs not called on 8 February 2016 at that hearing as follows:

• 1.1: Sustainable Management of Natural Resources and the Environment;

• 1.5: Environmental Regulation;

• 1.6: Management of Hazardous Wastes, Substances and Pollutants;

1 Journals of the Senate, No. 137, 4 February 2016, p. 3720.

2 Journals of the Senate, No. 124, 10 November 2015, p. 3336.

3 Journals of the Senate, No. 142, 29 February 2016, p. 3837.

4 Journals of the Senate, No. 1, 12 November 2013, p. 16.

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• 1.7: Cities and the Built Environment;

• 4.1: Water Reform; and

• 4.2: Commonwealth Environmental Water Office.

1.5 The committee's examination of the Communications and the Arts Portfolio took place on Tuesday, 9 February 2016.

1.6 The committee took evidence from Senator the Hon Simon Birmingham, Minister for Education and Training representing the Minister for the Environment; Senator the Hon Anne Ruston, Assistant Minister for Agriculture and Water Resources representing the Minister for the Environment; Senator the Hon Mitch Fifield, Minister for Communications and Minister for the Arts; and Senator the Hon Arthur Sinodinos AO, Cabinet Secretary representing the Minister for the Environment, together with officers from the relevant departments and agencies. The committee thanks the Ministers, departmental secretaries and the officers who appeared before it.

1.7 The Sydney Harbour Federation Trust was not required to attend.

Questions on notice and Hansard transcripts

1.8 In accordance with standing order 26(9)(a), the committee set Friday, 8 April 2016, as the date for the return of written answers or additional information for the hearing held on 8 February 2016. The committee agreed to 22 April 2016 from the hearing held on 4 March 2016.

1.9 Written answers and information provided to the committee in response to questions on notice arising from the hearings are tabled in the Senate and posted on the committee's webpage. Links to the transcripts of these public hearings and to answers and additional information are available on the internet at:

www.aph.gov.au/Parliamentary_Business/Senate_Estimates/ecctte/estimates/add1516/ index

Answers to questions on notice - Supplementary Budget Estimates 2015-16

1.10 The committee's examination of the Department of the Environment and its agencies for the Supplementary Budget estimates took place on 19 October 2015 and 13 November 2015.

1.11 The committee agreed to three dates for the return of answers to questions on notice from the Environment portfolio. Answers to Senator Urquhart's questions on notice in relation to programs 1.1, 1.4, 1.6, the Clean Energy Regulator and the Climate Change Authority were due to the committee by 4 November 2015. The committee set 4 December 2015 as the date for the return of answers to questions on notice arising from the hearing on 19 October 2015. Finally, answers to questions

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taken on notice arising from the hearing on 13 November 2015 were due to the committee by 15 January 2016.

1.12 The committee's examination of the Communications and the Arts portfolio took place on 20 October 2015. The committee held a separate hearing with the Australian Broadcasting Corporation (ABC) on 30 November 2015. The committee set 4 December 2015, as the date for the return of answers to questions on notice from the Communications and the Arts portfolio. The committee set 27 January 2016, as the date for return of answers to questions from the ABC.

Timeliness of answers to questions on notice

1.13 On 2 November 2015, the Department of the Environment indicated to the committee that it was not able to provide the answers to Senator Urquhart's written questions on notice by the due date of 4 November. The department advised that it would endeavour to provide the responses by 11 November 2015.

1.14 On 11 November 2015, the Department of the Environment provided answers to 63 of the 77 questions placed on notice by Senator Urquhart; seven more were provided on 12 November 2015. A further six answers to questions on notice were provided on 24 November 2015 and the final answer was provided on 3 December 2015.

1.15 The committee acknowledged that the Department of the Environment had provided the majority of answers to the questions on notice from Senator Urquhart and, at the hearing on 13 November 2015, the chair commented that this had been very helpful to the committee.

1.16 In relation to the remaining questions on notice the committee received the majority of the answers from the Environment portfolio that were due on 4 December by Friday, 21 December 2015. All answers were provided by 28 January 2016.

1.17 The committee did not receive any answers to the questions on notice from the Communications and the Arts portfolio by the due date of 4 December 2015. The first answers were received on 8 December 2015. Answers to 60 questions were provided between 8 December and 22 December 2015 and 80 answers were provided between 25 January and 8 February 2016.

1.18 The ABC did not provide any answers to the 24 questions on notice by the due date of 27 January 2016. The committee received the first seven answers on 8 February 2016.

1.19 The committee received the remaining 22 answers to questions on notice, including 17 from the ABC and five from across the department and agencies, on the

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morning of the committee's Additional Estimates hearing with the Communications and the Arts portfolio.5

1.20 At the Additional Estimates hearing with the Communications and the Arts portfolio, the committee expressed its concern that no answers to questions on notice had been received by the due date and that many answers were provided either on the Friday afternoon before the hearing or moments before the hearing commenced. The chair noted that the provision of answers so close to the hearing, provided little time for senators to review the answers and to prepare any supplementary questions that they may have for Additional Estimates hearing.6

1.21 The Secretary of the Department of Communications and Arts, Dr Heather Smith, responded to the committee's concerns regarding the lateness of answers to questions on notice and stated:

I did note that you wrote to the department yesterday about the need to ensure the timely coordination and response to questions asked by the committee. There were a number of factors contributing to the lateness of the [answers], including that many of the questions required coordinating responses from portfolio agencies of which we now have significantly more since the administrative order changes. I do wish to assure the committee, though, that the department does take the provision and tabling [of answers] very seriously and we will ensure a better response rate going forward.7

1.22 Dr Smith went on to inform the committee that administrative arrangements would be put in place to improve advice to portfolio agencies about questions on notice. Dr Smith concluded that the Department of Communications and the Arts 'will endeavour to ensure being more timely for the next estimates'.8

1.23 While welcoming Dr Smith's commitment to improving the timeliness of the provision of answers, the committee notes that comments were included in its report on the Additional Estimates 2014-15 concerning the late provision of the answers to questions on notice by the then Communications portfolio. The committee reiterates its comments regarding the importance of the provision of answers to questions on notice and its expectation that answers will be provided by the due date.

1.24 At the committee's second hearing with the Department of the Environment, the Secretary, Dr Gordon de Brouwer, also commented on the timely provision of

5 Of the five answers provided across the Communications and the Arts portfolio: three were from NBN Co; one from Program 2.1: Arts and Cultural Development; and one from the National Film and Sound Archive.

6 See Proof Committee Hansard, 9 February 2016, p. 4.

7 Dr Heather Smith, Secretary, Department of Communications and the Arts, Proof Committee Hansard, 9 February 2016, pp 4-5.

8 Dr Heather Smith, Secretary, Department of Communications and the Arts, Proof Committee Hansard, 9 February 2016, pp 4-5.

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answers to question on notice and indicated that the chair would be provided with information on the way in which the Department of the Environment undertakes the grouping of answers.

Claims of commercial confidentiality

1.25 The committee has examined answers to questions on notice from Budget estimates 2015-16 and Supplementary Budget estimates 2015-16 in relation to claims that information was not provided on the basis that it was commercial-in-confidence. The committee notes that some answers from agencies in the Communications and the Arts portfolio contained this claim. While a number of answers included an indication of the potential commercial harm of providing the information, some answers claiming confidentiality did not provide any basis for such a claim.

1.26 The committee again draws the attention of departments and agencies to Senate Procedural Order of Continuing Effect No. 11 of 30 October 2003 relating to claims for the withholding of information on the grounds that it is commercial-in-confidence.9 Without the required statement indicating the commercial harm that may result from the disclosure of the information, the committee is unable to consider whether it should require the answer or should not press the question.

1.27 At Budget Estimates 2015-16, Australia Post requested that the answers to five questions on notice be provided to the committee confidentially. As all evidence relating to estimates, including answers to questions on notice, must be in public session the committee agreed to receive this information under Standing Order 25(2)—its power to inquire into the performance of departments and agencies. The questions were in relation to its contracts, parcel sorting machines, digital mailbox and the forecast decline of mail volumes. The committee, upon receipt of the answers to questions on notice and in consultation with Australia Post, agreed to make public the answers to two of the five questions and these have been published with the portfolios answers to questions on notice.

Attendance of witnesses

1.28 The committee notes that most departments and agencies in the Environment portfolio and the Communications and the Arts portfolio were well prepared for the Additional Estimates hearings.

1.29 In relation to NBN Co, the committee noted that senators seek detailed information on highly technical matters. The committee had requested that a number of NBN officers attend the Additional Estimates hearings to respond to these questions. However, the officers requested were unavailable due to prior commitments and only Mr Bill Morrow, Chief Executive Officer, and Mr Stephen Rue, Chief Financial Officer, attended the hearings. The committee suggested that it would be

9 The Senate, Standing Orders and other orders of the Senate, August 2015, p. 131.

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helpful to senator attending the hearing if NBN Co would consider having the appropriate officers either attend or be contactable via email during estimates hearings. The committee notes Mr Morrow responded that, if an indication of the topics to be canvassed at the hearing was provided, that the appropriate officers would be available.10

Senators' guidance document

1.30 The committee would again like to thank both the Department of the Environment and the Department of Communications and the Arts for each preparing a 'guidance document' for the Additional Estimates hearings. The guidance documents provided a comprehensive overview of the outcome structure of each department and were very helpful to committee members in establishing the correct area in which to ask their questions.

Record of proceedings

1.31 This report does not attempt to analyse the evidence presented during the hearings. However, it does provide a brief list of some of the key issues that were covered by the committee for each portfolio.

Note on references and additional information

1.32 References to Hansard transcripts are to the proof Hansard; page numbers may vary between the proof and official Hansard transcripts.

1.33 Copies of the Hansard transcripts, documents tabled at the hearings, and additional information received after the hearings are tabled in the Senate and available on the committee's website.

10 Mr Bill Morrow, Chief Executive Officer, NBN Co, Proof Committee Hansard, 9 February 2016, p. 133.

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Chapter 2

Portfolio specific issues

2.1 This chapter provides an overview of some of the matters raised during the committee's hearings on the Additional Estimates 2015-16. The discussion follows the outcome and agency structure.

Environment Portfolio

Department of the Environment

2.2 The committee opened the hearing with the Department of the Environment by asking general questions about:

• the potential effect of CSIRO's announcement that it is planning to reduce its work in relation to climate change science (pp 5, 7, 9-10);

• staffing figures including graduate recruitment and retention (p. 6); and

• the National Collaborative Research Infrastructure Scheme (p. 8).

Outcome 1: Conserve, protect and sustainably manage Australia's biodiversity, ecosystems, environment and heritage through research, information management, supporting natural resource management, establishing and managing Commonwealth Protected areas, and reducing and regulating the use of pollutants and hazardous substances

2.3 The committee called officers in relation to Program 1.2: Environmental Information and Research. The committee discussed the following matters:

• the number of departmental officers engaged in international cetacean issues

(pp 71-72);

• 2015-16 whaling season in the Southern Ocean (pp 72-73); and

• the Australian Marine Mammal Grants Program (pp 73-74).

2.4 The committee also noted that it was assisted in its examination of international whaling issues by Ms Chris Schweizer, who attended the hearing although currently on secondment to another agency.

2.5 During the course of the hearing, the committee released officers in relation to Program 1.3: Carbon Pollution Reduction—Land Sector Initiatives without providing evidence.

2.6 Officers were called in relation to Program 1.4: Conservation of Australia's Heritage and the Environment. Matters raised included:

• the finalisation of the Australian Heritage Strategy and the timeframes for implementation (pp 106-107);

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• the process for sites to be added to the Australian heritage system

(pp 107-108);

• bushfires in the Tasmanian Wilderness World Heritage Area (pp 108-113);

• the Memorandum of Understanding on the Conservation of Migratory Sharks

(pp 114-115);

• an update on the nomination of the Royal National Park for United Nations

World Heritage listing (pp 116-117); and

• the addition of the Parramatta Female Factory to the Australian Heritage

Council's work plan (p. 117).

2.7 Officers from the department were called in relation to Program 1.5: Environmental Regulation. Matters discussed included:

• the investigation into the fire that occurred in and around Kakadu National Park in October 2015 (pp 125-126);

• Shenhua Watermark Coal Mine management plans (pp 126-127);

• approval of the Adani Carmichael Mine (pp 127-128, 133-135);

• land clearing in Northern Queensland (pp 128-130, 135-138); and

• the Environmental Impact Statement process for the Western Sydney Airport (pp 130-132).

2.8 Due to time constraints the committee did not complete its examination of Program 1.5 on 8 February. The committee agreed to hold a further hearing to continue its examination of Program 1.5 on 4 March 2016.

Outcome 2: Reduce Australia's greenhouse gas emissions, adapt to the impacts of climate change and contribute to the negotiation of an effective global solution to climate change, through developing and implementing a national response to climate change

2.9 Officers from the department were called in relation to Program 2.1: Reducing Australia's greenhouse gas emissions. Matters raised included:

• Australia's greenhouse gas emissions levels as reported in Tracking to 2020 an interim update of Australia's greenhouse gas emissions projections (p. 93);

• emissions abatement methodologies (pp 95, 103-104);

• greenhouse gas emissions from major bushfires (pp 96-97);

• the National Pollutant Inventory (p. 97);

• the release of the Quarterly Update of Australia's National Greenhouse Gas Inventory: June 2015 (p. 99); and

• funding of the Emissions Reduction Fund beyond 2024 (pp 99-102).

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2.10 In relation to Program 2.2: Adapting to Climate Change, matters raised included the National Climate Change Adaptation Research Facility (pp 105-106) and the potential effect of CSIRO's announcement that it is planning to reduce its work in relation to climate change science (p. 106).

Outcome 3: Advancement of Australia's strategic, scientific, environmental and economic interests in the Antarctic by protecting, administering and researching the region

2.11 Officers from the department were called in relation to Program 3.1: Antarctica: Science, Policy and Presence. The committee joined with Dr Nick Gales, Director, Australian Antarctic Division, to offer its sincere condolences to the family of Mr David Wood, the Division's helicopter pilot, who died after a tragic accident in Antarctica on 11 January 2016 (p. 56).

2.12 Other matters examined included:

• the potential effect of CSIRO's announcement that it is planning to reduce its work in relation to climate change science (pp 57-58, 63);

• the number of grants issued through the Australian Antarctic Science Program

for the current financial year (p. 59);

• an update on the negotiations for the new icebreaker (pp 59-61);

• the interactions of the climate and the currents in the Southern Ocean (p. 62);

• the Government's response to the 20 Year Australian Antarctic Strategic Plan

(pp 64-65); and

• the communications technology provided to Australian stations in the

Antarctic (pp 65-66).

2.13 The committee held an additional hearing on 4 March 2016 to complete its examination of the Environment Portfolio. Officers from the Department of the Environment were called in relation to:

• Program 1.1: Sustainable Management of Natural Resources and the

Environment;

• Program 1.5: Environmental Regulation;

• Program 1.6: Management of Hazardous Wastes, Substances and Pollutants;

• Program 4.1: Water Reform; and

• the Commonwealth Environmental Water Office.

2.14 Officers were called in relation to Program 1.1: Sustainable Management of Natural Resources and the Environment. Matters discussed included:

• the review of Australia's Biodiversity Conservation Strategy (pp 3-4);

• the Reef 2050 Plan (4-5);

• the Reef Trust (pp 5-7);

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• the Green Army Programme (pp 7-8);

• funding of the Tamar River Recovery Plan under the National Landcare

Programme (pp 9-12);

• the Threatened Species Strategy and recovery plans (pp 13-14);

• Christmas Island Frigate Bird (p. 20);

• baiting feral dogs and cats to protect threatened species (pp 20-21);

• planned burns in regional forests (p. 22); and

• the Leadbeaters Possum Recovery Plan (p. 23).

2.15 The committee continued its examination of Program 1.5: Environmental Regulation and canvassed issues related to land clearing in far north Queensland (pp 24-27) and prescribed burnings in forests or on publicly owned land (pp 27-30).

2.16 Officers were called in relation to Program 1.6: Management of Hazardous Wastes, Substances and Pollutants. Matters canvassed by the committee included:

• evidentiary certificates issued for hazardous waste (p. 44);

• the announcement by the Hon Peter Dutton MP, Minister for Immigration and

Border Protection, that the Australian Border Force has initiated an Independent Review of Australia's Asbestos Border Control Management policy (pp 44-45, 47); and

• the next meeting of the Conference of the Parties of the Rotterdam

Convention (p. 45).

2.17 The committee called officers in relation to Program 1.7: Cities and the Built Environment. Matters discussed included:

• the Cities and Built Environment Taskforce's definition of a 'city' (pp 30-31);

• the achievements of the Cities and Built Environment Taskforce (p. 31);

• the staffing arrangements of the Cities and Built Environment Taskforce (pp 32-33); and

• the timing for the release of the State of Australian Cities Report (33-34).

2.18 The committee notes that following the change to the Administrative Arrangement Orders, Cities and the Built Environment has transferred to the Department of the Prime Minister and Cabinet. The committee examined this program with the Department of the Environment as it was included in this portfolio's

Additional Estimates Statement and Appropriation bills.

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Outcome 4: Improve the health of rivers and freshwater ecosystems and water use efficiency through implementing water reforms, and ensuring enhanced sustainability, efficiency and productivity in the management and use of water resources

2.19 Officers were called in relation to Program 4.1: Water Reform at the committee's hearing on 4 March 2016. The committee discussed the advice provided by the Independent Expert Scientific Committee on Coal Seam Gas and Large Coal Mining Development in relation to the scope and method of bioregional assessments (pp 35-36).

2.20 The committee called officers in relation to Program 4.2: Commonwealth Environmental Water Office at its hearing on 4 March 2016. Matters raised included the Water Amendment (Review Implementation and Other Measures) Bill 2015 (pp 38, 40) and the research surrounding the potential use of an Indonesian strain of herpes virus in the Murray-Darling Basin to cull common carp

(p. 39).

Australian Renewable Energy Agency

2.21 The committee called officers from the Australian Renewable Energy Agency (ARENA) and canvassed the following matters:

• vacancies on the board of ARENA that have been vacant since midnight on

16 January 2016 (p. 118, 120);

• large-scale solar and solar-related projects (pp 118-119); and

• the number of renewable energy projects in Western Australia (p. 121).

Bureau of Meteorology

2.22 Officers were called from the Bureau of Meteorology (BOM) and matters examined included:

• the recent announcement to automate weather observations in 24 regional

monitoring stations across Australia and to consolidate BOM staff into eight activity hubs, which will be located in seven capital cities and Cairns (pp 16-21, 26);

• the potential effect of CSIRO's announcement that it is planning to reduce its

work in relation to climate change science (pp 21-26, 29);

• extreme weather events and the severity of the current fire season (pp 27-29); and

• reports that the Doppler radar at Mount Stapylton regularly malfunctions (pp 31-32).

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Clean Energy Finance Corporation

2.23 The committee called officers from the Clean Energy Finance Corporation (CEFC) and discussed the following matters:

• the challenges for new renewable energy projects (pp 76-77);

• developments in household power generation and battery storage (p. 78);

• the Australian Government's policy to abolish the CEFC (pp 79, 85);

• private sector investment in the CEFC's projects (p. 80); and

• the CEFC's residential energy efficiency project with St George Community

Housing (pp 81-82, 85).

Clean Energy Regulator

2.24 Officers from the Clean Energy Regulator were called and matters examined included:

• the Lake Bonney Wind Farm Pty Ltd (pp 121-122);

• the assets of the Redbank Power Station (p. 122);

• renewable energy large-scale generation certificates (pp 122-123); and

• results from a voluntary survey of power stations (p. 124).

Climate Change Authority

2.25 The committee called officers from the Climate Change Authority and canvassed the following matters:

• the release of the Authority's second draft report of its Special Review:

Australia's Climate Policy Options (pp 86-87);

• staffing figures and arrangements (pp 87-88);

• the outcome of the 2015 United Nations Climate Change Conference in Paris

(pp 87, 90); and

• global carbon budgets (p. 91).

Director of National Parks

2.26 The committee called the Director of National Parks, Ms Sally Barnes, and discussed the following matters:

• the status of the draft management plans for the south-west, north-west, north,

temperate east networks and the Coral Sea marine reserves (pp 66-67);

• the budget for the review of marine parks and reserves (pp 68-69); and

• the assessment of the potential impact of coral bleaching on marine parks and

reserves (p. 70).

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Great Barrier Reef Marine Park Authority

2.27 The committee called officers from the Great Barrier Reef Marine Park Authority. Matters canvassed included:

• the threat of coral bleaching on the reef becoming more frequent and severe

(pp 33-34, 35-36);

• the Crown-of-thorns Starfish Eradication Program (pp 34-35, 42);

• varieties of seagrass in the marine park and the risks and vulnerabilities of those species (p. 36);

• the use of drum lines in the marine park to reduce interactions with sharks

(pp 37-38);

• the potential effect of CSIRO's announcement that it is planning to reduce its

work in relation to climate change science (pp 38-39);

• actions being taken to improve water quality (p. 39);

• interactions with the tourism industry on marine plastic pollution (p. 40); and

• the Reef Guardian Fishers Program (p. 41).

National Wind Farm Commissioner

2.28 This was the National Wind Farm Commissioner's first appearance at Estimates and the committee congratulated Mr Andrew Dyer on his appointment. At the conclusion of Mr Dyer's opening statement the following matters were discussed:

• reporting arrangements (p. 45);

• establishment of the National Wind Farm Commission including office location, number of staff and contact details (pp 45-46, 54-55);

• the number of complaints received about wind farms (pp 46-47, 49, 55); and

• the Commissioner's powers to request information (p. 48);

Office of the Supervising Scientist

2.29 The committee discussed the following matters with the Office of Supervising Scientist:

• the number of vacant positions on the Alligator Rivers Region Advisory Committee (p. 11);

• the Northern Territory Government's investigation report into the leach tank

failure at the Ranger uranium mine site (pp 12-13); and

• the process to establish the security bond for the rehabilitation of the Ranger

uranium mine site (pp 14-15).

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Communications and the Arts Portfolio

Department of Communications and the Arts

2.30 The committee commenced its examination of the Communications and the Arts portfolio with general questions to the Department of Communications and the Arts. Matters raised included the lateness of the provision of answers to questions on notice to the committee (pp 4-5) and the future funding for community broadcasters (pp 5-6).

Outcome 1: Promote an innovative and competitive communications sector, through policy development, advice and programme delivery, so all Australians can realise the potential of digital technologies and communications services

2.31 Officers were called in relation to Program 1.1: Digital Technologies and Communications Services. Matters canvassed included the future funding to support community broadcasters (pp 94-95) and the Mobile Black Spot Program prioritising funding for areas that are prone to bushfires (pp 95-96).

Outcome 2: Participation in, and access to, Australia's arts and culture through developing and supporting cultural expression

2.32 The committee called officers in relation to Program 2.1: Arts and Cultural Development and discussed the following matters:

• the timing of the Government's response to the Senate Legal and

Constitutional Affairs Reference Committee's report on the impact of the 2014 and 2015 Commonwealth Budget decisions on the Arts (pp 87-88);

• the reallocation of $8.0 million per annum of funding to the Australia Council

to support small to medium sized arts organisations (pp 88-91); and

• the three grant recipients from the Catalyst—Australian Arts and Culture

Fund (pp 92-94).

Australian Broadcasting Corporation

2.33 The committee noted that this was the last appearance of Mr Mark Scott, Managing Director, Australian Broadcasting Corporation (ABC), before the committee at Estimates. Mr Scott will conclude his term in May 2016 after ten years as Managing Director of the ABC. The chair, on behalf of the committee, acknowledged Mr Scott's contribution to the estimates process:

…On behalf of the committee I would like to thank you very much for your contribution to the estimates process. On behalf of myself and committee members past and present, thank you very much for your appearance and

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your support of this committee and for all the work that you have done in this role. Congratulations and thank you.1

2.34 Other matters discussed included:

• the ABC's bid for the Asian Cup in 2015 (p. 43);

• the ABC's decision to air Foreign Correspondent at the same time as Dateline on the Special Broadcasting Service (SBS) (pp 43-44);

• the possibility of merging ABC and SBS into a single public broadcaster (pp 44-45);

• broadcasting of the National Livestock Reporting Service at an earlier time on the rural report and Country Hour (pp 45-46);

• the provision of rural and regional service including funding and

programming (pp 47, 63-64);

• changes to local radio across rural and regional Australia (pp 49-50);

• editorial policies and the coverage in New Matilda on matters relating to NBN Co (pp 50-58, 61-62);

• reporting on renewable energy matters (p. 58); and

• the ABC's reporting of the National Broadband Network (pp 60-61).

Australia Council

2.35 The committee called officers from the Australia Council and discussed the impact of funding cuts (pp 66-68) and the level of funding provided to the youth arts sector (pp 68-69).

Australian Communications and Media Authority

2.36 The committee noted Mr Chris Chapman, Chair, Australian Communications and Media Authority (ACMA), was completing his chairmanship of the ACMA after 10 years in that position. Under the Australian Communications and Media Authority Act 2005, the chair cannot serve more than 10 years.

2.37 Mr Chapman, in his opening statement, provided the committee with an overview of his time as Chair of the ACMA. He remarked that:

…I have over these 10 years seen six prime ministerships, served under five communications ministers, served with six department secretaries, come before six Senate estimates committee chairpersons, regulated with 15 outstanding authority members, chaired—unbelievably—246 authority meetings, and participated in 56 authority strategy sessions. Today, as I

1 Senator Linda Reynolds CSC, Proof Committee Hansard, 9 February 2016, pp 41-42.

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understand it, I am the longest serving agency head in the Commonwealth's 194 agencies.2

2.38 The committee congratulated Mr Chapman on his appointment as president of the International Institute of Communications, which will commence in April 2016. Mr Chapman is the first president of the International Institute of Communications from the Asia-Pacific region in the Institute's 46 year history.3

2.39 Other matters raised included:

• regional broadcasters licence obligations for local content (pp 17-20);

• the allocation of spectrum for emergency services (p. 21); and

• local content arrangements (pp 22-23).

Australian National Maritime Museum, Bundanon Trust, Museum of Australian Democracy at Old Parliament House, National Film and Sound Archive, National Gallery of Australia, National Portrait Gallery of Australia, National Library of Australia and National Museum of Australia

2.40 The committee called officers from the Australian National Maritime Museum, Bundanon Trust, Museum of Australian Democracy at Old Parliament House, National Film and Sound Archive, National Gallery of Australia, National Portrait Gallery of Australia, National Library of Australia and the National Museum of Australia. Officers from each agency were asked to explain the effect of the Australian Government's decision to introduce a three per cent efficiency target in order to achieve savings of $36.8 million over four years, as announced in the 2015-16 Mid-Year Economic and Fiscal Outlook (pp 77-87).

Australia Post

2.41 In his opening statement, Mr Ahmed Fahour, Managing Director and Chief Executive Officer, provided an update on the reforms to the Australia Post letter service, including the increase in the basic postage rate and the introduction of a new two-speed delivery service for regular mail. At the conclusion of the opening statement, the committee discussed the matter of post office boxes including the maintenance, pricing system and national vacancy rate (pp 24-25).

2.42 Other matters discussed by the committee included:

• payments to licensed post offices for street deliveries of parcels (p. 27);

2 Mr Chris Chapman, Chair, Australian Communications and Media Authority, Proof Committee Hansard, 9 February 2016, p. 15.

3 Proof Committee Hansard, 9 February 2016, p. 16.

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• the decline in the volume of letters (p. 30);

• the postcode allocation system (pp 31-32); and

• the appointment of Mr Bruce McIver to the Australia Post Board (pp 33-39).

National Broadband Network Co Ltd

2.43 Mr Bill Morrow, Chief Executive Officer, made an opening statement and provided the committee with an update on the progress of the rollout of the National Broadband Network (NBN) since Supplementary Budget Estimates (pp 97-99).

2.44 The committee canvassed the following matters with NBN Co:

• the lateness of answers to questions on notice (p. 99);

• rollout of the NBN to towns in West Coast Tasmania (pp 99-101);

• financial highlights including the average revenue per user (pp 103-104);

• capacity and use of the second NBN satellite (pp 105-106);

• staffing figures (p.106);

• complaints regarding fibre to the node, including slow speeds, delayed connection times and disrupted services (pp 107-109); and

• the rollout of the NBN in South Australia (pp 109-110).

Screen Australia

2.45 The committee called officers from Screen Australia and discussed the following matters:

• staffing figures (p. 70);

• reductions in funding (pp 70-71);

• the launch of the Gender Matters National Hub (pp 71-72);

• reductions in funding over the past four years (p. 73); and

• investment in the Australian film industry (pp 73-75).

Special Broadcasting Service

2.46 The committee called officers from the Special Broadcasting Service (SBS) and examined the following matters:

• SBS's budget position (pp 7-8);

• its discussions with the Australian Government regarding its triennial funding

from 1 July 2016 (pp 8-10);

• bidding for the Asian Cup and the reasons for its decision to not proceed with its bid (pp 10-11);

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• the Australian Broadcasting Corporation's decision to air Foreign

Correspondent at the same time SBS broadcasts Dateline (p. 12);

• its digital radio channel Chill (pp 12-13); and

• the payment of bonuses to senior executives (p. 14).

Senator Linda Reynolds CSC

Chair

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Appendix 1

Additional Estimates programs

The Senate BUSINESS OF COMMITTEES

This document is issued as a guide to Senators

Business listed is subject to change

It should be noted that times allocated for the consideration of outcomes, items and agencies within portfolios are indicative only.

Senators, staff and departments should liaise with secretariats on the progress of portfolios during the estimates process.

SENATE ENVIRONMENT AND COMMUNICATIONS LEGISLATION COMMITTEE

Public Hearings: ADDITIONAL ESTIMATES FOR 2015-16 Monday, 8 February and Tuesday, 9 February 2016

Committee Room 2S3

Parliament House

Canberra ACT

To be televised on Channel 111/Radio 91.1

http://www.aph.gov.au/News_and_Events/Watch_Parliament

MONDAY, 8 February 2016

Time Environment Portfolio

9.00 am General questions of the Department

9.40 am Office of the Supervising Scientist

10.00 am Bureau of Meteorology

Morning Tea: 10.30 am to 10.45 am

10.45 am Great Barrier Reef Marine Park Authority

11.30 am Outcome 3: Antarctica

11.50 am Director of National Parks

Lunch: 12.20 pm to 1.20 pm

1.20 pm National Wind Farm Commissioner

1.50 pm Program 1.2: Environmental Information and Research

2.20 pm Program 1.3: Carbon Pollution Reduction - Land Sector Initiatives

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2.35 pm Program 2.1: Reducing Australia's Greenhouse Gas Emissions

3.25 pm Program 2.2: Adapting to Climate Change

Afternoon Tea: 3.55 pm to 4.10 pm

4.10 pm Program 1.4: Conservation of Australia's Heritage and the Environment

4.40 pm Clean Energy Finance Corporation

5.10 pm Australian Renewable Energy Agency

5.40 pm Climate Change Authority

6.10 pm Clean Energy Regulator

Dinner: 6.30 pm to 7.30 pm

7.30 pm Program 1.5: Environmental regulation

8.30 pm Program 1.6: Management of Hazardous Wastes, Substances and Pollutants

8.45 pm Program 1.7: Cities and the Built Environment

Tea Break: 9.15 pm to 9.30 pm

9.30 pm Program 4.1: Water Reform

10.00 pm Commonwealth Environmental Water Office

10.30 pm Program 1.1: Sustainable Management of Natural Resources and the Environment

11.00 pm Adjournment

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TUESDAY, 9 February 2016

AGENDA

Time Communications and the Arts Portfolio

9.00 am General questions of the Department

9.40 am Special Broadcasting Service

Morning Tea: 10.10 am to 10.25 am

10.25 am Australian Communications and Media Authority

10.40 am Australia Post

11.10 am Australian Broadcasting Corporation

Lunch: 12.55 pm to 1.55 pm

1.55 pm Australia Council

2.25 pm Screen Australia

2.55 pm Australian National Maritime Museum

Bundanon Trust

National Film and Sound Archive

National Gallery of Australia

National Library of Australia

National Museum of Australia

National Portrait Gallery of Australia

Old Parliament House (The Museum of Australian Democracy)

Afternoon Tea: 3.25 pm to 3.40 pm

3.40 pm Program 2.1: Arts and Cultural Development

4.40 pm Program 1.1: Digital Technologies and Communications Services

5.10 pm NBN Co

Dinner 6.30 pm to 7.30 pm

7.30 pm NBN Co (continued)

Tea Break: 9.00 pm to 9.15 pm

9.15 pm NBN Co (continued)

11.00 pm Adjournment

125

22

The Senate BUSINESS OF COMMITTEES

This document is issued as a guide to Senators

Business listed is subject to change

It should be noted that times allocated for the consideration of outcomes, items and agencies within portfolios are indicative only.

Senators, staff and departments should liaise with secretariats on the progress of portfolios during the estimates process.

SENATE ENVIRONMENT AND COMMUNICATIONS LEGISLATION COMMITTEE

Public Hearings: ADDITIONAL ESTIMATES FOR 2015-16 Friday, 4 March 2016

Committee Room 1S4

Parliament House

Canberra ACT

Audio to be broadcast on Channel 932/Radio 89.1

http://www.aph.gov.au/News_and_Events/Watch_Parliament

FRIDAY, 4 March 2016

Time Environment Portfolio

8.00 am Program 1.1: Sustainable Management of Natural Resources and the Environment

10.00 am Program 1.5: Environmental regulation

Morning Tea: 10.30 am to 10.45 am

10.45 am Program 1.5: Environmental regulation (continued)

11.15 am Program 1.7: Cities and the Built Environment

11.45 pm Program 4.1: Water Reform

12.15 pm Program 4.2: Commonwealth Environmental Water Office

12.45 pm Program 1.6: Management of Hazardous Wastes, Substances and Pollutants

1.00 pm Adjournment

126

Appendix 2 Tabled documents

Monday, 8 February 2016

National Wind Farm Commissioner

Opening statement

Tuesday, 9 February 2016

Australian Communications and Media Authority

Opening statement

Australia Post

Opening statement

NBN Co Ltd

Opening statement

Friday, 4 March 2016

Senator O'Sullivan

Documents relating to land clearing in far north Queensland

127

24

128

The Senate

Finance and Public Administration

Legislation Committee

Additional estimates 2015-16

March 2016

129

ii

© Commonwealth of Australia 2016

ISBN 978-1-76010-360-6

Senate Finance and Public Administratio

n Committee Secretariat:

Ms Lyn Beverley (Secretary)

Ms Margaret Cahill (Research Officer)

Ms Ms Sarah Bra

sser (Administrative Officer)

The Senate PO Box 6100 Parliament House Canberra ACT 2600 Ph: 02 6277 3530 Fax: 02 6277 5809 E-mail: fpa.sen@aph.gov.au Internet: www.aph.gov.au/senate_fpa

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License.

The details of this licence are available on the Creative Commons website:

http://creativecommons.org/licenses/by-nc-nd/3.0/au/.

Printed by the Senate Printing Unit, Parliament House, Canberra.

130

iii

Membership of the Committee

Members

Senator Cory Bernardi (Chair) LP, SA

Senator Jenny McAllister (Deputy Chair) ALP, NSW Senator Joanna Lindgren (from 23 February 2016) LP, QLD Senator Bridget McKenzie NAT, VIC

Senator Nova Peris ALP, NT

Senator Janet Rice AG, VIC

Senator Dean Smith (until 23 February 2016) LP, WA

Senators in attendance

Senators Bernardi (Chair), McAllister (Deputy Chair), Lindgren, McKenzie, Peris, Rice, Bushby, Canavan, Conroy, Dastyari, Gallagher, Collins, Ketter, Leyonhjelm, Ludlam, Ludwig, McKim, Moore, O'Neill, Rhiannon, Seselja, Siewert, Smith, Whish-Wilson, Wong, Xenophon

131

132

Table of Contents

Membership of the Committee ........................................................................ iii

Chapter 1.............................................................................................................. 1

Additional Estimates 2015-16 .................................................................................. 1

Portfolio coverage .................................................................................................. 1

Portfolio Additional Estimates Statements 2015-16 .............................................. 1

Hearings .................................................................................................................. 2

Questions on notice and Hansard transcripts ......................................................... 3

Note on references .................................................................................................. 3

Committee conclusion ............................................................................................ 3

Chapter 2.............................................................................................................. 5

Issues .......................................................................................................................... 5

Parliamentary departments, 8 February 2016 ......................................................... 5

Prime Minister and Cabinet Portfolio, 8 February 2016 ........................................ 7

Prime Minister and Cabinet Portfolio, 22 February 2016 ...................................... 9

Finance Portfolio, 9 February 2016 ...................................................................... 10

Cross Portfolio Indigenous Matters, 12 February 2016 ....................................... 13

Appendix 1 ......................................................................................................... 17

Departments and agencies under the Committee's oversight ............................ 17

Parliamentary Departments .................................................................................. 17

Prime Minister and Cabinet Portfolio .................................................................. 17

Finance Portfolio .................................................................................................. 18

Appendix 2 ......................................................................................................... 19

Tabled documents ................................................................................................... 19

Monday, 8 February 2016 .................................................................................... 19

Tuesday, 9 February 2016 .................................................................................... 19

Friday, 12 February 2016 ..................................................................................... 19

133

134

Chapter 1

Additional Estimates 2015-16 1.1 On 4 February 2016

the Senate referred the following to the Senate Finance

and Public Administration Legislation Committee (the committee) for examination and report:

 Particulars of proposed additional expenditure in respect of the year ending on 30 June 2016 [Appropriation Bill (No. 3) 2015-2016];

 Particulars of certain proposed additional expenditure in respect of the year ending on 30 June 2016 [Appropriation Bill (No. 4) 2015-2016]; and

 Final Budget Outcome 2014-15. 1

Portfolio coverage 1.2 The committee has responsibility for examining the expenditure and outcomes of the following:

 Parliament;

2

 Prime Minister and Cabinet (PM&C) Portfolio;

 Finance Portfolio; and

 Cross Portfolio Indigenous Matters.

Portfolio Additional Estimates Statements 2015-16 1.3 The Portfolio Additional Estimates Statements (PAES) 2015-16 for the PM&C Portfolio and the Finance Portfolio were tabled in the Senate on 4 February 2016.3

1.4 The PAES for the PM&C Portfolio contain additional estimates statements for the Department of the PM&C and the Digital Transformation Office,4 advising that these are the only agencies in the portfolio affected by changes in resourcing since the publication of the Portfolio Budget Estimates 2015-16.5

1 Journals of the Senate No. 137, 4 February 2016, p. 3720.

2 As a matter of comity between the Houses neither House inquires into the operations of the other House. For this reason, neither the annual report of, nor the proposed expenditure for, the Department of the House of Representatives is referred to a Senate committee for review.

3 Journals of the Senate No. 137, 4 February 2016, p. 3720.

4 The Digital Transformation Office was transferred from the Communications and Arts Portfolio to the PM&C Portfolio on 21 September 2015.

5 Portfolio Additional Estimates Statements 2015-16 Prime Minister and Cabinet Portfolio, p. 9.

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2

1.5 The Finance Portfolio PAES advise that additional estimates and variations were being sought by the Department of Finance and the Australian Electoral Commission.6

Hearings 1.6 The committee held public hearings on 8, 9, 12 and 22 February 2016. The parliamentary departments were examined on 8 February, the PM&C Portfolio (excluding Indigenous matters) was examined on 8 and 22 February, the Finance Portfolio was examined on 9 February, and the Cross Portfolio Indigenous Matters hearing was held on 12 February 2016.

1.7 The committee took evidence from the President of the Senate, Senator the Hon Stephen Parry, and the following Ministers accompanied by officers of relevant departments and agencies:

 Senator the Hon George Brandis, Attorney-General, representing the Prime Minister;

 Senator the Hon James McGrath, Assistant Minister to the Prime Minister and

Assistant Minister for Immigration

 Senator the Hon Mathias Cormann, Minister for Finance and Special Minister

of State

 Senator the Hon Michaelia Cash, Minister for Employment, Minister for

Women, Minister Assisting the Prime Minister for the Public Service

 Senator the Hon Nigel Scullion, Minister for Indigenous Affairs.

1.8 The committee expresses its appreciation for the assistance of the President, Ministers and the officers who appeared.

1.9 Over the course of the hearings, the committee took evidence from the following departments, agencies and statutory officers:

Parliament

 Department of the Senate

 Parliamentary Budget Office

 Department of Parliamentary Services

 Parliamentary Services Commissioner

Prime Minister and Cabinet Portfolio

 Department of the Prime Minister and Cabinet (including the Office for Women and excluding Outcome 2 - Indigenous)

 Australian Public Service Commission

 Independent National Security Legislation Monitor

6 Portfolio Additional Estimates Statements 2015-16 Finance Portfolio, p. 3.

136

3

 Office of the Official Secretary to the Governor-General

 Australian National Audit Office

 Office of the Inspector-General of Intelligence and Security

 Digital Transformation Office

Finance Portfolio

 Department of Finance

 ASC Pty Ltd

 Future Fund Management Agency

 Australian Electoral Commission

 Commonwealth Superannuation Corporation

Cross Portfolio Indigenous Matters

 Department of the Prime Minister and Cabinet (Outcome 2 - Indigenous)

 Department of Health (in relation to Indigenous Health issues)

 Indigenous Business Australia

 Office of the Registrar of Indigenous Corporations

 Outback Stores Pty Ltd

 Office of Township Leasing

1.10 The Office of the Commonwealth Ombudsman was released without examination prior to its appearance time on 8 February 2016.

Questions on notice and Hansard transcripts 1.11 The committee has set 1 April 2016 as the date for the return of answers to questions on notice arising from the Additional Estimates 2015-16 hearings. This information, together with the Hansard transcripts of proceedings of hearings, are published on the committee's website at:

http://www.aph.gov.au/Parliamentary_Business/Senate_Estimates/fapactte/estimates/a dd1516/index

Note on references 1.12 References in this report to the estimates Hansard are to the proof Hansard; page numbers may vary between the proof and the official Hansard transcript.

Committee conclusion 1.13 The committee held an additional hearing for the first time in this Parliament. This additional hearing was required to complete examination of outstanding areas within the PM&C Portfolio. In accordance with procedural order of continuing effect No. 9A, this hearing could have been held on the Friday of the week in which the committee held its estimates hearings. However, the Cross Portfolio Indigenous hearing was scheduled for the Friday of the estimates week in accordance with the

137

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program for estimates hearings agreed by the Senate on 10 November 2015.7 Given this constraint, the committee needed to schedule the additional hearing at a later date and 22 February 2016 was agreed.

1.14 As a result of these scheduling issues, the committee has agreed to examine opportunities to consolidate its estimates program.

7 Journals of the Senate No. 124, 10 November 2015, p. 3335.

138

Chapter 2 Issues

2.1 This chapter lists some of the key issues raised for each department, agency and statutory office holder examined during the committee's hearings on the Additional Estimates 2015-16.

Parliamentary departments, 8 February 2016

Department of the Senate

 Current high number of Senate committee inquiries (pp 3-4)

 Accommodation of Mr Trent Zimmerman MP in the Senate Wing (pp 4-6)

 Security breaches in the Senate car park being brought to the attention of the Usher of the Black Rod (pp 6-7)

 Update on enterprise bargaining process (p. 7)

 Staff retention (pp 7-8)

 Approval and funding arrangements for international travel undertaken by the President of the Senate, including Department of the Senate responsibility for the costs associated with a trip to New Zealand by the President of the Senate in September 2015, changes in the arrangements which removes a requirement of concurrence by the Prime Minister, proposed changes to the future funding model which would transfer funding from Department of Finance to the Department of the Senate under a budgeted line item instead of a five trip uncapped funding allocation (pp 8-28)

 Cost of postage for items sent from the MIKTA (Mexico, Indonesia, the Republic of Korea, Turkey, Australia) Conference (p. 29)

 Representation on the Parliament House security review taskforce (pp 31-32)

Parliamentary Budget Office (PBO)

 Allocation of car parking for senior executive service officers of PBO in Parliament House (pp 33, 35-36)

 Salary sacrificing arrangements, including novated leases for vehicles (pp 34-37)

 Statistics on the completion time for costing requests (pp 37-38)

 Update on the new workflow management system project (pp 38-39)

 Self-initiated research program - Higher Education Loan Program (p. 40)

 Costing processes in relation to taxation and the underlying assumptions and parameters used, categories of reliability (pp 40-41)

 Costing the taxation of superannuation pensions and contributions -

assumptions (pp 41-43)

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6

 Costing of tobacco excise revenue and the data used (pp 44-46)

Department of Parliamentary Services (DPS)

 Tailgating incident in the House of Representative Carpark and subsequent security breach of unauthorised access into the building - inconsistent evidence provided to the committee (pp 47-48)

 Incidents of inappropriate entrance to the Parliament House car parks and

subsequent advice to the Usher of the Black Rod (p. 49)

 Potential conflicts of interest arising from DPS officers referring consultancy

work to outside companies where they were previously employed (pp 49-51, 66-67, 69)

 PSS officers - new grades for security officers, current numbers, impact of

enterprise agreement on new employment model for PSS officers (pp 51-52)

 Update on the Parliament House security works, including upgrading of

ministerial wing lunch rooms in the procurement process, and proposed operation of the new internal entrances to the ministerial wing (pp 53-59)

 Parking costs for motorbikes in the public car park (p. 56)

 Works undertaken in the Prime Minister's Office (PMO) and Cabinet suite, including installation of a new oven (pp 60-62)

 Wages of employees under the Limro contract for cleaning services at Parliament House and update on recent industrial action (pp 62-63)

 Changes to Prime Minister's suite after change of Prime Minister in 2015 (pp 64-65)

 Repair to the damaged marble table in the Cabinet suite, including the amount

of the invoice issued to replace the marble (pp 65-66)

 Use of external investigators (pp 66-67)

 Correspondence from the former Prime Minister to the Presiding Officers requesting consideration of an extension to Parliament House by extending the ministerial wing (pp 67-69)

 Early termination of the lease for the provision of florist services in

Parliament House (pp 69-70, 72)

 Follow-up on the investigation underway following a complaint by a member of the media regarding an incident involving the use of a temporary bollard (p. 70)

Parliamentary Service Commissioner

 Report

on the process to fill the vacancy in the office of the Secretary of the Department of Parliament Services (p. 72)

 Parliamentary Service Commissioner Annual Report 2014-15 (p. 73)

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7

 Update on the proposal to transfer the responsibility for determination of

remuneration of Australian Parliamentary Service statutory office holders from the Presiding Officers to the Remuneration Tribunal (pp 73-76)

 Update on the Baxter structural review of DPS, including date of completion

and presentation to the Presiding Officers, costs, and consultation process upon release (pp 73-74, 77-79)

Prime Minister and Cabinet Portfolio, 8 February 2016

Office of the Official Secretary to the Governor-General

 Mr Truss' letter to the Governor-General indicating support for a Turnbull government and whether a new letter of support would be required under a new National Party leader (p. 83)

 Changes to the ministry on 21 September 2015 and whether ministers not

retaining a ministry or executive appointment submitted letters of resignation (pp 83-85)

 Resignation letter from former Minister Briggs (pp 85-87)

 Whether the Governor-General has received any formal advice about former Minister Brough's stepping aside from ministerial duty (pp 87-88)

 Farewell lunch hosted by the Governor-General for the outgoing Secretary of the Department of the Prime Minister and Cabinet (pp 88-89)

Office for Women (Department of the Prime Minister and Cabinet)

 Circulation of the Convention on the Elimination of all Forms of

Discrimination Against Women report to the states (p. 90)

 Minister's attendance at the Third World Conference of Women's Shelters (p. 90)

 Update on the review of the alliances and the final KPMG report (pp 91-93)

 Office's interaction with areas of policy that impact on women, particularly in

relation to the early childhood education package, filling of the Human Rights Sex Discrimination Commissioner position, and review of maternity services in Australia (p. 93)

 Source of grant funding for the Luke Batty Foundation (p. 94)

 Grant for Technology to Keep Women Safe Digital Challenge under the

National Plan to Reduce Violence Against Women (p. 95)

 Interagency committee to monitor the implementation and evaluation of the

Women's Safety Package - membership (pp 95-96)

 Progress on the G20 commitment in relation to increasing women's workforce

participation (p. 96)

 Variation to grants on the list released on 12 October 2015 (p. 97)

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Australian Public Service Commission

 Jurisdiction of the Public Service Commissioner and involvement in the

investigation into the complaint by a public servant about the conduct of former Minister Briggs (pp 98, 100-105, 106-107)

 Involvement in policy work about the possibility of outsourcing

Commonwealth services to offshore locations (p. 99)

 Arrangements for provision of an entitlement of breastfeeding leave in the Australian Public Service and the status if contained in an enterprise agreement or policy (pp 106-107)

Independent National Security Legislation Monitor (INSLM)

 Current inquiries and upcoming work program, including in relation to

metadata laws (pp 108-113)

 Increases in staffing and update of other resources (pp 109, 114)

 Report on the operation of section 35P of the Australian Security Intelligence Organisation Act 1979, including reasons for the lateness, government response to recommendations and timeline for implementation (pp 109-111, 113)

Department of the Prime Minister and Cabinet (PM&C)

Outcome 1

 Ministerial re-shuffle and the revocation of the commission of those no longer

in the ministry, including the variation in practice of such ministers submitting a letter of resignation (p. 116)

 Advice sought by the Prime Minister from the Secretary of PM&C under the

Statement of Ministerial Standards in relation to the matter of former Minister Stuart Robert's trip to China, including processes of inquiry and communication devices taken on the trip (pp 117-129, 131)

 Coalition agreement to form government in a letter dated 15 September 2015

(pp 130-133)

 Role played by PM&C and processes followed in the matter of the

investigation into the alleged misconduct of former Minister Briggs (pp 133-137)

 Leaked National Security Committee document referred to the Australian

Federal Police by the Secretary of the Department of Immigration and PM&C involvement in referral (pp 137-139)

 Tweet from former Minister Andrews on the Hawkei decision (pp 139-140, 142-143)

 Article by the former Prime Minister Abbott's adviser Mr Andrew Shearer in

The National Interest regarding the future submarine project (p. 141)

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 Advice on whether the Prime Minister's private interests have potential to

conflict with official responsibilities (pp 144-146)

Prime Minister and Cabinet Portfolio, 22 February 2016

Department of the Prime Minister and Cabinet

 Changes to the PM&C Portfolio following the swearing in of the new

Turnbull ministry on 18 February 2016 and the changes to the Administrative Arrangements Order (p. 4)

 Post implementation review in relation to the Tobacco Plain Packaging Act

2011 (pp 4-6)

 New expense measures taken since the 2015-16 budget, including Towards

Constitutional Recognition of Aboriginal and Torres Strait Islander Peoples and the Geocoded National Address File (pp 6-11)

 Coalition agreement and whether there were any changes ahead of The Hon Barnaby Joyce MP being sworn in as Deputy Prime Minister (pp 11-14)

 Status of the Reform of the Federation White Paper and current timeline (pp 14-16)

 Advice provided

to Prime Minister Turnbull on a plebiscite on marriage equality (p. 16)

 Video equipment currently held in the Prime Minister's Office (p. 17)

 Changes to cabinet processes under Prime

Minister Turnbull (p. 17)

 The Lodge renovations, including handover to PM&C, processes for the

selection of soft furnishings, engagement of Adelaide Bragg and Associates through direct tender, installation of a specialised luggage lift, information available to the media (pp 18-27)

 Security and mail red

irection services provided to the Point Piper home of Prime Minister Turnbull (p. 26)

Australian National Audit Office

 Development of the work plan, including processes and the criteria for

prioritising work (pp 28-29)

 Resourcing and capability (p. 28)

Office of the Inspector-General of Intelligence and Security (IGIS)

 Staffing and resources, particularly to meet the increased scope and oversight

requirements following amendments to national security laws since 2008 (pp 29-31)

 Outreach activities by the office since the appointment of the new Inspector-General (p. 31)

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 Confirmation that the Office of the IGIS has not received a complaint about

alleged activity by officers of the Australian Secret Intelligence Service in relation to the covert recording of Timor Leste cabinet members (p. 32)

 Current legislative framework and investigative powers (pp 33-36)

 Number and breakdown of

complaints for the last financial year (p. 36)

Digital Transformation Office (DTO)

 Schedule of six current

projects, including resourcing and budgeting

processes, expenditure to date, evaluation processes and criteria, extent of engagement with line departments to ensure understanding of the requirements for delivery of services (pp 37-42)

 DTO interface with the Department of Finance (pp 41-42 )

Finance Portfolio, 9 February 2016

ASC Pty Ltd (ASC)

 ASC's financial position, including the $22 million profit in 2014-15 and the

major factors behind the improvement to the bottom line and turnaround from previous year, and outlook for current financial year (p 4-5)

 Government announcement in August 2015 to implement a continuous build

of surface warships in Australia, including Future Frigates and Offshore Patrol Vessels (OPV), including engagement with ASC prior and subsequent to the announcement, and ASC's understanding of the announcement and future processes (pp 5-8)

 Job losses in shipbuilding, retention of workforce and capability and the

potential impact of building OPV in South Australia and provision of local content as part of the supply ship build (pp 8-17, 19-20, 22, 49-58, 59)

 Consideration of privatisation of ASC (p. 18)

 Air

Warfare Destroyer program, including timeline of delivery of vessel and build efficiencies (pp 18-19)

 Submarine sustainment (p. 21)

 Involvement of ASC in the future submarines project (p. 21)

 Level of information in the ASC annual report about executive remuneration (p. 58)

Future Fund Management Agency (FFMA)

 Divergence of international interest rates and the FFMA response in regard to

investment decisions (p. 23)

 FFMA reduction in exposure to international government bonds (p. 24)

 Update on

performance and positioning of the funds, including performance of the private equity portfolio, percentage in cash holdings (pp 23-24, 29)

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 Performance of the Medical Research Future Fund (MRFF) and rationale for

its profile which comprises a higher proportion of debt securities as part of the asset portfolio than the Future Fund (p. 25)

 Establishment and operation of the Biomedical Translation Fund (pp 26-28)

 Infrastructure exposure, including listed or direct investment infrastructure, FFMA involvement in the management of infrastructure assets (p. 29)

 Integration of carbon exposure risk into investment decisions and disclosure of carbon exposure risk (pp 30-31)

 FFMA recognised as Sovereign Investor of the Year (pp 31-32)

 DisabilityCare Australia Fund, including update on performance, level of mandated returns, decision not to publish the estimates for the fund balance figures beyond 2015 in the Portfolio Additional Estimates Statements (pp 32, 33-34)

 Emerging markets investment strategy (p. 32)

 Australian based hedge funds (p. 34)

Australian Electoral Commission (AEC)

 Descriptions/terminology used for funds received on disclosure returns, particularly in relation to the term 'subscription to a political party' (pp 35-36)

 Required information on party disclosure forms, including whether there has been consideration of an amendment to require information on the donor's major commercial interest and position (p. 36)

 Application of the law and possible offences when an elector gives false

information when presenting at a polling station to vote, and the issue of multiple voting (pp 36-38)

 Process for the removal of an elector from the Electoral Roll because of

‘unsound mind’ (p. 38)

 Outreach by AEC to assist those people with a mental health condition or

intellectual disability to enrol and vote (pp 39-40)

 Submission of disclosure returns from Foundation 51 and whether the AEC

consider it to be an associated entity (pp 40-46)

 Proposals to remove group voting tickets for Senate voting and the impact on the time to count the votes (pp 46-47)

 Estimated time period required to implement changes if there were amendments to the Senate voting system (pp 47-48)

 Update on the process for the closure of pollin

g booths (p. 48)

Commonwealth Superannuation Corporation (CSC)

 Inability to roll over the balance of a Public Sector Superannuation scheme

fund to another fund of choice (p. 59)

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 Update on merger of ComSuper into CSC (pp 59-60)

 Level of information on executive remuneration available in the annual report

(p. 60)

 Investment strategy and asset mix to account for instability in world financial

markets, performance in meeting target rates of return (pp 60-61)

 Operation of the new administration fee arrangement for recovery of costs for

the Public Sector Superannuation Accumulation Plan (PSSap) scheme (p. 61)

Department of Finance (Finance)

General

 Update on the progress on the department's move to the new building, including timeline, new information technology environment, costs of move, office space for the Minister (pp 61-64)

 Belcher Red Tape Review, including decision to release the review, main

agencies responsible for regulations impacted by recommendations, progress on implementing recommendations, estimates of efficiencies derived from implementation of the recommendations which impact on Finance (pp 64-68)

 Treasurer's statement in December 2015 that Government payments as a share GDP have been brought back to 25.9 per cent (p. 68)

Outcome 1

 Finance's role in the costing process for new policy proposals, particularly in

regards to the school funding policy (pp 69-73)

 Statement in the Mid-Year Economic and Fiscal Outlook (MYEFO) on the

budget repair strategy and consistency with the medium term fiscal strategy (pp 76-77)

 Statement in MYEFO on the impact of policy decisions on the underlying

cash balance and how this is reconciled with the statement that all the policy decisions of government have been offset (pp 77-78)

 MYEFO measure on the Medicare Benefits Schedule - Changes to diagnostic imaging and pathology services bulk-billing incentives, and the basis of the claim that it is not expected to impact on people (pp 79-80)

 MYEFO measure on Mental Health - streamlining (pp 80

-81)

 Work being

done by Finance and Department of Defence to meet compliance with the application of the accounting standard relating to fair value measurement of defence weapons platforms (pp 81-83)

 Automotive Transformation Scheme funding (p. 83)

 Finance's role i

n the Government's ICT agenda (p. 84)

 Finance's organisational and staffing arrangements which include the

operation of a surge capability (pp 85-86)

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 Finance's role in leading whole-of-government reforms and efficiencies

(pp 86-88)

Outcome 2

 Update on the implementation and usage of the National TelePresence System

(pp 88-89)

 Intra Government Communications Network, including decision not to

privatise this entity and introduction of service level agreements (pp 89-91)

 Australian Taxation Office lease for new office accommodation in Gosford

(pp 91-95)

 Update on market testing of private sector interest to upgrade and operate the Australian Securities and Investments Commission Registry Business (pp 96-97)

 The Lodge renovations - details of scope of works, contract variations, budget

estimates and final costs, and post-project assurance review (pp 98-103)

 Commonwealth property disposal policy and whether housing affordability

outcomes have been considered (pp 103-106)

 Methodology to calculate the savings figure of $200 million delivered by Operation Tetris (pp 106-107)

 Forensic review of Defence Housing Australia by KordaMentha in regard to accounting information, technology and business reporting systems to improve transparency and the costs of providing services (pp 108-109)

 Update on the scoping study in relation to the Australian Rail Track

Corporation (pp 109-110)

 Update on further consultation processes regarding the future ownership options for Australian Hearing (p. 110)

 Functional and efficiency reviews of government departments, processes and role of Finance (pp 111-112)

 Government advertising campaigns, including current campaigns, operation of the Service Delivery and Coordination Committee, current processes for the development and launch of advertising campaigns (p. 112)

Outcome 3

 Changes to the government staffing profile (p. 115)

 Update on the Members of Parliament (Staff) Act 1984 enterprise agreement (p. 115)

Cross Portfolio Indigenous Matters, 12 February 2016

Indigenous Business Australia (IBA)

 Discussion of the ANAO Report No.11 2015-16 Performance Audit, Indigenous Home Ownership Program and how the recommendations are being addressed (pp 4-6)

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 Discussion of processes in place to verify that customers cannot access

mainstream finance (pp 4-6)

 Analysis of customer base against the average family income (pp 6-7)

 Aboriginal and Torres Strait Islanders' difficulties to accumulate a house

deposit due to the needs of extended families (p. 8)

 Ongoing review of the service delivery model (pp 8-9)

 Creation of a new marketing position which has driven 25 per cent of IBA's enquiries (pp 8-9)

 Closing the gap data regarding housing rates and improvements (p. 9)

 Discussion of the Forrest Review recommendations relevant to IBA (pp 9-10)

 Possibility of selling off housing loans (p. 9)

Office of the Registrar of Indigenous Corporations (ORIC)

 Clarification that if a poor commercial decision is made by an organisation,

ORIC can only look at whether proper processes were followed (p. 11)

 Data for criminal convictions and significant civil penalty actions against

individuals and corporations (p. 11)

 Development of terms of reference for a review which would encompass areas of ongoing concern including: building the capacity around informed consent; the need for independent directors; management of royalties; and making corporate decisions in a cultural framework (pp 11-13)

 Provision of a free corporate governance training program and a free legal service (p. 13)

 Update on issues with the Western Desert Lands Aboriginal Corporation

(pp 13-14)

Outback Stores Pty Ltd

 Data on and strategies to reduce sugar consumption in communities and the need for more community engagement (pp 13-15)

 Data on and strategies to increase sales of fruit and vegetables (p. 18)

Office of Township Leasing (OTL)

 Township leasing model (p. 19)

 An agreement with the Northern Territory Department of Housing has been concluded which sets out a process for the sale and transfer of public housing into private hands (pp 19-20)

 The mechanism for township leases which relies on an advance from the

Aboriginals Benefit Account (ABA) to the traditional owner corporation which is repaid by the OTL to the ABA (p. 19)

 Alice Spring town camps and tenancy management services (pp 19-23)

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15

 Update on Gunbalanya and Pirlangimpi township leases (pp 20-22)

 Tabling of annual reports f

or the following organisations and whether any

extensions had been requested (p. 23)

 Indigenous Business Australia, Annual report 2014-14

 Aboriginal Hostel Limited, Annual report 2014-15

 Indigenous Land Corporation, Annual Report 2014-15

Department of Prime Minister and Cabinet

Outcome 2- Indigenous

 Tabling of the Closing the Gap Prime Minister's Report 2016 and areas of

improvement (pp 23-24, 28)

 Update on the Remote School Attendance Strategy (pp 24, 37-39)

 Indicative data from the Indigenous procurement policy (pp 24, 35-36)

 Update on the work to improve the Indigenous Advancement Strategy funding

processes (p. 24)

 Update on national partnership agreements (pp 24-27, 29)

 Funding of NGOs and balancing the need for long-term funding certainty with

the need to ensure service delivery standards (pp 26-27)

 Additional funding to support the Referendum Council on Constitutional

Recognition for Aboriginal and Torres Strait Islander people, the Constitutional recognition taskforce and work with the Attorney-General's Department (pp 27-28)

 Changing the National Partnership Agreement on Remote Indigenous

Housing (NPARIH) to the Remote Indigenous Housing Strategy, negotiations with the jurisdictions and engagement with the Community Development Programme (pp 30-35)

 Indigenous staffing in PM&C and voluntary redundancies (pp 36-37)

 Funding for the Custody Notification Service in NSW and securing long term

funding (pp 40-41)

 Work with jurisdictions to transition people from prison to work and address

recidivism (pp 41-43)

 Justice targets for COAG (p. 43)

 Trial sites for the Empowered Communities model (pp 43-47)

Department of Health

 Australian General Practice Training Salary Support Programme: the process

to develop policy guidelines that started from January 2016; and ensuring placements are not restricted to 12 months (pp 47-49)

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16

 The intention, over 2016, to look at broader workforce issues for Aboriginal

medical practices (pp 48, 49)

 Arrangements for Aboriginal and Torres Strait Islanders concerning the 17 over-the-counter medications removed from the Pharmaceutical Benefits Scheme (PBS) (pp 49-50)

 Update on the roll out of low aromatic fuel (pp 50-52)

 Funding for the Rheumatic Fever Strategy (pp 52-53)

 Funding for sexual health services to Aboriginal and Torres Strait Islander

teenagers and maternal and child health programs (p.53)

 Update on the roll out of renal infrastructure projects (pp 53-55)

 Opportunities for discussion of Commonwealth-state issues around

Indigenous health (p. 56)

 Tendering process for primary health care services and some Mothers and

Babies Services transferred to Primary Health Networks in 2015-16 with funding due to expire at the end of this financial year (pp 56-58)

 Life expectancy data being used for Closing the Gap measurements (p. 58)

 Refreshing the Aboriginal Benefits Account board and consultation with the land councils who nominate individuals (pp 58-59)

Senator Cory Bernardi Chair

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Appendix 1

Departments and agencies under the Committee's oversight Parliamentary Departments • Department of the Senate

• Parliamentary Budget Office

• Department of Parliamentary Services

Prime Minister and Cabinet Portfolio • Department of the Prime Minister and Cabinet

• Australian National Audit Office

• Australian Public Service Commission

• Defence Force Remuneration Tribunal (APSC secretariat)

• Digital Transformation Office

• Independent National Security Legislation Monitor

• National Australia Day Council

• Office of the Commonwealth Ombudsman

• Office of the Inspector-General of Intelligence and Security

• Office of National Assessments

• Office of the Official Secretary to the Governor-General

• Remuneration Tribunal (APSC secretariat)

Indigenous agencies

• Aboriginal Hostels Limited

• Aboriginal Land Commissioner

• Anindilyakwa Land Council

• Central Land Council

• Indigenous Business Australia

• Indigenous Land Corporation

• Northern Land Council

• Office of the Registrar of Indigenous Corporations

• Office Township Leasing

• Outback Stores Pty Ltd

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• Tiwi Land Council

• Torres Strait Regional Authority

• Wreck Bay Aboriginal Community Council

Finance Portfolio • Department of Finance

• Australian Electoral Commission

• Commonwealth Superannuation Corporation

• Future Fund Management Agency

• ASC Pty Ltd

152

Appendix 2 Tabled documents

Monday, 8 February 2016

Parliamentary departments

 Department of the Senate: Correspondence from the Hon Tony Smith MP, Speaker of the House of Representatives, dated 27 January 2015, concerning temporary accommodation of Mr Trent Zimmerman MP in the Senate Wing

Prime Minister and Cabinet Portfolio

 Ms Rebecca Cross, Head of Domestic Policy, Department of the Prime Minister and Cabinet: Organisational chart

 Senator the Hon Stephen Conroy: Photographs of the Minister Robert's trip to

China from a Herald Sun article

 Senator the Hon Penny Wong: Former Minister Andrew's tweet of 4 October

2015

Tuesday, 9 February 2016

Finance Portfolio

 Senator the Hon Penny Wong: Copy of email from Graeme Lewis, Director of Foundation 51

 Senator Deborah O'Neill: Media release by Ms Lucy Wicks MP, Member for Robertson, entitled Gosford site selected to start the jobs, dated 25 September 2015

Friday, 12 February 2016

Cross Portfolio Indigenous Matters

 Department

of Prime Minister and Cabinet: Voluntary redundancies

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154

The Senate

Foreign Affairs, Defence and Trade

Legislation Committee

Additional estimates 2015-16

March 2016

155

ii

 Commonwealth of Australia 2016

ISBN 978-1-76010-361-3

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License.

The details of this licence are available on the Creative Commons website:

http://creativecommons.org/licenses/by-nc-nd/3.0/au/.

Printed by the Senate Printing Unit, Parliament House, Canberra

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Members of the committee Core members Senator Chris Back, LP, WA (Chair) Senator Alex Gallacher, ALP, SA (Deputy Chair) Senator Anne McEwen, ALP, SA Senator David Fawcett, LP, SA Senator Scott Ludlam, AG, WA Senator the Hon Eric Abetz, LP, TAS

Secretariat Mr David Sullivan, Committee Secretary Mr Owen Griffiths, Principal Research Officer Ms Casey Mazzarella, Senior Research Officer Ms Kimberley Balaga, Research Officer Ms Shannon Ross, Administrative Officer

Senate Foreign Affairs, Defence and Trade Committee Department of the Senate PO Box 6100 Parliament House Canberra ACT 2600 Australia

Phone: + 61 2 6277 3535 Fax: + 61 2 6277 5818 Email: fadt.sen@aph.gov.au Internet: http://www.aph.gov.au/senate_fadt

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Table of Contents

Members of the committee ............................................................................... iii

Senate Foreign Affairs, Defence and Trade Legislation Committee ............. 1

Report to the Senate ................................................................................................. 1

Introduction ............................................................................................................ 1

Questions on notice ................................................................................................ 2

Defence portfolio: 10 February 2016 hearing ........................................................ 2

Foreign Affairs and Trade portfolio: 11 February 2016 hearing ........................... 5

Spill-over hearing: 25 February 2016 .................................................................... 7

Spill-over hearing: 3 March 2016........................................................................... 8

Spill-over hearing: 17 March 2016 ........................................................................ 8

Acknowledgements ................................................................................................ 9

Appendix 1 ......................................................................................................... 11

Tabled documents ................................................................................................... 11

Defence portfolio .................................................................................................. 11

Foreign Affairs and Trade portfolio ..................................................................... 11

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Senate Foreign Affairs, Defence and Trade Legislation Committee Report to the Senate

Introduction 1.1 On 4 February 2016, the Senate referred the following documents to the committee for examination and report:

• particulars of proposed additional expenditure in respect of the year ending on

30 June 2016 [Appropriation Bill (No. 3) 2015-2016]; and

• particulars of certain proposed additional expenditure in respect of the year

ending on 30 June 2016 [Appropriation Bill (No. 4) 2015-2016].1

1.2 The committee conducted public hearings with the Defence portfolio on 10 February 2016 and the Foreign Affairs and Trade portfolio on 11 February 2016. The committee received evidence from Senator the Hon Marise Payne, the Minister for Defence and representing the Minister for Veterans' Affairs, and from officers from the relevant departments and agencies. The committee also received evidence from Senator the Hon George Brandis QC, representing the Minister for Foreign Affairs and Senator the Hon Richard Colbeck, Minister for Tourism and International Education and representing the Minister for Trade and from officers from the relevant departments and agencies.

1.3 The committee held a spill-over hearing on 25 February 2016 with the Department of Veterans' Affairs and the Department of Foreign Affairs and Trade. The committee received evidence from Senator the Hon James McGrath, representing the Minister for Veterans' Affairs, and from officers from the department. The committee also received evidence from Senator the Hon Concetta Fierrravanti-Wells, representing the Minister for Trade and from officers from the department.

1.4 On 23 February 2016, the Senate agreed to an instruction to the committee to reconvene before 10 March to take evidence from a named official who had been involved in the economic modelling of the future submarine project. The committee held the spill-over hearing on 3 March 2016, receiving evidence from Senator the Hon Marise Payne, the Minister for Defence, and from officers from the Department of Defence.

1.5 The committee agreed to hold a third spill-over hearing with the Department of Defence on Thursday 17 March 2016 to examine the 2016 Defence White Paper. At that hearing the committee received evidence from Senator the Hon Marise Payne, the Minister for Defence, and from officers from the department.

1.6 Links to the transcripts of these public hearings and to answers and additional information are available on the committee's internet site at:

1 Journals of the Senate, No. 137, 4 February 2016, p. 3720.

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http://www.aph.gov.au/Parliamentary_Business/Senate_Estimates/fadtctte/estimates/a dd1516/index

Questions on notice 1.7 In accordance with Standing Order 26(9)(a), the committee agreed that the date for the return of written answers in response to questions placed on notice would be Friday 1 April 2016.

Defence portfolio: 10 February 2016 hearing

Department of Defence

Officers required to attend

1.8 In the lead-up to the hearing, the committee wrote to the Secretary of Defence, Mr Dennis Richardson AO, requesting the attendance of Dr Rob Bourke, Economic Advisor, Capability Acquisition and Sustainment Group (CASG), to answer questions on the economic impact of the future Submarine project, and Dr Matthew Klein, Occupational Physician, to answer questions on the contamination at RAAF Base Williamtown. Mr Richardson advised the committee that Dr Klein would be made available if required but that Dr Bourke would not. No reason was provided to the committee.

1.9 Before inviting the Chief of the Defence Force to make an opening statement, the Chair advised that the committee had expressed concern that no reason had been given to the committee as to Dr Bourke's non-attendance, and reminded the department that should members of the committee not be satisfied with the answers provided by officers present, it was within the power of the committee and the Senate to compel Dr Bourke to appear.

1.10 Mr Richardson was asked to comment on his correspondence to the committee in relation to Dr Bourke. He explained:

…it relates to what we can and cannot say in evidence in respect to the question in hand. I think you will find that, when we come to that issue [the economic impact of the future submarine project] the real limitations of what we can say did not make it sensible to have more people here.2

1.11 The committee acknowledged the attendance of Air Chief Marshal Mark Binskin AC, Chief of the Defence Force (CDF); Mr Dennis Richardson AO, Departmental Secretary and officers of the Defence organisation.3

Chief of the Defence Force's opening statement

1.12 Air Chief Marshal Binskin made an opening statement. The CDF began by noting that three weeks prior, he had spent time with the Australian men and women deployed on operations in Iraq, Afghanistan and the broader Middle East region:

2 Proof Committee Hansard, 10 February 2016, p. 8.

3 Proof Committee Hansard, 10 February 2016, p. 7.

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3

As you are well aware, in late December the Iraqi forces struck a major blow against Daesh when they recaptured key territory in the city of Ramadi. The Iraqis achieved this important operational breakthrough after months of heavy fighting in a complex urban environment. Australians played a significant role in the Iraqi success. As the Australian trained Iraqi Special Operations Forces Brigade fought their way through Daesh-held territory, remotely based members of our Special Operations Task Group provided advice and assistance including critical joint terminal attack control. Australian Special Operations Task Group advisers enabled more than 150 airstrikes during the ISOF Brigade offensive, destroying around 50 Daesh fighting positions, 16 heavy machine guns and numerous vehicle-borne IEDs.4

1.13 The CDF discussed the NATO meeting on the Resolute Support Mission, which the CDF attended alongside the 28 NATO Defence chiefs. He explained:

NATO has indicated it will continue to stand alongside Afghan partners as they develop the necessary capabilities to stabilise the country. In December, NATO foreign ministers agreed to sustain the mission through 2016. They also committed to continue to review the mission in the months ahead. This will ensure that NATO responds to Afghan requirements as they emerge. The decision to sustain current NATO force levels throughout 2016 has taken the present security situation into account, and the NATO-led Resolute Support Mission will focus on three key areas: combat air support and logistics, as well as intelligence, surveillance and reconnaissance. During the first half of this year, NATO and the partner countries like Australia will consider our post 2016 commitments in the lead-up to the NATO summit in Warsaw in July. These deliberations and the decisions that follow will be crucial to ensuring Afghanistan's long-term security.5

1.14 The CDF elaborated on Defence's maritime commitment to intercept and seize illegal narcotics used to fund terrorism. Since HMAS Melbourne commenced operations in September, almost one tonne of illegal drugs has been detected and destroyed, taking the total of ADF seizures to more than five tonnes in two years.6

1.15 Other topics examined during the hearing on 10 February 2016 included:

Questions arising from opening statements, portfolio overview and budget summary

• Mr Stuart Robert 's travel (pp 19-24, 34-36, 52-53, 79-81, 95-96)

• Air Task Group operations (pp 24-25, 37-38, 40, 58)

• Counter-Daesh efforts (pp 36-41, 54-61)

• Operation Gateway, freedom of navigation (pp 69-75, 92-95)

• Force posture initiatives (pp 86-89)

4 Proof Committee Hansard, 10 February 2016, p. 8.

5 Proof Committee Hansard, 10 February 2016, p. 9.

6 Proof Committee Hansard, 10 February 2016, p. 9.

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4

• Defence White Paper (p. 95)

Program 1.3 Army Capabilities

• Resistance to interrogation training (pp 30-34, 74)

Program 1.4 Air Force Capabilities

• Joint Strike Fighter program (pp 17, 48, 82-83)

Program 1.6 Intelligence Capabilities

• Future frigates, AWDs, OPVs, continuous build program (pp 61-62, 97-101, 106-113)

• Pacific patrol boat program, aerial surveillance trial (pp 42-44, 81-82)

Program 1.7 Vice-Chief of the Defence Force

• Use of Mefloquine by the ADF (pp 119-122)

• Live animal use in emergency training (p. 68)

Program 1.9 Associate Secretary—Estate and infrastructure

• Contamination issues (pp 9-19, 48-49)

Program 1.11 Associate Secretary—Defence People

• Enterprise agreement bargaining negotiations (pp 44-46)

Capability, Acquisition and Sustainment Group

• Navy supply ships (pp 101-105)

• Future submarines, the competitive evaluation process (pp 26-30, 49-51, 61- 67, 96-98, 101-107, 114-116)

Defence Housing Australia

1.16 The committee welcomed Ms Jan Mason, Acting Managing Director of Defence Housing Australia, and officers from the department.7

1.17 Topics examined during the hearing on 10 February 2016 included:

• Seaward village (pp 122-131)

• Forensic review (pp 132-135)

• Privatisation of DHA (p. 135)

Department of Veterans' Affairs

1.18 The committee received evidence from Mr Simon Lewis PSM, Secretary of the Department of Veterans' Affairs, and officers from the department.

1.19 Topics examined during the hearing on 10 February 2016 included:

• Defence abuse (pp 33-34, 136-139)

7 Proof Committee Hansard, 10 February 2016, p. 122.

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5

• Vocational pilot phase 2 (pp 139-141)

• Sir John Monash Centre (p. 141)

• ICT upgrades (p. 142)

Foreign Affairs and Trade portfolio: 11 February 2016 hearing

Department of Foreign Affairs and Trade (non-trade programs)

1.20 The committee welcomed Mr Peter Varghese AO, Secretary, and officers of the Department of Foreign Affairs and Trade (DFAT).8

1.21 Topics examined during the hearing on 11 February 2016 included:

Portfolio Overview

• Mr Stuart Robert 's travel (pp 7-28)

• Mr Philip Ruddock's appointment (pp 28-32, 38-40, 90-91)

• Assistance given to former Prime Ministers (pp 35-37)

• Mr Briggs' conduct (pp 42-45, 50-54, 58-59)

• Fraud and corruption staff training (pp 48-49)

• InnovationXchange, furniture cost (pp 47-48, 55-58)

• Matters relating to Witness K (pp 62-64)

Outcome 1

Pacific

• Corruption in Vanuatu (pp 60-62)

North Asia

• Monitoring nuclear testing in North Korea (pp 22-23)

Southeast Asia

• NGO activities in Cambodia (pp 32-33)

• Vietnam aid program (pp 33-34)

• Indonesian education program (p. 34)

• Timor Sea Treaty, CMATS (pp 37-38, 45, 91-92)

• Update on Anwar Ibrahim (pp 92-93)

Americas

• Response to the inquiry into relations with Mexico (pp 76-77)

• BHP disaster in Brazil (pp 77-78)

8 Proof Committee Hansard, 11 February 2016, p. 6.

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Middle East and Africa

• Expenditure for embassy in Doha (pp 23-27, 73-74)

• Baghdad embassy security arrangements (pp 40-42)

• Australia's response to the Syrian crisis (pp 54-55)

• Australian delegation in Palestine (pp 84-86)

Multilateral Policy, Legal and Environment

• Australia's exclusive economic zone (pp 64, 91)

• Investigation into MH17 (p. 83)

Public diplomacy and communication

• Australia's participation in future Expos (pp 94-95)

New Colombo Plan

• Update on the New Colombo Plan (pp 75-76)

Outcome 3

Consular and passport services

• Matters relating to Julian Assange (pp 18-22)

Outcome 3

Overseas Property

• Cost for Ambassador's residence in Rome (pp 93-94)

Department of Foreign Affairs and Trade (trade programs), Australian Trade Commission and Tourism Australia

1.22 The committee welcomed officers from the Australian Trade Commission and Tourism Australia who appeared with DFAT trade division officers.9

1.23 Topics examined during the hearing on 11 February 2016 included:

Bilateral, regional and multilateral trade negotiations

• Minister Robb's retirement (pp 96-97)

• Re-regulating the sugar industry, Wilmar International (pp 97-100)

• Trans-Pacific Partnership, (100-108, 111-113)

• National Interest Analysis (pp 102-103)

• Biologics (pp 115-116)

• ISDS provisions (pp 105-107, 114-115)

Australian Trade Commission

• Match Australia (pp 118-120)

9 Proof Committee Hansard, 11 February 2016, p. 118.

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• Australia Business Week events (pp 120-124)

• FTA promotional activities (pp 124-126)

Tourism Australia

• Aquatic and coastal campaign (pp 128-130)

• Survey of tourist accommodation (pp 131-132)

• Expos 2017 and 2020 (pp 132-133)

• Major project facilitation service (p. 133)

Spill-over hearing: 25 February 2016

Department of Veterans' Affairs

1.24 The committee welcomed Mr Simon Lewis PSM, Secretary of the Department of Veterans' Affairs, and officers from the department.10

1.25 Topics examined during the hearing on 25 February 2016 included:

• Discontinuation of services at Lone Pine on Anzac Day (pp 4-6)

• DART process, continued access to counselling (pp 6-8)

• Claims submitted on the basis of child abuse (pp 7-8)

• Gold cards issued between 1999 and 2004 (pp 8-9)

• Claims assessments by contracted medical advisors (pp 9-10)

• Types of complaints submitted over last 5 years (p. 10)

• Updates on the DART (pp 10-11)

• Suicide statistics of veterans (p. 11)

• Costings for an automatic gold card (p. 11)

• Documents provided to the Administrative Appeals Tribunal (pp 12-13)

• Special rate disability pensions and income support payments (pp 14-15)

• Upgrades to DVA’s IT systems (pp 15-16)

• Client Liaison Unit (pp 16-17)

• Homeless and incarcerated veterans (pp 17-20)

• CDDA applications (pp 20-21)

Department of Foreign Affairs and Trade (trade programs)

1.26 The committee welcomed Mr Justin Brown, Acting Deputy Secretary, and officers of the Department of Foreign Affairs and Trade.11

10 Proof Committee Hansard, 25 February 2016, p. 4. 11 Proof Committee Hansard, 25 February 2016, p. 22.

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1.27 Topics examined during the hearing on 25 February 2016 included:

• Trans-Pacific Partnership Agreement (pp 22, 23, 24

• Changes to entry requirements for Australians overseas (pp 22-23)

• Meetings with Wilmar International (p. 23)

• Labour market testing (pp 24-27)

• Scope to change sponsorship requirements (p. 26)

• Mr Robb's authority as Special Envoy for Trade (pp 27-29)

Spill-over hearing: 3 March 2016

Department of Defence

1.28 The committee welcomed Air Chief Marshal Mark Binskin AC, Chief of the Defence Force, Mr Dennis Richardson, Secretary of the Department of Defence, and officers from the department.12

1.29 Topics examined during the hearing on 3 March 2016 included:

• Recent media reports related to Future Submarines (pp 2-3)

• Timing of the Future Submarines project (pp 2-3, 10)

• Upgrades to the Collins Class submarines (pp 3

• Dr Bourke's pre-hearing briefing (pp 3-4)

• PII and FOI claims for the Macroeconomic report (pp 4-6, 7-8, 10-12)

• Role and scope of the Macroeconomic report (pp 5-8)

• Economic analysis of the Collins project (pp 8-9)

Spill-over hearing: 17 March 2016

Department of Defence

1.30 The committee welcomed Mr Dennis Richardson, Secretary of the Department of Defence, and officers from the department.13

1.31 Topics examined during the hearing on 17 March 2016 included:

• Future submarines (pp 3-18, 22, 39-45)

• Advice to government on preferred CEP tenderer (pp 4-5)

• Offer Definition and Improvement Activity (ODIA) process (pp 6-8, 16)

• Presentation given to Capability and Investment Committee (pp 5, 8-9)

• 'Local Australian content' under the acquisition contract (pp 10-15)

12 Proof Committee Hansard, 3 March 2016, p. 2. 13 Proof Committee Hansard, 17 March 2016, p. 2.

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• Exclusion of Australian bids from tendering (pp 10, 17)

• OPVs, continuous build program (pp 15, 19-23, 26, 28-29, 35-37)

• Future Frigates, major surface ships build program (pp 24-26, 28-33, 35-37)

• Defence Industry Policy Statement, cancellation of programs (pp 38, 46-48)

Acknowledgements 1.32 The committee thanks Senator the Hon Marise Payne, Senator the Hon George Brandis QC, Senator the Hon Richard Colbeck, Senator the Hon James McGrath and Senator the Hon Concetta Fierravanti-Wells for their assistance during its hearings. The committee also acknowledges the attendance and cooperation of the many departmental and agency officers and the services of various parliamentary staff involved in the estimates process.

Senator Chris Back Chair

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Appendix 1

Tabled documents

Defence portfolio

Wednesday, 10 February 2016

1. Air Chief Marshal Mark Binskin AC, Chief of the Defence Force, Opening Statement.

2. Senator Alex Gallacher, 'Seaward Village' media article.

Foreign Affairs and Trade portfolio

Thursday, 11 February 2016

1. Senator the Hon Penny Wong, Chinese Government press release.

2. Department of Foreign Affairs and Trade, Details of assistance provided to former Prime Ministers.

3. Department of Foreign Affairs and Trade, Country and Regional Program commitments.

4. Senator Scott Ludlam, BHP disaster open letter.

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The Senate

Legal and Constitutional Affairs

Legislation Committee

Additional estimates 2015-16

March 2016

173

 Commonwealth of Australia ISBN 978-1-76010-362-0

This work is l

icensed under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License.

The details of this licence are available on the Creative Commons website:

http://creativecommons.org/licenses/by-nc-nd/3.0/au/.

This document was produced by the Senate Legal and Constitutional Affairs Legislation Committee and printed by the Senate Printing Unit, Parliament House, Canberra.

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Membership of the Committee

44th Parliament

Members Senator the Hon Ian Macdonald (LP, QLD) (Chair) Senator Jacinta Collins (ALP, VIC) (Deputy Chair) Senator Catryna Bilyk (ALP, TAS) Senator Barry O'Sullivan (NATS, QLD) Senator Dean Smith (LP, WA) Senator Nick McKim (AG, TAS)

Senators in attendance

Senator the Hon Ian Macdonald (Chair) Senator Sue Lines

Senator Jacinta Collins (Deputy Chair) Senator Scott Ludlam

Senator Catryna Bilyk Senator John Madigan

Senator the Hon George Brandis QC Senator Anne McEwen

Senator David Bushby Senator Nick McKim

Senator the Hon Kim Carr Senator Clair Moore

Senator the Hon Michaelia Cash Senator Helen Kroger

Senator the Hon Matthew Canavan Senator Barry O'Sullivan

Senator the Hon Concetta Fierravanti-Wells Senator Scott Ludlam

Senator Alex Gallacher Senator Lee Rhiannon

Senator Katy Gallagher Senator the Hon Scott Ryan

Senator Sarah Hanson-Young Senator Rachel Siewert

Senator the Hon Bill Heffernan Senator Robert Simms

Senator Jacqui Lambie Senator Dean Smith

Senator David Leyonhjelm Senator Dio Wang

Senator Nick Xenophon

Secretariat Ms Sophie Dunstone Committee Secretary Mr Joshua Wrest Research Officer Ms Jo-Anne Holmes Administration Officer

Suite S1.61 Telephone: (02) 6277 3560

Parliament House Fax: (02) 6277 5794

CANBERRA ACT 2600 Email: legcon.sen@aph.gov.au

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Table of contents

Membership of the Committee ........................................................................ iii

Preface ................................................................................................................vii

Reference of documents ....................................................................................... vii

Estimates hearings ................................................................................................ vii

Ministers ..............................................................................................................viii

Questions on notice .............................................................................................viii

Note on references ...............................................................................................viii

Chapter 1

Immigration and Border Protection portfolio ....................................................... 1

The High Court's ruli

ng on M68 and subsequent return of asylum seekers to Nauru and Manus Island ......................................................................................... 3

The welfare of children in detention ...................................................................... 4

Allegations of the sexual abuse of a minor on Nauru ............................................ 5

Enterprise Agreement negotiations ........................................................................ 6

Riot on Christmas Island ........................................................................................ 7

Operation Sovereign Borders ................................................................................. 7

Chapter 2

Attorney-General's portfolio ................................................................................. 11

Australian Human Rights Commission ................................................................ 11

Office of the Australian Information Commissioner ........................................... 12

Family Court of Australia and the Federal Circuit Court of Australia ................. 13

Australian Transaction Reports and Analysis Centre........................................... 14

Australian Security Intelligence Organisat

ion ..................................................... 15

Australian Federal Police .....................................................................................

16

Attorney-General's Department ............................................................................ 17

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Appendix 1 - Departments and agencies for which the committee has oversight ............................................................................................................. 21

Attorney-General's Portfolio ................................................................................ 21

Immigration and Border Protection Portfolio ................................

...................... 21

Appendix 2 - Index of Proof Hansards ........................................................... 23

Appendix 3 - Tabled documents ...................................................................... 25

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Preface

On 2 February 2016, the Senate referred to the Senate Legal and Constitutional Affairs Legislation Committee (committee) for examination the estimates of proposed additional expenditure for the financial year 2015-16. The committee is responsible for the examination of the Attorney-General's Portfolio and the Immigration and Border Protection Portfolio. The Portfolio Additional Estimates Statements for 2015- 16 were tabled on 2 February 2016.1

Reference of documents The Senate referred to the committee, for examination and report, the following documents:

 particulars of proposed additional expenditure in respect of the year ending on

30 June 2016 [Appropriation Bill (No. 3) 2015-2016];

 particulars of certain proposed additional expenditure in respect of the year

ending on 30 June 2016 [Appropriation Bill (No. 4) 2015-2016];

The committee was required to report on its consideration of the additional estimates on or before 1 March 2016.

Estimates hearings The committee met in public session on 8 and 9 February 2016.

Over the course of the two days of hearings, totalling over 20 hours, the committee took evidence from the following departments and agencies:

 Department of Immigration and Border Protection

 Attorney-General's Department;

 Australian Federal Police;

 Australian Human Rights Commission;

 Australian Security Intelligence Organisation;

 Australian Transaction Reports and Analysis Centre;

 Family Court of Australia and the Federal Circuit Court of Australia; and

 the Office of the Australian Information Commissioner.

Copies of the Hansard transcripts are available from the committee's internet page at: www.aph.gov.au/senate_legalcon.

An index of the Hansard for each portfolio appears at Appendix 2.

1 Journals of the Senate, No. 137—4 February 2016, p. 3720

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Ministers On 8 February 2016, the committee heard evidence from Senator the Hon Michaelia Cash, Minister representing the Minister for Immigration and Border Protection. Senator Cash was also assisted by Senator the Hon Concetta Fierravanti-Wells, Minister for Multicultural Affairs and Senator the Hon Scott Ryan, Minister for Vocational Education and Skills.

On 9 February 2016, the committee heard evidence from Senator the Hon George Brandis, Attorney-General.

Officers from both d

epartments and associated agencies also appeared. The committee thanks the ministers and officers for their assistance.

Questions on notice Further written explanations, and answers to questions on notice, will be tabled as soon as possible after they are received. That information is also available on the committee's webpage.

The committee has resolved that the due date for submitting responses to questions on notice from the additional estimates round is 8 April 2016.

Note on reference

s

References to the committee Hansard are to the proof Hansard. Page numbers may vary between the proof and the official Hansard transcript.

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Chapter 1

Immigration and Border Protection portfolio 1.1 This chapter summarises some of the matters raised during the committee's consideration of the additional estimates for the Immigration and Border Protection portfolio for the 2014-15 financial year.

1.2 The Secretary of the Department of Immigration and Border Protection (DIBP, the department) and the Commissioner of the Australian Border Force (ABF) provided, at length, opening statements that facilitated senators to ask questions based on the content of those statements. A synopsis of the opening statements is provided below.

1.3 The Secretary informed the committee that the High Court of Australia's ruling on the case known as M68 upholds 'the legal foundations of both turn back and take back maritime operations'.1 The Secretary stated that any attempt to enter Australia by illegal maritime means would result in vessels either being safely turned around or being 'taken to Papua New Guinea or Nauru for the purposes of being assessed and processed for potential settlement outside Australia or return[ed] to [their] country of origin'.2

1.4 In relation to people that are currently in the regional processing centres (RPCs) or currently in Australia for medical purposes, the Secretary stated:

[T]he department will continue to ensure that adequate medical services are provided to those who require them. Transferees and refugees temporarily in Australia for medical treatment or accompanying those in need of treatment will be returned to Nauru and Papua New Guinea, as the case applies, at the conclusion of their treatment, noting that determinations on this will be made on a case-by-case basis.3

1.5 The amalgamation of DIBP with the Australian Customs and Border Protection Service (ACBPS) was also commented on by the Secretary. As of 1 July 2015, the integrated department with the ABF as the enforcement arm would:

manage our nation's border processes by which we oversee the flow of people and goods to and from our nation…we are Australia's gateway to the world and the world's gateway to Australia. On occasions, we will need to act as gatekeepers and, as necessary, protect the border by all lawful means. However, the daily operating mode of the department will be to act as the open conduit of Australia's engagement with the world around us for the purposes of trade, travel or migration. The amalgamation of immigration and customs has been successfully accomplished.4

1 Estimates Hansard, 8 February 2016, p. 3.

2 Estimates Hansard, 8 February 2016, p. 3.

3 Estimates Hansard, 8 February 2016, p. 4.

4 Estimates Hansard, 8 February 2016, p. 4.

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1.6 However, the Secretary informed the committee that reforms and the integration of staff, financial, legal, infrastructure, technology and organisational policies and processes remain ongoing. It was noted that the amalgamation would save the Commonwealth $270 million over the forward estimates period.5

1.7 Finally, an update was provided to the committee on the ongoing enterprise agreement negotiations. The Secretary said that a reduction of only 184 employees, over the life of the agreement would have been required had employees accepted the previous offer. A larger pay increase would result in more employee reductions.6

1.8 The Commissioner for the ABF provided further details on the establishment and activities of the ABF. The Commissioner highlighted the record drug seizure of 7.3 tonnes in 2014-15 and the work of the counter-terrorism unit (CTU) teams at Australia's international airports. CTU officers have assessed almost 110 000 inbound and outbound passengers. These assessments had resulted in 1100 outcomes, including the collection of intelligence and referrals to security and intelligence partners. ABF had detected more than $3 million in undeclared currency in 2014-15.7

1.9 During the Commissioner's opening statement, the committee was informed that the ABF had assumed responsibility for Australia's onshore immigration detention facilities and is now responsible for the 2000 detainees in those facilities. The ABF had 'embarked on a substantial remediation program to improve the security, safety and amenity of these facilities'.8 Compulsory training courses had been instituted for ABF officers that incorporated 'input and delivery from NGOs and oversight bodies such as the Australian Human Rights Commission, the Commonwealth Ombudsman, the Minister's Council on Asylum Seekers and Detention, and the Child Protection Panel'.9 The operating policies and practices of the detention facilities had been overhauled, with the implementation of new risk assessment tools and community monitoring mechanisms. Service providers to these facilities had also been engaged to improve security, medical and recreational services.10

1.10 The Commissioner's opening statement provided senators with an update on the ABF's maritime capabilities. It was reported that the new Cape class fleet was fully operational, as was the ABF's berthing facility and marine base in Darwin. The ABF has had operational success relating to illegal maritime people smuggling and other civilian maritime threats, especially illegal foreign fishing within Australia's maritime borders.11

5 Estimates Hansard, 8 February 2016, p. 4.

6 Estimates Hansard, 8 February 2016, p. 5.

7 Estimates Hansard, 8 February 2016, p. 5.

8 Estimates Hansard, 8 February 2016, p. 5.

9 Estimates Hansard, 8 February 2016, p. 6.

10 Estimates Hansard, 8 February 2016, p. 6.

11 Estimates Hansard, 8 February 2016, p. 6.

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1.11 Additional commentary was provided on the work of ABF at Australia's airports, namely the recruitment of front-line officers and the investment and installation of automated smart gates, with an anticipated 90 outbound smart gates being commissioned by the end of this calendar year across the entire airport network.12 The Commissioner also highlighted the creation of the Trusted Trader program that had 22 participants and is projected to include approximately 1000 traders, representing 30 per cent of Australia's two way trade by 2020.13

1.12 The committee proceeded to enquire on matters relating to the opening statements of the Secretary and Commissioner, and the funding and operations of both DIBP and ABF. Key topics raised during the hearings are provided in more detail below.

The High Court's ruling on M68 and subsequent return of asylum seekers to Nauru and Manus Island 1.13 Senators asked questions relating to the planned return of asylum seekers in Australia for medical purposes to offshore RPCs. The Secretary advised the committee that advice would be first sought by medical practitioners to determine whether an individual is able to be returned to the RPCs. Subsequently, the Secretary stated that the department 'will work through those [determinations] in a staged fashion…They will not be, does not need to be and should not be a bulk determination'14 and '[a]ll persons, when they are fit to travel, will be sent back to Nauru. That is both policy and law. And then, within that, individual determinations will be made on a compassionate and empathetic basis'.15

1.14 The Secretary highlighted that the High Court ruling on M68 had provided the department with a 'very clear legal footing that it is able to return persons'16 to Nauru and Manus Island. Additionally:

As [the department] improve[s] the medical facilities on Nauru, with the agreement of the Nauru government and in support of their role as the processing authority, there will be less and less opportunity and requirement to repatriate people to Australia.17

1.15 The department advised the committee on the number of transferees and refugees that are currently in Australia, particularly those whose return to the RPC on Nauru was delayed due to the M68 case. Details of those numbers are in Table 1.1.18

12 Estimates Hansard, 8 February 2016, p. 6.

13 Estimates Hansard, 8 February 2016, p. 7.

14 Estimates Hansard, 8 February 2016, p. 14.

15 Estimates Hansard, 8 February 2016, p. 40.

16 Estimates Hansard, 8 February 2016, p. 14.

17 Estimates Hansard, 8 February 2016, p. 14.

18 Estimates Hansard, 8 February 2016, p. 19, p. 41.

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Table 1.1:

Transferees19 Refugees

Individuals in Australia to be returned to the Nauru RPC 280 16

Individuals currently in Nauru RPC 357 840

Individuals in Australia to be returned to the Manus Island RPC 34 2

Individuals currently in Manus Island RPC 472 404

1.16 In total, 267 people would be returned to Nauru as a result of the recent High Court (M68) ruling. Of this number, 37 transferees are babies born in Australia;20 62 people from Nauru RPC were not subject to the M68.21

The welfare of children in detention 1.17 The welfare of children in detention, in particular, children in the open centre on Nauru, was discussed during the hearing.

1.18 In regards to children's education, the department informed senators that DIBP, in partnership with Nauru's Department of Education, had enhanced Nauru's school infrastructure by building eight new classrooms at a value of approximately $9 million. School counsellors and teachers have been provided through the Brisbane Catholic Education Office. Assistance was also provided through the University of New England's campus on Nauru and the University of the South Pacific.22

1.19 The department stated that a number of child detainees did not attend school. Approximately 50 per cent of children from the RPC were not attending school, which roughly reflects the number of children that had not engaged with the education facilities in the RPC. Preschool activities are provided to younger children within the centre, and older children are encouraged to go to school. Other services include the children protection unit and a gender violence unit that provide counselling to refugees, transferees and Nauruans.23

1.20 In regards to the medical conditions of children held in detention, the Chief Medical Officer (CMO) of DIBP informed the committee that his 'general impression of the health services has been very positive—of the skilled clinicians [he] had met. [Clinicians] know their patients and have an interest in their clinical situation and

19 Transferees are individuals that have not yet had their refugee status determined.

20 Estimates Hansard, 8 February 2016, p. 40.

21 Estimates Hansard, 8 February 2016, p. 42.

22 Estimates Hansard, 8 February 2016, p. 15.

23 Estimates Hansard, 8 February 2016, p. 15.

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care'.24 The CMO commented that 'the government and the department's concerted efforts to remove children from detention' has meant that there are fewer children in detention,25 however, the CMO acknowledged that '[t]he scientific evidence is that detention affects the mental state of children. It is deleterious and for that reason wherever possible children should not be in detention'.26

1.21 The Secretary of DIBP, in response to the CMO's comments, reminded the committee that:

it is the government's policy that it will do whatever possible within the ambit of the policy to get children out of detention. Those who are repatriated to Nauru do not go back to detention; it is an open centre. The handful that are left in Australia… We are working as carefully as we can with relevant families to try to come up with arrangements where, even if one or both parents have to be held in detention for security concerns, which the department is well briefed about as is the minister, accommodative arrangements are put in place so that the children are outside of detention.27

1.22 A concern was raised regarding developmental delays of children in detention. In response to this concern, the CMO advised the committee that it was for this reason he highlighted the importance of children having access to a

multidisciplinary team of medical experts that included psychologists, psychiatrists, occupational therapists and speech pathologists.28

Allegations of the sexual abuse of a minor on Nauru 1.23 The committee queried the department on reports of the alleged rape of a five year old child at the Nauru RPC. The committee heard that the department had contacted a paediatrician from the Royal Children's Hospital in Sydney and were advised that the child was not five years old and the allegations of sexual assault are against an older child from within the facility. The department stated that this was not an allegation of rape and that it was in fact 'physical skin to skin contact'.29

1.24 Furthermore, the allegations had already been brought to the attention of the department and had been investigated by the child protection panel; the incident was also considered in the Moss report. The child protection panel determined that the department's actions were correct and the department ensured support services were provided including medical, welfare and counselling. Within one month of the

24 Estimates Hansard, 8 February 2016, p. 20.

25 Estimates Hansard, 8 February 2016, p. 21.

26 Estimates Hansard, 8 February 2016, p. 21.

27 Estimates Hansard, 8 February 2016, p. 21.

28 Estimates Hansard, 8 February 2016, p. 30.

29 Estimates Hansard, 8 February 2016, p. 16.

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incident, the child was moved to Australia for further counselling and was living in the community with his family.30

1.25 The incident and the allegations of sexual assault were, at the time of the hearing, under investigation by Nauruan police.31

Enterprise Agreement negotiations 1.26 The Commissioner of the ABF and the Secretary of DIBP were questioned by the committee on matters relating to ongoing wage negotiations. The Secretary advised the committee that the department was currently preparing for a second offer after the first offer was rejected by 91 per cent of employees. The Secretary said the 'offer that we are putting is as reasonable and as generous as we can craft within the government's parameters'.32

1.27 The amalgamation of the ACBPS and DIBP had resulted in some tension during the wage negotiation process. The Secretary informed the committee the one tension has been reconciling the two different pay scales of ACBPS and DIBP employees. Some of the difficulties confronted by the department were:

How you reconcile those scales over time; how you trade-off giving workers a general pay increase but also deal with anomalous situations…in some cases with quite ancient allowances that have not been reviewed for many, many years and that in some cases are not at all connected with contemporary work practices; and how you, at the same time as blending a workforce, preserve traditional benefits that have arisen through two different streams, as it were, of entitlements is very complicated.33

1.28 The Secretary denied that the department's proposal was based on 'a legacy Customs pay offer and a legacy immigration pay offer'; instead, the department was proposing 'one set of pay outcomes [for its] staff'.34 Furthermore:

[employees] cannot be doing the same job prima facie, insofar as a former Customs officer—former—who brings a different set of skills to the job that is currently being done certainly should not be docked salary and go backwards; so they are going to retain that salary. For a former Immigration officer who is asked to come up to, say, the standard of being an investigator or to operate in the new arrangements that we have and who brings, potentially, a lower salary, in terms of local management, consideration will have to be given to additional training for that officer and to supporting them to operate at the level that is expected.35

30 Estimates Hansard, 8 February 2016, p. 16.

31 Estimates Hansard, 8 February 2016, p. 47.

32 Estimates Hansard, 8 February 2016, p. 50.

33 Estimates Hansard, 8 February 2016, p. 51.

34 Estimates Hansard, 8 February 2016, p. 51.

35 Estimates Hansard, 8 February 2016, p. 52.

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1.29 The current proposal, with a wage increase of two per cent, was being negotiated at the time of the hearing and the department informed the committee it meant a reduction of 680 employees. Further productivity savings would also be needed.36

Riot on Christmas Island 1.30 Another matter raised with ABF was the issue of the riot that occurred at the Christmas Island detention centre on 9 November 2015. The Commissioner informed the committee that the investigation was being conducted by the Australian Federal Police (AFP) in relation to the conduct of any alleged criminal acts during the riot. An internal review, conducted by the service provider Serco, and the department's Integrity, Security and Assurance Division, had proposed recommendations in relation to intelligence, better governance arrangements and hardening of the facilities, and were in the process of being implemented by ABF.37

1.31 The cost of repairs to the facility came to $10 million, with $3.4 million expended on rectification, and an estimated amount of $7.6 million would go towards full recovery of the facility.38 These improvements would include:

Installation of security gates over a range of roller doors; some more heavy-duty furniture and the attachment of the furniture; other shutters, particularly around medical facilities; security screening; fencing; an upgrade of the inner perimeter fence.39

1.32 The committee was informed that the facility is now fully operational, however not all detainees have been, and potentially would not be, returned to the facility.40 At the time of the riot, there were 'around 200 detainees'41 and approximately 180 of those people participated, 50 of which were New Zealand citizens.42 One detainee managed to escape43 during the riot and the committee heard that Serco had conducted a review on the convergence of circumstances that led to the detainees escape.44

Operation Sovereign Borders 1.33 Major General Bottrell of Operation Sovereign Borders (OSB) informed the committee in his opening statement that during the last two years of OSB operations, they had 'seen the successful return of 23 boats and more than 680 people to their

36 Estimates Hansard, 8 February 2016, p. 56.

37 Estimates Hansard, 8 February 2016, p. 59.

38 Estimates Hansard, 8 February 2016, p. 59.

39 Estimates Hansard, 8 February 2016, p. 59.

40 Estimates Hansard, 8 February 2016, p. 60.

41 Estimates Hansard, 8 February 2016, p. 60.

42 Estimates Hansard, 8 February 2016, p. 60.

43 The detainee was subsequently recaptured.

44 Estimates Hansard, 8 February 2016, p. 61.

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country of departure'.45 For more than 560 days, no boat has successfully entered into Australia's migration zone.46

1.34 During the hearing it was discussed that since the October 2015 round of estimates hearings, there had been two turn-backs in November 2015, one of which came close to Christmas Island. There were 17 people on one boat, and three on the other. Both boats had departed from Indonesia.47

1.35 Questions were asked in relation to UNHCR registered refugees residing in Indonesia. The Secretary advised the committee that:

[The department's] preference is to take such persons from the Middle East and other places. Now that we have defeated the boats, the next pull factor becomes getting to Indonesia because there is another way to, if you like, queue yourself into Australia so the policy position remains one of assisting Indonesia. We work with Indonesian authorities. We work with the [International Organisation on Migration] to make sure that people in Indonesia are as comfortable as circumstances can be and that they are given durable options to apply for settlement places in the appropriate manner. But our focus at the moment is really to focus on refugees from the Middle East and elsewhere but not those who have travelled to Indonesia for the conscious purpose of getting on a boat to come to Australia, which is a path that is now blocked.48

1.36 When asked about how OSB communicates its policy position regarding Australia's border control operations to deter illegal maritime arrivals, Major General Bottrell said that OSB strategic communication is based on fact and focused on four key messages:

 highlighting the hazardous nature of the journey;

 the financial risk taken to engage with people smugglers;

 the deception and lies of people smugglers; and

 the consequences of illegal migration to Australia. 49

1.37 This communication strategy was delivered across 13 countries and in 18 different languages via television, radio, press, online and social media, billboards, transit advertising, roadshows, leaflets, stickers and community workshops.50

45 Estimates Hansard, 8 February 2016, p. 77.

46 Estimates Hansard, 8 February 2016, p. 77.

47 Estimates Hansard, 8 February 2016, pp 77-78.

48 Estimates Hansard, 8 February 2016, pp 80-81.

49 Estimates Hansard, 8 February 2016, pp 81-82.

50 Estimates Hansard, 8 February 2016, p. 82.

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Other matters of interest

1.38 A wide range of other matters were also canvassed. These included:

 the Doogan review relating to the dismissal of Save the Children staff; 51

 the reduction of incidents of self-harm in onshore and offshore detention

facilities;52

 the status of the resettlement of 12 000 Syrian refugees; 53

 $9.864 million spent on ABF rebadging; 54

 the cancellation of visas based on character assessments (section 501 of the

Migration Act 1958);55 and

 an update on the visa status of the 30 000 legacy caseload. 56

51 Estimates Hansard, 8 February 2016, pp 22-24.

52 Estimates Hansard, 8 February 2016, pp 25-27.

53 Estimates Hansard, 8 February 2016, pp 32-36.

54 Estimates Hansard, 8 February 2016, pp 56-57.

55 Estimates Hansard, 8 February 2016, pp 61-68.

56 Estimates Hansard, 8 February 2016, pp 83-86.

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190

Chapter 2

Attorney-General's portfolio

2.1 This chapter summarises some of the matters raised during the committee's consideration of the additional estimates for the Attorney-General's portfolio for the 2014-15 financial year.

Australian Human Rights Commission 2.2 The committee put questions to the Attorney-General and the Australian Human Rights Commission (AHRC) about the appointment of the Sex Discrimination Commissioner. The Attorney-General informed that committee that an 'arms-length process of selection has resulted in the appointment that was decided upon by cabinet' on 8 February 2016.1 The selection panel consisted of four panellists including Secretary of the Attorney-General's Department (AGD, the department), Mr Chris Moraitis, and the former Sex Discrimination Commissioner, Ms Elizabeth Broderick.2

2.3 The President of the AHRC advised the committee that she was not included in the selection panel and that the Prime Minister had consulted her about the timing and need for a proper process for the selection; however, the President was not subsequently consulted. The President said 'the usual procedure in the past has been to include the President and to consult the President about the appointment'.3

2.4 The committee also discussed with the AHRC its report into The health and well-being of children in detention and the High Court's decision in M68. The President said the report's findings confirmed that 19 out of 20 children had 'little hope for the future' and:

They are in despair and they are at high levels of trauma—so much so that the medical experts were able to say that they had never seen so many children reaching these high levels in the tests—that demonstrated that they were deeply traumatised, mentally ill in some cases, and certainly needing medical treatment for mental and other conditions. In essence, the consequence of the medical reports, the outcomes, were to confirm all of the findings that have been made over the last two or three years. This was only, sadly, significantly compounded because these children are now traumatised partly by the conditions of their parents—that they will be sent back to conditions that they are very familiar with, so they knew what they will be going back to if they were to be returned.4

2.5 In response to the release of the report, the AHRC is working with the department to address the report's findings. Furthermore, the President noted that the

1 Estimates Hansard, 9 February 2016, p. 6.

2 Estimates Hansard, 9 February 2016, p. 6.

3 Estimates Hansard, 9 February 2016, p. 8.

4 Estimates Hansard, 9 February 2016, p. 18.

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High Court's decision in M68 did 'clear the air in terms of the constitutional and domestic law'5 of returning asylum seekers in Australia, to Nauru.

2.6 The Attorney-General added that:

One of the central issues in the M68 case is whether those people—adults and children—being detained in Nauru were being detained by Australia. The High Court resolved that question by a majority of four to three. The High Court decided unequivocally that people being detained in Nauru under a memorandum of understanding between the government of Australia and the government of Nauru are not being detained by Australia.6

2.7 Other matters discussed with the AHRC were:

 Mr Tim Wilson, Human Rights Commissioner's travel to the United States and his former membership of the Liberal Party;7

 the adoption of same-sex marriage laws; 8

 employment opportunities for and discrimination towards indigenous people

with a disability;9 and

 the AHRC's view on the treatment of people in detention. 10

Office of the Australian Information Commissioner 2.8 The Acting Australian Information Commissioner, in his opening statement, provided the committee with the following statistics for 2014-15:11

No. of inquiries (privacy and FOI matters) 18 066

No. of complaints relating to privacy functions 2 840

No. of voluntary data breach notifications 55

No. of assessments (formerly known as audits) 9

No. of Commissioner investigations into agency decisions on FOI functions 373

2.9 The Acting Commissioner informed the committee that priority would be given to the continued oversight of: the eHealth sector; data retention and foreign

5 Estimates Hansard, 9 February 2016, p. 17.

6 Estimates Hansard, 9 February 2016, p. 27.

7 Estimates Hansard, 9 February 2016, pp 8-9, 12-16, 20-26.

8 Estimates Hansard, 9 February 2016, pp 9-12, 30-33.

9 Estimates Hansard, 9 February 2016, pp 33-36.

10 Estimates Hansard, 9 February 2016, pp 27-29, 39-40.

11 Data extracted from Estimates Hansard, 9 February 2015, pp 44-45.

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fighters' acts; privacy implications arising from the enhanced welfare payment integrity initiative; issues relating to the national facial biometric matching capabilities; and the proposed mandatory data breach notification scheme.12

2.10 The Attorney-General reminded the committee that the Office of the Australian Information Commissioner (OAIC) had received in the last budget a sum of $1.7 million for its continued operation and that the government's intention remains to abolish the OAIC, and have its functions consolidated.13 The Acting Commissioner said that this funding would run out on 30 June 2016.14

2.11 Other matters raised with the OAIC were:

 the implementation of changes to its functions, such as the transfer of functions to the Administrative Appeals Tribunal (AAT) and the Attorney-General's Department;15

 the number of full-time equivalent staff. 16

Family Court of Australia and the Federal Circuit Court of Australia 2.12 The Family Court of Australia and the Federal Circuit Court of Australia (the courts) were questioned by the committee on the blow-out in wait times. In response, the Chief Executive Officer (CEO) provided the following data on applications for final orders from the past six years:17

Year Family Court Federal Circuit Court Total no. of final orders

2010-11 3249 17 512 19 426

2011-12 3271 17 412 19 326

2012-13 2807 17 364 18 999

2013-14 2923 17 565 19 279

2014-15 2936 17 685 19 480

2.13 The courts projected that the 2015-16 figures would be 3200 applications for the Family Court and 18 000 for the Federal Circuit Court for a sum of 20 000. The CEO said:

12 Estimates Hansard, 9 February 2016, p. 45.

13 Estimates Hansard, 9 February 2016, p. 45.

14 Estimates Hansard, 9 February 2016, p. 48.

15 Estimates Hansard, 9 February 2016, pp 46-48.

16 Estimates Hansard, 9 February 2016, p. 48.

17 Data extracted from Estimates Hansard, 9 February 2016, p. 50.

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the workload has increased again back to that of nearly 15 years ago. I do not think there is a judge who works in—and these are family law figures only; not general federal law—this jurisdiction who would not say that the work has become much more complex than it was. It is much more complex. I think that is one of the factors that impacts on delays.18

2.14 The committee heard that, in 2014-15, the average time from lodgement to the first day of a trial was 13 months for the Family Court and 14.1 months for the Federal Circuit Court. The wait time had increased and, at the time of the hearing, was 15.9 months for the Family Court and 15 months for the Federal Circuit Court.19

2.15 The CEO attributed the complexity of the cases, in particular family violence and the level of conflict between parties, to the increase in waiting times. Other factors identified by the CEO included proceedings in other courts; delay matters in the courts; and the availability of judicial resources.20

2.16 Other matters raised with the courts were:

 the vacancies and appointments of judges to the courts; 21

 broadening the skill base of judicial officers; 22 and

 the recommendation from the Productivity Commission on the rules to prevent perpetrators of domestic violence cross-examining their victims in court.23

Australian Transaction Reports and Analysis Centre 2.17 The Australian Transaction Reports and Analysis Centre (AUSTRAC) were questioned by the committee on matters relating to the monitoring of transactions between Australia and Vanuatu and other countries in the South Pacific region.

2.18 AUSTRAC stated that it works with the Asia-Pacific Group on money- laundering, and is a member of the Egmont Group24, in which Australia was a member of Asia-Pacific. AUSTRAC also had over 77 memoranda of understanding with countries around the world.25

2.19 AUSTRAC confirmed that Vanuatu 'has challenges around money laundering and terrorism financing' and that 'Australia ha[d] done a lot of work to help build Vanuatu's capabilities over the years';26 however:

18 Estimates Hansard, 9 February 2016, p. 50.

19 Estimates Hansard, 9 February 2016, p. 50.

20 Estimates Hansard, 9 February 2016, p. 50.

21 Estimates Hansard, 9 February 2016, pp 50, 52-54, 58

22 Estimates Hansard, 9 February 2016, p. 51.

23 Estimates Hansard, 9 February 2016, pp 60-61.

24 155 countries are members of the Egmont Group.

25 Estimates Hansard, 9 February 2016, p. 66.

26 Estimates Hansard, 9 February 2016, p. 67.

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One of the challenges in trying to fight organised crime and terrorism financing is that they do not always use the legitimate financial sector, which we can monitor. They will use criminal enterprises, they will use other forms of money laundering—hawala, cash smuggling, for example— and obviously that places us at a disadvantage…that is where strong law enforcement partnerships are really important, because that is where we can exchange intelligence, share information and experiences and hopefully minimise the opportunities for criminals to use the black market money channels.27

Australian Security Intelligence Organisation 2.20 The Director-General of the Australian Security Intelligence Organisation (ASIO) in his opening statement advised the committee on:

 the three attacks that had occurred since September 2014 in Australia and a further six attacks that were disrupted by law enforcement operations;

 the approximately 110 Australians that were fighting or engaged with terrorist groups in Syria or Iraq, with at least 45 Australians confirmed killed in the conflict. It was reported that 190 people were actively supporting extremist groups whilst in Australia;

 the cancellation and refusal of passports for Australians, with 156 adverse

security assessments issued by ASIO;

 security assessments of

12 000 Syrian refugees; and

 espionage threats to Australia and i

ts interests.28

2.21 The committee asked further questions about the nature of the thwarted attacks. In response, the Director-General informed the committee that the planned attacks were regarded as 'low-tech'. He said there were attempts to assemble an explosive device, 'but it [was] fairly unsophisticated and not of the sort of magnitude that you might imagine with large, vehicle-born incendiary devices or explosive devices'.29

2.22 ASIO also advised the committee that the number of people who engaged with these terrorist organisations had plateaued. The Director-General commented that this decline may indicate that engagement had reached a 'saturation point' and had 'taken up the obvious candidates'.30

27 Estimates Hansard, 9 February 2016, p. 67.

28 Estimates Hansard, 9 February 2016, pp 67-68.

29 Estimates Hansard, 9 February 2016, p. 71.

30 Estimates Hansard, 9 February 2016, p. 71.

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2.23 Other matters discussed with ASIO were:

 the attack in Indonesia and the problem of returned fighters from the Middle

East to South-East Asia;31 and

 the screening of humanitarian entrants, in particular the 12 000 Syrians

seeking asylum in Australia.32

Australian Federal Police 2.24 The Commissioner of the Australian Federal Police (AFP) informed the committee in his opening statement that the AFP has seen an increase in its work, in particular national security and counter-terrorism. The Commissioner commented that since September 2014, the AFP's 'threat level specifically against police was raised to high or probable' under the new threat advisory system.33 He said that there were two people subject to control orders and 11 Australians that are offshore 'that are subject to first-instance arrest warrants for matters relating to counter-terrorism'.34

2.25 The committee discussed with the AFP the unauthorised disclosure of and access to the diary of a former Speaker of the House of Representatives. The AFP confirmed that search warrants were executed on the premises of three individuals in relation to the investigation.35 The Deputy Commissioner said that the investigation was ongoing and:

we are relying heavily on electronic records, which we have obtained from various entities. Because of the complex nature of this matter we have also had to obtain legal opinion in respect of search warrants and other avenues of inquiry. Just to demonstrate, some of the investigation time frames are quite lengthy, because we have recovered, to date, in excess of 7,600 emails, 141,000 documents, 116,000-plus images and thousands of email attachments. That just highlights for you the extent of the investigation we are undertaking.36

2.26 If 'sufficient evidence beyond reasonable doubt' is obtained through the investigation, the AFP would put a prima facie case to the Commonwealth Director of Public Prosecutions (CDPP). The CDPP would then need to decide whether charges are to be laid in respect of any people.37

31 Estimates Hansard, 9 February 2016, p. 71.

32 Estimates Hansard, 9 February 2016, pp 73-74.

33 Estimates Hansard, 9 February 2016, p. 89.

34 Estimates Hansard, 9 February 2016, p. 89.

35 Estimates Hansard, 9 February 2016, p. 94

36 Estimates Hansard, 9 February 2016, p. 95

37 Estimates Hansard, 9 February 2016, p. 95

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2.27 Questions were also asked of the AFP about the resources allocated to the Trade Union Royal Commission. The committee was informed that between 13 March 2014 and 31 December 2015, the AFP contributed 30 staff to the Royal Commission; the cost to the AFP was $5.5 million. On 1 January 2016, the AFP received a further $6 million to continue its work in 'finalising the investigations that arose during the royal commission and also assess any arising from the final report of the royal commission'.38

2.28 The Deputy Commissioner confirmed that there were currently 11 defendants before court (both for state or Commonwealth offences) arising from the Royal Commission. One charge against an individual in the ACT did not proceed and there was one matter with the CDPP for its consideration.39

2.29 Other matters raised with the AFP were:

 additional funding for the AFP's counter-terrorism activities; 40

 the AFP's community engagement efforts relating to foreign fighters; 41

 allegations of human rights abuses by the Criminal Investigation Department

in Sri Lanks and the Indonesian National Police (Detachment 88) in West Papua.42

Attorney-General's Department 2.30 A number of issues were raised with the AGD. Some of these issues detailed below.

Marriage plebiscite

2.31 The Attorney-General outlined his responsibilities for the proposed plebiscite on marriage equality. The Attorney-General said:

As the Attorney-General, I have responsibility for the Marriage Act, which would be the statute to be amended were the proposal to succeed. I also have responsibility, as you know, for antidiscrimination law, but the acting Special Minister of State…has responsibility for electoral matters, which would include the conduct of a plebiscite. I think it is correct to say that I have overall carriage of the issue, but, on the specific matter of what we might call the mechanics of the plebiscite, Senator Cormann as acting Special Minister of State has an involvement as well.43

38 Estimates Hansard, 9 February 2016, p. 99.

39 Estimates Hansard, 9 February 2016, p. 99.

40 Estimates Hansard, 9 February 2016, pp 90-92.

41 Estimates Hansard, 9 February 2016, pp 102-103.

42 Estimates Hansard, 9 February 2016, pp 108-114.

43 Estimates Hansard, 9 February 2016, p. 80.

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2.32 The Attorney-General confirmed that both a non-binding plebiscite and a self-executing plebiscite were being considered by government,44 and that the referendum was no longer being considered as an option. The plebiscite would 'be conducted at some time after the election', and no submission had been taken to cabinet at the time of the hearing.45

2.33 A decision about the structure of the plebiscite would include whether both the 'yes' and 'no' campaigns would be publicly funded. Cabinet would also need to determine whether an exposure draft would be released for consultation.46 The Attorney-General also confirmed that his:

disposition is to publish the proposed amendments to the Marriage Act so that people voting in the plebiscite would know what the shape of the legislation would be, were they to vote yes or no—that people who vote in the plebiscite would know what the legislative amendment would look like in the event the plebiscite were passed.47

2.34 The government had not conducted a costing for the plebiscite.48

Emergency Management Australia and the Tasmanian bush fires

2.35 The department advised senators that at the time of the hearing, there were 73 active fires in Tasmania, 26 were uncontrolled/uncontained and 47 were in control. Approximately 110 000 hectares had been burnt by the fire, encompassing a perimeter of approximately 815 kilometres. There were at time, over 400 firefighters on the ground, with 32 aircraft operating in the state, with support (personal and vehicles) coming from Queensland, the Australian Capital Territory, New South Wales, Victoria, South Australia and New Zealand.49

2.36 In total, 30 000 hectares of wilderness had been impacted by the fires, and Emergency Management Australia (EMA) estimated that of that 30 000 hectares, between 14 000 and 17 000 hectares comprises of sensitive biodiversity areas.50

2.37 EMA noted that the fires had facilitated 'the biggest single mobilisation of firefighting resources to Tasmania…and it happened quite rapidly, facilitated by Commonwealth coordination through EMA'.51

2.38 The committee was advised that the Commonwealth had not contributed any funds towards the cost of the firefighting operation, however:

44 Estimates Hansard, 9 February 2016, p. 80.

45 Estimates Hansard, 9 February 2016, p. 81.

46 Estimates Hansard, 9 February 2016, p. 82.

47 Estimates Hansard, 9 February 2016, p. 82.

48 Estimates Hansard, 9 February 2016, p. 82.

49 Estimates Hansard, 9 February 2016, p. 118.

50 Estimates Hansard, 9 February 2016, p. 119.

51 Estimates Hansard, 9 February 2016, p. 118.

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Tasmania has contacted the Commonwealth in relation to its forecast assistance under the Natural Disaster Relief and Recovery Arrangements. They are working through their costs. They are working through the criteria of those arrangements, and we have been maintaining a dialogue with Tasmania to assist them with their interpretation and with some of those programs that may come forward.52

Confidential volumes in relation to the Trade Union Royal Commission

2.39 The committee asked the department about the two confidential volumes of the Trade Union Royal Commission. The first non-publication order was made when the interim report was released on 11 December 2014 and was required to protect the identity of a person who had provided evidence before the Commission.53

2.40 In respect of the final report, the department said:

There was no…non-publication order on the final report. The only statement that the commissioner added was that it was recommended that this volume not be published and be kept confidential. Any particular decision to publish should take into account the fact that the safety of some witnesses and sources of information may be imperilled by publication. So there was not a non-publication order for the final report, but it was to remain confidential and he recommended it on those terms.54

2.41 The department was not able to provide an answer to the committee as to why the Commissioner decided not to place a non-publication order on the final report,55 however, it was stated that there was:

a paragraph within the confidential report that actually states that the volume should not be published and to be kept confidential, but [the Commissioner] did not put a non-publication direction on like he did for the interim report, which he has subsequently amended to give restricted access.56

2.42 The Attorney-General reiterated the reason for the restrictions:

The reason the two volumes were to remain confidential, as we know, is that there was concern for the physical safety of the named witnesses, given the violent criminality of some of those involved in certain unions, which was disclosed by the public volumes of the report. The commissioner had a fear that those people could be physically harmed, which is why the reports were made confidential. So the redaction of the names of the individuals seems to me to be an appropriate measure not only to protect those individuals; also, in the unhappy event that something did happen to one of them, so it could never be suggested that the source of the person who

52 Estimates Hansard, 9 February 2016, p. 121.

53 Estimates Hansard, 9 February 2016, pp 114-115.

54 Estimates Hansard, 9 February 2016, p. 115.

55 Estimates Hansard, 9 February 2016, p. 115.

56 Estimates Hansard, 9 February 2016, p. 116.

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identified that witness was a member of parliament who had been given access to the report.57

Senator the Hon Ian Macdonald Chair

57 Estimates Hansard, 9 February 2016, p. 126.

200

Appendix 1

Departments and agencies for which the committee has oversight Attorney-General's Portfolio  Attorney General's Department;

 Administrative Appeals Tribunal;

 Australian Federal Police;

 Australian Financial Security Authority;

 Australian Commission for Law Enforcement Integrity;

 Australian Crime Commission;

 Australian Human Rights Commission;

 Australian Institute of Criminology;

 Australian Law Reform Commission;

 Australian Security Intelligence Organisation;

 Australian Transaction Reports and Analysis Centre;

 CrimTrac;

 Family Court of Australia;

 Family Law Council;

 Federal Circuit Court of Australia;

 Federal Court of Australia;

 High Court of Australia;

 National Archives of Australia;

 Office of the Australian Information Commissioner;

 Office of the Director of Public Prosecutions; and

 Office of Parliamentary Counsel.

Immigration and Border Protection Portfolio  Department of Immigration and Border Protection (inclusive of Australian

Border Force and Operation Sovereign Borders Joint Agency Task Force).

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202

Appendix 2 Index of Proof Hansards

Immigration and Border Protection portfolio, 8 February 2016 Pages

Department of Immigration and Border Protection ................................................... 3

Australian Border Force ....................................................................................... 50

Operations Sovereign Borders, Joint Agency Task Force ................................... 77

Outcome 1, programme 1.1, 1.2, 1.3, 1.4 and 1.5 ................................................ 83

Outcome 2, programme 2.1, 2.2, 2.3 and 2.4 ....................................................... 94

Attorney-General's portfolio, 9 February 2016 Pages

Australian Human Rights Commission ...................................................................... 5

Office of the Australian Information Commissioner ............................................... 44

Family Court of Australia and the Federal Circuit Court of Australia ..................... 50

Australian Transaction Reports and Analysis Centre ............................................... 66

Australian Security Intelligence Organisation.......................................................... 68

Attorney-General's Department

Cross-portfolio, general and corporate ................................................................. 78

Australian Federal Police.......................................................................................... 89

Attorney-General's Department

Programme 1.9: Royal Commissions ................................................................. 115

Emergency Management Australia (Programme 1.2) ........................................ 118

Programme 1.9: Royal Commissions ................................................................. 123

203

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204

Appendix 3 Tabled documents

Immigration and Border Protection portfolio, Monday, 8 February 2016

No. Tabled by: Topic

1 Mr Michael Pezzullo, Secretary, Department of Immigration and Border Protection

Opening statement

2 Mr Roman Quaedvlieg APM, Commissioner, Australian Border Force Opening statement

3 Major General Andrew Bottrell CSC, Commander, Joint Agency Task Force Opening statement

Attorney-General's portfolio, Tuesday, 9 February 2016

No. Tabled by: Topic

1 Mr Timothy Pilgrim, Acting Australian Information Commissioner, Office of the Australian Information Commissioner

Opening statement

2 Mr Duncan Lewis AO DSC CSC, Director-General, Australian Security Intelligence Organisation

Opening statement

3 Senator Jacinta Collins, Deputy Chair, Legal and Constitutional Affairs Legislation Committee

ABC News, Peter Slipper diary affair

4 Senator Jacinta Collins, Deputy Chair, Legal and Constitutional Affairs Legislation Committee

Letter from Senator the Hon Michaelia Cash to Senator Lambie

5 Ms Sue Innes-Brown, Chief Executive Officer, Royal Commission into Trade Union Governance and Corruption

Non-Publication Direction, The Hon John Dyson Heydon AC QC, Commissioner

6 Senator the Hon George Brandis, Attorney-General Letter from Family Court of Australia to Ms Cathy McGowan

AO, MP

7 Senator Jacqui Lambie Letter from Chief of the Defence

Force to Senator Jacqui Lambie

8 Senator Scott Ludlam Senate Question on Notice No.

2626

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206

The Senate

Rural and Regional Affairs

and Transport

Legislation Committee

Additional estimates 2015-16

March 2016

207

© Commonwealth of Australia 2016

ISBN 978-1-76010-363-7

This document was prepared by the Senate Standing Committee on Rural and Regional Affairs and Transport and printed by the Senate Printing Unit, Department of the Senate, Parliament House, Canberra.

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License.

The details of this licence are available on the Creative Commons

website: http://creativecommons.org/licenses/by-nc-nd/3.0/au/.

208

iii

Membership of the committee

Members

Senator the Hon Bill Heffernan, Chair New South Wales, LP

Senator Glenn Sterle, Deputy Chair Western Australia, ALP

Senator Joe Bullock Western Australia, ALP

Senator Sean Edwards South Australia, LP

Senator Rachel Siewert Western Australia, AG

Senator John Williams New South Wales, NATS

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iv

Secretariat

Mr Tim Watling, Secretary Ms Kate Campbell, Research Officer Mr Michael Fisher, Administrative Officer

PO Box 6100 Parliament House Canberra ACT 2600 Ph: 02 6277 3511 Fax: 02 6277 5811 E-mail: rrat.sen@aph.gov.au Internet: www.aph.gov.au/senate_rrat

210

Table of contents

Membership of the Committee ........................................................................ iii

Chapter 1: Introduction ..................................................................................... 1

Additional Estimates hearings ................................................................................ 1

Questions on notice ................................................................................................ 2

Record of proceedings ............................................................................................ 2

Note on references and additional information ...................................................... 2

Chapter 2: Infrastructure and Regional Development portfolio ................... 3 Corporate Services Division; Western Sydney Unit .............................................. 3

Infrastructure Investment Division ......................................................................... 4

Infrastructure Australia ........................................................................................... 5

Surface Transport Policy Division ......................................................................... 5

Civil Aviation Safety Authority ............................................................................. 5

Airservices Australia; Aviation and Airports Division .......................................... 6

Australian Transport Safety Bureau ....................................................................... 6

Australian Maritime Safety Authority .................................................................... 6

Office of Transport Security ................................................................................... 6

Chapter 3: Agriculture and Water Resources portfolio ................................. 7

Meat and Livestock Australia Limited ................................................................... 8

Rural Industries Research and Development Corporation ..................................... 8

Cotton Research and Development Corporation .................................................... 8

Grains Research and Development Corporation .................................................... 8

Fisheries Research and Development Corporation ................................................ 9

Australian Fisheries Management Authority ......................................................... 9

Australian Grape and Wine Authority .................................................................... 9

Australian Pesticides and Veterinary Medicines Authority ................................... 9

Horticulture Innovation Australia Limited ........................................................... 10

Plant Health Australia ........................................................................................... 10

Animal Health Australia ....................................................................................... 10

Australian Livestock Export Corporation Limited ............................................... 10

Australian Meat Processor Corporation ............................................................... 11

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vi

Corporate Divisions .............................................................................................. 11

Australian Bureau of Agricultural and Resource Economics and Sciences ......... 11

Outcome One Divisions ....................................................................................... 11

Outcome Two Divisions ....................................................................................... 12

Outcome Three Divisions ..................................................................................... 13

Appendix 1: Documents tabled ........................................................................ 15

Infrastructure and Regional Development portfolio ............................................ 15

Appendix 2: Additional Information received ............................................... 17

Infrastructure and Regional Development portfolio ............................................ 17

Agriculture and Water Resources portfolio .......................................................... 17

212

Chapter 1

Introduction

1.1 On 4 February 2016, the Senate referred the following two documents to the Rural and Regional Affairs and Transport Legislation Committee (the committee) for examination and report:

• Particulars of proposed additional expenditure in respect of the year ending on 30 June 2016 [Appropriation Bill (No. 3) 2015-16]; and

• Particulars of certain proposed additional expenditure in respect of the year ending on 30 June 2016 [Appropriation Bill (No. 4) 2015-16].1

1.2 The committee is required to examine the 2015-16 additional estimates contained in these two documents in relation to the Infrastructure and Regional Development portfolio and the Agriculture and Water Resources portfolio.2 Following examination, the committee is required to table its report on the 2015-16 additional estimates on 1 March 2016.

Additional Estimates hearings

1.3 The committee examined witnesses from the Infrastructure and Regional Development portfolio on 8 February 2016, and witnesses from the Agriculture and Water Resources portfolio on 9 February 2016.

1.4 The committee heard evidence from the following senators:

• Senator the Hon. Richard Colbeck, Minister for Tourism and

International Education and Minister Assisting the Minister for Trade and Investment (representing the Minister for Infrastructure and Regional Development); and

• Senator the Hon. Anne Ruston, Assistant Minister for Agriculture and Water Resources (representing the Minister for Agriculture and Water Resources).

1.5 Evidence was also provided by:

• Mr Mike Mrdak, Secretary of the Department of Infrastructure and

Regional Development; and

1 Journals of the Senate, No. 78, 4 February 2016, pp 3720-3721.

2 Following machinery-of-government changes in September 2015, amendments to the Administrative Arrangements Orders gave responsibility for water policy and resources to the former Department of the Agriculture, creating the Department of Agriculture and Water Resources.

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• Mr Daryl Quinlivan, Secretary of the Department of Agriculture and

Water Resources; and

• officers representing the departments and agencies covered by the estimates before the committee.

1.6 The committee thanks the ministers, departmental secretaries and officers for their assistance and cooperation during the hearings.

Questions on notice

1.7 In accordance with Standing Order 26, the committee is required to set a date for the lodgement of written answers and additional information. The committee resolved that written answers and additional information be submitted by 1 April 2016.3

Record of proceedings

1.8 This report does not attempt to analyse the evidence presented during the hearings. However, it does provide a summary of the issues that were covered by the committee for each portfolio.

Note on references and additional information

1.9 References to the Hansard transcript are to the proof Hansard; page numbers may vary between the proof and the official Hansard transcripts.

1.10 Copies of the Hansard transcripts, documents tabled at the hearings, and additional information received after the hearings will be tabled in the Senate and available on the committee's website.

3 Once received, answers to questions on notice will be published at the following website address: http://www.aph.gov.au/Parliamentary_Business/Senate_Estimates/rratctte/estimates/add1516/in dex

214

Chapter 2

Infrastructure and Regional Development portfolio

2.1 This chapter outlines the key issues discussed during the hearing for the Infrastructure and Regional Development portfolio on 8 February 2016.

2.2 The committee heard from the divisions of the Department of Infrastructure and Regional Development (the department) and portfolio agencies in the following order:

• Corporate Services Division;

• Western Sydney Unit;

• Infrastructure Investment Division;

• Infrastructure Australia;

• Surface Transport Policy Division;

• Civil Aviation Safety Authority;

• Airservices Australia;

• Aviation and Airports Division;

• Australian Transport Safety Bureau;

• Australian Maritime Safety Authority; and

• Office of Transport Security.

2.3 The following agencies and divisions were called to appear but released during the course of the hearing without providing evidence:

• Australian Rail Track Corporation;

• Local Government and Territories Division;

• National Capital Authority;

• Policy and Research Division; and

• National Transport Commission.

Corporate Services Division; Western Sydney Unit

2.4 The committee queried officials on various matters related to planning for the Western Sydney Airport to be constructed at Badgerys Creek, including the proposed flight paths, indicative noise levels, and the draft environmental impact statement.1

1 Proof Hansard, 8 February 2016, pp 6-13, 22-29.

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2.5 Senators also engaged in discussion over a government advertising campaign for infrastructure investment, with particular emphasis given to the contracts and timeline for the campaign, as well as the $18 million funding allocation.2

Infrastructure Investment Division

2.6 The committee inquired into the progress of a number of infrastructure projects in states and territories, seeking detailed evidence on the following:

• Perth Freight Link in Western Australia, in particular the

commercial-in-confidence nature of traffic modelling and projected funding arrangement;3

• Western Distributor and Melbourne Metro Rail Project in

Victoria;4

• infrastructure spending in Tasmania, including the Hobart airport; 5

• National Stronger Regions Fund; 6

• funding and strategic reasons for WestConnex in New South

Wales;7

• funding profiles for the Northern Connector in South Australia; 8

• East West Link in Victoria; 9

• Gold Coast Light Rail in Queensland; 10

• Northern Australia Road Programs in Queensland; 11

• the broader infrastructure agenda in northern Australia, including the Beef Roads program and the Cape York package;12

• infrastructure plan for western Sydney; 13 and

• Community Development Grants program. 14

2 Proof Hansard, 8 February 2016, pp 13-18, 29-34.

3 Proof Hansard, 8 February 2016, pp 34-39, 51-53.

4 Proof Hansard, 8 February 2016, pp 39-42.

5 Proof Hansard, 8 February 2016, pp 46-49, 78-79.

6 Proof Hansard, 8 February 2016, pp 49-51, 71-74.

7 Proof Hansard, 8 February 2016, p. 51.

8 Proof Hansard, 8 February 2016, pp 53-56.

9 Proof Hansard, 8 February 2016, pp 42-46, 56.

10 Proof Hansard, 8 February 2016, pp 57-58.

11 Proof Hansard, 8 February 2016, pp 58-61.

12 Proof Hansard, 8 February 2016, pp 61-63.

13 Proof Hansard, 8 February 2016, pp 63-67.

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Infrastructure Australia

2.7 Continuing on from discussions in the Infrastructure Investment session, the committee sought more information on the East West Link in Victoria and the WestConnex project in New South Wales. In particular senators posed questions relating to the role Infrastructure Australia had played in the assessment of the business cases.15

2.8 Officials provided the committee with information on the updated Infrastructure Australia assessment framework, and outlined the methodology utilised in assessing projects for the Infrastructure Priority List and Australian Infrastructure Plan due to be released in mid-February. 16

Surface Transport Policy Division

2.9 The committee engaged in a detailed examination of matters surrounding the MV Portland. Senators inquired into the actions the department took when considering the application for a temporary licence for a foreign flagged vessel in late 2015, and sought clarification on how the relevant legislation is applied in such situations. 17

2.10 In addition, officials provided information on stakeholder consultations on the Motor Vehicles Standards Act, and gave a progress update on the regulatory impact paper statement. 18

Civil Aviation Safety Authority (CASA)

2.11 The committee traversed a number of topics during this session, inquiring into limitations implemented by CASA on the operations of Jabiru engine powered aircraft, possible exemptions to ADS-B surveillance coverage regulations, and the capacity of Melbourne airport, including the impact of potential strategies to increase aircraft movement.19

2.12 Senators also explored the interplay of fuel management and fatigue management among pilots, and engaged in broader discussions on the complexity of balancing commercial interests and safety concerns in an aviation environment.20

14 Proof Hansard, 8 February 2016, pp 67-69.

15 Proof Hansard, 8 February 2016, pp 74-76, 80-81.

16 Proof Hansard, 8 February 2016, pp 76-78, 82-86.

17 Proof Hansard, 8 February 2016, pp 88-102.

18 Proof Hansard, 8 February 2016, pp 102-104.

19 Proof Hansard, 8 February 2016, pp 105-116.

20 Proof Hansard, 8 February 2016, pp 117-122.

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Airservices Australia; Aviation and Airports Division

2.13 Continuing with a line of questioning related to the Western Sydney Airport started earlier in the day, the committee inquired into Airservices Australia's input into the draft environmental impact statement, with a particular emphasis on the indicative flight paths over the Blue Mountains and potential noise and emission levels. 21

2.14 Airservices Australia officials also undertook to provide further information on several loss of separation assurance incidents at Australian airports that occurred between 2013 and January 2016.22

Australian Transport Safety Bureau (ATSB)

2.15 The committee engaged in a brief discussion with ATSB on the current investigation into the 2009 Pel-Air ditching, and inquired whether ATSB had any knowledge of two incidents of go-arounds in 2013 and 2015. Officials undertook to provide more information on notice.23

Australian Maritime Safety Authority (AMSA)

2.16 Discussions during this session turned again to the MV Portland, with the committee querying officials on when AMSA became aware of the intention to replace the Australian crew of the ship with foreign-sourced counterparts. Senators concentrated on ascertaining the subsequent communications AMSA had with officials from the department, and the department undertook to provide further details on notice. The committee also sought information on the process for changing ratings, as well as the actions undertaken by AMSA when issuing foreign seafarers with certificates of recognition to ensure compliance with the requirements of minimum safety manning certificates.24

Office of Transport Security

2.17 Further matters in regard to the MV Portland were canvassed with officials from the Office of Transport Security, with senators seeking information on whether the vessel had a ship security plan. Discussion then moved to a broader examination of ship security plans and the auditing role of the department, as well as particulars of the Maritime Security Identification Card scheme.25

21 Proof Hansard, 8 February 2016, pp 122-127, 129-131, 132-135.

22 Proof Hansard, 8 February 2016, pp 136-138.

23 Proof Hansard, 8 February 2016, pp 138-139.

24 Proof Hansard, 8 February 2016, pp 139-145.

25 Proof Hansard, 8 February 2016, pp 145-148.

218

Chapter 3

Agriculture and Water Resources portfolio

3.1 This chapter highlights the key issues discussed during the hearing for the Agriculture and Water Resources portfolio on 9 February 2016.

3.2 The committee heard from the divisions of the Department of Agriculture and Water Resources (the department) and portfolio agencies in the following order:

• Meat and Livestock Australia Limited;

• Rural Industries Research and Development Corporation;

• Cotton Research and Development Corporation;

• Grains Research and Development Corporation;

• Fisheries Research and Development Corporation;

• Australian Fisheries Management Authority;

• Australian Grape and Wine Authority;

• Australian Pesticides and Veterinary Medicines Authority;

• Horticulture Innovation Australia Limited;

• Plant Health Australia;

• Animal Health Australia;

• Australian Livestock Export Corporation Limited;

• Australian Meat Processor Corporation;

• Corporate divisions [Finance and Business Support; Corporate Strategy and Governance; Information Services; Service Delivery; Office of the General Counsel];

• Australian Bureau of Agricultural and Resource Economics and Sciences;

• Outcome One divisions [Farm Support; Sustainable Agriculture, Fisheries and Forestry; Agricultural Policy; Trade and Market Access];

• Outcome Two divisions [Exports; Biosecurity Animal; Chief Veterinary Officer; Biosecurity Plant; Australian Chief Plant Protection Officer; Compliance; Biosecurity Policy and Implementation]; and

• Outcome Three divisions [Water Policy; Murray-Darling Basin Authority].

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3.3 Landcare Australia Limited was called to appear but released during the course of the hearing without providing evidence

Meat and Livestock Australia Limited (MLA)

3.4 The committee traversed a variety of topics with MLA, including the current and predicted states of the domestic and export markets, as well as the agency's relationship with the peak industry councils. Officials also provided an analysis of current beef and lamb prices, and information on the broader issues surrounding productivity and the critical mass of the beef herd.1

Rural Industries Research and Development Corporation (RIRDC)

3.5 Following a similar line of questioning from previous estimates, senators queried officials on the details of the potential relocation of RIRDC to Wagga Wagga. In addition to clarifying timelines and the potential of the hub and spoke model for the agency, discussion also took place on the government's decentralisation policy more generally.2

3.6 The committee also discussed the 2015 research undertaken by RIRDC on cooperatives and the potential of collective bargaining, and sought information on how the government intended to move forward with the cooperatives program noted in the Agricultural Competitiveness White Paper.3

Cotton Research and Development Corporation (CRDC)

3.7 Senators inquired into the research priorities and five year strategic plan of CRDC, as well as the extent of collaborations between the agency and the Commonwealth Scientific and Industrial Research Organisation (CSIRO). The potential effects of CSIRO job losses on this partnership were also raised during this discussion.4

Grains Research and Development Corporation (GRDC)

3.8 The committee queried officials on the agency's sponsorship of the 2016 Global Food Forum to be held in Melbourne, seeking details on the exact nature of the sponsorship package and the benefits to be gained by GRDC.5

1 Proof Hansard, 9 February 2016, pp 2-17.

2 Proof Hansard, 9 February 2016, pp 17-22, 30-35.

3 Proof Hansard, 9 February 2016, pp 24-30.

4 Proof Hansard, 9 February 2016, pp 35-37.

5 Proof Hansard, 9 February 2016, pp 38-43.

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3.9 Senators also requested information on the staffing profile and professional development activities of the agency, with officials undertaking to provide on notice details on training sessions for the senior leadership group.6

Fisheries Research and Development Corporation (FRDC)

3.10 FRDC officials provided the committee with further information on the proposed relocation of the agency away from Canberra, outlining the potential benefits of being located in regional Australia and the possible impact on staffing levels.7

3.11 The committee also received details on the proposal that FRDC be responsible for the costs of Australia's membership to various regional fishery organisations, and the impact this would have on the agency's budget.8

Australian Fisheries Management Authority (AFMA)

3.12 The committee raised matters relating to the activities of the Geelong Star trawler, querying officials on the recent albatross deaths and the subsequent actions taken by AFMA to minimise the risk of further wildlife interactions. Officials provided information on the levels of observer coverage employed and the mitigation strategies and limits currently in place for the vessel.9 The committee also discussed the Australian plan of action for seabirds in relation to trawling activities more generally.10

Australian Grape and Wine Authority (AGWA)

3.13 AGWA officials provided the committee with an update on the activities of the agency in its first 18 months of operation. The committee posed questions relating to the marketing expenditure of AGWA, and received information on the current growth and trends in the Australian wine industry export market, particularly in regard to the United Kingdom, the United State of America, and Asia.11

Australian Pesticides and Veterinary Medicines Authority (APVMA)

3.14 The committee requested details on the number of applications received for the registration of veterinary chemical products, and also inquired into the ongoing court case and other matters related to the agency's interpretation of legislation

6 Proof Hansard, 9 February 2016, pp 44-49.

7 Proof Hansard, 9 February 2016, pp 50-52, 54-55.

8 Proof Hansard, 9 February 2016, pp 52-53.

9 Proof Hansard, 9 February 2016, pp 55-65

10 Proof Hansard, 9 February 2016, pp 66-67.

11 Proof Hansard, 9 February 2016, pp 67-2.

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pertaining to the use and disclosure of confidential commercial information when assessing applications.12

3.15 Officials also discussed the potential relocation of the agency to Armidale, the projected impacts of the abolition of the APVMA advisory board, and various matters relating to a global shortage of a vaccine for the equine herpes virus. Senators also sought clarification on the superbug MCR-1 and the use of the Colistin antibiotic.13

Horticulture Innovation Australia Limited (HIAL)

3.16 The committee canvassed a number of issues with HIAL, including the sweet potato levy framework and the funding and market access challenges facing cherry growers. Following on from a line of questioning employed at the 2015-16 Supplementary Estimates hearing, senators sought an update on the case of funds misappropriated by a former employee, and questioned officials on the lessons the agency had learnt from the incident.14

Plant Health Australia

3.17 Plant Health Australia officials presented evidence illustrating how the agency is tackling issues of plant biosecurity and fruit fly management, noting efforts to establish a fruit fly council. Senators also received clarification on the cost-benefit considerations that led to the decision of the agency not to relocate to premises with Animal Health Australia.15

Animal Health Australia

3.18 The committee queried officials on the decision of the agency not to relocate in conjunction with Plant Health Australia, as well as the new lease arrangements now in place. Senators also sought information on the decision not to transfer National Livestock Identification System Limited from MLA to Animal Health Australia.16

Australian Livestock Export Corporation Limited (LiveCorp)

3.19 The committee received an update on the Livestock Global Assurance Program, including details on the aims of the program and the projected timeline for discussions with industry.17

12 Proof Hansard, 9 February 2016, pp 72-75.

13 Proof Hansard, 9 February 2016, pp 75-87.

14 Proof Hansard, 9 February 2016, pp 87-90.

15 Proof Hansard, 9 February 2016, pp 90-92.

16 Proof Hansard, 9 February 2016, pp 92-93.

17 Proof Hansard, 9 February 2016, pp 93-94.

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Australian Meat Processor Corporation (AMPC)

3.20 AMPC provided an overview of recent changes to the board, as well as details on the current strategic plan of the organisation. In particular the senators sought an understanding of AMPC stakeholder requests for greater scientific inputs towards addressing issues such as food safety, product development, market access and industry and environmental sustainability.18

Corporate Divisions

3.21 This session encompassed Finance and Business Support, Corporate Strategy and Governance, Information Services, Service Delivery, and the Office of the General Counsel.

3.22 The committee received a detailed update on the implementation of recommendations from the 2015 review conducted by Ernst and Young into the department's handling of freedom of information requests.19

3.23 Department officials also provided information on the reasons behind the abolition of the National Rural Advisory Council (NRAC), with senators seeking clarification on the practical implications arising from the merging of the functions of NRAC with the Agricultural Industry Advisory Council.20

3.24 The progress of the implementation of the Agricultural Competitiveness White Paper initiatives was also discussed, with particular reference to the transitional loan program, drought concessional loans, and pest and weed programs. 21

Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES)

3.25 The committee engaged in a brief discussion over the research ABARES is undertaking on productivity in the agricultural, fishery and forestry sectors.22

Outcome One Divisions

3.26 The scope of Outcome One is as follows:

More sustainable, productive, internationally competitive and profitable Australian agricultural, food and fibre industries through policies and

18 Proof Hansard, 9 February 2016, pp 94-96.

19 Proof Hansard, 9 February 2016, pp 96-99.

20 Proof Hansard, 9 February 2016, pp 99-104.

21 Proof Hansard, 9 February 2016, pp 105-106.

22 Proof Hansard, 9 February 2016, pp 106-109.

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initiatives that promote better resource management practices, innovation, self-reliance and improved access to international markets.23

3.27 This session encompassed the Farm Support division, the Sustainable Agriculture, Fisheries and Forestry division, the Agricultural Policy division, and the Trade and Market Access division.

3.28 The committee sought details on the Regional Forest Agreements in operation in Tasmania and Victoria, receiving details on the independent review results, as well as the discussions currently being held with state governments on the future of the agreements. 24

3.29 Senators also queried officials on the funding specifics of the Farm Household Allowance Program, the department's priorities for developing a formal agricultural productivity work plan, and work being done in relation to a Californian ban on imported kangaroo products.25

3.30 The committee inquired into the role of five new agricultural counsellors to be stationed in Vietnam, Malaysia, the Middle East, China and Thailand, and received an update on the uptake of drought concessional loans and drought recovery concessional loans. Broader discussions on Commonwealth drought-related programs also traversed the eligibility criteria for the Drought Communities Program, as well as the Rural Financial Counselling Service.26

Outcome Two Divisions

3.31 The scope of Outcome Two is as follows:

Safeguard Australia's animal and plant health status to maintain overseas markets and protect the economy and environment from the impact of exotic pests and diseases, through risk assessment, inspection and certification, and the implementation of emergency response arrangements for Australian agricultural, food and fibre industries.27

3.32 This session encompassed the Exports division, the Biosecurity Animal division, the Chief Veterinary Officer, the Biosecurity Plant division, the Australian Chief Plant Protection Officer, the Compliance division, and the Biosecurity Policy and Implementation division.

3.33 The committee engaged officials in an in-depth discussion on the particulars of the equine herpes virus, receiving an explanation from the Chief Veterinary Officer

23 Agriculture and Water Resources Portfolio Additional Estimates Statements 2015-16, p. 32.

24 Proof Hansard, 9 February 2016, pp 109-112.

25 Proof Hansard, 9 February 2016, pp 112-116.

26 Proof Hansard, 9 February 2016, pp 116-126.

27 Agriculture and Water Resources Portfolio Additional Estimates Statements 2015-16, p. 32.

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on the impact of the disease, as well as further information on the status of the supply of the vaccine in Australia. In this context, the committee also inquired into the broader issues surrounding vaccine importation, including the influence of commercial priorities.28

3.34 Senators also posed questions on the progress of the regulatory and non-regulatory reform options the department is considering to improve the management of imported food under the Imported Food Inspection Scheme to ensure food safety outcomes. This line of questioning followed the committee's interest in the topic in the wake of the 2015 outbreak of the hepatitis A virus linked to contaminated frozen berries sourced from China. The committee also briefly asked after the department's engagement with their state counterparts and other relevant government agencies in light of the recent salmonella outbreak connected to fresh lettuce leaves.29

3.35 The committee inquired into matters surrounding the importation of bee semen, seeking clarification on the department's policies and the biosecurity risks associated with the importation of the product. The committee heard details on the methods and goals of bee semen importation, with officials noting the process is aimed at improving the genetics of the bee population, thereby creating better disease and mite resistance.30

3.36 Officials furnished the committee with information relating to the department's response to allegations of cruelty to greyhounds in Macau outlined in a media investigation. A progress update on the current investigation into Serana Propriety Limited was also provided, with the committee receiving further clarification on the challenges inherent in the work. 31

Outcome Three Divisions

3.37 The scope of Outcome Three is as follows:

Improve the health of rivers and freshwater ecosystems and water use efficiency through implementing water reforms, and ensuring enhanced sustainability, efficiency and productivity in the management and use of water resources.

3.38 This session encompassed the Water division and the Murray-Darling Basin Authority.

28 Proof Hansard, 9 February 2016, pp 126-128.

29 Proof Hansard, 9 February 2016, pp 130-134.

30 Proof Hansard, 9 February 2016, pp 134-135.

31 Proof Hansard, 9 February 2016, pp 135-139.

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3.39 The chair made a statement on issues relating to the northern development water resource, and senators indicated they would place all further questions on notice. 32

Senator the Hon. Bill Heffernan Chair

32 Proof Hansard, 9 February 2016, pp 139-140.

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Appendix 1

Documents tabled

Infrastructure and Regional Development portfolio

1. Document titled 'Flight Operations: Flight Standing Order: Application of Flight Time Limitations'. Tabled by Senator Nick Xenophon on 8 February 2016.

2. Document titled 'Information Brief: Melbourne Basin Coordination Incidents'. Tabled by Mr Jason Harfield, Acting Chief Executive Officer, Airservices Australia on 8 February 2016.

3. Document titled 'Information Brief: LAHSO at Melbourne Airport'. Tabled by Mr Jason Harfield, Acting Chief Executive Officer, Airservices Australia on 8 February 2016.

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Appendix 2

Additional Information received

Infrastructure and Regional Development portfolio

1. Correspondence received 15 February 2016 from Ms Judith Zielke, Deputy Secretary, Department of Infrastructure and Regional Development, correcting evidence given on 8 February 2016.

2. Correspondence received 24 February 2016 from Mr Mark Skidmore AM, Chief Executive Officer and Director of Aviation Safety, Civil Aviation Safety Authority, correcting evidence given on 8 February 2016.

Agriculture and Water Resources portfolio

1. Correspondence received 19 February 2016 from Ms Jo Evans, Deputy Secretary, Department of Agriculture and Water Resources, correcting evidence given on 9 February 2016.

2. Correspondence (2) received 19 February 2016 from Ms Jo Evans, Deputy Secretary, Department of Agriculture and Water Resources, correcting evidence given on 9 February 2016.

3. Correspondence received 19 February 2016 from Dr Narelle Clegg, Assistant Secretary, Exports Division, Department of Agriculture and Water Resources, correcting evidence given on 9 February 2016.

4. Correspondence received 23 February 2016 from Mr Ian Thompson, First Assistant Secretary, Agriculture, Fisheries and Forestry Division, Department of Agriculture and Water Resources, correcting evidence given on 9 February 2016.

5. Correspondence received 24 February 2016 from Mr Richard Norton, Managing Director, Meat and Livestock Australia Limited, correcting evidence given on 9 February 2016.

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