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Wednesday, 23 August 1972
Page: 323

Senator BISHOP - My question is directed to the Minister for Air and it follows questions asked by Senator Willesee relating to the alarming disclosures by the Auditor-General and the newspapers in connection with overcharging of Australia by the United States Armed Forces to the extent of $1m. I ask the Minister: Is it a fact that there had been an inadequate checking of billings by the Department of Air and other departments? Is it also a fact that a complete audit examination is likely to reveal more than the$1m overcharging? Has his attention been drawn to the Auditor-General's statement that the Department of Air acknowledges that the only checks performed in Australia to date on such charges have related to ocean freight charges? If the Minister is not in a position to advise about this matter today, will he attach the questions I have raised to the questions asked by Senator Willesee?

Senator DRAKE-BROCKMAN - I was going to take the opportunity of making a statement later in regard to the situation as it affects the Department of Air. The statement would take about 2 minutes to read. Perhaps I could seek leave to read it now?

The ACTING PRESIDENT- Is leave granted? There being no objection, leave is granted.

Senator DRAKE-BROCKMAN - I have noted the Press reports indicating that the Australian Defence Services may have sustained possible overcharges amounting to $US900,000 in respect of supplies from the United States Government. Although it is not clear in the newspaper reports, these overchargesarose from the incorrect application by the United States agencies of percentage on costs known as accessorial charges. These charges cover such things as storage, packing, handling and freight. In my Department the , amount involved was $US33,485. I am pleased to say that all but $US4,720 has been financially adjusted our way by the United States Government. There were 3 cases involved and one of these is still under departmental examination. Following the disclosure of the incorrect charges my Department is examining in detail the nature and extent of the checking performed by Australian staff in the United States. Depending on the outcome of these inquiries it may be necessary to arrange for additional documentation to be sent to Australia or to provide additional staff in North America to undertake the task of checking.

Press reports on the Auditor-General's report also referred to avery substantial number of potential discrepancies in EDP computer records. My Department is using computer processing to obtain a reconciliation between United States, . Government invoices and our own receipt vouchers. I believe this to be a logical computer application in view of the high volume of goods delivered from the United' States Services. For example, over 100,00.0 types of equipment and spares apply to theF111C aircraft alone. The number of potential discrepancies disclosed by the . March 1972 computer produced reports was high. However investigation of such discrepancies in the meantime has revealedthat the majority of these can be attributed to teething problems associated with the conversion to the computer programming process.

During the last few days, for example, it was discovered that because of a malfunction in the input of data to the computer relating to credit billings, the number of discrepancies disclosed in March 1972 can be reduced by about 60 per cent. It must be appreciated that the United States Armed Services are alsomonitoring the purification of their computer records and without prompting from Australia, adjustments are automatically made to previous billings on the ascertainment of refined details. Nevertheless my Department is actively pursuing the matter and is confident that the situation is infinitely less serious than early computer reports indicated. As anomalies in the computer process are detected appropriate rectification is being effected and when the system is perfected the Department will reap the labour saving benefits it planned to achieve in departing from the tedious manual process, lt must be appreciated also that 'discrepancies' as reported by the AuditorGeneral means 'under-billings' as well as excess-billings' and there is no evidence of deliberate overcharging by the United States Armed Services.

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