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COMMONWEALTH OF AUSTRALIA

Proof Committee Hansard

SENATE

ENVIRONMENT AND COMMUNICATIONS LEGISLATION

COMMITTEE

Budget Estimates

(Public)

WEDNESDAY, 29 MAY 2013

CANBERRA

BY AUTHORITY OF THE SENATE

[PROOF COPY]

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It is made available under the condition that it is recognised as such.

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SENATE

ENVIRONMENT AND COMMUNICATIONS LEGISLATION COMMITTEE

Wednesday, 29 May 2013

Members in attendance: Senators Abetz, Back, Bilyk, Birmingham, Boswell, Cameron, Colbeck, Heffernan,

Joyce, Ludlam, Ian Macdonald, McKenzie, Ruston, Singh, Waters, Williams, Xenophon.

Wednesday, 29 May 2013 Senate Page 1


SUSTAINABILITY, ENVIRONMENT, WATER, POPULATION AND COMMUNITIES

PORTFOLIO

In Attendance

Senator Farrell, Minister for Science and Research and Minister Assisting on Tourism

Department of Sustainability, Environment, Water, Population and Communities

Executive

Dr Paul Grimes, Secretary

Mr Malcolm Thompson, Deputy Secretary

Dr Kimberley Dripps, Deputy Secretary

Mr David Parker AM, Deputy Secretary

Ms Donna Petrachenko, Chief Adviser International Biodiversity and Sustainability

Australian Antarctic Division

Dr Tony Fleming, Director

Dr Rob Wooding, General Manager, Support Centre

Dr Nick Gales, Chief Scientist

Mr Matthew Sutton, Finance Manager

Biodiversity and Conservation Division

Mr Sean Sullivan, First Assistant Secretary

Ms Claire Howlett, Assistant Secretary, Biodiversity Policy Branch

Ms Charmayne Murray, Acting Assistant Secretary, Program Delivery South Branch

Ms Peta Lane, Acting Assistant Secretary, Program Delivery North Branch

Ms Lisa Nitschke, Acting Assistant Secretary, Indigenous Policy Branch

Mr Nathan Sibley, Director, Program Support Branch

Dr Julie Anorov, Director, Program Support Branch

Mr Joshua Thomas, Director, Biodiversity Policy Branch

Environment Assessment and Compliance Division

Mr Dean Knudson, First Assistant Secretary

Ms Barbara Jones, Assistant Secretary, North, West and Offshore Assessment Branch

Ms Deb Callister, Assistant Secretary, Queensland and South Australia Assessment Branch

Mr James Tregurtha, Assistant Secretary, South-Eastern Australia Assessment Branch

Mr Shane Gaddes, Acting Assistant Secretary, Compliance and Enforcement Branch

Ms Carolyn Cameron, Assistant Secretary, Strategic Approaches Branch

Ms Mary Colreavy, Assistant Secretary, Great Barrier Reef Taskforce

Mr James Barker, Assistant Secretary, Regulatory Reform Branch

Supervising Scientist Division

Mr Richard McAllister, Acting Supervising Scientist

Mr Keith Tayler, Director, Supervision and Assessment

Wildlife, Heritage and Marine Division

Ms Alex Rankin, First Assistant Secretary

Mr Paul Murphy, Assistant Secretary, Heritage North Branch

Mr Matthew White, Acting Assistant Secretary, Wildlife Branch

Ms Lara Musgrave, Assistant Secretary, Marine Environment Policy and Programs Branch

Mr Geoff Richardson, Assistant Secretary, Marine Biodiversity and Biosecurity Branch

Ms Jennifer Carter, Acting Assistant Secretary, Heritage South Branch

Senate Wednesday, 29 May 2013


Environment Quality Division

Dr Diana Wright, First Assistant Secretary

Mr Andrew McNee, Assistant Secretary, Environment Protection Branch

Mr Matthew Dadswell, Assistant Secretary, Environment Standards Branch

Mr Bruce Edwards, Assistant Secretary, Waste Policy Branch

Sustainability, Policy and Analysis Division

Mr Mark Flanigan, First Assistant Secretary

Mrs Mary Wiley-Smith, Assistant Secretary, Sustainability and Communities Branch

Dr Kathryn Collins, Assistant Secretary, Environment Research and Information Branch

Parks Australia Division

Mr Peter Cochrane, Director of National Parks

Mr Charlton Clark, Assistant Secretary, Commonwealth Marine Reserves Branch

Mr Mark Taylor, Assistant Secretary, Parks and Protected Areas Programs Branch

Policy and Communications Division

Mr Stephen Oxley, First Assistant Secretary

Mr Howard Conkey, Acting Assistant Secretary, Communications and Ministerial Services Branch

Corporate Strategies Division

Ms Dianne Carlos, Chief Operating Officer

Ms Lily Viertmann, Chief Financial Officer, Financial Services Branch

Water Efficiency Division

Ms Mary Harwood, First Assistant Secretary

Mr Colin Mues, Assistant Secretary, Water Recovery Branch

Mr Richard McLoughlin, Assistant Secretary, Irrigation Efficiency Northern Branch

Mr John Robertson, Assistant Secretary, Basin Communities and On Farm Branch

Ms Lucy Vincent, Assistant Secretary, On Farm and Urban Water Programs Branch

Water Reform Division

Mr Tony Slatyer, First Assistant Secretary

Mr Greg Manning, Assistant Secretary, Aquatic Systems Policy Branch

Commonwealth Environmental Water Office

Mr David Papps, Commonwealth Environmental Water Holder

Mr Steve Costello, Assistant Secretary, Policy and Portfolio Management Branch

Dr Simon Banks, Assistant Secretary, Environmental Water Delivery Branch

Office of Water Science

Ms Suzy Nethercott-Watson, Acting First Assistant Secretary

Agencies

Bureau of Meteorology

Dr Rob Vertessy, Director of Meteorology

Dr Ray Canterford, Deputy Director, Services

Ms Vicki Middleton, Deputy Director, Corporate

Mr Graham Hawke, Deputy Director, Climate and Water

Dr Neville Smith, Deputy Director, Research and Systems

Mr Barry Hanstrum, Acting Deputy Director, Research and System

Mr Trevor Plowman, Assistant Director, Finance

Great Barrier Reef Marine Park Authority

Dr Russell Reichelt, Chairman



Mr Bruce Elliot, General Manager, Environment and Sustainability

Ms Margaret Johnson, General Manager, Communication and Policy Coordination

Mr John Barrett, Director, Corporate Services

Mr Adam Smith, Director, Environmental Assessment and Management

Murray-Darling Basin Authority

Dr Rhondda Dickson, Chief Executive

Dr Fraser MacLeod, Executive Director, Joint Programs Internal Review Taskforce

Mr Russell James, Executive Director, Policy and Planning Division

Mr Frank Nicholas, Executive Director, Corporate Services Division

Ms Jody Swirepik, Executive Director, Environmental Management Division

Mr David Dreverman, Executive Director, River Management Division

National Water Commission

Mr James Cameron, Chief Executive Officer

Ms Kerry Olsson, General Manager Industry and Sustainability

Mr Matt Kendall, General Manager Planning and Evaluation

Committee met at 08:59

CHAIR (Senator Cameron): I declare open this public hearing of the Senate Environment and

Communications Legislation Committee. Today the committee continues its examination of the Sustainability,

Environment, Water, Population and Communities portfolio. The committee has set Friday, 26 July 2013 as the

date by which answers to questions on notice are to be returned. Under standing order 26, the committee must

take all evidence in public session. This includes answers to questions on notice. Officers and senators are

familiar with the rules of the Senate governing estimates hearings. If you need assistance, the secretariat has

copies of the rules. I particularly draw the attention of witnesses to an order of the Senate of 13 May 2009

specifying the process by which a claim of public interest immunity should be raised, which I now incorporate in

Hansard.

The extract read as follows—

Public interest immunity claims

That the Senate—

(a) notes that ministers and officers have continued to refuse to provide information to Senate committees without properly

raising claims of public interest immunity as required by past resolutions of the Senate;

(b) reaffirms the principles of past resolutions of the Senate by this order, to provide ministers and officers with guidance

as to the proper process for raising public interest immunity claims and to consolidate those past resolutions of the Senate;

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

(1) If:

(a) a Senate committee, or a senator in the course of proceedings of a committee, requests information or a document from

a Commonwealth department or agency; and

(b) an officer of the department or agency to whom the request is directed believes that it may not be in the public interest

to disclose the information or document to the committee, the officer shall state to the committee the ground on which the

officer believes that it may not be in the public interest to disclose the information or document to the committee, and specify

the harm to the public interest that could result from the disclosure of the information or document.

(2) If, after receiving the officer’s statement under paragraph (1), the committee or the senator requests the officer to refer the

question of the disclosure of the information or document to a responsible minister, the officer shall refer that question to the

minister.

(3) If a minister, on a reference by an officer under paragraph (2), concludes that it would not be in the public interest to

disclose the information or document to the committee, the minister shall provide to the committee a statement of the ground

for that conclusion, specifying the harm to the public interest that could result from the disclosure of the information or

document.

(4) A minister, in a statement under paragraph (3), shall indicate whether the harm to the public interest that could result from

the disclosure of the information or document to the committee could result only from the publication of the information or

document by the committee, or could result, equally or in part, from the disclosure of the information or document to the

committee as in camera evidence.



(5) If, after considering a statement by a minister provided under paragraph (3), the committee concludes that the statement

does not sufficiently justify the withholding of the information or document from the committee, the committee shall report

the matter to the Senate.

(6) A decision by a committee not to report a matter to the Senate under paragraph (5) does not prevent a senator from raising

the matter in the Senate in accordance with other procedures of the Senate.

(7) A statement that information or a document is not published, or is confidential, or consists of advice to, or internal

deliberations of, government, in the absence of specification of the harm to the public interest that could result from the

disclosure of the information or document, is not a statement that meets the requirements of paragraph (1) or (4).

(8) If a minister concludes that a statement under paragraph (3) should more appropriately be made by the head of an agency,

by reason of the independence of that agency from ministerial direction or control, the minister shall inform the committee of

that conclusion and the reason for that conclusion, and shall refer the matter to the head of the agency, who shall then be

required to provide a statement in accordance with paragraph (3).

(Extract, Senate Standing Orders, pp 124-125)

Department of Sustainability, Environment, Water, Population and Communities

Murray-Darling Basin Authority

National Water Commission

[09:00]

CHAIR: I welcome Senator the Hon. Don Farrell, Minister for Science and Research, representing the

Minister for Sustainability, Environment, Water, Population and Communities; and portfolio officers. We now

turn to outcome 4, and I call officers from the Murray-Darling Basin Authority together with officers from the

department in relation to program 4.1, water reform, and officers from the National Water Commission. Does

anyone want to make an opening statement?

Senator Farrell: No, thank you, Chair.

Senator JOYCE: Can the department please provide a list of expenditure under each of the following

programs for all of the financial years beginning in 2007-08, including the most up-to-date spending for the

current financial year? Can the department also provide forecasts or projections for these programs over the

forward estimates? No. 1, Restoring the Balance.

Ms Harwood: Just to clarify, you are wanting the expenditure by year for Restoring the Balance?

Senator JOYCE: Yes. From 2007-08, including the most up-to-date spending for the current financial year.

Ms Harwood: The total administered expenditure in 2007-08 was $30,775,346.76; in 2008-09 it was

$373,989,659.45; in 2009-10 it was $780,188,070.82; in 2010-11 it was $357,676,795.46; in 2011-12 it was

$540,896,438.63; and this year, as at April, it is $700,992,671.58.

Senator JOYCE: Okay. The Sustainable Rural Water Use and Infrastructure Program.

Ms Harwood: I might have to take that on notice. I could come back to it during the morning. I just need to

find it amongst my many tables.

Senator JOYCE: If you take it on notice, when will you get back to us?

Dr Grimes: We might just give Ms Harwood a small opportunity to find the material quietly.

Senator JOYCE: While you are looking for that, I am also going to be asking about the National Water

Security Plan, the National Rainwater and Greywater Initiative and the Green Precincts Fund. We probably won’t

get a chance to get these back on notice, so I need to, as best we can, get these answers now.

Dr Grimes: Yes, we will seek to assist you with that.

Mr Parker: I am sure we can draw those numbers together for you during the course of these hearings.

Senator JOYCE: Today?

Mr Parker: Yes.

Senator JOYCE: Okay. What I will do, Ms Harwood, is leave those with you. It is going to be Restoring the

Balance, the Sustainable Rural Water Use and Infrastructure Program, the National Water Security Plan for Cities

and Towns, the National Rainwater and Greywater Initiative and the Green Precincts Fund. I want to get those

numbers because we want to try and work out where we are going with the department.

Can the department indicate what elements of this funding has already been allocated? Can you answer that

now or do you want to get back to me on that?

Mr Parker: Over the forward estimates?



Senator JOYCE: Yes.

Mr Parker: We will have to take that on notice. We will endeavour to get those numbers to you today.

Senator JOYCE: I want to get an update of where your intergovernmental agreements are with the states in

regards to the implementation of the basin plan. Who is the best person to answer that?

Mr Slatyer: The intergovernmental agreement is still going through its development process.

Senator JOYCE: It is still going through its development process. What areas of disagreement are there

currently?

Mr Slatyer: We are not in a position to say that, Senator. There are many issues covered by the

intergovernmental agreement, and until it is finalised we are not able to advise of the attitudes of different parties

to different provisions.

Senator JOYCE: Are we going to get to an agreement?

Mr Slatyer: The governments are working actively on that agreement. That is as much as the department is

able to say about that.

Senator JOYCE: How often are we having meetings about trying to get to an intergovernmental agreement?

Mr Slatyer: There have been a large number of meetings at the officials level between water agencies of the

Commonwealth and state governments, and there have also been interactions between agencies at central

government level. So considerable work has been done to finalise the agreement.

Senator JOYCE: What happens if we do not get an agreement.

Mr Slatyer: The intention is to get an agreement, Senator.

Dr Grimes: I think that it is appropriate to indicate that we are really at the very final stages of the finalisation

of the intergovernmental agreement. As Mr Slatyer has indicated, we are not in a position to give you an update

on every aspect of that just at this moment. They are matters being considered by governments. But it is very well

positioned and we are in the very final stages of consideration of the IGA.

Senator JOYCE: Can you tell us which states still have issues outstanding?

Dr Grimes: I do not think it would be appropriate to go into that level of detail in these hearings. But I am

very comfortable in advising you that the discussions between officials have been very productive, and

governments are in the very final stages of the consideration of the IGA.

Senator JOYCE: Do you have a draft version of the intergovernmental agreement?

Dr Grimes: Yes, there are draft versions of the intergovernmental agreement, and those are very advanced.

Senator JOYCE: When is the next meeting between the states and the Commonwealth to discuss the

intergovernmental agreement?

Mr Parker: There is not presently a meeting scheduled between all officials. There are bilateral discussions

taking place, and discussions between water officials are substantially complete, as Dr Grimes has said.

Dr Grimes: It is for that reason, because the process is so advanced, that it is not at the point of large-scale

meetings. It is really at the very final stages of the IGA consideration by governments.

Senator JOYCE: We are now in the process of basically bilateral agreements to finish things off?

Dr Grimes: We are essentially making sure that all final details that have been raised by jurisdictions are

properly considered and finalised. But, as I have indicated, it is at the very final stages of the process.

Senator JOYCE: Have you reached an agreement on Nimmie-Caira? That seems to be belted around all the

time.

Mr Parker: Not yet.

Senator JOYCE: Is that one of the problems we are having with New South Wales, coming to an agreement

on Nimmie-Caira?

Mr Parker: There are active discussions between the Commonwealth and New South Wales on the Nimmie-

Caira proposal.

Senator JOYCE: Is it true that there are discussions also in regard to the purchase of the water from Nimmie-

Caira by an external party that might be out there?

Mr Parker: That has not been discussed between the Commonwealth and New South Wales.

Senator JOYCE: What are the areas with Nimmie-Caira that are causing problems? Where does the issue lie

there?



Mr Parker: The Nimmie-Caira proposal is a very interesting, large and important proposal. It has basin-wide

implications, being effectively at a chokepoint near the confluence of the Murrumbidgee and Murray rivers. It is a

complex proposal involving water purchase and land management arrangements, and those issues are being

actively worked through between the Commonwealth and New South Wales on a daily basis.

Senator JOYCE: If you do not purchase the water, there is nothing to stop a state-owned enterprise from

another country purchasing that water and developing it, is there?

Mr Parker: Nothing within water policy, that is right. The foreign investment rules are potentially applicable.

Senator JOYCE: Are you aware of Chinese interest in purchasing the water at Nimmie-Caira?

Mr Parker: I have seen press reports to that effect.

Senator JOYCE: Can you give me an update on the progress of Menindee?

Ms Harwood: Working with New South Wales, we have agreed the scope of a suite of infrastructure changes

at the lakes that would enable them to be run more efficiently, and thereby produce savings in terms of

evaporative losses. The next step is to move to the full costing, design and development of the infrastructure side,

and also to work with the other states who have an interest in how that project unfolds in terms of the water

management at the lakes. We have commenced discussions with South Australia and Victoria on the proposal and

how it would work. That is where it is up to.

Mr Parker: We are envisaging that before too long a public consultation process would start on the project.

Senator JOYCE: Menindee seems to be hanging around forever.

Mr Parker: It has been a multiple-decade exercise.

Senator JOYCE: Upon the conclusion of Menindee, how much water will we have saved?

Mr Parker: That number remains to be finally settled. It depends upon a complex interaction of the changed

infrastructure proposals at Menindee. As Ms Harwood mentioned, there is substantive agreement on the possible

infrastructure changes at Menindee. It also depends upon the rules of operation of Menindee and where water is

held and where it is released from. The present modelling exercises that are being undertaken point to substantive

possible savings. How that will be accounted for under the Basin Plan, including the SDL adjustment mechanism,

is presently being worked through with New South Wales.

Senator JOYCE: So what is the number we come up with?

Mr Parker: Well, the number has not been finally settled.

Senator JOYCE: Is there a range?

Mr Parker: It is in the order of 80 gigalitres.

Senator JOYCE: How much money has the government spent on Menindee thus far and what has the money

been spent on? My question is how much water has been saved, but no water has been saved at this point in time.

But we are looking at a roundabout 80 gigalitres when we complete?

Mr Parker: That is correct. The savings come from the implementation of the project.

Senator JOYCE: So could I get the number of how much we have spent at Menindee?

Ms Harwood: The expenditure to date at Menindee—that is, all the technical studies and work so far—is

around $24 million. I can get you a precise figure.

Senator JOYCE: Since we started talking about it to where we are now we have spent only $24 million?

Ms Harwood: That is since 2008.

Senator JOYCE: Do we have studies for $24 million?

Ms Harwood: We have a very extensive study of the groundwater resources in the region. It is a major piece

of work, using new technologies to get a much better understanding of the groundwater resources in the region,

because that is relevant. Part of the project is also making sure that Broken Hill's water supply is secure.

Senator JOYCE: So how much have you spent on studying groundwater? How much of that $24 million was

into studies of groundwater?

Ms Harwood: The cost of the groundwater work is in the vicinity of $22 million.

Senator JOYCE: So $22 million on groundwater studies. What has been the outcome of those studies?

Ms Harwood: An interim report was released last year from Geoscience Australia that is up on our website. A

final report, which is an extensive technical report on the work, will be released soon. The result is a completely



new understanding of the scale, distribution and character of the groundwater resources in the region. It is major

new information.

Senator JOYCE: In your own words, give me a rundown of how it works.

Mr McLoughlin: The work by Geoscience Australia has identified in the study area—approximately 100

kilometres or so north and south of the Menindee Lakes on the Darling flood plain—some 14 new aquifers that

were previously unknown to groundwater science, with a very large volume of water currently stored in those

aquifers. The final reports will be available, as Ms Harwood said, in coming weeks. That should underpin that

part of the election commitment from 2007 that relates to water security for Broken Hill.

Senator JOYCE: How much water, in your estimation, is stored in those aquifers, and what is the

conductivity of it?

Mr McLoughlin: The draft report released last year, with the final numbers made public in coming weeks,

estimated current storage volumes of up to around 3,000 gigalitres of groundwater. There is a lot of work to go

yet on finalising that, and storage volume is not the same as the sustainable yield of potential groundwater.

However, Geoscience Australia will have estimates of that, including sustainable yields, potentially available for

the summary reports and new work that is being released shortly.

Senator JOYCE: What is the conductivity of that water, the saline content of that water. I know that you

understand that, but for the purpose of Hansard—

Mr McLoughlin: Yes, I do. It varies substantially between aquifers and between the depths of the aquifers. I

do not have the reports in front of me, but there are substantial quantities of water that is effectively freshwater or

less than 3,000 microsiemens.

Senator JOYCE: Is there any perviousness between the aquifers? If you take water from the bottom aquifer

does it affect the top aquifer?

Mr McLoughlin: One of the technical criteria for this work was that they were semi-confined aquifers so that

there was no impact on surface groundwater or on groundwater dependent vegetation. So that has been a key

component of the work.

Senator JOYCE: But if you tap a bottom aquifer do you affect the aquifers above it?

Mr McLoughlin: Potentially, and that would have to be tested. If one of these aquifers were ever to be

utilised as a drought security supply for Broken Hill, pump testing would need to determine that and what the

risks of surface water would entail.

Senator JOYCE: I am interested to know how you go about doing that. This is not a trick question. How do

you go about finding out whether taking water from the bottom aquifer might affect the top aquifers?

Mr McLoughlin: As part of the work, Geoscience Australia drilled test bores in the areas and put data loggers

in the bores. They have been watching the height of those aquifers over the last two years or so in various places.

The pump testing would need to determine what the response of the aquifer was to a draw down in terms of what

the water table did in response to pumping.

Senator JOYCE: Do you generally find that there is a bit of a response effect—what is your terminology for

it?—in the upper aquifers?

Mr McLoughlin: I assume that there would be, but I am starting to get out of my technical depth here. That is

maybe a question that we can take on notice for Geoscience Australia.

Senator JOYCE: Is that a unique feature just down there or would that be a pertinent feature of most

aquifers—that if you take water from the bottom aquifer it affects the aquifers above?

Mr McLoughlin: I think that is a question we would take on notice. It is one of those things that would be

dependent on the geology of the area and the aquifer concerned, I would have thought.

Senator JOYCE: That is an interesting question in regards to the coal seam gas. When will we start to do

some earthworks at Menindee? Obviously everybody is fascinated by the studies, but they really want to see

something actually happen. I know that you have to go through all of the preliminary studies, but ultimately

people will want to walk out there and say 'We are doing this.' When does the earthmoving and the sorts of tactile

construction components of Menindee start actually happening?

Mr McLoughlin: We are in discussion or negotiation with New South Wales on a draft funding agreement for

the New South Wales Office of Water to prepare a detailed project plan for implementation of the agreed

infrastructure. We have done some preliminary costing on that. It is a matter of, over the next six to 12 months,

preparing detailed construction plans, environmental approvals, and planning approvals and processes.



Mr Parker: Any construction timelines are contingent on the weather and in particular the amount of water

coming down the Darling. It would not be technically feasible to start the construction right now, for instance.

Senator JOYCE: How much water has been saved at Menindee by any works? I suppose none has been

saved yet by any works. How much do we actually have stored at Menindee at the moment?

Ms Harwood: The authority might be able to answer that question.

Senator JOYCE: We have not booked any savings of water at Menindee yet have we?

Ms Harwood: No.

Mr Parker: No.

Senator JOYCE: In construction work you have done thus far, what are the savings that you have booked?

Ms Harwood: I could work through those in detail, but the major projects that have water efficiency savings

for which the Commonwealth has received a share for the environment would include the Northern Victorian

Irrigation Renewal Project and the Private Irrigation Infrastructure Operators Program, which is now all under

contract. The Commonwealth On-Farm Irrigation Efficiency Program has substantial yields of water. The first

two rounds of that are well underway. Some of the projects are completed, and the third round will be under

contract soon. Then there are other state priority projects which yield water, including the Queensland on-farm

program. The New South Wales farm modernisation program is getting underway with the first tranches of

contracts there, and the pilot for that program yielded water. The early projects in the Basin Pipe program in New

South Wales will be bringing their yields forward, and the private irrigation infrastructure program in South

Australia has also yielded water savings for the Commonwealth. I can provide you with a detailed list of the

sorts—

Senator JOYCE: I suppose what everyone is interested in really is what it adds up to.

Ms Harwood: The water recovery through infrastructure as of 30 of April is 313 gigalitres.

Senator JOYCE: How much did you spend doing it?

Ms Harwood: I should say also that that went up just a couple of weeks ago by another 30 gigalitres because

the final contract came in with Murrumbidgee irrigation.

Senator JOYCE: So we are up to 343. How much have you spent to get that 343?

Ms Harwood: I will take that on notice. I would need to add up all the contracts that go with that 313.

Senator JOYCE: Plus the 30 on top of that.

Ms Harwood: Yes.

Senator JOYCE: What is the status of the draft recovery strategy and when will it be finalised?

Ms Harwood: We received comments from a range of bodies and individuals on the draft water recovery

strategy and we will be preparing a final. We are working on that at the moment—to take in those comments and

to prepare. When I say a final, it will be a first edition of that because it will need to be an evolving document that

reflects the changes that occur as we proceed through to the full implementation of the basin plan. It will need a

major review in 2016 when we know the results of the SDL adjustment mechanism.

Senator JOYCE: Sorry, I am trying to work out when it will be finalised. When will the draft recovery

strategy be finalised?

Ms Harwood: I do not have a precise date for the release of that.

Senator JOYCE: So we are reviewing it in 2016. We have to finish it before we can review it.

Ms Harwood: We will release it this year, I just do not have a precise date for when the first formal version of

the Commonwealth water recovery strategy will be released.

Senator JOYCE: How much water does the Commonwealth Environmental Water Holder currently have?

Ms Harwood: Is that in terms of the actual registered holdings for the Commonwealth?

Senator JOYCE: Yes.

Ms Harwood: The contracted is the 313 gigalitres. That is under a works contract. Sorry, the total water

recovery in contracted recoveries is 1,600 gigalitres. That has been recovered towards the 2,750 of the basin plan.

That comprises 1,119 gigalitres of secured water purchases; 313 gigalitres, as of April, for infrastructure; 11

gigalitres gifted by Queensland; two gigalitres from the Water Smart Australia project; and 154 gigalitres

recovered through state government actions, as at September 2012.



Senator HEFFERNAN: How much supplementary water is in that? It might be even better just to break it up

into high security, general allocation and supplementary—bearing in mind that supplementary used to be off

allocation. It should never have been licenced.

Ms Harwood: I can give you the figures for supplementary for water purchases secured. I just need to do a

breakdown. There is not much supplementary through the infrastructure programs. There is for some for things

like metering where you get a pro rata water yield from the projects, but in general the infrastructure projects

yield general security of high security. Apart from, I should say, the Northern Victoria Irrigation Renewal Project,

where the savings reflect the character of the reconfigurations that are taking place. There are some low reliability

water shares from that.

Senator JOYCE: All I am trying to work out is how much water the Commonwealth Environmental Water

Holder currently holds, because where I really want to head to is how much we are actually using, how much are

we storing, how much have we lost and carried over and how much could have been basically sent back to the

farming sector because we could not use it and we lost it?

Ms Harwood: The Commonwealth Environmental Water Holder is a separate outcome and he is on after this

session.

Senator JOYCE: Great! Then we will prepare ourselves for that question so that when they turn up we get an

answer. If you just go back to Menindee, what flow conditions do you need before you can start work at

Menindee?

Ms Harwood: I think it is how much water there is in the lakes at the particular sites where the works are

going to occur. I do not have the precise figures on that, but for some of the things where you are changing outlet

regulators or points of connection between the lakes, you need the Lakes to be empty or near empty to do the

works.

Senator JOYCE: When are these conditions likely to occur, given what is in the system?

Mr McLoughlin: There is some surface water infrastructure that could potentially go ahead, including a new

outlet regulator from Menindee Lakes. But one of the issues for the inefficiency of Menindee Lakes is the amount

of dead storage volume in the lakes. Looking at opportunities to reduce that dead storage volume by drainage

channels to new outlet regulators is part of the mix of potential surface water infrastructure. That could not be

done unless the lakes were dry. It is not likely with current storage levels, as I understand them, that Menindee

Lakes itself would be dry potentially for another couple of years, even in wet conditions. So dry conditions would

be needed for quite a while.

Senator JOYCE: You are going to need a drought before you can get back into it, aren't you?

Mr McLoughlin: Into the lake itself, but some of the other surface water infrastructure can proceed.

Senator JOYCE: I want to refer you to a discussion paper, Trading of Commonwealth environmental water,

released in November 2011. The document was released for comment until May 2012. On your website it says:

The next step in the process will be the public release of a position paper with our responses to the issues raised in the

submissions. This will inform development of operating rules which will establish the general framework within which trade

will occur.

When will the position paper can be released?

Mr Parker: We can take that question under outcome 6.1.

Senator JOYCE: So you have an answer, and you will take that question in a subsequent outcome.

Senator HEFFERNAN: Will you answer it in that outcome?

Mr Parker: We will endeavour to give you the best possible answer.

Senator HEFFERNAN: Do you know the answer yourself?

Mr Parker: I will give you an overview. The precise time line for the release of that paper has not been

determined.

Senator JOYCE: There is your answer.

Ms Harwood: I have those figures you wanted. Do you want me to read those into the record?

Senator JOYCE: Yes.

Ms Harwood: The green precincts funding, I should say, is reported inside the National Water Security Plan

for Cities and Towns, so I will start with that program. In 2007-08—and these are rounded figures—the

expenditure was $10 million; in 2008-09 it was $13.5 million; in 2009-10, the figure was $18.8 million; in 2010-



11, the figure was $22.4 million; in 2011-12, the figure was $86.4 million; and the figure for 2012-13, which I

think is the total budget figure, is $58 million. For the National Rainwater and Greywater Initiative, starting in

2008-09, the figure is $600,000; in 2009-10, the figure is $4.7 million; in 2010-11, the figure is $2.3 million; and

in 2011-12, the figure is $200,000. That program concluded in that year. Under the National Urban Water and

Desalination Plan, the first year in which there is expenditure is 2008-09, where the figure is $24 million. Then in

2009-10, the expenditure for that program is $92.8 million; in 2010-11, the figure is $51 million; in 2011-12, the

figure is $320.2 million; and in 2012-13, the figure is $117.9 million.

I will also read you the Sustainable Rural Water Use and Infrastructure Program figures. In 2007-08, the figure

is $137,127,000; in the next year it is $82,853,000; in 2009-10, it is $235,815,000; in 2010-11, it is $270,606,000;

and in 2011-12, it is $608,339,000. The expenditure for this year will be close to $590 million. I will need to

adjust that figure. We are not quite at the end of the financial year, but our expected expenditure for this year is

between $590 million and $600 million.

Senator BIRMINGHAM: For those of us who do not take shorthand, is it possible to get Ms Harwood to

table the information that she has given Senator Joyce across these programs and the funding?

CHAIR: Ms Harwood, is that possible?

Ms Harwood: Yes. We can prepare that and submit it to the committee.

CHAIR: What is the time frame?

Mr Parker: Today.

Senator BIRMINGHAM: While we are still in session would be good.

Senator RUSTON: Could you also table the same information for the Strengthening Basin Communities

program as well?

Ms Harwood: Yes, I will.

Senator JOYCE: In answer to question number 46 from the last estimates, the department stated that it had

$180 million unallocated from the Sustainable Rural Water Use and Infrastructure Program. How much do you

have left unallocated now?

CHAIR: Ms Harwood, before you go into that, is it possible for one of your officers to start preparing those

documents. Mr Parker said 'today' and there is obviously some concern at trying to get the documents as soon as

practicable. So could you get someone working on it?

Ms Harwood: Yes. I think that the remainder in SRWUIP remains about that level. I will confirm that.

Senator JOYCE: So it is still $180 million?

Ms Harwood: Yes.

Senator HEFFERNAN: That would be the sort of money you would use on Nimmie-Caira?

Ms Harwood: The unallocated amount in SRWUIP is money that has no speaking against it. New South

Wales has $208 million of state priority project funding agreed through the 2008 intergovernmental agreement,

which it has yet to allocate to a specific project. That is separate and different from the $180 million that is

unallocated.

Senator HEFFERNAN: The proposition that New South Wales has put to you on the buyback of Nimmie-

Caira is out of this bin?

Ms Harwood: No, it is not.

Senator HEFFERNAN: Well where is it out of?

Ms Harwood: New South Wales's proposal is to do the project as a state priority project, and it would be

proposing that the funding for that comes from the remaining $208 million which New South Wales has available.

Senator HEFFERNAN: Which is for water buybacks.

Ms Harwood: No. It is part of the sustainable rural water use and infrastructure program.

Senator HEFFERNAN: It does not matter if you spend most of the money on the land and not on the water.

Given that you agreed before they issued the licence—

CHAIR: Senator Heffernan, please allow officers to respond—even to take a breath to get a response would

be good.

Senator HEFFERNAN: Just for the record, as you know, before the licences were issued under this

proposition—which is only a proposition at this stage from New South Wales—there was an agreement before the



licences were issued to pay 2¼ times the value of the water to acquire the water and the land. I can go into great

detail on why I think that is a fraud of the public purse but we'll leave it at that.

Senator JOYCE: I really need to clarify over what years that $180 million is unallocated.

Ms Harwood: It has no project; it is not subject to any commitment. There is about $570 million of other

money in SRWUIP which is the sum of the remaining funds under the original state priority projects. So each of

the states has state priority projects underway. Some of them have the majority of their funding out. But in each

state there is an amount of funding from the original amounts committed in the IGA of 2008, which has yet to be

assigned or come in under contract for a specific project. So that money is committed but it is not contracted. The

$180 million has no project assigned or aligned against it.

Senator JOYCE: Over how many years can that $180 million be allocated?

Ms Harwood: SRWUIP covers a very wide array of contractual commitments.

Senator JOYCE: Could it be 10 years?

Ms Harwood: The program runs until 2019-20.

Senator JOYCE: We should have it all parked away before the great depression starts.

Ms Harwood: Yes. We basically manage within the appropriation provided for SRWUIP each year in both

the Treasury and the departments administer appropriation and manage the stream within that. So the $180

million sits in that stream.

Senator JOYCE: There is no definitive place where it sits—it is just between now and 2019?

Ms Harwood: In essence, yes. It is in the space where we stack up all the contracted commitments in each

year. We have are an amount remaining in each year that has yet to come under contract.

Senator JOYCE: How much water has been recovered towards the basin plan target?

Ms Harwood: There has been 1,600 gigalitres recovered so far in long-term average annual yield terms

towards the 2,750. Plus very recently we signed the final Private Irrigation Infrastructure Operators Program in

New South Wales with Murrumbidgee Irrigation, which yielded, from memory, 30 gigalitres or around that. It

might be 33.

Senator JOYCE: Of that 1,600 gigalitres, how much is buyback?

Ms Harwood: There is 1,119 gigalitres of secured water purchases.

Senator JOYCE: How much of this water is from infrastructure savings? I suppose it is the remainder, is it?

Ms Harwood: Three hundred and thirteen gigalitres of it is from contracts for infrastructure works.

Senator JOYCE: And there is another 30 about to happen?

Ms Harwood: Yes. The 30 has just come under contract, but these figures were for the end of April.

Senator JOYCE: So there is another 30 on the way?

Ms Harwood: Yes.

Senator JOYCE: In making the rest up to 2,750, what is the plan at the moment? Where are you looking?

Ms Harwood: For the rest of the way to 2,750, we are expecting to get at least another 270 gigalitres from

infrastructure projects. That is to achieve a total of 600 gigalitres in long-term average annual yield terms from

the Sustainable Rural Water Use and Infrastructure Program.

Senator JOYCE: Eighty of that will come from Menindee. Are you budgeting for that?

Ms Harwood: Menindee is an interesting case in that it is evaporative savings. Without complicating things, it

is not necessarily a gap-bridging saving. It may be more of a SDL adjustment to account for the evaporative

savings of the project. The effect will be the same. If it achieves an 80 gigalitre offset to the 2,750 then it counts

either way.

Senator JOYCE: I am just trying to work this out. I am a simple soul. You have 1,600 gigalitres long-term

average. Out of that—and I'm doing it very quickly—you have 1,119 from buybacks, so that would mean that

there is about 481 that is sort of left over. You have 313 of that from infrastructure. Am I getting the numbers

right, because I'm just doing them in front of me as I go? We are still short some numbers here, aren't we?

Mr Parker: I might give you a sort of top-level answer. If we start at 2,750 as the starting point specified as

the gap—

Senator JOYCE: If my maths is correct, you are still looking for about 130.



Mr Parker: I think that it is slightly more than that. We start at 2,750. There is a potential under the SDL

adjustment mechanism from environmental works and measures and other measures to reduce the actual recovery

of water by up to 650 gigalitres. That is written as a mechanism in the plan. So it is 2,750 minus up to 650

gigalitres. Then, as Ms Harwood said, we are expecting in the vicinity of 600 gigalitres from infrastructure. So

2,750 minus 650, minus 600 takes you to 1500 gigalitres of, effectively, water purchase. I am talking here in

round numbers. So there are approximately 300—

Ms Harwood: If the 650 of offsets is achieved, of the SDL adjustment, that would leave 550, at least 270 of

which we are expecting to get through infrastructure to bring the total to 600. That would mean the remaining

water purchase would be 280 gigalitres.

Senator JOYCE: What areas are we strategically behind? Where is that 280 gigalitres of buyback? That in

essence reflects an economic effect on a district. Where is that coming from?

Ms Harwood: We are operating the water buyback program in the interim essentially with an assumption to

allow space for the full 650 gigalitres of offsets to be achieved. What that means is that there is still water

recovery to do in New South Wales to bring them to the point where, if they got their full share of the 650, the

gap would be breached. But in Victoria and South Australia, in the short term, there is no requirement for water

buyback to bridge the gap. Because if they got their full offset value out of the 650 gigalitres allowed for, then the

gap would be bridged in those states.

Senator JOYCE: So this 280 gigalitres is predominantly going to come from New South Wales and

Queensland?

Ms Harwood: There is also water recovery to proceed in Queensland. The other thing we are doing at the

moment is, in the northern basin, focusing on where there is an in-stream gap at the moment, allowing space also

for the northern basin scientific review to take place so that if there is a change to the figures of the distribution or

the apportionment of the downstream component in the northern basin, we don't overshoot the mark in some way.

And you would have seen that we have had three tenders in the Condamine-Balonne. There is only a limited

number of catchments where there is an in stream gap to bridge in the northern basin.

Senator JOYCE: So there could be a review in the northern basin which would affect whether that 280 is

280—it might be less or it might be more.

Ms Harwood: The review in the northern basin might affect where we recover the water to meet the

adjustment, if there is an adjustment, to how the SDLs are set in the northern basin or how the downstream needs

are to be met in the northern basin.

Senator JOYCE: When will that review be completed?

Ms Harwood: The authority is leading that review.

Senator JOYCE: Whereabouts are they at the moment?

Dr Dickson: The review program has already commenced. The work is due to be completed over the next

couple of years. We are working closely with the Northern Basin Advisory Committee and with local

communities in managing that process. It is going to be looking at the environmental water requirements and the

SDLs and the potential for different recovery mechanisms, so to speak, that might improve the efficiency of the

outcomes in the northern basin. So it is looking particularly at the Barwon-Darling, where there is a downstream

need from many of the tributaries, and it is also looking at the Condamine-Balonne.

Senator JOYCE: Have you been in negotiations with the new owners of Cubbie Station for purchases of

water from them?

Mr Parker: The answer is no.

Senator JOYCE: So if you don't get the water from Cubbie Station, where are you going to get it from.

Mr Parker: I was answering your quite specific question. It is open to the owners of Cubbie Station to put

offers into the tender process. That is the way that we conduct the purchase arrangements. People come in through

the front door through tender processes. There has been one example where, as a result of the very complex

nature of the offer, we entered into negotiations, and that has been subject to discussions in this committee before.

But we are not undertaking negotiations with Cubbie over any offers that they may have made.

Senator HEFFERNAN: If you were, it would be the overland allocation or the extraction allocation?

Mr Parker: That would depend, hypothetically, on what they offered.

Senator HEFFERNAN: If it were overland, which is in the press, how in God's name can you buy that water

back and shepherd it to somewhere else in the system when it is peculiar to that landscape?



Mr Parker: That is a very interesting question, Senator. The issue of shepherding is a matter of substantive

discussion between ourselves and New South Wales.

Senator HEFFERNAN: Could I also get you to note the cost of the earthworks to shepherd the water, and

that that flood plain is peculiar to a lot of other flood plains in Australia in that the water actually leaves the river

and is extracted as overland flow. But if nature had its way, it actually returns to the river so that the 271/2 per

cent of mean flow at the Darling that the Culgoa used to deliver, which is now 4 1/2 per cent, will not be fixed

with that proposition.

Senator JOYCE: How much of that 280 do you intend to get from Queensland?

Mr Parker: We don't have a precise figure split for that, Senator, but in the Balonne there is an in-stream gap

to bridge set in the basin plan of around 100 gigalitres, and we have made—

Senator JOYCE: You already have some of that, haven't you?

Ms Harwood: Yes, we have. I would need to check exactly how much remains.

Senator JOYCE: Is it 35 or 40?

Ms Harwood: I think there is more than that still to recover.

Senator JOYCE: No, that is how much you have got.

Ms Harwood: I am not sure if it is up to 40, but I will check.

Senator JOYCE: The problem being, of course, that if it is between 35 and 40 then it is between 60 and 70

still to recover, and that would mean devastation to St George. If Cubbie Station is not in the market place, then

you are starting to run out of places you can go for it. Did you buy Clyde's water? You bought a section of Todd's

water.

Ms Harwood: Sorry, I am looking at this and listening at the same time.

Senator JOYCE: I am just trying to work out where we are going to get the water from. Because it is

anecdotal, but I am sure it is a reflection of other parts of the basin. You have to start asking the question of where

on Earth this water will come from.

Ms Harwood: The recovery to date in the Condamine-Balonne is 33 gigalitres in long-term yield terms.

Senator JOYCE: It is close to 35. Okay. So you are looking at 67. If Cubbie have no offer on the table, where

is that 67 going to come from?

Ms Harwood: We have been running a series of tenders in the lower Balonne in Queensland. We have run

three this year and are securing water sequentially through those. We have until 2019 to bridge the gap, and we

have a sort of steady measured presence in the market to achieve that. Also, we have infrastructure projects

operating in that catchment as well. So far, two of that 33 has come from infrastructure, but Queensland has asked

to expand their on-farm program by using their remaining money from their state priority project of $40 million to

make the total expenditure on their on-farm program greater. So we would be expecting further yields through the

infrastructure program as well.

Senator JOYCE: But you also have to get some of that 143-gigalitre shared amount from the Condamine-

Balonne, don't you?

Ms Harwood: The connectivity of the catchments and the extent to which they can contribute to the

downstream recovery is really one of the issues that is central to the northern basin review.

Senator JOYCE: If it is currently about 50 gigalitres and you still need 65 or 67 gigalitres, then it is 110. The

total usage around St George is only about 250. That would be half the town gone.

Ms Harwood: It is a hypothetical question, Senator. Because we do not know yet the relative contributions of

the catchments. We also have a very significant on-farm investment program operating in Queensland, and much

of that water could be achieved in ways that had a positive socio-economic impact.

Senator JOYCE: Such as?

Ms Harwood: Modernisation of on-farm systems, reducing evaporation from storages on-farm et cetera—

basically sharing savings from farm upgrades in that catchment.

Senator JOYCE: And you have programs going on that now?

Ms Harwood: Yes. Queensland has put the lion's share of its state priority project funds towards a long run

on-farm irrigation efficiency program.

Senator JOYCE: That water goes down and across the Culgoa flood plain and bifurcates. Some ends up in

Narran Lakes at the terminal wetland. So the connection is not as apparent there. I was talking to water resources



engineers and they say that if you try to shepherd water from the Namoi dam you would be lucky to get 10 per

cent to South Australia. So how on earth are you going to go getting water from Queensland across a bifurcated

flood plain? What happens if they prove there is not the connection there, what are you going to do then?

Ms Harwood: I think that that is a matter for the authority in terms of how the—

Senator HEFFERNAN: It won't work; I can tell you now.

Ms Harwood: review unfolds in the north.

Dr Dickson: Senator, that is one of the key things that the science review is going to be looking at—that is,

the connections between the northern tributaries and the Barwon-Darling. As you say, there are very limited

connections between some tributaries in the Barwon-Darling and for others it is not clear-cut. It is precisely that

distribution, rather than doing it equally between them, which does not make any sense, that the whole process is

to look at—that is, what the real connections are to be able to determine the relative contributions from the

different tributaries.

CHAIR: Senator Joyce, before you go on can I just indicate that I do have a lot of senators seeking the call.

Can you manage another 10 minutes?

Senator JOYCE: Sure. It becomes a trick of mathematics, because we are not getting it from the northern

catchment. I will be honest: I think it is more a theoretical concept than an actual concept. I live there and it just

doesn't pulsate through. It becomes terminal wetlands, and there is an absorption of about one megalitre per

hectare. It looks great on a map but it just doesn't work in practice, unless you want to create channels and

completely change the nature of what is going on. I think then the conservation movement will go off and get

very excited, and so will the local farmers, too, by the way. But that means that if you are not getting the water

from there, you have to get it from one of the catchments as you go south. So where are we going to—the

Gwydir, the Namoi? Where are we going to get this water?

Dr Dickson: It is probably worth saying that we are talking about the in-stream and the downstream shared

amount for the Barwon-Darling. The in-stream amounts are all to look after the health when there is no

expectation there will be any water going through from there. How the downstream amount for the Barwon-

Darling is allocated between the different tributaries is a different issue, and that is the one that we will be looking

at through the science review of where those connections can be made.

Senator JOYCE: Thank you, Dr Dickson. But the problem is that we have the legislative cap in place, so we

are now trying to do the research that would actually affect what would be possible to get in that legislative cap.

We seem to be doing post hoc research. It is calling into question our capacity to meet the water of that cap. I

wish you all the best of luck in trying to do the on-farm works to get, probably, 120 gigalitres from around St

George and Dirranbandi. Unless you are into Cubbie Station, it is just not possible. Even if you did get it, you

would not be able to get it downstream, and if you are not getting it downstream and you have to play to a

legislative cap, that means you have to get it from another catchment. That means all the other catchments come

back into play and they start asking questions about what is going to happen to them. How do we answer that

question for them to try and make this thing stick together?

Dr Dickson: In the basin plan the downstream was not allocated at the time, and it was left to having further

considerations for that through the review we have been talking about. The capacity to do this extra work was

something that was wanted by the communities. We got the message fairly clearly that they wanted to have an

opportunity to review some of the science and how the tributaries contribute. So that is the purpose of doing that.

Senator JOYCE: If we find that that there are only a couple of catchments that are actually connected to the

Darling, does that mean that they will have to contribute all of the 143 gigalitres? Let's take the Mooney, for

instance: you would have to take every licence and even that would only get you 20 or something.

Dr Dickson: That is one of the issues. Already there are some contribution to the downstream. I cannot

remember exactly what it is. We can get that to you later, but it is in the documents. But that is what is a fair

distribution of the contribution to the downstream element from those catchments. I do not think we can comment

on that yet. We made some assumptions earlier on. We want to have those thoroughly tested over the next couple

of years.

Senator JOYCE: Where it becomes extremely tenuous, of course, is the social impacts that would be derived

from those catchments that, unbeknownst to them at this point in time, might be about to contribute vastly more

water. Therefore, with the economic impacts for those towns, villages, or communities—who have every right to

be protected, just like a person in Sydney, Brisbane or Melbourne—how are we going to look after them? This

would mean we would have to take all their water.



Dr Dickson: I do not think it will end up in that sort of situation, but in the process that we have over the next

couple of years we are doing some extensive additional work on social and economic issues. A lot of it is about

working with communities to get a better understanding of the key things that are of concern to them in that.

Senator HEFFERNAN: So it is the overland flow you are talking about.

Senator JOYCE: No, it would be licences.

Senator HEFFERNAN: What sort of water do you want to buy?

Dr Dickson: The most efficient way to get the recovery with the least impact and still get your environmental

outcomes is a key focus of the review.

Senator HEFFERNAN: But in Senator Joyce's territory this is the problem.

Dr Dickson: So we do not have any predetermined assumptions on where it might come from.

Senator HEFFERNAN: This is the basic problem—not yours; you did not cause it. There is 1,500-odd

gigalitres of on-farm storage for a river system that has 1,200 gigalitres of mean flow and an 830 per cent

variability. What you are talking about is mission impossible—I am sorry—if you know the figures and know the

game. I will not use the bush language I would use.

Senator JOYCE: I might quickly go through this. What volume of water entitlements have been secured for

Murray-Darling Basin to go towards the sustainable diversion limits. You have answered that question, haven't

you? That was 1,600. How much has been spent on the infrastructure projects that have delivered or are expected

to deliver water savings into the Murray-Darling Basin to contribute to the SDL set by the Basin Plan? Have you

answered that?

Mr Parker: I think we may have, but could you just repeat the question?

Senator JOYCE: How much has been spent on infrastructure projects which have delivered or are expected

to deliver water savings into the Murray-Darling Basin to contribute towards the SDL set by the Basin Plan?

Mr Parker: Yes, I think we have answered it, and that will be part of the document that we are preparing for

the committee today.

Senator JOYCE: How much water under the Living Murray Initiative has been carried over to 201213?

Ms Harwood: I am sorry, could you ask that again?

Senator JOYCE: How much water under the Living Murray Initiative has been carried over to 201213?

Ms Harwood: The authority will take that one.

Ms Swirepik: In the Living Murray we had 123 gigalitres carried over from last year.

Senator JOYCE: Where is that water?

Ms Swirepik: It is within the Murray system. So it does not get held anywhere in particular. Actually, your

entitlement gives you a right to access the resource, and the river operator decides where that is coming from. So

it is not held in a particular storage.

Senator JOYCE: So if I wanted to, not that I do but just so that I can, any model only stands to reason if you

can question the reason behind it and get delivery of the outcomes into it. In fact, if I want to buy that water back,

where would I be getting it from?

Ms Swirepik: If you wanted to buy it back, you would buy it back off us.

Senator JOYCE: But where would I stick my water pump in?

Ms Swirepik: The physical nature is not linked in the way that you are suggesting. What you do is buy the

water back on the market and that then gives a different person the right to access part of the resource in the

Murray system. So at any time anybody culls their water, whether that is us or an irrigator, what the river

operators will do is actually assess whether that need can be met from flows in stream or whether they have to

release from storages. So noone's water is actually held in any particular storage.

Senator JOYCE: So for someone listening to this, if someone is talking about 123 gigs held over, this is

really just a theoretical aspiration. You could not actually find the water, if you wanted to; it is not actually there.

It is an aspiration. It is part of a model rather than the actual water itself. The water has long gone.

Ms Swirepik: No. The water is part of the resources of the system and it is water that was not used last year,

which any user can choose to carry over within the rules that apply to the users in that state.

Senator JOYCE: Is any of it held in the public storage?

Ms Swirepik: As a long-term average, yes, of course some would be held in the public storage.



Senator JOYCE: How much is held in the public storage?

Ms Swirepik: That is not something that you can determine because, until you order the water and an operator

assesses whether they can meet all of the orders in stream—

Senator JOYCE: It is a book thing in a paper tray, isn't it?

Ms Swirepik: It is a paper tray, but it does relate to what is physically in the system. So in just the same way

as there has been a very large amount of carryover from other users in the system over the recent years, basically

that does mean that water is held in the various dams in the system—it is not in a particular dam—and, depending

on where that flow is called to, an operator will decide whether they release water from Menindee Lakes, from

Lake Victoria or from the Hume Dam.

Senator JOYCE: Just going back to buybacks, how much water is going to come from buybacks in the

southern system under the water recovery strategy?

Ms Harwood: I am sorry, Senator?

Senator JOYCE: How much water is left to come from buybacks in the southern part of the system under the

water recovery strategy?

Ms Harwood: Of that remaining 280, to get to 2,750, under the hypothesis that the full 4,650 of offsets is

achieved, from memory, it is about 200 gigalitres in the south and 80 in the north. But I will confirm that, if that is

wrong.

Mr Parker: You asked a question about the carryover?

Senator JOYCE: Yes.

Mr Parker: The carryover figure from 2011-12 into 2012-13 is now reported as 564 gigalitres. That has

reduced from earlier reports of 615 gigalitres because of, firstly, a spill in the Macquarie, which reduced the

carryover accounting but obviously brought about environmental benefits in doing so, and also the settlement of

an accounting issue in New South Wales which reduced the carryover but increased the allocation this year.

Senator JOYCE: And the 200 gigalitres in the south includes any carryover, does it?

Ms Harwood: No. And I should say that you asked me for the proportion of the buyback. But of course, the

amount that comes from the buyback will be what has not been recovered through infrastructure. So, depending in

both the north and the south on the rollout of additional contracted water infrastructure projects, that will

influence the amount that needs to be purchased, in that the purchase is just for the remainder essentially. We

have negotiations underway on a range of projects in the basin for further water efficiency projects and we would

only need to purchase the water that does not come. So if a catchment has a large water infrastructure project, that

catchment might not need to have much water buyback. I guess that is the point, that the water buyback is not a

set amount that we are going and getting. We are moving in a very steady and measured way at a slow pace of

water buyback, allowing space for both the infrastructure rollout and for the offset SDL adjustment projects to be

explored through to 2016.

Senator HEFFERNAN: But a carryover of 173 net, 370-odd gross, would fix the book. Are you being held to

political ransom by New South Wales in that regard?

Ms Harwood: No would be the short answer.

Senator HEFFERNAN: Can I just—

CHAIR: You have a couple of minutes left, Senator Joyce.

Senator JOYCE: Can you provide the committee with the model annual inflows of the Murray-Darling for

every year since 1895? Please include these up to the latest year possible. Obviously, I want that on notice; I am

not going to ask you to do it now. Is it possible to get that in the next—

Ms Harwood: I am sorry; what was the—

Senator JOYCE: Can we get model annual inflows into the Murray-Darling for every year since 1895?

Ms Harwood: Yes.

Senator JOYCE: Has the MDBA appointed members to the Advisory Committee on Social, Economic and

Environmental Sciences yet?

Dr Dickson: Yes; we announced that some time ago. I will have to check on the exact date. I think it was last

year—in fact, yes, November last year.

Senator JOYCE: Whom have we appointed?



Dr Dickson: The chair is Dr Brian Walker. We also have Professor Stuart Bunn, Professor Tom Kompas—I

am sorry; I have a list of them here. We have Dr Poh-Ling Tan from Griffith University, Dr Kate Auty from

Victoria and we have just recently replaced Dr Bill Young with Dr Mike Stewardson.

Senator JOYCE: What is the latest position on the funding for the MDBA? Do you need to make any

additional cuts to the services that the MDBA provides, as a result of reductions from the state government?

Dr Dickson: Yes. Out of the reductions for this coming financial year, we are reducing some programs. If you

can just give me a moment, I can tell you what they are.

Mr Parker: Senator, while Rhondda is looking for that answer, I would just like to correct an earlier answer

which we gave in response to your question about spending in the Murray-Darling Basin. I misheard it as the

broader—

Senator JOYCE: Can you just speak into the microphone? I am sorry, but I just cannot hear you.

Mr Parker: Yes. The microphone is a major problem; we are all having a problem hearing each other. I

would just like to correct an earlier answer to your question, Senator. You asked a question about spending in the

Murray-Darling Basin?

Senator JOYCE: Yes.

Mr Parker: I had not picked up that particular nuance from your question. So we would just like to correct

that and provide the answer.

Ms Harwood: You asked the question about expenditure on infrastructure projects in the Murray-Darling

Basin. To date, to 30 April, it is a total of $1.2 billion since the inception of the program.

Senator JOYCE: We are talking now about the cuts. With the latest position on the funding for the MDBA,

do you need to make additional cuts to the services that MDBA provides as a result of reductions in funding from

the state government?

Ms Harwood: First, the decision on what programs were reduced was made by the governments; it is not a

decision that the MDBA makes. The four governments and the Commonwealth made a decision on which

programs to reduce. The overall funding reduces this year. For 2012-13, it was $92,864; and, for the next

financial year, it is $89,678. That reduction reflects the known reduction from the New South Wales cuts. I am

sorry, I meant millions. Yes, $92,864,000 and $89,000,678.

Senator JOYCE: The environmental watering strategy, where is that up to? Has that been completed?

Ms Harwood: The environmental watering strategy has a two-year timetable under the Basin Plan. So that is

due to be completed by November 2014.

CHAIR: Senator Joyce, I am going to have to wind you up after this one.

Senator JOYCE: Okay. Just tell me: where are we with the development of the environmental watering

strategy? Obviously, the whole thing is pointless unless we have tactics on how to hit environmental assets with

the water that we are purchasing. Are we halfway developed? Do we have it in train somewhere? Has it been

rolled out already in certain areas or is it still in a theoretical position and there will be no sort of rollout of this

program until such time as it is finished?

Ms Harwood: There are a number of parts to the environmental watering plan. The environmental watering

strategy is one of those. The first thing that we have in train is the annual environmental watering priorities, which

we will do obviously every year. They will be coming out at the end of June, as required under the plan. The

environmental watering strategy is the broad, long-term strategy on which state long-term plans will be based.

Yes, there has been a lot of development and there will be a fair amount of consultation on that over the next six

months; that is our intention. The time it takes to develop that is not going to delay the proper use and the

effective use of environmental water in the meantime. In regard to the work that the states and water holders do in

their planning for environmental water, already they are looking to be consistent with the Basin Plan in doing that,

and the annual environmental watering priorities will also guide that.

CHAIR: Senator Ruston.

Senator RUSTON: Before I get on to some specific projects, can I just seek clarification on a matter. On

Tuesday of this week, the AuditorGeneral brought down his report and there is a line in the report that actually

says that as at 28 February 2013, the Commonwealth held water entitlements totalling 1,523 gigalitres in 17 of the

19 catchments across the basin, which equates to between 35 per cent and 42 per cent of the Commonwealth

Environmental Water Holder's anticipated final entitlement holdings. If I equate that out, that would suggest that

it is somewhere between 4,351 and 3,626 gl that we are intending to take back. Am I missing something here?



Mr Parker: We will take that question.

Ms Harwood: First of all, this is a matter for the Commonwealth Environmental Water Holder, who is on in

the next session, but it is the difference between entitlement value and long-term average annual yield. So the

holdings come into the Commonwealth as paper value—entitlements that say they are differing liabilities. The

megalitre amount on them may be quite different from the long-term average annual yield. So the amount that the

Commonwealth Environmental Water Holder would end up holding in long-term average annual yield terms will

be less than 2,750, because some of it will be held by the states.

Senator RUSTON: I suppose I bring that up only because it confused me. It rang an alarm bell but it also

confused me. It makes it very difficult when there is a discrepancy across the nomenclature. Anyway, the

Auditor-General is not here to answer that, so I will not pursue that any further. Can I ask you about the Water

Industry Alliance's River Murray Improvements Program, the $265 million announced in October last year via a

combined release by the Premier of South Australia, Jay Weatherill, and Minister Burke. It was announced that

$180 million would be made available from SRWUIP funding and a further $85 million under a national

partnership agreement with the South Australian government. Could you give me some idea of where that is at

and when we are likely to see that money flowing—just generally an overview of what is going on there?

Ms Harwood: The project is under development. We have just received this week, from the South Australian

government, the business case for the project.

Senator RUSTON: Can I just say something here? At the last estimates, you said exactly the same thing to

me: 'just this week we have received'.

Ms Harwood: We had a draft business case at the last estimates and we provided extensive feedback to South

Australia.

Senator BIRMINGHAM: So the first one clearly was not good enough.

Senator RUSTON: Yes. We have $265 million on the table, as announced. What we really need to know now

is: when are we going to see that $265 million actually start coming out and being spent—because it does say that

it will be spent in this forthcoming financial year. Whereabouts in the budget papers that I have is the $180

million that is coming from SRWUIP funding?

Ms Harwood: Assuming that the project goes through and is approved, it would roll out over a number of

years. The part funded from the SRWUIP part would come from within the overall SRWUIP profile. We do not

have a partitioned budget line for all the hundreds of things that come out of SRWUIP. It would be funded from

within the available appropriation for SRWUIP in any year.

Senator RUSTON: Can I just take you back to something that you said at the start of your response to that

question: 'if the project is approved'?

Ms Harwood: It has yet to go through final due diligence. There have been discussions with South Australia

about South Australia's wishes to make some adjustments to the structure of the program as announced and

agreed in October.

Senator RUSTON: Subsequently there has been a request to change what was announced.

Ms Harwood: Yes.

Senator RUSTON: So on that basis—because I note that the minister did say up to $180 million, subject to

due diligence assessment—where are we at with that due diligence process?

Ms Harwood: We are just commencing the formal due diligence on the project having received the final

business case this week.

Senator RUSTON: Do you have a time frame in which you think it is likely that that will be undertaken?

Ms Harwood: We have undertaken to do it as quickly as we can, but I would not be able to put a precise do-

by date on it.

Senator RUSTON: The other thing is that there does not seem to be any specific mention of the $85 million.

Where do I actually get some sort of understanding about whether there is $180 million still considered within—

in program estimates, where do I find the $85 million; or is that not in your department?

Ms Harwood: The $85 million is in the contingency reserve.

Senator RUSTON: So at this stage there is still $265 million potentially able to be expended on this project in

South Australia, subject to the satisfactory conclusion of the due diligence process.

Ms Harwood: Yes.



Senator RUSTON: Do you have an idea, in the process of establishing this, of two things? One is: how much

money will be consumed in the administration of the project—because at this stage it is in your department;

wherever the other $85 million comes from, the South Australian government obviously has some role in it. Do

we have an administration cost?

Ms Harwood: We do not have a precise figure on that, but the department's side of it does not come from

within the $265 million. That is, the departmental funds for the people working on it in SEWPAC are covered by

other means. In terms of the administrative costs of the South Australian government in delivering the program,

they would normally be in the order of six to eight per cent across the board for projects of this sort. But I do not

know what the precise figure is that South Australia is intending to posit as its administrative costs for running the

program.

Senator RUSTON: So the South Australian government will be the lead player, in terms of the administration

of the funding—subject, obviously, to its approval?

Ms Harwood: Yes.

Senator RUSTON: Has any work been done on the establishment of the criteria or guidelines under which

people would become eligible for actually accessing this funding, or is that something for the South Australian

government?

Ms Harwood: Work is underway by the South Australian government to develop a full description of the

program architecture and the eligibility and assessment criteria for people to apply for funds under the program,

and that forms part of the business case.

Senator RUSTON: Just finally on that particular project, one of the concerns that was expressed to me by

some of the people who possibly might like to access this fund is—have you any idea of the difference between

what they are actually paid for their water, which is obviously determined by the infrastructure cost of otherwise

achieving that water, and the actual price of water? Is it to be treated as a capital gain?

Ms Harwood: We do not normally arbitrate or comment on the taxation treatment of the grants. It depends

very often on the precise corporate circumstances of the recipient as to how the moneys—received under

SRWUIP grants, a program through the state or whatever—are received. There is in front of the parliament a bill

to amend the tax act to provide essentially a potential additional choice for treatment of moneys received under

SRWUIP, for tax purposes; that has been sought by the industry. Regardless of that, I would say that it is up to the

applicant to ascertain for themselves the likely tax treatment of any moneys they receive and to understand that

matter before they accept the grant, if it is of concern to them.

Senator HEFFERNAN: It would be an easy definition between repairs and maintenance and capital work.

Ms Harwood: It really does depend on the corporate structure as to how the tax treatment to SRWUIP grants

applies.

Senator RUSTON: Obviously, you are sympathetic to the issue that is on the table.

Ms Harwood: Yes.

Senator RUSTON: Can I just come back to a particular line item in the budget? In the portfolio budget

statement of the MDBA—the explanatory notes—there is an amount from last year's MYEFO of $155 million

over seven years to be provided to undertake the South Australian Riverland Floodplains Integrated Infrastructure

Program just to restore the health of the flood plains. Of this, $55 million is being transferred from existing

resources within the department. Could you just give me a quick outline of what that money is being spent on?

Ms Harwood: We could probably cover that between us. It is a project that South Australia sought for,

essentially, environmental works and measures on a flood plain in South Australia. It was funded by $55 million

of South Australia's state priority project funding. So, essentially, $55 million of the $155 is coming from

SRWUIP—from the state priority project funding—and that was transferred to the authority.

Senator RUSTON: That was from the state—

Ms Harwood: Priority project funding. But the project in its entirety is to be managed by the authority. I am

sorry; I should say that the other 100 was a new appropriation for that. For simplicity of management, the

authority is responsible for the whole project. We have transferred the $55 million to the authority as administered

funding, so they now have the full project line to manage the project.

Senator RUSTON: Have you quantified how much water will be recovered by this program?

Ms Harwood: It is not in the character of a water efficiency project, but it is arguable that it would have an

SDL offset potential as a project. But I would let the authority comment on that.



Senator RUSTON: Also in that same budget statement there are additional departmental appropriations over

11 years et cetera. It refers to environmental works and measures, $39.358 million from 201314, and advanced

environmental outcomes, $31.592 million through to 2020. Do we have any idea what works are to be undertaken

on either of those two projects?

Ms Harwood: Could you just give me the page number that you are working from?

Senator RUSTON: Page 185 of the portfolio budget statement.

Dr Dickson: I think you are referring to the funding for the SDL adjustment work which is over that period of

time. That is departmental funding to support the work that needs to be done for the assessment of SDL offsets

and all the subsidiary work to support that.

Senator RUSTON: Where is that collective $70 million coming from?

Ms Harwood: The funding for the states to undertake business case development for environmental works

and measures—this is basically in pursuit of the potential 650 gigalitres of offsets?

Senator RUSTON: Yes.

Ms Harwood: It is essentially a sort of 'bring forward' of funds, in simple terms, from the total allowance for

environmental works and measures that is being provided for. That comes into the Sustainable Rural Water Use

and Infrastructure Program and it would go to the Treasury papers, in terms of being paid out to the states through

the FFI. But, essentially, it is a modest amount of money for the states to prepare the business cases and technical

project design to submit to the authority for the SDL adjustment mechanism.

Senator RUSTON: So it is not actually coming out of the $200 million.

Ms Harwood: Unless I am misunderstanding—

Dr Dickson: No. The funding that you are talking about is actually the departmental funding that comes to the

authority—

Ms Harwood: My apologies.

Dr Dickson: for the SDL adjustment and the constraints management strategy. The funding that Ms Harwood

was talking about is separate funding for the states. This funding is to support both the constraints and the SDL

work, which is over seven years and 11 years. There is a lot of modelling, analysis and evaluation of those

projects that the authority is doing, so that is the funding for that.

CHAIR: Senator Ruston, can I ask you to wind up? I am happy to come back.

Senator RUSTON: Okay. I will ask about one specific project, if I can get some more information on that.

Can I just ask you quickly about the Chowilla regulator project that is happening in the Riverland? My

understanding is that the original price of the project was $42 million. Could somebody give me an idea of how

that is tracking against budget?

Dr Dickson: I will ask Dr Dreverman to give us the background.

Dr Dreverman: The project at Chowilla was started in about August 2010. It has had major overbank flow

conditions, major floods. It was under water for many months and we have been back working there since about

May last year. The project is a little over half completed at this stage. It should be completed within about another

nine months, provided that we do not get further flows. I do not actually have with me the current total estimate,

but the total cost of the project has gone up because of flood claims and the cost of standing down the contractor

and then remobilising the contractor back to site. But, other than that, the cost is basically on original track.

Senator RUSTON: On that basis, I would ask you to get me what you think the final cost of the project is

going to be. Could you also confirm whether, in the contract, the contractor was paid $66,000 a day for down time

when they were unable to work and actually what that $66,000 equates to in a total amount for the number of days

that were down and who is responsible for the paying of that $66,000 a day, if it is actually a correct figure?

Could you also—if you do not have the answer now—provide me with some information about where the

negotiations are currently at with the landholder. My understanding is that we do not have an agreement with the

landholder in relation to any compensation that is to be paid to them. So the question is: what is the government's

liability, what is the taxpayer's liability in relation to this particular person who has, so far, not got a contract with

the department for the consequences of the inundation of his land in relation to the infrastructure?

Dr Dreverman: I will take all of that on notice because some of those are quite complex commercial matters

between the state of South Australia and the contractor or between the state of South Australia and the landholder.

So they are not matters that the authority is directly responsible for. We fund the overall project, but the project is



delivered by the state of South Australia on behalf of four governments. I will have to take that on notice because

I will have to go back to the state of South Australia to get that information.

Senator RUSTON: Perhaps you could just let me know where the liability rests if there is an unsatisfactory

conclusion to the negotiations with the landholder, despite the fact that we have a regulator—

CHAIR: Senator Ruston, we need to move on.

Senator RUSTON: and who will pay. Thank you very much, Mr Chairman.

CHAIR: Dr Dickson, your chair, Craig Knowles, addressed a thematic debate at the UN General Assembly

recently and gave a speech. Are you aware of that?

Dr Dickson: Yes.

CHAIR: You probably wrote it. The speech starts off with a quote from Tom Trevorrow from the

Ngarrindjeri people. It says:

Our traditional management plan was don't be greedy.

Don't take any more than you need and respect everything around you.

That's the management plan—it's such a simple management plan, but so hard for people to carry out.

The speech goes on:

The simple fact is that you might have all the science and evidence in the world to support the need to make change, but if

you don't have people willing to be a part of that change, you will not succeed.

Does that apply to coal seam gas in the Murray-Darling?

Dr Dickson: Thank you for the question, Senator.

Senator HEFFERNAN: That will cause fear in the heart!

Dr Dickson: The quote that our chairman referenced involved probably the guiding principles on which we

conducted the basin plan. We, in fact, quoted Tom Trevorrow in our draft documents. So that was the ethos there.

Coal seam gas is not an area that the Murray-Darling Basin is involved in, so it is probably not for me to

comment.

CHAIR: You are not involved in it?

Dr Dickson: Not involved in coal seam gas activities, no.

CHAIR: Are there any coal seam gas activities within the Murray-Darling catchment area?

Dr Dickson: There are. I am sorry; I was probably a little bit too broad there. The issue that we are involved

in—should be; we are not at the moment—is really looking at the sustainable levels of water extraction. The

management of the projects themselves is not within our responsibilities. But we do look at the impacts on the

quantity and quality of water, and that is the issue. That applies to any other use of water—industrial use,

agricultural use or human use. So it is the actual use that we look at and the impacts on the water rather than any

particular project or activities.

CHAIR: Who should we be talking to in relation to the impact of coal seam gas, if it is not the Murray-

Darling Basin Authority, Dr Grimes?

Dr Grimes: The matters can be handled by the department. We obviously have the Office of Water Science in

the department, and that reports to Mr Parker. We also have our role in conducting environmental assessments in

relation to coal seam gas developments. As Dr Dickson indicated, the Murray-Darling Basin Authority is

involved to the extent that it goes to sustainable use of water in the Murray-Darling Basin. But more substantive

questions around coal seam gas are probably best directed to the department; and, if there are matters that the

MDBA is involved in, Dr Dickson can contribute.

CHAIR: Mr Parker, those quotes that I have given you from the chair: is that an overarching principle that the

department would see as being appropriate to apply to coal seam gas?

Mr Parker: They were very broad sentiments expressed by Mr Knowles. What the department is doing in this

space, as mentioned by Dr Grimes, is that where there is a matter which falls under the Environmental Protection

and Biodiversity Conservation Act, with respect to the regulator in the department, functions under that act for

approval of the coal seam gas project will come into play. I should mention, of course, that there is a piece of

legislation currently before the Senate which would extend the reach of Commonwealth regulatory power in that

matter to matters where there is a significant impact on water resources.

The other thing that the department is doing—and I have just been joined by my colleague Suzy Nethercott-

Watson—is a new program which the department is running, which is in the area of improving a number of the



scientific underpinnings of the regulatory processes, firstly to provide a heightened level of scientific advice both

to the Commonwealth and to the states for regulatory purposes as they relate to coal seam gas and large coal

mining. The second element of that program is a research program to fill in knowledge gaps as they relate to a

number of groundwater matters relating to coal seam gas and large coal mining. The third element of that is a

bioregional assessment program.

CHAIR: But none of those points—and they are all very valid; I do not have an argument with them—go to

what Mr Craig Knowles has indicated are the critical lessons from the Murray-Darling authority; that is, without

community support, having the science is not enough. I am just concerned that there may be cumulative effects

and issues that may not be properly addressed by the individual assessment and approval process for coal seam

gas issues.

My concern is that there is now an argument that simply says that, if you give the farmers more money, it is

going to be okay and it can come on. But that then creates a bigger problem, in my view, in that the

environmental impacts from one farm to another and the degradation of some areas become a problem. That then

feeds in to this community concern. On one hand, I have been to CSIRO briefings and they are pretty convincing

that even fracking can be done without a problem. That is the scientific assessment they have made. But I think

the community assessment is, 'That's rubbish.' I am just wondering how we get this balance. I think the

department has an obligation. I would have thought the Murray-Darling Basin Authority would also have its eye

on this, to try and deal with what is going to be an emerging, very tough debate for a long period into the future. I

am not sure how you are coordinating that.

Senator HEFFERNAN: Could I add to those remarks, Chairman?

CHAIR: I do not know whether Mr Parker wants to go to any of those points that I have raised; then I will

come to you.

Dr Grimes: I am happy to say a few things. Obviously, the government has made a very substantial

investment in scientific analysis here through the Office of Water Science. Ultimately, this is an issue that

requires diligent examination and regulation by the relevant authorities, both state and Commonwealth. We

certainly take our responsibilities in this area very seriously. It does require good information for the community

and continual information for the community. The government has certainly identified the need for good scientific

research as being quite fundamental, both to inform the community and to underpin the decision making that is

being made by regulators at the Commonwealth and at the state level.

Senator HEFFERNAN: The advice given to the Queensland government—you are right on the money—was

that there had been no consideration—that was when Anna Bligh was there and I did the inquiry—of the

cumulative impact. It is all right to say that we have had 200 wells by Santos at Roma, but we are going to have

4,000 or 10,000. There is no solution to the accumulation in those three tenements in Queensland—some of which

are in the Murray-Darling Basin; of course, the tail water is going into the top of the Condamine from some of

that—of 700,000 tonnes a year of salt. If you do not think that is an issue for the Murray-Darling Basin—phew!

That is the most toxic substance to agriculture. They have an environmental approval, without an environmental

solution, to go ahead with the mining. An amount of 700,000 tonnes of salt, as I said, at 806 kilograms per cubic

metre, stacked at 32 degrees, is a bloody big stack, several kilometres long, for which there is no known solution

at the present time.

The CSIRO, Mr Chairman, has said that it could take hundreds of years to rebalance the aquifers. We do not

know the scientific answer. So it is a huge unknown. You are right, Mr Chairman; they think it is about a set of

footy jumpers for the local footy team and a few thousand dollars to the farmer to shut them up to let them in—

and in 50 to 80 years time we are all going to say, 'Oh my God!' as they have done in America, where the

Bakersfield municipality is suing for $2 billion over the destruction of their water supply.

Dr Grimes: As part of the conditions for those Queensland projects, the Commonwealth imposed a

requirement that there needed to be full oversight by an independent expert scientific committee. There is a

specially dedicated—

Senator HEFFERNAN: But noone has to take any notice of their advice; that is the flaw in that. They can

listen to it but they do not have to take it.

Dr Grimes: The companies are obliged to produce water management plans and related matters, which are

formal Commonwealth conditions, and they need to be completed to the satisfaction of the environment minister.

We will have officers here this afternoon who are involved in that work who can answer more detailed questions,

if necessary. But there is very considerable work going on in that area.

CHAIR: What area is that in?



Dr Grimes: That is in our environmental regulation area.

CHAIR: What program?

Dr Grimes: Program 5.2 this afternoon.

CHAIR: Program 5.2 at four o'clock.

Dr Grimes: Yes. But there is very considerable work being done by Queensland, by the companies, and the

companies cannot progress without having completed the water management plans to the satisfaction of the—

Senator HEFFERNAN: Let me know when they have solved the salt.

Dr Grimes: Indeed, there is a lot of work going on in salt management—

Senator HEFFERNAN: There is, indeed; but they have not solved it.

Dr Grimes: by the companies. There are a number of pathways through to the proper management of salt.

Senator HEFFERNAN: Mr Chairman, could I take some advice? Can we come back? I want to talk to—

CHAIR: Yes. The reason I have raised it in this area is because it is about adaptation to climate change, and

CSG is being seen as a transitional approach to that. It is secure water supplies and the health of the rivers. I think

it does fit here. Is it agreed, Dr Grimes, that the issue of CSG does fit here to some extent?

Dr Grimes: Indeed. Questions on CSG and water appropriately fit here. When it comes to the regulation of

the Queensland projects, Dr Dripps and I will probably make a fair fist of things this morning; but, if there were

very detailed questions, we would probably refer them for officers at 5.2.

CHAIR: So we come back in 5.2.

Dr Grimes: But the general issue of coal seam gas and impacts on water are appropriately handled here.

Indeed, we have officers from the Office of Water Science who are available to answer questions.

CHAIR: I have agreed with Senator Xenophon that he will get 15 minutes at 11 o'clock, after the break, and

my proposal is that we will then return to this matter at 11.15.

Senator HEFFERNAN: I want to ask some questions—with your advice, Mr Chairman—on the Wah Wah

scheme buyback.

CHAIR: Not now, because we are about to suspend for morning tea. Senator Xenophon will have the call at

11 am.

Proceedings suspended from 10:45 to 11:01

CHAIR: We will go to Senator Xenophon to 11.15 and then come back to the coal seam gas issue. You have

until 11.15, Senator Xenophon—go for it.

Senator XENOPHON: Further to Senator Ruston's line of questioning in relation to the Water Industry

Alliance funding of $265 million for South Australia, can the department indicate whether it has received a

business plan from the South Australian government in relation to this?

Ms Harwood: Yes, we have just received a final business case from the South Australian government for

$240 million, for the River Murray Improvements Program.

Senator XENOPHON: When was that received? There have been various drafts. My understanding is that

the South Australian draft was received on 21 December, 2012 from the South Australian government.

Ms Harwood: That was an early draft. I think it was in February. I will have to remember when we received

the draft. The final came either on Friday of last week or Monday of this week. I will need to check that.

Senator XENOPHON: How long will it take for that to be processed?

Ms Harwood: The precise date for finishing the due diligence I would not be able to give. We have

undertaken to conduct the due diligence on that as quickly as we can.

Senator XENOPHON: Can I ask the minister whether the government can provide a guarantee that this

funding will make it to the Riverland before 14 September?

Senator Farrell: You can ask me, Senator, but I would have to consult with the minister himself about that. I

cannot give a statement on his behalf.

Senator XENOPHON: Sure; if you could take that on notice.

Senator Farrell: What is the significance of election day as the date for—

Senator XENOPHON: I just thought that was a convenient date. It is three and a half months away.

Senator Farrell: What about if it was a day before; would be that a problem?



Senator XENOPHON: I said 'by that day'. They have been waiting a long time for these funds. Can I go to

one of my favourite topics—the Private Irrigation Infrastructure Program for South Australia; $110 million

allocated. How much has been allocated to projects under this program? How many years has the program been in

place?

Ms Harwood: From memory, it commenced in 2009. So far there have been two rounds of applications under

that program, with Commonwealth grants totalling $14.4 million.

Senator XENOPHON: Still $14.4 million?

Ms Harwood: That is because there have been no further rounds, at the request of the South Australian

government.

Senator XENOPHON: But is it your information from irrigators that, because a level of water efficiency

already exists, it is quite difficult for the criteria to be met for those grants under that program?

Ms Harwood: I do not believe that to be case. Since then the South Australian NRM Board submitted an

application for our On-Farm Irrigation Efficiency Program and was successful. We had a $100 million round right

across the southern basin and, from memory, $35 million of that was allocated to a South Australian

proposition—basically a grant in-principle to them. There are clearly opportunities and interest from South

Australian irrigators in improving their efficiency on-farm.

Senator XENOPHON: But it is acknowledged that the bar is higher in South Australia for on-farm efficiency

programs by virtue of the fact that there are pre-existing levels of efficiency already in place?

Ms Harwood: I would not say it is peculiar to South Australia.

Senator XENOPHON: No, I did not say 'peculiar'. I said: do you agree that the bar is somewhat higher as a

general rule for South Australian irrigators because they are already more efficient than other parts of the river

system, on the whole?

Ms Harwood: Across the border there are pipe systems which have similar forms of technology upgrade

having been applied. It is true that the delivery system in South Australia is more efficient than the average

efficiency elsewhere, in terms of it having been piped in earlier years. On-farm many farmers in the Riverland are

using dripper, and more conservative, technologies—but those technologies are used in other districts in the basin

as well.

Senator XENOPHON: How does the department audit the efficacy of funds awarded under the On-Farm

Irrigation Efficiency Program? By way of background, I note the advice that was provided to my office by the

department, which states: 'Monitoring and evaluation activities are currently under way within each of the

programs, which include progress reports, audits and site visits focusing on reviewing the technical and financial

aspects of the project.' I have also received information from a constituent suggesting that not all auditing

agreements have been finalised to the program's delivery partners. Can you advise whether the department has not

finalised all auditing agreements with delivery partners?

Ms Harwood: We have, so far, three rounds. There is a first round where, largely, many of the projects are

complete. There is a second round where those projects are in train. There is a third round which is currently in

stage two of the assessment. There may be aspects of audit processes that still have to be developed, but it is a

program that flows through time and some of the projects have yet to come under contract.

Senator XENOPHON: So not all of the auditing process have been developed for this program?

Ms Harwood: I would say yes in simple terms to that, because the program continues and we have new

delivery partners coming on stream in the current round with whom we have yet to form a contractual

relationship.

Senator XENOPHON: I guess my direct question was: has the department not finalised all the auditing

agreements with delivery partners?

Ms Harwood: I might just ask my colleague. If you are referring to the existing delivery partners, I will check

that. The auditing requirements are actually specified in the contracts with the delivery partners where we have

got to the contract stage. The answer is that, for those, the auditing requirements are in place and agreed in the

contract. For delivery partners who are still to come under contract with us—for instance, the ones under round

three—their contracts will specify the auditing requirements, but those contracts are not made yet. For the projects

in train, rolling out under contract, yes, there are auditing requirements in place and they are specified in the

contractual arrangements with the delivery partner.

Senator XENOPHON: Without breaching any commercial-in-confidence requirements—there must be, I

presume, generic auditing requirements—are you able to provide copies of those?



Ms Harwood: We could provide you with copies of the standard clauses, yes.

Senator XENOPHON: Yes, that would be useful. In terms of assessing the merit criteria regarding the

competitive grants model basis for these efficiency programs, you are saying that all the auditing agreements are

in place?

Ms Harwood: There are two things here. One is assessment. At the front of the project, when we receive

applications to a round under the program, all the applications go through a competitive assessment, which first of

all looks at eligibility and then looks at merit criteria in terms of ranking the applications according to the set

merit-based criteria. Much of that is focused on the efficiencies that will be achieved through the project and the

value for money that those projects will deliver in terms of water return for the environment against

Commonwealth investment. That is the assessment process. When we get to a point of a recipient delivery partner

coming under contract to deliver a tranche of individual on-farm projects, then the audit requirements are

specified in the contract with that delivery partner.

Senator XENOPHON: Do you not have to look at the merit criteria and tie that in with the auditing

requirements to make sure that there will be a robustness in terms of whether the merit criteria are achieved or

not?

Ms Harwood: If you are talking about an assessment of the commercial viability of the enterprise applying to

be a delivery partner, yes, that forms part of the assessment on the way in. It is not so much audit as ensuring that

they are capable, professional, and have the skills necessary to deliver the tranche.

Senator XENOPHON: Can you outline—I am happy for you to take this on notice because we have limited

time—what documents delivery partners provide to the department to demonstrate that appropriate auditing of

projects have occurred?

Ms Harwood: Yes, we will take that on notice.

Senator XENOPHON: Can the department provide advice on how much delivery partners receive for the

administration of projects? For instance, is it on a sliding scale based on the amount awarded? Is there an

acceptable or benchmark percentage of total funding awarded? Are there any rules in place to ensure that projects

do not allocate an unreasonable amount on administration costs? Finally, how can you be sure, if all projects do

not have their auditing arrangements robustly in place?

Ms Harwood: We will provide a more comprehensive answer on notice. In essence, there is a sort of

benchmark of eight per cent; that would be the normal maximum that we would allow in a contract for project

administration costs as opposed to funds going to projects on-farm. We were talking earlier about that. For most

infrastructure projects, in that six to eight per cent tends to be where the project administration costs fall.

Senator XENOPHON: This is a very broad question, but since 2007 I think $13.7 billion has been allocated

to return the Murray-Darling Basin to health. Again, I am happy for you to take this question on notice: can you

indicate how much of this remains unallocated and unspent? What projects are in the pipeline? In other words,

how much of that money has not actually been allocated yet?

Ms Harwood: Specifically for the Sustainable Rural Water Use and Infrastructure Program, which is $5.6

billion of administered funding, around $180 million of that has yet to be allocated to a specific project. In terms

of commitment, there is also about, from memory, $570 million—perhaps $520 million, with the move to the

regulators in the Riverland—which is committed to the states but which has not yet come under project for state

priority projects. The broader $13.7 billion includes urban infrastructure programs, funds going to other agencies,

et cetera. For the remaining unspent moneys in the global $13.7 billion, I would need to take that on notice.

Senator XENOPHON: Sure. Finally—Chair, I am within time, you will be pleased to know—an agreement

was entered into with the government in 2009 in relation to an additional allocation of stormwater harvesting

grants projects. The criteria were altered to encourage more local projects. Can you outline—now or on notice—

what the progress has been in relation to the allocation of that additional funding for stormwater projects,

particularly allowing for those smaller community-based projects, rather than having much higher criteria?

Ms Harwood: The third round of the stormwater program closed at the end of 2011. Then in 2012 the nine

successful in-principle grants were announced. Of those, eight have taken up the funding offer. Those projects are

in train and under contract. I can read out the funding recipients, if you want.

Senator XENOPHON: No. Because of time constraints, I would be grateful if the department could provide

that on notice, and obviously a breakdown of where those projects are and, further, what unallocated funds there

are in respect of that stormwater program.

Ms Harwood: Yes, we can do that.



Senator XENOPHON: That might be the most convenient way to do it. There you go, Chair; 30 seconds

within time.

CHAIR: Thanks very much, Senator Xenophon; you were very disciplined, for a change.

Senator XENOPHON: Chair, you will withdraw that, won't you? Come on!

CHAIR: Mr Parker, we will come back to the coal seam gas issue. As you are aware, there has been

legislation going through to try to deal with the protection of water in relation to coal seam gas. It seems to me

there is now an increased push in the media by mining companies. Some reporters are being ferried around at the

expense of the coal seam gas companies, writing reports to try to push coal seam gas.

I do not have a problem with coal seam gas if it can be done in an environmentally sustainable manner, but if

the resolution to this is that you simply provide individual farmers more of a cash incentive to individually accede

to coal seam gas development—and I think that is the question that Senator Heffernan and I were alluding to—if

it is simply giving them more money, how do you then balance the cumulative impact of those individual

developments, which could go into the thousands of coal seam gas exploration wells? How do you deal with that

under the current legislation?

Mr Parker: There are probably two parts to that. One is the approval process. Perhaps Kimberley Dripps

could talk to that. Then there is the scientific question of assessment of cumulative impacts downstream and with

multiple projects. I will ask—

CHAIR: I would ask Senator Heffernan, after you have responded, not to jump in. I like to hear these

answers. Then we will go to Senator Heffernan. Dr Dripps.

Dr Dripps: Under the current EPBC provisions, there is an assessment of prospective coal seam gas projects

under the EPBC Act when there is likely to be a significant impact on matters of national and environmental

significance. In the case of the very large coal seam gas projects that are progressing in Queensland, there was an

assessment during the period 2008-2010, with approvals in 2010 and 2011 of those three large projects. The

reason we were able to undertake those assessments was that the current listed matters of NES—threatened

species and communities, Ramsar wetlands, heritage properties and the other things with which you are quite

familiar, those projects—

CHAIR: Excuse me, Dr Dripps. Senator Ruston, Senator Xenophon, can you guys go outside? Thanks.

Dr Dripps: So those projects were approved with a large number of conditions, including a requirement that

the minister approve a number of different plans. Mr Gaddes, who is next to me, will provide some detail about

those plans. One of those plans is the water management plan for the operation of the facilities. We have

appointed a special panel in Queensland, an expert panel on coal seam gas that pre dates the Independent Expert

Scientific Committee, which you might be slightly more familiar with. This panel meets very frequently and with

a high degree of detailed analysis of the work that the companies are intending to undertake, including analysis of

potential impacts on water, disposal of salt and other such things. That committee provides advice to the minister

in deciding whether or not he approves the subordinate plans of those companies. Those subordinate plans must

be approved before the companies are allowed to progress with their work.

Would you like Mr Gaddes to provide a little more detail on that?

CHAIR: Yes, that would be good.

Mr Gaddes: As Dr Dripps has told you, those projects were approved, with substantial conditions. In March

2011, the minister set up an expert panel to provide advice to him on those detailed plans. They are very detailed

plans. The last I saw of the QGC plan, it was in the order of 800 pages. It takes a lot of time to go through and

assess those plans. The panel met on 16 occasions to go through them. A lot of the times the panel goes through,

provides advice back to the companies saying, 'You need to do more work', 'You need to provide more detail',

'We understand that you have done the modelling but it is not in the plans'—that sort of thing.

I will go through the requirements in each of the plans. In the stage one plan there is groundwater monitoring

and management measures requirements; groundwater draw down limits for each targeted aquifer are required; a

schedule for aquifer connectivity studies and monitoring of relevant aquifers; a schedule for field piling of aquifer

re-injection of treated CSG water; early warning indicators of where draw down thresholds are being approached.

There are requirements for information on hydraulic fracturing, which includes but is not limited to estimated

numbers and distribution of boreholes to be fracked; details of constituent components of fracking agents and any

other re injected fluids; their toxicity as individual chemicals and total effluent toxicity and eco toxicity; surface

water quantity and quality monitoring plans, including number and location of monitoring sites upstream and



downstream of proposed CSG water discharge points and the frequency of monitoring at those points; baseline

data for each monitoring site—

CHAIR: Mr Gaddes, how long will this take?

Mr Gaddes: This could take quite some time.

CHAIR: Can I then propose that what you do is take this on notice and provide us a graph or a detailed plan

on how this works. In a graphical way would be good, so we can have a quick look at it.

Senator HEFFERNAN: And table what he is reading from.

CHAIR: Yes, and table what you are reading from. I would rather get a schematic that we can look at, if that

is possible. Maybe we will stop there. We will deal with the science and then we will go to Senator Heffernan.

Ms Nethercott-Watson: The Independent Expert Scientific Committee considers the project proposals, with

particular questions from the regulator. As part of the consideration of projects, it looks at both the individual

impact of the project as well as the cumulative impact, based on known and understood information and science.

There have been a number of advices that the Independent Expert Scientific Committee provided to the regulator

in which it expressed the precautionary principle about looking at cumulative impacts. A number of the advices

that are publicly available that the committee has issued do mention looking across a number of project proposals

and what the potential cumulative impacts might be, based on what the committee understands to be the available

science or the expert knowledge.

CHAIR: Senator Heffernan, you have got it.

Senator HEFFERNAN: Could I just ask a simple question. Where are we up to with British Gas, Santos and

Origin? Are they approved, the mining licences?

Dr Dripps: Those projects are approved under the EPBC Act, with some subordinate plans required. The

material we are just having copied for you will show you where the projects are up to with regard to the water

management plan.

Senator HEFFERNAN: Yes, but Queensland has given it the tick and the mining is proceeding.

Dr Dripps: Yes, that is correct.

Senator HEFFERNAN: Fracking will not be an issue, let me assure you of that, once they sort out the

patenting arrangements with the people that have got this new fracking material. You can drink the water if you

want to. The fracking thing is fixed, for all intents and purposes. That is commercial in confidence. But there is

the accumulative impact. It is difficult to imagine how this could happen. With the 40,000 wells in Queensland,

there is no solution scientifically for what they are going to do with the salt.

Dr Dripps: Of what they are going to do with what, I am sorry?

Senator HEFFERNAN: The salt. They have got an environmental approval to go ahead without an

environmental solution for the salt.

Dr Dripps: They have an environmental approval to go ahead, subject to the minister's approval of their water

management plans. Their water management plans need to include what they intend to do with the salt.

Senator HEFFERNAN: They do not have a solution. How can they go ahead with it until they find out? They

thought Penrite was going to solve the problem, and then they thought the glass industry and the aluminium

industry would. There is no solution. It is the most toxic substance. There are 700,000 tonnes a year just for the

three tenements that have been licensed. There is no solution. The CSIRO advises us, and the chairman was at the

meeting, that it will take several hundred years to rebalance the aquifers. They do not know how long it will take

but it could take several hundred years.

Mr Gaddes: I have some advice in that regard. The default position for the companies that have had their

plans approved to date is that the salt will either be re injected into the aquifer or it will be buried in secure

landfill.

Senator HEFFERNAN: Let me go to that. There is only one site. They all thought they would be able to re

inject it. It is not going to work. Could you please explain to me how you would safely bury a stack of salt that is

at 32 degrees, at 860 kilograms a cubic metre that will be 11 kilometres long, 30 metres wide and 10 metres high?

That is per annum? Can you explain that to me?

Mr Gaddes: There are state regulations around how toxic substances like this are required to be stored.

Senator HEFFERNAN: Twenty million tonnes for the life of the known tenement. If I were in charge, if I

were in charge of the Murray-Darling Basin, I would be saying do not store it in Australia's most productive area,

the Murray-Darling Basin. You do not know what they are going to do with it. We do not know.



Mr Gaddes: Would you like me to provide advice, on notice, because I do not have the details of each of the

storage facilities to hand—

Senator HEFFERNAN: I do. Never ask a question unless you know the answer.

Mr Gaddes: I can provide some documentation for you.

Senator HEFFERNAN: Can I tell you, this is a serious problem.

CHAIR: So you are clear, Mr Gaddes, you should provide that advice to the committee.

Dr Dripps: Thank you, Senator. We are very concerned about the salt issue as well, which is why we have got

the detailed conditions. We will take that question on notice.

Senator HEFFERNAN: All right. I do not really want to dwell on this. I want to go back to water. Obviously

there are low geological fault lines which at the present time are naturally balanced between the aquifers, but

there are fault lines. When you depressurise one area, fault lines start to work and you contaminate, as happened

in the Walloon. So what do you do by way of compensation when the legal obligation of the miner ceases when

the well is sealed, when you have a contaminated aquifer? What do you do about that?

Mr Gaddes: Under the EPBC Act—

Dr Dripps: The compensation of farmers after mining activities is beyond the responsibilities of this

department.

Senator HEFFERNAN: No, this is not about compensating farmers or footy jumpers for the local football

team. This is about Mother Earth and the long-term contamination of the aquifer. How do you make good a

contaminated aquifer?

Dr Dripps: Our intention is to ensure that the aquifers are not contaminated in the first place.

Senator HEFFERNAN: They already are.

Dr Dripps: So what we are endeavouring to do through the application of conditions to these projects is

ensure that the companies are responsible, that there is detailed monitoring—

Senator HEFFERNAN: Yes, I accept all that.

Dr Dripps: and there is re-injection or virtual re-injection where that is possible, which the companies have

claimed for a long time is possible.

Senator HEFFERNAN: We should learn from Bass Strait. In 1969, there was the environmental approval.

Now no-one wants to fix the better than 50 per cent chance of the coastal subsidence in the Gippsland area. We

should learn from that in regard to this. I will not go through the detail because we do not have time.

CHAIR: Just before you go to another matter—and you will get time to ask the question—there is the issue of

different types of agricultural capacity in different regions. Some of the coal seam gas in Queensland has been

done out in the back blocks, to use the colloquial term. There are now big debates about Liverpool Plains. I was

involved in the Liverpool Plains with some of the coalmining projects. The aquifers and the watercourses are

extremely complex and difficult to map. How do you deal with coal seam gas and the accumulation issue in an

area like the Liverpool Plains?

Dr Dripps: Under the current law, we deal with that from the perspective of potential impacts on matters of

national environmental significance. So we require consideration and advice by the Independent Expert Scientific

Committee on the adequacy of the environmental impact assessment statements that have been undertaken by

companies. We have in fact referred 23 projects to either the interim or the final Independent Expert Scientific

Committee. Ms Nethercott-Watson could give further information on the kind of advice that that committee

provides back to us.

We look at the water balance, the likelihood of connectivity. We require companies to undertake detailed

groundwater modelling. We then require validation of that groundwater modelling before they are allowed to

progress with the stages of their project.

CHAIR: Is there any provision federally for an assessment of the economic benefits of coal seam gas in the short

term—it is not a renewable resource—against the long-term farming capacity of an area like the Liverpool Plains?

How do we balance that?

Dr Dripps: The EPBC Act has in its objects the principle of ecologically sustainable development. That

means that social matters and matters of economic outcomes may be considered by the minister in making

decisions under that act. That act essentially enables the minister to determine whether the long-term ecological

impacts are worth the shorter term or medium-term economic growth that may come from an activity. That is the

principle that is embedded in the act.



CHAIR: Thanks. Senator Heffernan.

Senator HEFFERNAN: There is roughly about a million cubic metres per annum of granulated mid course

salt. This is where you are going to store it safely underground?

Dr Dripps: A million?

Senator HEFFERNAN: A million cubic metres per annum for 30 years.

Dr Dripps: Senator, as Mr Gaddes—

Senator HEFFERNAN: Do you understand the logistics of that?

Dr Dripps: We do, Senator. As Mr Gaddes has advised, we will provide you with some more information

about our understanding of how that is to occur.

Senator HEFFERNAN: This is 'don't ask and don't tell' with the industry. We would all like it to work, but

we want to protect the earth. They are saying, 'Well, maybe we can centralise it,' or 'Maybe we can take the brine

to the sea,' or 'Maybe we can reinject it.' But how, in God's name, did we and you and everyone else involved give

an environmental approval when there is no environmental solution? I will move on. If I could go to Nimmie-

Caira. In the last estimates in February I asked questions about the study of Nimmie-Caira. My understanding

today is that the money to purchase the asset of the land and the water is going to come out of a New South Wales

fund, not the Commonwealth.

Ms Harwood: The New South Wales proposal for the project in its entirety, which involves the acquisition of

land and water and works and other things, was that that be funded as a state priority project. That is

Commonwealth funds in the Sustainable Rural Water Use and Infrastructure Program.

Senator HEFFERNAN: So it is a Commonwealth matter.

Ms Harwood: But it is money that is allocated or committed to New South Wales for state priority projects in

the 2008 IGA.

Senator HEFFERNAN: I was wondering why you were involved if it was not your money; but it is your

money, allocated to New South Wales.

Ms Harwood: Yes. It is Commonwealth—

Senator HEFFERNAN: So this is in the $200 million that is in the kitty?

Ms Harwood: No. As I explained before, it is part of the remaining funds in state priority projects—

Senator HEFFERNAN: How much is in the kitty there?

Ms Harwood: For New South Wales there is $208 million of state priority project funding that they have. I

am sorry, I thought you were referring to the other—

Senator HEFFERNAN: No.

Ms Harwood: unallocated—

Senator HEFFERNAN: So they are going to pay for it. You said in the last estimates in February that there is

a study underway. Where are you up to with final due diligence?

Ms Harwood: We are in the final stages of due diligence on the project business case.

Senator HEFFERNAN: If you are in the final stages of due diligence, is the due diligence going to take into

account the environmental damage of the alleged removal of water from the floodplain?

Ms Harwood: The due diligence looks at all aspects of the proposal, including the environmental use of the

water. That is, if the water entitlement held by the Nimmie-Caira landholders were put to environmental use, how

that would work. It looks at the infrastructure works that would be done to make the best use of that water.

Senator HEFFERNAN: As you know, the gross figure is approximately 380 gigs; correct?

Ms Harwood: Of entitlement value.

Senator HEFFERNAN: Yes. As you know, the agreement, in theory, to buy the entitlement back at 2¼ times

the value of the water, so you can cover the cost of the land and the windmills and the fences et cetera, was agreed

to before they issued the licences; correct?

Ms Harwood: The proposition that New South Wales has put to us—

Senator HEFFERNAN: It is correct.

Ms Harwood: has embodied in it an understanding reached between New South Wales and the landholders in

the Nimmie-Caira, but that is a matter between New South Wales and the landholders.



Senator HEFFERNAN: Yes, but surely if I know, you know that that is what happened.

CHAIR: Senator Heffernan—

Senator HEFFERNAN: Yes, okay.

CHAIR: Last question.

Senator HEFFERNAN: Are you sure? This is pretty serious stuff. I think is the perpetration of a fraud.

CHAIR: I am happy to come back to you, but there are other senators seeking the call.

Senator HEFFERNAN: Can I just ask then, in your due diligence study to get to the 380 gigs, and I know

this country backwards, to get to the outer limit of the floodplain, which happens about once every seven or eight

years—the gross is 380, the net is 173. In the 380 event, how much of that water is supplementary and how much

of it is flood?

Ms Harwood: I might also ask the authority to come in—

Senator HEFFERNAN: I can assure you it is not supplementary.

Ms Harwood: In a major flood event there would be overland flows that are separate and different from the

water that would be allocated to the supplementary licence—that is, the 381,000 litres of supplementary—

Senator HEFFERNAN: How many times has the 380 gigs been allocated as supplementary water to that

floodplain?

Ms Harwood: The modelled long run yield from the supplementary licence in question in terms of the long

run average water provided from that is 173 gigalitres.

Senator HEFFERNAN: That is correct. One of the cons in this job is that the outer limit people and I know

them; one of them was here the other day and was not too happy, but I said, 'Good luck to you if you get it

because it's lotto.' They only get it once in a blue moon. Yet they are going to get paid for it as if they got it all the

time.

Mr Parker: I do not think that is right, Senator.

Senator HEFFERNAN: I can assure you it is right. I can take you to the places.

Mr Parker: We have been there ourselves, Senator.

Senator HEFFERNAN: I have had cattle there, made and mustered them and done all the things that you do.

I will come back to that. This is the perpetration. If they get away with it, are they—

CHAIR: Let me indicate for the senators that I have Senator Birmingham seeking the call, Senator Waters

seeking the call

Senator HEFFERNAN: Yes, I have just one little question.

CHAIR: Senator Joyce again and then I will come back to Senator Heffernan. We have got until 12.15. I will

go to Senator Birmingham now.

Senator HEFFERNAN: Could I just ask a question and put it on notice? I have a query from the Ulonga

Grazing Company, which has to do with the Wah Wah scheme and the buyback of Murrumbidgee water. I would

like to come and deal with you on this because it is very peculiar. SEWPAC, your people, have committed $4,200

a meg to the buyback of the Wah Wah scheme. I think it is a great idea to put it in a pipe and send it down the

channel. The same water, Murrumbidgee water—bearing in mind that comes out the back end of the irrigation

area—the same water at Darcoola, which is just across the road; it is about 15 kilometres across Murrumbidgee

water; New South Wales is paying $2,200 a meg for the water. Is there some reason why you have been nearly

double the price for the same water?

Ms Harwood: If you are talking about the net cost of water achieved through the Murrumbidgee irrigation

project, that would be for a wide array of infrastructure, modernisation and some changes, including the Wah

Wah scheme.

Senator HEFFERNAN: Yes, all of the above.

Ms Harwood: I do not know if we are comparing like for like here.

Senator HEFFERNAN: Can I just put it in simple terms to you?

CHAIR: You will have to do it very quickly.

Senator HEFFERNAN: There is about 9,000 gigs of freight water that you are buying back. You are paying

$4,200 for a gig of freight water and yet it is only $2,200 for active water. Could I, through you, Mr Chairman,

indulge on the minister—



CHAIR: No, there is no indulging.

Senator HEFFERNAN: to have a private briefing on this matter from the Ulonga—

CHAIR: You can ask for a private briefing any time.

Senator HEFFERNAN: Because this thing is an absurd proposition which was about a farmer from

Ulonga—

CHAIR: Senator Heffernan, you said you wanted to put a question on notice. I am happy for you to put that

on notice. You can put all the detail you like in a written question. I will now move to Senator Birmingham. I will

come back to you.

Senator BIRMINGHAM: Thanks, Chair. If I can pick up on a couple of issues from Senator Joyce this

morning and a few other pointers. Firstly, in answer to Senator Joyce's question on notice No. 67, at that stage you

indicated that approximately 20 successive versions of the proposed intergovernmental agreement on

implementing water reform in the Murray-Darling Basin have been circulated to and discussed with basin states.

How many different versions of the agreement are we up to now?

Mr Slatyer: Senator, we would have to take on notice that precise number. In the early development of the

draft there were a number of interchanges with the states, as the draft iterated. That would be quite normal in any

complex process of this nature. As a general observation, I would say the curve would flatten out rapidly as the

negotiations proceed.

Senator BIRMINGHAM: So it was more than 20 several months ago. Would you say it is 30 or 40 now,

Mr Slatyer?

Mr Slatyer: I will not say, Senator. I will take that question on notice.

Senator BIRMINGHAM: It was more than 20 a few months ago. It is obviously more than 20 now, one

would assume, given that it has not been settled yet. Dr Grimes or Mr Parker said it was substantially complete,

but it is still going through the development process. When is the deadline for completion of it? Does it have to

still be signed off by the ministerial council?

Mr Slatyer: It is not going to ministerial council. It will be an agreement signed between first ministers. There

is no prescribed deadline for that process. When the draft is finalised it will be submitted by the Prime Minister to

premiers.

Senator BIRMINGHAM: Is there a reason why it has to go through first ministers as against the ministerial

council?

Mr Slatyer: It is the normal process for an intergovernmental agreement, Senator.

Senator BIRMINGHAM: Does there need to be a COAG meeting for that to take place?

Mr Slatyer: It is not a requirement.

Senator BIRMINGHAM: It can be done out of session of COAG to have it signed?

Mr Slatyer: The normal process would be, and we are envisaging this process, though you might address

these questions to the Prime Minister's department, that—

Senator BIRMINGHAM: I think they have been and gone.

Mr Slatyer: the Prime Minister would send the document to the relevant premiers for their consideration and

signature.

Senator BIRMINGHAM: Is it the government's ambition to have it completed and signed before the

caretaker mode?

Mr Slatyer: It is a question you would have to direct to the government.

Senator BIRMINGHAM: Is the department working towards a time line to have it completed and signed

before the caretaker mode?

Dr Grimes: Senator, I hope you do not mind me taking this one. My evidence this morning was that we were

very much in the very final stages of finalisation of the IGA. It has not been signed off by first ministers yet. It is

outstanding in that sense. Discussions are very, very well advanced. It is in the final stages at this time.

Senator BIRMINGHAM: Is the June meeting of the Murray-Darling Basin ministers still proceeding?

Mr Slatyer: There is not a scheduled meeting in June.

Senator BIRMINGHAM: There was last estimates.



Mr Slatyer: I am not aware that there was a formally scheduled meeting. There are normally two meetings a

year of the ministerial council.

Senator BIRMINGHAM: Has the ministerial council met this year?

Mr Slatyer: No, Senator.

Senator BIRMINGHAM: When will it meet?

Mr Slatyer: When meetings are scheduled.

Senator BIRMINGHAM: Is there a scheduled meeting for the remainder of the year?

Mr Slatyer: I am not aware of a scheduled meeting at this point in time.

Dr Dickson: There is the scheduled in November there—there are the two yearly meetings, June and

November—but there is not one scheduled in June. At the moment one is scheduled in November, but this may

change.

Senator BIRMINGHAM: There is usually a June meeting and a November meeting. There will not be a June

meeting this year, or there is not one scheduled?

Dr Dickson: There is not one scheduled.

Senator BIRMINGHAM: And it would be a miracle to schedule one a week before June.

Mr Slatyer: Can I clarify: it depends. There have been meetings in March, April, May and June. Sometimes

there are not meetings in that period. These matters are determined by ministers each year.

Senator BIRMINGHAM: Are there matters that should be going to a ministerial council to finalise the IGA

or other matters in relation to how the plan will be implemented that now will have to wait until November?

Mr Slatyer: The council can operate through regular, conventional face to face meetings, but it can also deal

with matters out of session. It is quite normal for regular business that needs attention, as the year proceeds, to be

dealt with out of session, if required. That process has been availed of and can be availed of this year.

Senator BIRMINGHAM: Does the current draft of the IGA include a cap for New South Wales?

Mr Slatyer: We are not able to comment on the content of the current draft, Senator.

Senator BIRMINGHAM: It is always worth trying. How many submissions were received on the draft water

recovery strategy?

Ms Harwood: I think around 22, but I will correct that if that figure is not right.

Senator BIRMINGHAM: Approximately 22. Those submissions were received back in March, were they

not?

Ms Harwood: Yes.

Senator BIRMINGHAM: What consultation is necessary now to finalise that strategy?

Ms Harwood: I think we have the input from people who are commenting on the draft strategy. I have also

had meetings with bodies like the Irrigators Council discussing the content of the strategy and with others. So we

will now prepare the final version—that is, the first formal iteration of the water recovery strategy. But, as I said

before, it will be an evolving document as the water recovery landscape evolves.

Senator BIRMINGHAM: Is there anything that—

Mr Parker: Just to correct that answer, it is important to note that there are ongoing discussions between

water officials and the Commonwealth and the states. That happens regularly, including around the table of the

so-called basin officials committee. When you asked the question about consultation, there is not a black and

white consultation process formally scheduled on the finalisation of the water recovery strategy, but it is not, in a

sense, a private process just in Canberra.

Senator BIRMINGHAM: Given that this draft was released in November last year, and noting that more

than half of the water has already been recovered, is there anything preventing the immediate finalisation of the

strategy so that it is transparent to all as to what the strategy of the Commonwealth is working towards?

Ms Harwood: No. We are just working our way through the comments that we have received and preparing a

robust final that respects and reflects the input that we have received.

Senator BIRMINGHAM: When will it be finalised?

Ms Harwood: I cannot give a precise date, Senator.

Senator BIRMINGHAM: Does it require ministerial sign-off?



Mr Parker: It does not require ministerial sign-off by the council; it is a Commonwealth document.

Senator BIRMINGHAM: Does it require sign-off by Minister Burke?

Mr Parker: I expect Minister Burke will want to approve the document, yes.

Senator BIRMINGHAM: When does the department hope to get it to Mr Burke?

Ms Harwood: Again, we do not have a precise date for that, Senator.

Senator BIRMINGHAM: Are you talking about days, weeks or months?

Ms Harwood: Weeks.

Senator BIRMINGHAM: You indicated in response to Senator Joyce that in terms of the bridging the gap

arrangements, working through what might be achieved by works and measures and what might be achieved by

infrastructure, there were still some 280 gigalitres that you indicatively expected to need to purchase. The draft

water recovery strategy seems to indicate a figure of 239 gigalitres as the indicative residual water purchase. Why

has that changed from 239 to 280?

Ms Harwood: I am not sure. It may be that my calculations on the spot here were not correct. I will take that

question on notice.

Senator BIRMINGHAM: If you could have a look and if the department is able to correct the record today, I

am sure many people would like to be certain of what the case is in that regard. Can I go to some of the funding

issues. The department has rephased, deferred—whatever the nice words are that are always used in these terms—

expenditure on the restoring the balance program, which of course is the buybacks program, and has pushed out

around $110 million or so beyond the forward estimates; is that correct?

Ms Harwood: There have been a number of reprofilings and movements of funds for the restoring the balance

program. That is correct. So the actual funds available for water purchase in the near years are less than they used

to be.

Senator BIRMINGHAM: Is about $110 million right, on my rough sums?

Ms Harwood: It sounds right.

Senator BIRMINGHAM: It sounds right to you, Ms Harwood; excellent. Leaving, according to your table,

$91 million for the 2013-14 year for water buybacks?

Ms Harwood: Yes.

Senator BIRMINGHAM: That would be, according to the table that you have presented, the lowest figure in

terms of water buybacks since the program first commenced in 2007-08?

Ms Harwood: Correct.

Senator BIRMINGHAM: Ms Harwood, what would the figures for water buybacks look like now for the

2017-18 and 2018-19 financial years—those years that come after the crunch time for achieving the 2,750 in

2019?

Ms Harwood: My understanding is that the agreed expenditure profile for capital for water purchase is

published by the government up to 2016-17. I am unaware of whether we normally provide the information

beyond the forward estimates.

Senator BIRMINGHAM: I am interested in whether you have the information beyond the forward estimates.

If you do then norms aside, essentially the point I am trying to get to is: is there a risk that there is now, with the

deferral of this $110-plus million, these big lump sums sitting in the final year or two of implementation that

could see significant tenders needing to be undertaken and an almighty rush to try to get things completed, which

of course would have the commensurate impact of driving prices higher?

Ms Harwood: I think the volume of water purchased in those years will be affected by a number of factors.

One is how much of the 650 gigalitres of SDL offsets are achieved through the SDL adjustment mechanism when

that applies in 2016, and we will not know that until 2016. The second is: how much water will we secure under

contract in infrastructure projects? The more yield we get from infrastructure projects, the less that needs to be

purchased. So there will be a significant review point in 2016 as to the remaining quantum of water purchase

required to bridge the gap to 2,750 by 2019.

Senator BIRMINGHAM: How much of the 239 or 280, whichever it is, would you expect to acquire over

the period of the forward estimates to 2016-17?

Ms Harwood: I will take that on notice because I would need to do some estimations in terms of the likely

yield from the available expenditure profile through to the end of the estimates.



Senator BIRMINGHAM: Is the available expenditure profile, including this deferred $110 million, purely

dedicated towards achieving 239 gigalitres or 280 gigalitres, whichever it is, or is there surplus potentially within

restoring the balance that could allow for greater buybacks if that proves necessary—or will that have to be

funded out of presumably there being lesser expenditure in SRWUIP?

Ms Harwood: I would probably say there is the gap there that relates to what is the water purchase task if the

full 650 is realised from an offset process. There are also some small aspects of water purchase. For instance,

although there is a sort of generalised pause in terms of water buyback in Victoria because we have already got to

the point of what you would acquire by 2016, there is a small water purchase program in Victoria, by agreement

with Victoria. There are water sales from points in the Goulburn-Murray connections program where farmers are

exiting from channels that have been decommissioned and wish to sell their water. So that is by agreement with

the government, the irrigators and Goulburn-Murray corporation. So the landscape of water purchase ahead is on

bridging the part of the gap that goes to the point where you allow for 650 but also some additional acquisitions

through small programs like that.

Senator BIRMINGHAM: What is the status of identification of the constraints that are required to be able to

make any progress on the additional 450 gigalitres?

Ms Harwood: I will pass that to the authority.

Dr Dickson: You are asking about the progress of the constraints strategy?

Senator BIRMINGHAM: Yes.

Dr Dickson: This year, as you know, we are required to do a strategy by the end of November. So is your

question about the rollout of the funds?

Senator BIRMINGHAM: No, about the progress on the development of that strategy.

Dr Dickson: We have done quite a lot of work in advance, with some discussions with communities and a lot

of discussions with the states, and have a lot of the technical work done. We have been, over this month and will

be over the next two or three months, having a lot of detailed discussions with communities, basically reach by

reach, in individual areas to work through the issues and risks in relation to those particular areas, and look at

trying to identify what are some of the mitigating options. That is all part of the development of the strategy.

Senator BIRMINGHAM: To be clear, if the constraints cannot be removed then the 450 gigalitres cannot be

acquired; is that correct?

Dr Dickson: There is nothing in the plan that puts a condition on the removal of constraints on the

450 gigalitres.

Senator BIRMINGHAM: So the 450 gigalitres could be acquired by the Commonwealth regardless of

whether constraints are removed?

Dr Dickson: There are three activities that are all coming to a head for consideration in 2016 for the SDL

adjustment. That is the work on the offsets, up to 650, the work on the constraints strategy, and governments will

have quite a lot of involvement until then on which are the value for money constraints that they want to address,

and also on the development of the program for the 450.

Senator BIRMINGHAM: I am being given the wind-up. One final issue: what will be the cut to the MDBA

as a result of South Australia's budget cuts? We received, in answer to some questions on notice, identification of

what is going to be cut as a result of New South Wales budget cuts. What decisions have been made in relation to

SA's budget cuts?

Dr Dickson: The decisions that the ministerial council have made on the joint programs is only for this

coming financial year. They are yet to make any decisions on what they are going to change for the future

financial years. We have not yet seen South Australia's budget for next year, so we do not know whether the

forecasts they made at the end of last year for their cuts are going to be factored into their budget for forthcoming

years. We really need to wait on that. In terms of the decisions made, they are only being made for one financial

year. The ministerial council asked all the basin officials to look through what some of the options might be for

the long-term funding of joint programs. That is the process that is happening for the rest of this calendar year.

Senator BIRMINGHAM: Has the government sought or received any assurances from South Australia that it

will reinstate the funding?

Dr Dickson: I cannot talk for the government. South Australia have agreed to maintain their funding

contribution for this coming financial year. As I said, with the future arrangements, as yet there has not been any

consideration by ministerial council. They are awaiting advice from officials.



Senator BIRMINGHAM: Mr Parker, can you add anything?

Mr Parker: In respect of your question, we are awaiting the outcome of the South Australian budget

deliberations this year.

Senator BIRMINGHAM: In response to the Victorian minister's suggestion of a Productivity Commission

review into the management and funding of river operations, Minister Burke stated on 30 March that it was an

'extremely constructive suggestion from Victoria and I will start the processes to see whether it's possible'. Has

Minister Burke started the process and can and will there be a Productivity Commission review into the

management and funding of river operations?

Mr Slatyer: The ministers did call for a process to be set up last year to look at the joint funding arrangements

for the authority. As a result of that, officials have recommended approaches to the budget arrangements for the

coming financial year. As part of that process discussions are occurring as to the value and role of an independent

inquiry into the joint activities of the Murray-Darling Basin Authority—not just River Murray water operations

but more broadly the joint activities of the authority—and whether and how such a review should be conducted.

Those matters are under consideration currently.

Senator BIRMINGHAM: Consideration at ministerial level or at departmental level?

Mr Slatyer: The Commonwealth is considering the issues in regard to a possible inquiry by the Productivity

Commission. Ultimately, if it is a Productivity Commission inquiry process then that would be finalised and

settled in accordance with the normal process for establishing such inquiries.

Ms Harwood: Chair, with your indulgence, could I correct a figure I gave earlier to solve the 239-280

problem. My apologies; I made an arithmetic error in going through the process of working out the remaining

water to purchase that goes if we get the full 650. There is 2,750 to bridge the gap under the basin plan. Of that,

we have recovered 1,600. If you set aside 650 of that as allowing space for the offsets or SDL adjustments to be

achieved, and we assume a further 270 from the rest of the infrastructure projects, that leaves 230 gigalitres,

which is much more in tune with the figure in the water recovery strategy. My apologies for getting those sums

wrong earlier.

CHAIR: Senator Waters.

Senator WATERS: I want to go to the document that was distributed a little while ago: the summary of

requirements about the water monitoring and management programs. In both the Santos and the QGC columns

you note that, in the expert panel review of stage 1 of those plans, the minister decided not to approve those plans.

Santos then proceeded on to stage 2 without stage 1 having been ticked off. From your table here, it looks as

though Santos still do not have their water management and monitoring plan ticked off. What happens now? Are

they operating? Why was approval issued if the water problems still, almost two years on, have not been able to

be properly dealt with?

Dr Dripps: I might have to take that question on notice. I have lost Mr Gaddes. I have sent him to do

something else—

Senator WATERS: Can he be brought back?

Dr Dripps: He can be brought back. He is in the building, but he is not here right now. There was a degree of

complexity—

Dr Grimes: I was just going to make one suggestion, Senator. These matters would typically be covered

under item 5.2. We are trying to take as much here as we possibly can, but Mr Gaddes will be available for item

5.2 this afternoon.

Senator WATERS: Okay. I have a number of other questions for that session too.

Dr Grimes: Indeed, we could pick up questions there, if we cannot get him back a little sooner.

Dr Dripps: As we indicated in the evidence provided previously: there have been a lot of meetings of the

Queensland expert panel and a lot of detailed technical analysis of the plans and the work that has been

undertaken by the proponents in preparing their water management plans. The precise detail about what was

approved on what date?—you have the piece of paper in front of you; I no longer do. I am sorry about that. But

we did find, as you would expect in areas where there is an adaptive management approach, that there were things

that were prescribed to be in the stage 1 water management plans that it was unreasonable to expect could have

been completed in the time frames of the stage 1 plans. So they have been incorporated into the stage 2 water

management plans.

Senator WATERS: Which still have not been ticked off for Santos. Yet their approval was issued years ago

and presumably they are operating.



Dr Dripps: They are not able to operate in a manner covered by things in the water management plan until

their water management plan has been approved by the minister.

Senator WATERS: So are they extracting gas from the wells?

Dr Dripps: I do not have that information to hand. My understanding would be that, if they are having an

impact on water that is covered by the water management plan and that water management plan is not yet

approved by the minister, they would not be operating.

Dr Grimes: There is no doubt that those projects are not operating at anything like their full scale because the

processing facilities have not yet been completed. The processing facilities have to be completed before there are

going to be commercial levels of extraction at the coal seam.

Senator WATERS: That is true, but even the pilot and exploration levels of extraction can have water

impacts, as you well know.

Dr Grimes: We have officers who can provide you with further information on that.

Senator WATERS: Great.

Dr Grimes: The more significant issues are related to when you ramp up to very large scales of production.

Senator WATERS: With respect, the scientists say otherwise. They say that there can be groundwater

impacts even from an exploration stage. But I will leave that, given my limited time. Can I take you to the matters

that are required to be dealt with in stage 1 of a water monitoring and management plan? The fourth bullet point

in the first item, groundwater monitoring, says that early warning indicators of where drawdown thresholds are

being approached need to be addressed. Can you outline for me what sort of early warning indicator, and how that

matches up with the evidence from CSIRO and the water commission that say that sometimes these impacts are

not detected for decades and possibly hundreds of years? How can you have an early warning indicator when

water moves slowly?

Dr Dripps: As you are aware, we are only able to regulate water as it relates to matters of national

environmental significance. With the projects in Queensland, those matters are mound springs—mound spring

dependent communities—so they are some distance away from the actual operating of the coal seam gas facilities.

Without doubt, the operation of coal seam gas extraction does have an impact on water levels in the immediate

vicinity. We have worked with the companies and with the expert advisory committee to develop extremely

conservative thresholds of what would be a natural variation in levels of aquifers on the pathway between where

the coal seam gas extraction activity is taking place and the mound spring so that there is an early warning.

Senator WATERS: How is that able to be fixed? If you detect that the threshold is reaching that danger zone

level, what measures are then put in place to remedy that?

Dr Dripps: You are going slightly beyond my area of technical expertise, but my understanding of things is

that there are a number of options, including either slowing down or halting the extraction of coal seam gas as

well as the provisions around reinjection into aquifers that have been impacted by coal seam gas extraction.

Senator WATERS: Again I think there is some significant scientific concern about whether or not that is a

successful process. Perhaps I will revisit this in 5.2, but my general concern is that approvals have been given.

When we have fundamental detail about water impacts and we do not even know whether they can be managed,

why were the approvals given in the first place? Does the department advise the minister as to the propriety of

issuing such highly conditional approvals? Should the department advise the minister that perhaps it would be

more sensible to be in possession of the information about water impacts and how and if they can be managed

before giving these major projects the approval?

Dr Dripps: It is regular practice under the EPBC Act for companies to apply for their approvals at quite an

early stage of the consideration of the potential economic activity. This aligns with their investment time frames

and essentially the need not to make investment decisions that would subsequently be overruled by environmental

concerns or conditions. As you are aware, we do give approvals for projects with a number of detailed and

subordinate plans and activities that need to be undertaken before the activity is able to progress, and that is the

same case in these coal seam gas activities in Queensland.

Senator WATERS: So if the water management and monitoring plan can never meet the satisfaction of the

minister, what happens to the status of the overarching approval?

Dr Dripps: It is a condition of the project that the water management plan be prepared to the satisfaction of

the minister.

Senator WATERS: So the approval is void if those subsidiary plans cannot be satisfactorily ticked off by the

minister?



Dr Dripps: That would be the most likely option.

Senator WATERS: I want to take you also to your bullet points there about information relating to hydraulic

fracturing. You have listed two items there which need to be examined in a stage 1 water plan in relation to

fracking issues. What is not listed there is the environmental impact of the mobilising of naturally occurring

BTEX by the fracking process itself. Evidence was given to this committee in the course of my bill—or it might

have been the government's water bill; one of the water bills—which was to the effect that fracking can mobilise

naturally occurring BTEX. That is not included on your list here of issues that companies have to address in their

plans. Is there an intention to revise this list and add that?

Dr Dripps: We regularly revise these kinds of lists as new information comes to light. I am happy to take on

notice what we have done with that particular evidence from the inquiry. I am not personally familiar with exactly

what we have done with that.

Senator WATERS: Thank you. I would be very keen to know that that is being attended to and reflected in

the standards. Coming back to the East's bioregional planning, can you give me an update on where that is at and

how it is progressing; and are we filling those gaps in our water knowledge?

Dr Dripps: I will pass you to Ms Nethercott-Watson for an update on the bioregional planning process.

Ms Nethercott-Watson: I am sorry, Senator; I am not sure if you are after one particular one, but I can give

you a feel of where the program is up to.

Senator WATERS: The overarching one first would be great.

Ms Nethercott-Watson: Yes, sure. As you know, six bioregions have been identified. A number of them have

been broken into the relevant subregion areas based on the appropriate geology and hydrogeology of the region.

There are around 15 subregions that we are looking at. At the moment, four priority subregions have been

identified which will be the first areas subject to bioregional assessments. Those four areas include Galilee,

Namoi, Gloucester and Clarence.

So far, in terms of what the program has been doing, the main focus has been on the construct of a scientific

methodology to undertake bioregional assessments. This has been done in conjunction with our partner agencies:

CSIRO, Geoscience Australia and the Bureau of Meteorology. Very, very detailed planning has gone into that

methodology and it has been the subject of a lot of conversations with the Independent Expert Scientific

Committee.

We have commenced some detailed stakeholder consultations in a lot of these regions—particularly the four

subpriority regions—talking to councils, natural resource management organisations and mining companies about

the commencement of bioregional assessments and what the scientific methodology is looking to do. That would

include bringing together a wide range of products—technical and scientific products—that would be released as

part of bioregional assessments through a number of phases. The first phase would be a contextual analysis phase;

the next phase would be a data modelling phase; the third phase would be an impact analysis phase, and the fourth

would be a risk analysis phase. Particular scientific products are being identified for each of those phases under

the scientific methodology.

We are starting to talk to people about what those approaches might be and also to utilise the work we have

undertaken with the 29 natural resource management organisations that we have contracted. It is important to

concentrate on the fact that that is local knowledge; that is identifying local water assets and receptors. That forms

the basis of the scientific methodology to take in and understand what might be the potential impacts on and risks

to those water assets and receptors. So a lot of discussion has commenced and the data analysis is starting to be

brought together. A fair bit of work is going on within the scientific agencies at the moment to better understand

the availability of data that might be around to draw in and then work through each of those phases, on top of the

water asset and receptor information that is coming from natural resource management organisations.

CHAIR: Thank you, Senator Waters; we have to move on. I am going to run this through to 20 past, so you

have only a few minutes each. I still have Senator Joyce, Senator Heffernan and Senator McKenzie. I am sorry

about that, but that is what we have.

Senator JOYCE: In your initial report on the Murray-Darling Basin, you say:

We also acknowledge that this has meant that implementation planning is still in its early stages. Ideally, such planning would

have occurred concurrently with the development of the Basin Plan. Because, for the most part, that did not occur, the

establishment of a clear implementation pathway is the next critical step. Until a pathway is in place, we consider that there is

a real risk to realising all the benefits of efforts and investment to date.



In your view, what ideally would have occurred has not occurred; for example, environmental watering plans,

water recovery strategies, et cetera?

Dr Grimes: I do not think that is a matter that officials can comment on.

Senator JOYCE: Because the plan has not occurred, what do you see as the key risks?

Mr Cameron: I think the comments made in that report reflect the view of commissioners that, in an ideal

world where full information was available, the authority and relevant parties would be in a position to discuss

and put in place a set of understandings about the roles, responsibilities and accountabilities for implementation

steps, including considerations of the interdependencies between the various roles of parties in implementing the

Basin Plan. It would not necessarily be the case that all systems and structures would be in place. You made

reference to environmental water plans and other strategies. I do not think from the commission's perspective that

we would have expected to see all of those processes in place; but certainly a clearer understanding of the

agreements and implementation strategies from the various parties would, in an ideal situation, be required. But

we do not live in an ideal world. For that reason, we have indicated in the report that we will be looking for the

early implementation of those strategies and certainly at coming back in 2015, which is when we propose to do

our next audit, to identify whether those arrangements are in place.

Senator JOYCE: I note that you have three new commissioners and a new chair—and a new commission

there for the first time in February. Is the new commission taking the NWC in new directions?

Mr Cameron: You are correct; we have new commissioners. We have four commissioners currently in place.

The commissioners had some early discussions about the direction of the organisation at that February meeting

and agreed that when they next meet—which is next week—they will have a discussion about the strategic

direction of the organisation. I would expect that would result in some decisions about priorities for our work

program over the next couple of years and areas of particular interest to commissioners to pursue in relation to

water reform.

Senator JOYCE: What are they doing? How is the NWC involved with Western Australia? What is going on

there?

Mr Cameron: The National Water Commission has a role to report and to provide advice on water reform

across the country. Western Australia, like all states and territories, is a signatory to the National Water Initiative.

We have discussions with the Western Australian government and report on the performance of the Western

Australian government through our various reports.

Senator JOYCE: I notice that there was some stuff there from Karlene Maywald. She said that the National

Water Commission sees urban water reform as an area that was underdone in the 2004 National Water Initiative.

What elements of water reform does the National Water Commission see as undone?

Mr Cameron: The National Water Initiative contained a relatively small number of commitments in relation

to urban water reform relating to water efficiency labelling, work in relation to water sensitive urban design and

some commitments which apply across the country in relation to pricing principles and institutional arrangements.

But unlike water management in regional Australia, the National Water Initiative does not, in the commission's

view, present a coherent framework for best practice water management in urban areas. In our report on urban

water which we released in 2011, we indicated that we felt there was room for the development of a national

articulation of principles in relation to institutional design and accountabilities and responsibilities and for

discussion about the role of the urban water sector, particularly in relation to new areas, such as the objectives of

liveable cities, but also a recommitment to implementing those important economic and environmental principles

around urban water management.

CHAIR: Senator Joyce, I am going to have to go to Senator McKenzie.

Senator McKENZIE: I am following up on a question on notice which Senator Birmingham touched on

earlier in his questioning, and that is question 228, around the jointly funded programs in the Murray-Darling

Basin and the list that was provided. My question 3 was: 'Have any other basin states'—that is, Victoria or

Queensland—'indicated that they will also be reducing funding to these jointly funded Murray-Darling Basin

programs?' In your answer at the time you suggested that no other jurisdiction has indicated they will be reducing

their contribution to the joint program. So I am just following up on whether that is still the case.

Dr Dickson: That is still the case, yes. South Australia has that forecast for the following financial year.

Neither Victoria nor Queensland has made any comment on that. But all jurisdictions have wanted to make this

for one year, the next financial year. For future financial years, it is going to be contingent on doing the review of

the future for the joint programs.



Senator McKENZIE: New South Wales has not made any further announcements?

Dr Dickson: No.

Senator McKENZIE: I will ask the rest in another area.

CHAIR: I am just trying to get Senator Heffernan in here. I did promise that I would give him a couple of

minutes.

Senator JOYCE: We are up to the Commonwealth Environmental Water Holder.

Environmental Water Office

[12:19]

CHAIR: We are now moving to program 6. I call officers from the Commonwealth Environmental Water

Office together with officers from the department in relation to program 6.1: Commonwealth environmental

water. Senator Joyce.

Senator JOYCE: Congratulations, you are now the biggest irrigators in the nation, are you not? You would

have the largest amount of water compared to any other body in Australia?

Mr Papps: As I understand it, we are the single largest holder of water.

Senator JOYCE: On the books, how much is that water worth?

Mr Papps: That water is valued at about $1.89 billion.

Senator JOYCE: How many staff do you have?

Mr Papps: The current full-time equivalent staff numbers are 55.66.

Senator JOYCE: What is the average cost of each staff member?

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

Senator JOYCE: Over the past five years, how much water has the water holder delivered to the

environment?

Mr Papps: The total delivered since the commencement of the program five years ago to 30 April is 2,359

gigalitres.

Senator JOYCE: You were allocated 2,978, is that correct?

Mr Papps: The figure I have is 2,812 gigalitres, but I will check that during the day and let you know.

Senator JOYCE: So there is about a 550 difference between the two or something, is that correct?

Mr Papps: About 450, according to my numbers.

Senator JOYCE: What did you do with that water?

Mr Papps: The difference?

Senator JOYCE: Yes.

Mr Papps: The difference is made up of the fact that the 2012-13 water year has not yet finished; so there will

be more water used. There have been some evaporative loss deductions during the life of the holdings. In

accordance with the normal state rules, there has been a very small amount of forfeit and then the balance is made

up of carryover that we are expecting into 201314.

Senator JOYCE: What do you mean by 'forfeit', for the purpose of Hansard?

Mr Papps: Forfeit or reallocation by basis states is a process whereby essentially—if you cannot use your

water, you are not entitled it carry it over and you have not traded it—under certain circumstances, given the rules

in each basis state, you forfeit it or lose it.

Senator JOYCE: Use it or lose it! How much forfeit water was there?

Mr Papps: Over the life of the program, the total forfeiture for the Commonwealth environmental water

holdings is 0.464 gigalitres.

Senator JOYCE: So that is at 46,000 megs or something?

Mr Papps: Yes.

Senator JOYCE: Is there any chance of selling that on to anybody? Seeing that we are going to lose it, is

there any chance of selling it to farming communities or something like that that might want to buy it?



Mr Papps: Not really in the time that we have been operating, simply because, particularly since the Basin

Plan has come into force, there are new rules governing the trade by the Commonwealth Environmental Water

Holder. I have to be compliant with those rules before I can trade, and I am not yet in that position.

Senator JOYCE: So just for the purpose of Hansard, 46,000 megs is about half of Beardmore Dam. Do laws

need to be changed so that you could actually trade that water back into the market? Are there things that we need

to change so that could happen?

Mr Papps: No. I think the trade question is reasonably settled. With the new provisions in the Basin Plan as it

now exists and the requirements on me and, indeed, every irrigator within the basin states—they have got their

own sets of rules and regulations—as far as I am concerned, as the Commonwealth Environmental Water Holder,

I simply have to address those requirements so that I am in a position to trade. At this stage, I do not see any

changes that are necessary.

Senator JOYCE: You should read the notes just beside you.

Mr Papps: Thank you.

Senator JOYCE: You are welcome. How many people do you have in the field?

Mr Papps: How many people in the field?

Senator JOYCE: Yes.

Mr Papps: Do you mean based outside Canberra?

Senator JOYCE: I mean in the field, where your environmental assets are—driving around in the field and

checking out how the trees are growing.

Mr Papps: We do not have any staff at the moment permanently located outside Canberra. We are in the

process of employing six local engagement officers who will be employed within the basin, outside Canberra.

Having said that, I should also say that the staff within Canberra travel across the basin very frequently and very

widely, particularly those staff involved in the delivery of Commonwealth environmental water, because they

undertake this process in a very collaborative manner with a wide range of other agencies, interest groups, local

communities and the like. Those sorts of relationships and that sort of interaction can only be facilitated by direct

contact throughout the basin. So while they are not based in the basin, they are certainly out there a great deal.

Senator JOYCE: You have a $1.89 billion asset. You have 55 staff based in Canberra. The water, the asset, is

out there across the Murray-Darling Basin. In regard to your environmental assets, you are supposed to be

watering them out there as well. If you were a company, you would be in probably the top five or six per cent, in

terms of size, of companies in Australia. So we are talking about a big show. Don't you think it would be good to

have some more sort of ontheground staff permanently applied next to your environmental assets? If that is what

we are supposed to be doing all this for, how do we know it is actually achieving its objectives?

Mr Papps: There are two elements in response to that question. The first, as I alluded to before, is that the

Commonwealth Environmental Water Holder and, indeed, the Commonwealth environmental watering process is

an extensively collaborative one. In other words, we undertake both our planning for water use and our delivery

of Commonwealth environmental water in collaboration with a range of other agencies and entities, particularly

the state-based agencies: in New South Wales, for example, State Water and the Office of Water; with river

operators, for example, the Murray-Darling Basin Authority; and with private companies, for example,

Murrumbidgee Irrigation. So the total resources available to the Commonwealth Environmental Water Holder are

less relevant; it is the collaborative work that we conduct across the basin.

In terms of monitoring outcomes, it is fundamentally important for us to be able to demonstrate the effect that

our water is having. Of course, given that we have a commitment and an obligation to an adaptive management

framework, you cannot do that without monitoring the impact of our watering activities. We have an

environmental monitoring program and we are seeking to expand that.

Senator JOYCE: What will be the value of your asset at the end? How much water will be the book value?

What do you anticipate to be the ultimate value that you will have on the books for your water by the time the

plan is completed?

Mr Papps: I am not able to answer that at the moment; it is not information that we have available. I can take

it on notice.

Senator JOYCE: Roughly, over $2 billion?

Mr Papps: I would expect so.



Senator JOYCE: And the increment of that asset as it increases, will that be booked as a capital profit, or

how will we deal with that? Obviously the value of the water goes up; so the value of that asset would go up. How

will the government deal with it?

Mr Papps: I will just ask my colleague.

Mr Costello: They are characterised as intangible assets. So they come on to the books at cost but they are

revalued. Each year, we have a look at all of the trades through the state water registers and then see whether there

has been a significant decline or increase in the value of the assets so that they can be written down. They can

only be written up to cost, if they go beyond that.

Senator JOYCE: Can you provide figures on a catchment-by-catchment basis, that is, how much water has

been allocated in each catchment in each year and how much water has been delivered in each catchment in each

year?

Mr Papps: We can provide those figures. I will take that on notice. We can probably provide them today.

Senator JOYCE: Thank you very much for that. How much have you lost over the past five years; that is,

how much water were you allocated that subsequently could not be used? Was that just the forfeit amount?

Mr Papps: Essentially it is just the forfeiture amount in the way that we interpret that. So, in effect, from our

perspective, there are four broad uses that water can be put to: we can use it for environmental watering activity;

we can trade it; where we do not trade it and do not use it, subject to the rules that apply, we can carry it over, as

can other irrigators; and then the fourth category is forfeit, and I have given you the figures on forfeit.

This year, because it is essentially a rolling program where the ledgers, if you like, are squared off at the end of

each water year, if we go to 2012 13, which are the figures represented in some of the recent reports, we are in a

position where we are forecasting total use of around 1,125 gigalitres, but that may go up because we are still

contemplating a number of water activities and we are forecasting a carryover of about 350 to 400 gigalitres.

Again, the precise nature of that number will not be known until the end of the water year. It is dependent on, as I

say, a number of watering activities that we are still contemplating before the end of the water year. As you would

be aware, Senator, carryover water is not water lost; it is still available to us. We would expect to utilise it in the

early stages of the next water year.

Senator JOYCE: Do you ever get to a point where you just say, 'Look, we can't use the water we've got. It's

not being used. Let's get this back to farming communities. Let's at least sell some of it.' If it does not have an

environmental use and there is no prospective environmental use because it might have flooded, you could do

something with the water. Tell me about that process.

Mr Papps: Sure. Our principal focus is obviously on environmental water and use. That is why the water has

been purchased. That is why it has been given to the Commonwealth Environmental Water Holder. That is my

legislative remit, to protect and restore the environmental assets of the Murray-Darling Basin.

Having said that, the Water Act gives me the capacity to trade. Without going into the detail of it, which I

would have to read out to you anyway, there are very limited circumstances in which I can trade, the net effect of

which amount to, if I cannot use the water for environmental purposes for some reason or if I could get a net

environmental gain from trading in the water then I am entitled to trade and it is my intention that, once all the

processes are in place, including the Chinese walls that I am required to implement under the basin plan, we

would trade. Having said that, my expectation is that our trading activity would be a minor part of the portfolio.

Senator JOYCE: Even as a minor part, it would be a massive asset. You would be one of the biggest water

traders in the market.

Mr Papps: I think that is speculative. I really cannot comment on that.

Senator HEFFERNAN: If you traded, would it be a gross or a net trade?

Mr Papps: I do not know, Senator. I would have to get back to you on that.

Senator HEFFERNAN: Do you know what I am talking about?

Mr Papps: You are talking about the specific rules that apply.

Senator HEFFERNAN: If you have got environmental water and, as Senator Joyce correctly points out, you

want to trade it to someone and it is in a dam somewhere and I order it halfway to Adelaide, what am I buying

when I buy 300 gigs? What comes out of the dam and what gets halfway to Adelaide?

Mr Papps: The simple answer I have to that—and my colleagues may be able to provide more detail—is that

what you get is what you are entitled to get under the trading rules of the basin state in question.

Senator HEFFERNAN: So if it takes 900 gigs—



CHAIR: Senator Heffernan, I have not given you a call. I think you are diverting Senator Joyce's questioning.

Senator Joyce.

Senator JOYCE: How much do you expect to be allocated in the 2012-13 year?

Mr Papps: I am sorry?

Senator JOYCE: How much water do you expect to be allocated in the 2012-13 year?

Mr Papps: In the 2012-13 year—that is, this year?

Senator JOYCE: Yes.

Mr Papps: Our allocation this year—our holdings are 1,583. What is available for use is 1,610 gigalitres.

Senator JOYCE: You expect to use how much?

Mr Papps: We have approved already for delivery 1,223 gigalitres. But, as I said, there are some watering

actions still in the balance, still being contemplated, so I cannot give you a precise final figure.

Senator JOYCE: There is no environmental watering plan set down yet, is there?

Mr Papps: The Commonwealth Environmental Water Holder has watering plans. For 2012 13 there are

watering plans. We are currently working on finalising the watering plans for 2013 and 2014. Those plans, and

certainly the next plan, the 2014 plan, will reflect the objectives and other obligations within the environmental

watering plan, which is chapter 8 of the basin plan.

Senator JOYCE: But there is not a finalised environmental watering plan, is there?

Mr Papps: It depends how you define 'environmental watering plan'. The environmental watering plan

terminology—I am taking you to mean chapter 8 of the basin plan.

Senator JOYCE: That is correct.

Mr Papps: Chapter 8 is a final environmental watering plan. I think you are probably alluding to the fact that

the environmental watering plan does not identify specific obligations on watering activities catchment by

catchment. It sets up a series of processes, a series of principles, a series of objectives. It, for example, gives me

guidance on how to identify priority environmental assets—

Senator JOYCE: How do you do that?

Mr Papps: I apply the rules in the environmental watering plan. For example, priority environmental water

assets would include Ramsar-listed wetlands. They would include water dependent ecosystems that contained

listed threatened species or ecological communities. They would include water dependent ecosystems that are rare

or unique. They would include water dependent ecosystems that are representative, so they show the

characteristics of a once widespread wetland. There is a series of criteria that help me, and other water holders, of

course, because other water holders are bound by the same plan, to identify those assets.

Senator JOYCE: When you have two Ramsar wetlands, how are you going to choose between the two?

When it is the lower lakes or something upstream from them, how are you going to define the lossage? You can

say: 'Well, I can get 80 per cent of the job done here or 20 per cent of the job done at the lower lakes.' How are

you actually going to go through that process?

Mr Papps: That is a very complicated question. If there were a trade-off required—so I am assuming you are

talking about if water was constrained and we did not have sufficient environmental water to meet the needs of all

of those assets—then you would go through a process of examining the condition of those assets. Most require

wetting and drying cycles, as you would understand, so we would make an assessment of where they are in the

cycle. We would make an assessment of their health. We would make an assessment of what had occurred in

prior years. Where we are dealing, for example, with a wetland that because of natural wetting was in good

condition and had developed ecological resilience and therefore could perhaps go without environmental—

Senator JOYCE: I get the gist of what you are saying. Who makes those decisions?

Mr Papps: In the end I make those decisions.

Senator JOYCE: You make them presented on the evidence of who?

Mr Papps: I am provided with formal advice from the Commonwealth Environmental Water Office, which is

a division in the department. They, in turn, draw on a wide array of advice. I have referred to them before. I do

not necessarily want to go through them in great detail. They would draw on advice from a scientific advisory

panel that we have set up, they would draw on advice from the Murray-Darling Basin Authority, the relevant state

agencies and, of course, Senator, as you would appreciate, local community knowledge.



Senator JOYCE: I refer to the Auditor General's recent report on environmental watering. In that report it

stated that the CEWO is preparing to make changes to its water use guidance and materials and introduce

additional reporting to meet the requirements of the recently introduced basin plan. What are the changes you are

preparing to make?

Mr Papps: To a large extent those changes have already been made. Before I defer to my colleague for more

detail, for example, the decision making framework that guides how I make my decisions about the allocation of

environmental water required some minor modification to better reflect the obligations imposed on me by the

environmental watering plan in the basin plan. So those changes were made.

Senator JOYCE: The Auditor General notes that in January 2012 the CEWO engaged the Australian

Government Solicitor to identify and assess the sources of the CEWO's strategic, legal and governance risk and

identify appropriate treatments. The detailed assessment finalised in June 2012 indicated that risk treatment could

reduce the ratings of most risk sources to medium or low. Can the CEWH provide a copy of this report?

Mr Papps: Yes, Senator.

Senator JOYCE: What were the risks which were identified?

Mr Papps: I do not have the detail in front of me. I can provide that information, though.

Senator JOYCE: Will that also deal with what risk treatments could reduce the ratings of most risk sources

from medium or low?

Mr Papps: Yes, Senator.

Senator JOYCE: The Auditor-General's report states that, in the absence of long term monitoring and

evaluation, the CEWO has adopted a measured approach to short term ecological monitoring and evaluation that

is based on delivery partner monitoring activities and detailed studies at key locations where Commonwealth

environmental water has been delivered. Why is there not a long term monitoring and evaluation strategy?

Mr Papps: We are working on one now. We are in the last stages of developing a long term intervention

monitoring program because we recognise, through our own experience, that there were limitations in the short

term processes. Ecological processes, for example, often take a long time to manifest themselves. We have

commissioned consultants to prepare the scientific background for the long term intervention monitoring and later

this year we will move to implementing that.

Senator JOYCE: What would happen if your oversight over the department—what would actually happen to

the water asset if you guys were not there?

Mr Papps: I have never actually contemplated that. The legislation, the Commonwealth Water Act, provides

me with the statutory responsibilities to make decisions over Commonwealth environmental water. If I did not

exist I would have to assume that the Commonwealth Water Act no longer existed or had been amended.

Senator JOYCE: What would happen to the water?

Mr Papps: It would be, I imagine, a stranded asset.

Senator JOYCE: Where would it be stranded? It would just be that an unallocated amount of water would go

down the river?

Dr Grimes: I think we are actually straying a little bit here into speculative matters. It is very difficult for

officials to be able to comment, as you would appreciate, on hypothetical examples.

Senator JOYCE: What I am getting at is the differentiation of holding an asset. We hold an asset, a $1.89

billion asset, and we are managing it. I am just thinking that if we said those licences do not exist anymore, they

are no longer there, that asset just becomes like an unallocated measure of water and it goes down the river like

any other piece of water.

Mr Papps: Or, more importantly, Senator, again acknowledging what the secretary says about being

speculative, I think the more important outcome of such a scenario would be that we would fail to address the

very purpose of the Commonwealth Environmental Water Holder, which is to protect and restore the

environmental assets of the Murray-Darling Basin.

Senator JOYCE: I am glad you are holding the asset. It is valuable. Whilst you are holding the asset and

whilst the nation is running out of money, people are going to start looking at that asset to try to work out how

they save money. Someone will say, 'Well, if you're holding a $2 billion asset, could you hold a $1 billion asset?'

When the nation hits its credit limit it is going to look everywhere to try to work out how to save money.

Senator HEFFERNAN: Over my dead body.



Senator JOYCE: You will not have much say in it because the cheques will be bouncing. What other

agencies, state or federal, will be involved in metering and monitoring CEWH's watering actions? Have there

been funding cutbacks within any of these organisations which will impact on the metering and monitoring of

CEWH's environmental watering?

Mr Papps: I cannot speak on behalf of other agencies or entities. I do note that our long term intervention

monitoring program is set in the context of other monitoring programs undertaken by the Murray-Darling Basin

Authority and relevant state agencies.

Senator JOYCE: In response to question No. 129 of the last estimates you stated that the accumulated

impairment relating to the water entitlements held and managed by the Department of Sustainability,

Environment, Water, Population and Communities was $313.470 million. In effect, that means that the

Commonwealth has made a loss of more than $300 million on water buybacks. Why did the Commonwealth pay

too much for water?

Mr Papps: I will ask my colleague.

Mr Costello: The impairment loss reflects the change in the value of entitlements over time. Not just our

entitlements but all water entitlements have decreased in value over the last couple of years.

Senator JOYCE: Where did you make your biggest loss? Which purchase was the worst one?

Mr Costello: The impairment figure looks at the holdings as a whole. I have not broken it down.

Senator JOYCE: How about the Twynam purchase? What is the value of that on the books now?

Mr Costello: I would have to take that on notice. I do not have that.

Mr Papps: Could I provide some generic overview rather than the detail. The Commonwealth environmental

water holding has enormous value, as you would appreciate—I think you have already acknowledged this—in

addressing the problem that it was established to address. It is fair to say that while there is an obligation on me

over time, particularly using trade to balance the portfolio if I think it needs balance—that is, if I could sell some

water and buy water that has greater environmental utility—overall you would have to see it as an asset that has

great value, and difficult to assign a dollar value to in terms of the ecological impacts it has.

Senator JOYCE: You have all your officers in Canberra. Whereabouts is your office in Canberra?

Mr Papps: It is in the John Gorton building.

Senator JOYCE: When does the lease on that run out?

Mr Papps: I do not know.

Senator JOYCE: Is there any reason it could not be in Albury?

Mr Papps: That is a question that is often asked. My view is that our effectiveness and our efficiency in

managing the environmental watering is best served by having officers based both in the regions, in the basin—

Senator JOYCE: But we do not have any officers in the region.

Mr Papps: But we will. By the end of this year, we will.

Senator JOYCE: Whereabouts?

Mr Papps: We are yet to work that out. We are negotiating with hosting agencies within each basin state. But

going back to the original question, there is merit, I believe, in retaining some Canberra based staff because, first

of all, it is beneficial to have a critical mass, rather than spreading a smaller number of staff across a wide array of

locations. Secondly, there are real synergies involved in being in Canberra where, for example, the Murray-

Darling Basin Authority has its headquarters, and where we are very capably supported by the department, both in

an administrative way and, more importantly, by interactions with other water groups and biodiversity groups

within the department. There are real synergies and benefits in being located here. Having said that, I

acknowledge the value that we would derive from working more closely with local communities in the basin.

CHAIR: Senator Joyce, your colleagues have indicated they are seeking the call as well.

Senator JOYCE: My final question is: could the states do your job? Could the state water holders do your

job?

Mr Papps: I do not believe so. In any case, it is largely an academic question because we work so closely

with the states that it is already a seamless collaborative exercise.

Senator McKENZIE: I want to follow up on question on notice 135 about the Commonwealth local

engagement officers, which I think are the positions you were referring to in answering Senator Joyce.

Mr Papps: That is correct.



Senator McKENZIE: I got a vague answer and I want to see if you are any further along the line of

appointing, how many you intend to appoint and where you want them. Similarly, you say they are going to be

working closely and collaboratively with state agencies. Will they be superseding or doing work that is already

being done? Given the long process that we have been going through with getting this right, doesn't that expertise

already exist on the ground and wouldn't it be a better way rather than you paying for people on the ground?

Mr Papps: I will try and address each element of your question in turn. Our intention is to appoint six local

engagement officers across the basin. As I said in reply to Senator Joyce, we have not made final decisions about

where they will be located.

Senator McKENZIE: Who are you discussing that with? Who is part of that decision making?

Mr Papps: We issued a public request for tenders from interested agencies and organisations to host a local

engagement officer. We believe, and we still believe, that this was going to facilitate the integration of these

officers, although they will be performing Commonwealth duties—I will come back to that in a moment—both

into the local community and into the relevant agencies and entities within the basin. We invited, as I say, those

organisations to tender. We received a number of tenders. We are in the process of analysing those.

Senator McKENZIE: How many tenders?

Mr Papps: I believe it was 10.

Senator McKENZIE: Across all basin states?

Mr Papps: Yes. So we are in the process of analysing those. Not surprisingly, we are looking at both the offer

of hosting organisations—the level of resource support, and also support in terms of integration into existing

processes and systems. Also, we are looking at where we have our environmental assets, where our key

environmental assets are, where most of our water is distributed, where there are particular local community

concerns or a particular desire to be involved in the decision-making process. A combination of all those factors

will lead us to decide where they will be located.

Senator McKENZIE: Have the position descriptions been done?

Mr Papps: No, they are being finalised at the moment.

Senator McKENZIE: I am getting that there is an engagement bent but also a bit of a PR component?

Mr Papps: I probably would not use the term 'PR' but I would certainly acknowledge that there is a large

component about community engagement. They will be involved in the decision-making process to support me

and my decisions around Commonwealth environmental watering. We are also keen for them to be involved in

capacity building within local communities across the basin.

Senator McKENZIE: I am conscious that Senator Heffernan has some questions. How much has been

allocated in the budget for these six positions, and obviously their ongoing support?

Mr Papps: It is approximately $5 million.

Senator McKENZIE: I might apply for one, Mr Papps!

Mr Papps: That is over seven years, Senator.

Senator McKENZIE: Okay. We will do the maths.

Mr Papps: You might want to reconsider that.

Senator McKENZIE: So $5 million over seven years for six positions?

Mr Papps: Yes.

Senator McKENZIE: I might have some questions on notice on that.

CHAIR: I am sure somebody else would take your position in the Senate, if you were successful.

Senator McKENZIE: The Nationals in Victoria have depth.

Senator HEFFERNAN: I am not too sure who is buying the water, so I might seek some guidance—the Wah

Wah water.

Mr Papps: Who is buying the water?

Senator HEFFERNAN: Wah Wah water—is that going to the environment?

Mr Papps: That is a question you should direct to Ms Mary Harwood.

Mr Parker: I am sorry; Mary has departed.

Senator HEFFERNAN: What I am curious about is that the Wah Wah scheme is a channel scheme that

comes out the back end of the irrigation area. There are 9,000 megs in the allocation for the conveyance. They are



going to pipe it, which is a good idea. But they are paying $4,200 a meg for that water, which is conveyance

water, and $2,200 a meg—same water, different scheme, the Darcoola scheme. Who decides the price of water?

Mr Parker: I would have to take that on notice. The price of water which comes out of irrigation

infrastructure projects depends very much on the composition of the project and the investment.

Senator HEFFERNAN: It is not the value of the water, is it? You can value the water so that you can take the

cost of the piping of water out of the water account by charging so much for the bloody water, but it is actually

not for the water; it is paying for the pipeline.

Mr Parker: Correct.

Senator HEFFERNAN: Which is what the Nimmie-Caira thing is all about it; it is a dodging of the books.

The bulk of the money there—

Mr Parker: If I could—

Senator HEFFERNAN: No, there is no getting away from it. The bulk of the money there is for the land.

Mr Parker: The Nimmie-Caira proposal includes water, it includes the land and improvements and it also

includes infrastructure.

Senator HEFFERNAN: It includes a whole lot of things, but it is the dodgiest deal I have ever come across. I

thought the Tandall deal was bad enough. That was 230 gigs. Were you blokes involved in the Tandall buyback?.

It was 230 gigs at $350 a meg, which was net 11 gigs at the Murray, and they thought that was a good deal.

Mr Papps: We were not directly involved in those purchases.

Senator HEFFERNAN: It has financially saved Tandall. It just befuddles me. I will, minister, take up this

issue of the Ulonga matter and the Wah Wah scheme versus the—

CHAIR: Senator Heffernan, you have a couple of minutes. I have some questions.

Senator HEFFERNAN: In the last drought this particular Ulonga Grazing Company had water allocations on

the Murrumbidgee River. I actually have a place in the region, so I know about it. It is 23 kilometres out to the

One Tree Plain. They sold Murrumbidgee water for $1,663 a meg to the feds and built a pipeline to save a lot of

water, because the Lachlan was buggered. They were also fully participating in the Wah Wah scheme, which is

different water that comes down and waters the same property, but there was no water in the scheme: They are

beside themselves about how they can get equity, having done what they have done. That is what it is all about.

We will have to talk about it.

CHAIR: Mr Papps, Senator Joyce was asking you about a $300 million loss. You said basically you had to

look at the ecological value of the asset. Could you just explain that a bit more in terms of the context of someone

looking at this as a loss and then saying this scheme is not working? What are the values that you should put on

the scheme?

Mr Papps: It was intended as a contextual commentary about the Commonwealth environmental water

holding, which has a dollar value because water is a tradeable commodity and can be bought and sold; so there is

a dollar value. I was simply providing a contextual comment that there is a value that that water holds in restoring

and protecting the critical environmental assets of the Murray-Darling Basin which is hard to quantify in dollar

terms but nonetheless should be taken into account in our consideration of the value of it. There is, of course, a lot

of literature around assigning dollar values to ecosystem functions and ecosystem services. We are not in a

position to do that with environmental water holdings. I do want to make the point that it has that enormous value

to the basin. Again, if I can go back to a contextual comment, it is certainly my view that a healthy economy in

the basin is dependent on a healthy ecosystem.

CHAIR: There was, again, what seemed to be some implied criticism from Senator Joyce in relation to your

management system. You have indicated that that will devolve to some extent as you go on. I have had a look at

your business plan for 2012-13, and in 2.1 it talks about active management, how you deal with it. It talks about

how you make decisions, how you develop options for the use of the water and how you assess your potential

actions, including seeking local and expert advice. We only have a couple of minutes. Could you, in a couple of

minutes, advise us how that is going?

Mr Papps: Yes. From my perspective it is going very well. We already had a reasonably well-established

decision-making framework before the basin plan was finalised and with it the environmental watering plan. I

think the Murray-Darling Basin Authority folks had been alluding to the fact that we had been environmental-

watering; there had been Commonwealth environmental water used before the basin plan. So we already had a

decision-making framework. It was based on best available science and it engaged with local communities and, as

I have said before, other entities in the basin.



We have refined that over time, based on experience. Again. the adaptive management framework, which we

are obliged to implement, means that we go back and look at what we have done and we compare what happened

with what we thought would happen and we make adjustments year by year. The more formal process that we

have engaged in recently is making sure that the decision making framework now properly reflects the obligations

on me generated from the environmental watering plan in the basin plan. That has further emphasised the role of

best available science and the role of local communities, which is one of the reasons why, for example, we have

established the local engagement officers to give better effect to our commitment to ensuring that local knowledge

is incorporated into decisions.

CHAIR: It might be a bit difficult before September, but on a number of the other committees that I have

been involved in, when senators are not aware how the management system is working, we have actually gone

and visited the authority or the government body. Would that be an option after September, to come and look at

how you are going?

Mr Papps: I would be happy to accommodate senators.

CHAIR: Would there be any benefit in that for the Senate? If there is no benefit, I would not want to do it.

Mr Papps: I would need a better understanding of what you were looking to enhance in terms of your

understanding of our approach. But based on those conversations—

CHAIR: A briefing outside the estimates atmosphere might be constructive, I think.

Mr Papps: In the first instance that is probably a more productive way to go. I am happy to oblige, of course.

CHAIR: We might organise that for after September.

Mr Parker: Chair, Mr Slatyer can provide an answer to a question asked during the course of the morning by

Senator Birmingham.

CHAIR: Yes, Mr Slatyer, as long as it is not a long-winded answer.

Mr Slatyer: Senator Birmingham asked how many further versions of the draft intergovernment agreement

had been prepared since the answer was given on question 67. There have been five further iterations to the

agreement since that time. They have been relatively minor iterations.

CHAIR: We will suspend for lunch. We will be back at 2 pm.


CHAIR: I welcome Minister McLucas to the table. Dr Dripps, I have some questions on this area. We are

now up to program 5. I call the officers from the department in relation to program 5.1, conservation of Australia's

heritage and environment. Dr Dripps, are you aware of proposals to build a bridge in Windsor?

Dr Dripps: Yes, I am aware of that.

CHAIR: There is very, very significant local concern about the implications for Thompson Square.

Dr Dripps: Yes.

CHAIR: As I understand it, Thompson Square is described as not only rare but unique. Is that your

understanding of Thompson Square?

Dr Dripps: I have read correspondence that has made that suggestion, yes.

CHAIR: Apparently it is the only 18th century civic square in Australia.

Dr Dripps: I cannot answer the question about whether it is the only one, but I have certainly read the

correspondence around the matter.

CHAIR: Senator Boswell, I am having difficulty hearing Dr Dripps.

Senator BOSWELL: You must have supersensitive hearing.

CHAIR: I have. You just have a big voice, Senator Boswell. If you want to talk, can you talk outside, please.

Thompson Square, which is called the conservation precinct, has evolved over 217 years. So it is 217 years old. It

is considered Australia's earliest remaining civic square. Is that consistent with your understanding of it?

Dr Dripps: As I have said, I have read the incoming correspondence.

CHAIR: I also understand that there has been an application for a heritage listing.

Dr Dripps: Yes. It was considered by the Australian Heritage Council in its consideration last year and not

recommended for further assessment work.

CHAIR: Is that the end of it as far as a listing is concerned?



Dr Dripps: I will just pass you over to Ms Rankin for the detail of the consideration by the Australian

Heritage Council this year.

Ms Rankin: The nomination is going to go back to the Australian Heritage Council for reconsideration again

this year.

CHAIR: It is going back for reconsideration?

Ms Rankin: Yes. So they can consider it two years in a row. This will be the second year that they are able to

consider whether they want to recommend to the minister that it goes on the priority assessment list for further

assessment work to see whether it meets the criteria for national heritage listing.

CHAIR: Were there reasons provided for not listing?

Ms Rankin: They did not think that it met the criteria for national heritage listing.

CHAIR: Let us deal with that. So it is the only 18th century civic square in Australia. That is either factual or

not. Are you aware of that?

Ms Rankin: I do not have the extra detail about whether that is the case or not, as Dr Dripps has said.

CHAIR: If it is the only 18th century civic square in Australia, and if we cannot get a heritage listing, there

must be reasons for that. Take on notice to provide details of the reasoning why this unique and rare example of

early Australian settlement is not considered of heritage value.

Ms Rankin: We will do that.

CHAIR: I understand that there are some issues of timing on this and some urgency to dealing with this. In

the submission made by New South Wales Transport, Roads and Maritime Services, they say in terms of heritage

approval that the project to build this bridge is not supported by the Heritage Council of New South Wales. Do

they have an input to the national heritage assessment?

Ms Rankin: They would certainly have had the opportunity to provide comment on the nomination.

CHAIR: And the Heritage Council say that Thompson Square is listed on the state heritage register and has

potential national significance, but that was rejected by the national heritage assessment last year?

Dr Dripps: It was last year and, as Ms Rankin has indicated, the Australian Heritage Council will consider

that matter again this year and provide their advice to the minister about what ought to be considered for listing in

the future.

CHAIR: The Heritage Council of New South Wales is saying that if this bridge goes ahead, there will be

irrevocable damage to Windsor and Thompson Square. They say that the project should be refused on the grounds

of heritage impact. The problem we have is that unless there is a listing on this square, the New South Wales

government's development process will deal with this as a priority project and then we have lost this rare and

unique heritage square. Is there a fast-track option that can be taken by the Heritage Council when you are faced

with impending destruction of a heritage value site?

Dr Dripps: There is a provision under the EPBC Act for emergency national heritage listing of a property.

CHAIR: And how does that work?

Dr Dripps: If I recall correctly, a request is put to the minister for emergency heritage listing. The minister

then asks the department for advice and has a time period in which to make that decision, which is quite short,

although I do not have the act in front of me. During the period of time that a property is on the emergency

national heritage list, it is referred back to the Australian Heritage Council for a full assessment of its values.

CHAIR: Do you have details of when this assessment would be made of the Windsor site?

Dr Dripps: I am not aware that we got a request to consider emergency heritage listing of the site, Chair.

Mr Murphy: There was an application last year for the minister to use the emergency powers under the EPBC

Act and that was in parallel to the Australian Heritage Council's consideration under the normal process. As the

council advised the minister that it did not meet the criteria for national heritage listing, the minister decided not

to use the emergency powers.

CHAIR: Is that being reconsidered just as a matter of form or because there is a concern that they may have

got it wrong?

Mr Murphy: The reconsideration by the Australian Heritage Council is a standard process, where if it is not

successful in the first year, the legislation requires reconsideration in the second year.



CHAIR: I know Windsor Square. If you cannot get some heritage protection there, I just do not understand

what the act does if it cannot protect one of the oldest and only examples of that type of architecture in the

country.

Dr Dripps: We might take that as a comment, Senator, if that is okay.

CHAIR: Pass it on. It really is of significant community concern as well. I know that you get significant

community concern on certain issues. Mr Murphy, you did not answer my question about what the timeframe

would be for a decision, even if it is not an emergency decision. What would be the timeframe for the second

assessment?

Dr Dripps: The minister generally makes his decisions about inclusion of items on the priority assessment list

for the Heritage Council by the end of the financial year or early in the next financial year. So the minister would

be expected to be advised reasonably shortly of the council's recommendations.

CHAIR: I might move on to another issue of heritage that I did raise some questions about at the last

estimates. That is the question of the New South Wales state government implementing what is described as a

standard instrument local environmental plan. Are you aware of these standard instrument local environmental

plans in New South Wales?

Dr Dripps: Yes. We are aware of them.

CHAIR: The Blue Mountains Conservation Society have written to me and spoken to me about this issue.

They are an active organisation with a big membership in the Blue Mountains. They are concerned that this

standard instrument local environmental plan could potentially risk the continuing World Heritage listing of the

World Heritage area because of development outside abutting the Blue Mountains World Heritage area. Are you

aware of those concerns?

Dr Dripps: I have heard of those concerns, yes.

CHAIR: Are you aware of what the standard instrument LEP from the New South Wales government is

intended to do?

Dr Dripps: At the broadest level I am, in that it is intending to apply a standard approach to development

across New South Wales and thereby, one assumes, remove regulatory burden.

CHAIR: The Blue Mountains Conservation Society claim that it means the application of inappropriate zones,

decreased information and mapping, significantly decreased assessment of the environmental impact of

development, less stringent and certain language in terms of what needs to be considered and addressed when

undertaking development, and the exclusion of comprehensive environmental and landscape overlays. That is

what they have put to me. How would the department deal with that concern?

Dr Dripps: It is not our approach to assess planning schemes as such. We are interested in developments that

have or may have a significant impact on matters of national environmental significance, so we do not assess

statutory plans made by state governments specifically except in circumstances where the state governments or

others have called for something like a strategic assessment to be done of such a plan or for a conservation

agreement to be developed that applies to a particular area. So there are a couple of examples in Sydney where

those instruments have been used. There has been a strategic assessment of western Sydney to protect the

Cumberland Plains grassy woodlands in partnership with the New South Wales government. There is work being

undertaken on a conservation agreement to protect the heritage values of Parramatta as they relate to the

viewscapes from Old Parliament House.

CHAIR: What the Blue Mountains Conservation Society is saying is that they believe it will have a

significant impact and that you should act under part 2 of the EPBC Act. Do you need someone to bring this to

your attention to assess it? What happens?

Dr Dripps: We would undertake an assessment of a planning scheme generally at the request of the planning

authority if they were seeking to ensure that they optimised and maximised the environmental outcomes. We

would also have consideration of the planning measures as part of looking at the management plan for the World

Heritage property, although there are limitations to the extent to which that can be considering activities outside

of the property.

CHAIR: If the New South Wales government implements the standard instrument LEP and then development

starts taking place, and consistent with that standard instrument LEP it has a significant impact on the World

Heritage area, would it not be better for us to actually have a look at the standard instrument LEP now and make

an assessment as to whether it is appropriate for development abutting a World Heritage area?

Dr Dripps: That might be a very strategic way to go about things.



CHAIR: How can we deliver that assessment if the New South Wales state government says, 'This is our

business. We don't want you to be involved in it?' How can we do something about it?

Dr Dripps: I am not sure that the provision of policy advice is part of the role of officials attending this

committee. But there are a number of measures that could be used.

CHAIR: I am not asking how the act works.

Dr Dripps: I was just going to go there. There are a number of measures that could be used, including

undertaking a strategic assessment of the local environment plan in that area.

CHAIR: What are the others?

Dr Dripps: We would need to take a look at the extent to which the management plan for the World Heritage

property is able to consider matters outside of the area of the World Heritage property and the way in which they

are undertaken. Another option available is should there be an action that is likely to have a significant impact, the

onus is on the proponent to refer that. If they do not refer that, there are penalty provisions of various kinds under

the EPBC Act.

CHAIR: One of the issues that has been raised by the Blue Mountains Conservation Society is that they make

an application to UNESCO. That seems to me to be a last resort type option. They would seek a World Heritage

endangered listing. I really do not think we should be going down that path. So the other issues you have raised

would be done before you would do something like this, would they not?

Dr Dripps: Well, I would certainly hope so. But people have liberty to make their own choices about these

things.

CHAIR: I am just trying to get a practical way forward to address the concerns that the conservation society

and the public have in the Blue Mountains area without them having to make applications to UNESCO. I may

have some discussions with you outside estimates, because I would like to try to help get this resolved. That is

good. Thanks for that information. My last issue is shooting in New South Wales and recreational hunting in New

South Wales national parks. At question No. 073, I asked about New South Wales reserves where recreational

hunting is done. Does the Blue Mountains World Heritage area abut any of the New South Wales reserves where

recreational hunting has been approved? Your answer was that the Blue Mountains World Heritage area abuts the

Goulburn River national park. That is one of the reserves listed by the New South Wales government as being

assessed for the supplementary pest control program, which is political speak for hunting by amateurs in the park.

If we have an abutment to the Blue Mountains World Heritage area and you are going to have recreational

amateur hunters wandering around the Goulburn River national park, how will those hunters delineate when they

are in the Goulburn River national park or in the Blue Mountains World Heritage area? When does abutting

become encroaching?

Dr Dripps: They would know that they had moved from one estate to the other if they had a GPS tracking

device or if they were very good at reading maps.

CHAIR: These are amateur hunters. What if they are not good at reading maps and they do not have a GPS

device?

Dr Dripps: Then they may not be aware that they have moved from one property into the other.

CHAIR: So there are implications for this legislation in New South Wales for the World Heritage area in the

Blue Mountains?

Dr Dripps: Well, there—

CHAIR: That would be the logical conclusion you would have to come to?

Dr Dripps: That would be one conclusion. The World Heritage area, as you know, Chair, is listed for its

values. Whether a very small number of recreational hunters would have an impact on those values I think is

probably a matter for debate. But I would lean towards it being reasonably unlikely.

CHAIR: So if we have one of the World Heritage area rangers going about their business in the Blue

Mountains World Heritage area and we have these amateur hunters tramping around the Goulburn River national

park abutting the World Heritage area firing at whatever they want to fire at, what are the health and safety

implications for staff employed by the World Heritage area or your department?

Dr Dripps: Senator, we do not have World Heritage area rangers employed by this department. The ranger

arrangements are done by the New South Wales government rangers. We are not experts in occupational health

and safety risk analysis in that regard. But there would be a possibility of there being an unintended interchange

between hunters and rangers.



CHAIR: An unintended interchange. You mean somebody could get killed?

Dr Dripps: That is possible.

Ms Rankin: We would have to assume that as part of any arrangements New South Wales is making in

relation to their consideration of this legislation, they would be considering these issues and putting in place

mechanisms.

CHAIR: Why would we assume that, Ms Rankin? Why would we assume anything if you are under political

pressure from a sectional pressure group to bring in recreational hunting and you have expended a lot of political

energy in doing a deal with them? Why would you assume that they are going to look after this?

Ms Rankin: I cannot imagine any government would want to see a situation arise where there was a chance of

somebody being accidentally killed.

CHAIR: Well, you may not, but that is not the debate that is taking place in New South Wales at the moment.

Senator BOSWELL: You are leading the witness.

CHAIR: We are not in a court, Senator Boswell. The officers know when they are being led. They are smarter

than me. So you have conceded that there could be someone killed in the Blue Mountains World Heritage area

because of this amateur hunting that is going on in the Goulburn River national park. Can you take on notice and

provide me details of what actions we could take at the federal level to try to minimise someone who is using the

Blue Mountains World Heritage area in a recognised way not being killed by some amateur shooter in the

Goulburn River national park?

Dr Dripps: We can certainly make inquiries about that and take that question on notice.

CHAIR: Thank you.

Senator LUDLAM: I have a couple of general questions on the heritage portfolio. I want to start with some

quick true or false answers. I will work my way through the budget papers and you can tell me if I am reading

them right. Staff cuts in environment regulation and heritage from 588 to 540? Staff cuts in the environment

regulation and heritage area were from 588 to 540. Does that sound about right?

Dr Dripps: So 48 people. Yes, I gave some evidence to Senator Waters yesterday on this matter.

Senator LUDLAM: Heritage grants cut from $7.4 million to $4.4 million across the forward estimates?

Dr Dripps: That is right.

Senator LUDLAM: Your total program expenses cut from $56 million to about $50 million in the forward

estimates?

Dr Dripps: Yes.

Senator LUDLAM: And that is off the back of the year on year cuts that I have been asking about in here

since about 2008. So of the 40 staff or thereabouts who are cut from environmental regulation and heritage, how

many were cut specifically from heritage?

Dr Dripps: As I advised Senator Waters yesterday, it is approximately 15 staff. The other thing I should add

to my evidence from yesterday which I failed to recall at the time was that the balance of the numbers that were

not included in yesterday's evidence is from the regulatory reform taskforce within the division, which at the start

of the financial year was undertaking the approvals bilaterals work with the states.

Ms Rankin: I want to clarify that figure. Dr Dripps just mentioned the 15 relates to cuts from the combined

heritage, wildlife and marine functions.

Senator LUDLAM: I do not want to traverse ground that Senator Waters covered yesterday if it is already on

the record. I am specifically interested in the heritage side of the portfolio. Is it possible to carve out how many

fewer people are working on heritage post budget than before, or is that not possible?

Dr Dripps: We would like to take that question on notice, if we could, please, Senator.

Senator LUDLAM: In the last four years, how many people in total have been cut from heritage? Maybe take

that as a supplementary on notice, if you like.

Dr Dripps: Yes.

Senator LUDLAM: It appears that the Commonwealth's capacity around heritage matters has been severely

degraded. The budget of a fortnight or so ago has not given us any good news. Sticking specifically to the heritage

portfolio, what programs and services will these most recent cuts specifically impact?

Ms Rankin: Senator, are you referring to just heritage?



Senator LUDLAM: Yes. I will leave the environment side to Senator Waters. From our perspective, I am

interested specifically in heritage.

Ms Rankin: When we talk about heritage in my division, heritage and wildlife functions are combined

together.

Senator LUDLAM: I am interested in the human heritage side inasmuch as you are able to disaggregate

programs.

Ms Rankin: One action we will be taking is reducing the number of branches from five to four. That means a

reduction in the number of SES officers working in the area. We are going to be adopting a much more, I guess,

triage focussed approach to providing advice on the potential impacts of proposed developments that are going to

have an impact on heritage matters. The timelines that will be taken to undertake some heritage listing

assessments are likely to be extended and will have to take longer than under a circumstance where we had more

resources. In a number of cases, we have had to extend the legislative timelines for the assessment of places

nominated for a national heritage list out to the maximum legislative timeline.

Senator LUDLAM: Thanks for being so forthright. It sounds as though we have indeed degraded our

capacity even further. Am I correct in assuming that the national heritage strategy still does not exist?

Ms Rankin: That is right.

Senator LUDLAM: Has it been affected in any way by the most recent budget cuts?

Ms Rankin: No. It is still an issue that is being discussed with the Australian Heritage Council.

Senator LUDLAM: The last time I picked this up was at question on notice No. 130. Thanks for your reply to

that from January. It said that the timing of the final strategy has not yet been determined. What is taking so long?

This is not going to be thesis length. This is going to be, I expect, a fairly short document. Why is it taking more

than three years for it to be developed?

Ms Rankin: There have been a lot of considerations about what the best approach to the strategy would be. A

number of iterations have gone backwards and forwards, with the Australian Heritage Council providing

comment on drafts. They are proposing to consider it again at their next meeting. They most recently were

interested in looking at a comparison between the approach taken with the draft heritage strategy they were

considering with the cultural heritage policy that was released and to make sure that there was some cohesion and

alignment between the approaches being taken by the two broad policies. So that probably came out after their

last meeting. That is something they have asked us to look at again and provide them with some advice on.

Senator LUDLAM: Can you give us some advice on when it might be tabled and when we might actually see

it?

Dr Dripps: That is really a matter for the minister, Senator. I might add to Ms Rankin's comments. I think it is

fair to say that out of the stimulus package and the jobs fund there was a substantial investment in heritage which

has come off. So the fundamental question for the strategy is: what does national leadership in heritage actually

mean and how does one best engage in heritage in the oversight of the management of properties, in the setting of

standards and in enabling people to protect their heritage? That has been a fundamental challenge for the people

involved in drafting the strategy.

Senator LUDLAM: I can imagine it has, as you are seeing resources running down before your eyes. I will

move on. A response by the minister to the AHC's report on the outstanding universal values of the Dampier

Archipelago in the Burrup Peninsula was received more than a year ago—last April. What is happening? Is

anything at all progressing in the matter of the World Heritage listing of the Burrup or, indeed, anything at all?

Mr Murphy: The report from council identified two of the World Heritage criteria that may be met by the

Burrup and enable a successful nomination. It also identified that much more work would need to be done with

the traditional owners and custodians of the area on identifying the cultural values of the engravings. The minister

has written to the Murujuga Aboriginal Council and asked for that work to take place. He has also asked the

Australian Heritage Council to consider adding similar cultural values to the national heritage listing.

Senator LUDLAM: In the interests of time, because I have one other question on a different matter, could

you provide us in writing and on notice any other information regarding the Commonwealth's policy on World

Heritage listing for the Burrup? I have framed that very broadly. Anything at all you can tell us beyond the fact

that you have put the ball back into the court of the Murujuga association. My last question is on buildings and, in

particular, empty buildings. What grants are currently available for adaptive reuse? Is there any work at all being

done on an Australian adaptive reuse code or standard for bringing heritage properties that are currently empty



back on to the market for either residential, commercial or cultural use? Any thinking going on at all in that

space?

Ms Rankin: Not that we are aware of. The Australian Heritage Council recently considered and released a

report on, I guess, the inherent energy values in heritage buildings and the potential benefits of how you need to

factor that into your potential energy costs versus rebuilding a new building.

Senator LUDLAM: I do not think the benefits are in any way in dispute. It is more whether anything is being

done to bring heritage properties or precincts back into active service. We have an acute homelessness and

housing affordability crisis. We have businesses that cannot afford rent in our town centres anymore and we have

a large amount of empty and vacant space in our cities and towns. Is anything being done in your branch to bring

those two agendas together at last?

Dr Dripps: As the officer advised you, Senator, we are not aware of any work of that type being done. In

terms of the heritage grants that are available, as you indicated when you were reading from the budget papers,

the potential of those grants to fund the kind of activities that you are talking about would be quite limited.

Senator LUDLAM: Okay. Because we have run capacity down so far. I will leave it there, Chair, thanks.

Senator BOSWELL: What is the current status of the work on a World Heritage nomination for Cape York?

Mr Murphy: Consultation with traditional owners is continuing to take place on their interest in proceeding

with a nomination for Cape York.

Senator BOSWELL: Is the government working with some traditional owner groups with the intention of

lodging a World Heritage nomination prior to the federal election?

Mr Murphy: The minister has made it clear that the timing of a nomination or submitting a nomination is in

the hands of traditional owners.

Senator BOSWELL: You have said that you are working with groups of Aboriginals to seek World Heritage

listing, so you are obviously looking for groups to make a consent to the process. Is that correct?

Mr Murphy: Yes. Any nomination would be subject to traditional owner consent.

Senator BOSWELL: What form would this consent process take?

Mr Murphy: The form of the consent is really up to the traditional owners, and discussions with various

groups about what that consent might look like is ongoing.

Senator BOSWELL: This would have to be done by an Indigenous land use agreement, I would assume?

Mr Murphy: Well, Indigenous land use agreements are used under the Native Title Act and World Heritage

per se is not a matter of native title. There have been some discussions on the use of Indigenous land use

agreements, but at this stage no group is proposing to use that mechanism.

Senator BOSWELL: Is the intention of the department to achieve World Heritage nomination before an

election?

Mr Murphy: As I answered before, the timing of any submission is really in the hands of traditional owners.

Senator BOSWELL: There is a huge number of traditional owners. The only way that you would get a true

agreement would be by an Indigenous land agreement. Otherwise you can go and get this little group here of three

or four people and five or six over here, but that is not getting Aboriginal consent. The department must know that

you are just not going out there on a fishing expedition. You must know how you are going to get this consent and

what process you are going to use.

Mr Murphy: The form of the consent is up to the traditional owners. For example, if an area of land is owned

through a trust, then not only would perhaps the traditional owners give consent; they may then go to the owners

and seek their views. If the owners of the land consented, and they did not want to pursue other mechanisms, such

as Indigenous land use agreements, then that consent would be good enough for that particular area.

Senator BOSWELL: How many groups of people have you contacted and who are they?

Mr Murphy: We have a number of different contracts in place.

Senator BOSWELL: Who are they with?

Mr Murphy: We have contracts with eight country based planning groups.

Senator BOSWELL: Who are they?

Mr Murphy: We have Mapoon, Laura, Pormpuraaw, Kuuku Y'au, Olkala and there is another one in the

Hopevale area. To the north, there are contracts in place for Mapoon.



Senator BOSWELL: When you say contracts, what is a contract? You go to certain people and say what?

How do you contract with them?

Mr Murphy: The country based planning groups started with the Queensland government. There was a co-

investment from the Commonwealth.

Senator BOSWELL: How much was that?

Mr Murphy: We funded half of the cost of that. So the Australian government component was approximately

$920,000.

Senator BOSWELL: Those contracts were agreed by the Queensland government with those eight traditional

owner groups?

Ms Rankin: And as part of the terms of those contracts, Senator, one of the outcomes we were seeking

through our co-investment was advice about whether those groups consented to World Heritage nomination and

over what areas, if they did consent.

Senator BOSWELL: This is the problem. We have numerous people out there. Some live on land but they

are not traditional owners. Some traditional owners may live in Brisbane. Some traditional owners may live in

Cairns or Townsville. But they are the custodians of the land. You cannot make a decision without them. If you

try and give someone's land away to World Heritage without consulting them and getting their agreement, you

will start World War III. So you just cannot go out and select a group of Aboriginals that happen to be on an area

and get an agreement with them. Those agreements must be locked down to the people that traditionally own that

land. The only way I see you do it is with an Indigenous land agreement. To do it without that would be really

putting it up the Aboriginal people.

CHAIR: Senator Boswell, I am sure the officers are thoughtfully advised. You have one minute left for

questions.

Senator BOSWELL: Are there any offers to these eight groups of some form of incentive if they agree?

Dr Dripps: No.

Senator BOSWELL: What is the World Heritage covering? The whole of Cape York or just some areas in

Cape York?

Dr Dripps: As Mr Murphy has advised, there will be the submission of a World Heritage nomination for Cape

York only when there is agreement to participate by the relevant traditional owners in the appropriate areas.

Senator BOSWELL: Is the department trying to seek World Heritage over the whole cape or just parts of the

cape?

Dr Dripps: We are running a process that identifies the values in the cape. At this stage, we do not believe

that the values cover the entire cape.

Mr Murphy: The minister has made it clear that there will be no blanket listing of the entire Cape York

Peninsula.

Senator BOSWELL: That is good to know. I am sure there will be very serious interference in this

parliament if you go out and seek to get a listing without getting full consultation with the traditional owners.

Anything other than that will be fraught with danger. Thank you.

Senator COLBECK: I want to ask some questions on the process for the nomination of 170,000 hectares in

Tasmania for World Heritage listing as a minor boundary adjustment. Can you give me the parameters to start

with of what qualifies as a minor boundary adjustment?

Dr Dripps: If I recall correctly, a minor boundary modification is generally a modification of about 10 per

cent of the total area of a World Heritage property.

Senator COLBECK: About 10 per cent? Up to about 10 per cent?

Dr Dripps: If I recall correctly. I do not have the procedures of the World Heritage Committee in front of me.

Mr Murphy: Senator, that is correct. The committee does not have a specific number. But from the decisions

it has made in the past, it has indicated that it is quite comfortable with extensions of around 10 per cent.

Senator COLBECK: So extensions in excess of that would normally go through the full process rather than a

minor boundary adjustment?

Mr Murphy: Every extension is a decision that the World Heritage Committee would make.

Senator COLBECK: But their parameters are around up to 10 per cent. In respect of the community

consultation opportunities that come with a minor boundary adjustment versus a full nomination, how does the



government look at the opportunities that are provided in a minor boundary adjustment versus a full nomination?

How does the government see that they have been satisfied in this particular circumstance?

Ms Rankin: The nomination for the minor boundary adjustment to the Tasmanian wilderness area was

undertaken as part of, as you know, a lengthy negotiation process around the Tasmanian forests.

Senator COLBECK: I understand fully the circumstances by which it came about.

Ms Rankin: So, as part of that process, there was extensive consultation that occurred between a range of

different interest groups. The only areas that are covered by the proposed boundary extension are areas that are

already preserved as national parks or some sort of state owned land. So the Tasmanian government has been

consulted or consented to that. There were a couple of small areas of private land where we were specifically

requested by the owners of those areas to include them within the extension nomination.

Senator COLBECK: So the inclusion of private land under those circumstances is an accepted part of the

process?

Dr Dripps: Yes. That is right, Senator. Not every country has the same land tenure arrangements as Australia

so it is quite common for World Heritage properties to encompass private land.

Senator COLBECK: I do not have an issue with that. But the circumstances of the forest agreement were

between two particular parties—that is, the forest industry and the environment movement. As you would be very

well aware, that whole process has been very, very contentious with respect to other parties that were not included

in that negotiation. So how does their exclusion from that process satisfy the requirements for broader community

consultation?

Ms Rankin: The requirements for consultation are largely related to people that are directly impacted by the

proposed extension. In this case, the areas of land that are covered are, as I mentioned, already crown land owned

by the Tasmanian state government or by private landholders who specifically requested that areas be included.

Senator COLBECK: So what about those that might have boundaries with those pieces of land? What about

the impacts on them? We heard through questions earlier in the hearing that you have people with an interest in a

World Heritage area complaining about provisions that might occur outside the boundaries of them. So there is

clear inference, even from that line of questioning from Senator Cameron, that there is an expectation of impact

outside the World Heritage boundaries. My understanding is that there are considerable areas of private land that

abut the proposed boundaries. So what about the impact on those people and their opportunity to be consulted as

part of the process?

Mr Murphy: The legislative requirement is that the consultation takes place with the owners and occupiers of

the proposed area.

Senator COLBECK: Well, has that occurred?

Dr Dripps: Yes. There has been consultation.

Senator COLBECK: Of the occupied area, the area being nominated? What about the people on the

boundary who are obviously impacted by that process? There is an expectation in the New South Wales case that

Senator Cameron talked about about planning requirements outside. I would not expect that to be any different

anywhere else. That is a given. I am not arguing about that. There are considerable areas of private land—farming

land—that are operated for very different purposes on the boundaries that we know of. Those people who will be

impacted by this process have had no opportunity under that process to have their say. How has that then become

a legitimate part of the process? How is that considered as part of this nomination?

Dr Dripps: As Mr Murphy has indicated, the legislative obligation is to consult with the owners and occupiers

of the land included in the nomination. I think it is fair to say also that during the Tasmanian forestry process

there was a range of views provided to the government from a range of different stakeholders who may or may

not have been part of the formal negotiating process. So in terms of the views and concerns, I think it is fair to say

that the government was well aware of them in submitting the nomination.

Senator COLBECK: Let us go to the boundaries themselves. In a letter to Jane Calvert, who was one of the

negotiators within the process, the minister said on 30 April that the boundaries were not finalised. Are the

boundaries finalised for that nomination?

Ms Rankin: Senator, the boundary submitted to the World Heritage Committee is finalised. What we are

doing at the moment is working through a process of detailed technical, I guess, GIS refinement to make sure that

when we gazette the boundary and actually produce it, if subject to a decision being taken by the World Heritage

Committee, it is actually meaningful on the ground. When we overlay different data layers, what has actually

been described needs to make sense and align with roads and not create little strange cut-offs in things that were



not intended. So we are going through quite a detailed technical process of verifying the data to make sure that the

technical mapping of the boundary is correct.

Senator COLBECK: But my understanding from that letter is that it related to some coupes that were still to

be logged that were inside the boundaries of the World Heritage area. My understanding or inference from the

letter—if I am wrong, I am wrong—is that there were some attempts to remove them from the World Heritage

proposal so that the principles of not logging within a World Heritage area could be maintained if the listing were

accepted. So on what basis can you say in that circumstance that the boundaries are finalised?

Dr Dripps: There have been a number of matters like that which have been under active discussion, Senator.

The commitment from the forestry authorities in Tasmania was that where there were such coupes that were

scheduled for logging, they would be logged in advance of consideration of this matter by the World Heritage

Committee and then allowed to regrow as part of the World Heritage property.

Senator COLBECK: Have they been logged?

Ms Rankin: I think the provision was up to 14 June. There were some small numbers.

Senator COLBECK: My understanding is that there is still a number of coupes to be logged, which was

legitimately the point of the discussion. I am not complaining about that. It is legitimately the point of the

discussion.

Ms Howlett: I may be able to assist you here. As you would be aware, the negotiations around the forestry

agreement have been quite complex.

Senator COLBECK: I do not want to revisit that. I have a very, very short period of time. I just want to know

if the boundaries are finalised. While you are on that, what impact does the decision by the Tasmanian parliament

to excise 35,000 hectares from the area nominated have on the listing application?

Ms Howlett: I will just take you back to your question about coupes being logged within the World Heritage

area, Senator. In the preparation of the nomination there were a number of what are termed by the signatories and

Forestry Tasmania transitional coupes. A number of those coupes are scheduled for logging to be completed by

14 June. So in any coupes that were included in the World Heritage area, logging will be completed by 14 June.

There was a small number of coupes that could not be completed by 14 June, and they were excised from the

nomination.

Senator COLBECK: At what point were they excised?

Ms Howlett: They were excised prior to the Australian government lodging the nomination at the end of

January. Then there is a third set of coupes—those you refer to being excised by the Tasmanian legislation.

Senator COLBECK: It is not a set of coupes. It is 35,000 hectares.

Mr Thompson: For those coupes, the effect of the Tasmanian legislation is that they cannot be formally

proclaimed as reserves by the Tasmanian government prior to either or both of the World Heritage Committee

making a positive decision on the World Heritage area and the Tasmanian government obtaining forest

stewardship certification for their forestry operations. That legislation does not have an impact on whether or not

the World Heritage Committee makes a decision about the World Heritage boundary extension. So if the

nomination is successful, those coupes will be covered by the EPBC Act and protected as World Heritage. Further

to that—

Senator COLBECK: But that is clearly not the intent. I spoke to the member who moved the motion. The

intent of that motion was to excise that 35,000 hectares from the World Heritage listing. There is no question in

my mind about that.

Ms Howlett: I cannot speak for the intent of the member. But the effect of the legislation—

Senator COLBECK: What you are saying is the effect of the amendment that he moved is as you have just

described?

Ms Howlett: It has an impact on the Tasmanian government's reserve making powers. It does not have an

effect on the World Heritage listing.

Senator COLBECK: I have another question and it relates to the ICOMOS report to the World Heritage

Commission in relation to consultation with the Indigenous community. We just heard Senator Boswell talking

about that, so perhaps that throws some light on what is happening. Why was consultation not done? What is

happening with that consultation?

Ms Rankin: We have started that process of consultation, including writing to a number of Aboriginal groups

in Tasmania. The minister wrote to them earlier this year to say that the Australian government was wanting to



work with them to undertake the process of describing and properly identifying the cultural heritage values of that

proposed minor boundary extension area. I guess the primary focus of the original nomination to the World

Heritage Centre was on the natural values of the extension area. We clearly identified in our submission to the

World Heritage Centre that the Australian government was very committed to continuing to undertake work in the

timeframe required to work with Aboriginal groups to allow them to properly identify those cultural heritage

values and that we would come back to the World Heritage Committee at a future date once those consultations

had been completed.

Senator COLBECK: Before or after the assessments considered?

Dr Dripps: The intention would be after. We have a previous decision relating to this property that requests

that Australia come back with information on Indigenous cultural values at the meeting in 2015.

Senator COLBECK: So why is the approach for the Cape York Indigenous community different from the

approach for the Tasmanian Indigenous community?

Ms Rankin: It is not.

Senator COLBECK: Well, it clearly is. The Cape York Indigenous community have control over whether the

listing goes ahead or not. The Tasmanian Indigenous community get the opportunity, which they did not even

know about until the ICOMOS report came out, to start having consultations after the nomination has been

submitted. How is that the same?

Dr Dripps: This property has been listed since 1982.

Senator COLBECK: Not the extension.

Dr Dripps: I was going to go on with that to say that it has been listed for its mixed cultural and natural values

for that period of time. The property has been considered for a number of boundary extensions over the period of

time between then and now.

Senator COLBECK: Do you consider that clause 40 from the RFA has been given full consideration as part

of the nomination?

Dr Dripps: I am sorry, but I do not have the RFA in front of me, Senator. Can we take that question on

notice?

Senator COLBECK: Yes, certainly.

CHAIR: Senator, you will have to wind up.

Senator COLBECK: Really, was this not just the government trying to get, as Senator Boswell was talking

about before, a nomination in before the election? Was that not what this was all about? This area is clearly larger

than 10 per cent. My understanding is that the government continues to communicate with the World Heritage

Commission on this submission. The boundaries, from what I have read, are not finalised. How can the

community fairly get the opportunity to comment on this submission when the boundaries are still being modified

by the process, their submissions were supposed to be in by 28 February, and that process, from a government

submission perspective, continues potentially right up to the consideration by the World Heritage Commission of

the nomination? How is that a fair process?

Dr Dripps: As the officials here have described, it has been a process in line with the Australian legislation

and driven clearly by the Tasmanian forestry process. In terms of its fairness, I am not at liberty to provide a view

on whether that is fair or not.

CHAIR: I do not think we will use the full time with the Office of the Supervising Scientist, but we will need

a fair bit of time. Senator Singh and Senator Waters still wish to make a contribution. I will run past a bit on this.

Are you just about finished, Senator Colbeck?

Senator COLBECK: Just one question and I will finish. Are you satisfied that this listing has been made in

full compliance with the guidelines?

Dr Dripps: That is my understanding, Senator.

Senator COLBECK: I will leave it at that.

Senator WATERS: Can you, firstly, tell me how many government officials will form part of the delegation

to the Cambodia World Heritage Committee meeting?

Dr Dripps: As I indicated, I think, yesterday, I will be leading the delegation. Have you got the list there?

Senator WATERS: I do not need the names as such. Just the number will be fine, thanks.



Dr Dripps: There will be four Commonwealth government officials, one official from GBRMPA, one official

from DFAT, one official from Tasmania and a technical expert from Tasmania.

Senator WATERS: How many days will the delegation be there for?

Dr Dripps: It does depend a little on the agenda for the World Heritage Committee, Senator. The properties

are discussed in a particular order, so the attendance of officials will be based on the likely timing of discussion of

those matters. The meeting runs for 12 days.

Senator WATERS: I want to take you to the draft decision of the World Heritage Committee around the

Great Barrier Reef—decision 37.COM/7B.10—which I am sure you are well aware of. Will the delegation be

seeking to have discussions with other participants to that meeting with a view to changing the terms of that draft

decision?

Dr Dripps: We have been advised by the World Heritage Centre that the item will be opened up for

discussion. So we expect that we will be approached by various state parties to present the position of the

Australian government. The position of the Australian government has not yet been finalised. There are

discussions with Queensland and, obviously, amongst members of the Australian government around what that

should say. However, it is fair to say that there are a number of announcements by the Australian government that

are not reflected in the draft decision, probably reflecting the timing of those announcements, along with the

timing of the drafting and translation of the draft decision. In particular, the Prime Minister's announcement of 24

April about the $200 million worth of investment in Reef Rescue is a very significant contribution and addition to

the preservation of this property.

Senator WATERS: Sure. Beyond those funding announcements that were made subsequent to the draft

decision being released, are there other matters that the delegation will seek to amend in that draft decision?

Dr Dripps: There are not any matters that I can comment on at this time, Senator, because those decisions

have not yet been made.

Senator WATERS: Given about a year or so ago the World Heritage Committee expressed extreme

concern—their words—about the reef, has the minister requested advice on whether there are any other issues

arising with the management of our other World Heritage properties?

Dr Dripps: I do not recall the minister specifically asking for that advice, Senator.

Senator WATERS: If you could just take on notice and double-check, that would be helpful. The Great

Barrier Reef Marine Park Authority yesterday, in response to some of my questions about the release of Legacy

Mine Water in Queensland, said that they thought there were likely to be significant impacts on the river systems,

the estuarine systems, as opposed to the marine park itself. Has the department looked into this issue at all—the

release of the contaminated mine water authorised by the Queensland government?

Dr Dripps: Dr Reichelt referred to localised impacts on rivers in Queensland. I am not aware of whether we

have or have not. It would probably be a question best answered by the folk from the environment assessment and

compliance division. Now they have a heads-up, they can come armed with that answer later, if that is okay with

you, Senator.

Senator WATERS: Thank you. Particularly given that that program was extended yesterday, in fact, was the

minister or the department consulted by the Queensland government on the extension of that program?

Dr Dripps: Which program is that, Senator?

Senator WATERS: The Legacy Mine Water program.

Dr Dripps: I am not aware of consultation that may have occurred yesterday, Senator. We can take that

question on notice.

Senator WATERS: Or obviously consultation prior to the announcement yesterday. Thank you. Have you

advised the minister, either at your own initiative or in response to a request from the minister, about the potential

environmental impacts on matters of national environmental significance from the repeal of those wild river

declarations?

Dr Dripps: I can recall a number of verbal discussions with the minister on that matter. We would have to

take on notice whether there were specific briefings. It would not have been from officers from this area.

Senator WATERS: Which area would that have been from?

Dr Dripps: It may have been outcome 5.2 or it may have been officers from the water part of the department.



Senator WATERS: If you could take that on notice on their behalf, that would be great. Have you advised the

minister on whether or not any of those rivers formerly protected under those declarations have national heritage

values?

Dr Dripps: The advice that we have provided the minister on national heritage values is based on

consideration by the Australian Heritage Council after nomination of those properties for consideration by the

Australian Heritage Council.

Senator WATERS: So you do not do a proactive advice? You wait for a nomination to be made before

providing input?

Mr Murphy: The general process is as Dr Dripps said. For example, if the minister wanted to consider an

emergency listing, we might provide advice for that purpose.

Senator WATERS: Has advice around an emergency heritage listing been provided to the minister for any of

those formerly declared wild rivers?

Dr Dripps: We would have to take that question on notice, Senator. We are not immediately aware.

Senator WATERS: Have you advised the minister on any other ways to protect those rivers using the means

available to the federal government?

Dr Dripps: I think we will need to wrap that question up with the others we have taken on notice, Senator.

Senator WATERS: Thank you. I want to go back to the broader World Heritage areas. You said earlier you

were not sure whether the minister had requested advice on whether there are any other issues about the

management of our World Heritage properties. You have taken on notice to check on that. Is there any sort of

regular review or public reporting process either to the Australian public or to the World Heritage Committee on

how each of our World Heritage properties are faring?

Dr Dripps: Yes, this is, Senator. As an example, I draw your attention to the State of conservation report that

has been prepared for Macquarie Island that is available on the World Heritage Committee's website, which

commends Australia for the management effort over the past about half a dozen years in controlling rats and

rabbits on Macquarie Island. That is an example. There is a regular process of reporting back to the World

Heritage Committee on the management of the properties, which becomes more frequent if there is a level of

concern.

Senator WATERS: And how regular is that? Is it every year?

Dr Dripps: No. It is not every year.

Senator WATERS: You said it is regular, but it is not every year. That is not terribly regular, in my books.

Dr Dripps: It is more like every five years. But I am not certain, Senator, so we would prefer to check that

with the guidelines.

Senator WATERS: Are those reports then made available on the SEWPaC website?

Mr Murphy: I think the periodic reports are available on the World Heritage Centre's website.

Senator WATERS: The full text and not any sort of summarised or edited version?

Mr Murphy: Yes.

Senator WATERS: Great. Do those reports address not only the state of the property but also any pressures

that they are facing and any funding variations that might have occurred?

Dr Dripps: Yes. They cover those things.

Senator WATERS: They cover all aspects—administration as well as pressures. Good. Lastly, has the

department briefed the minister on what additional steps he could take to implement the World Heritage

Committee's requests that we fix our limited progress on their recommendations?

Dr Dripps: As I indicated previously, there have been a range of announcements made since the draft decision

was drafted by the World Heritage Committee. It would not be my view, and, as I said, the Australian government

has not completed the process of forming its view, that that statement is true. We do brief the minister on a range

of matters relating to Queensland—the strategic assessment and the progress of the implementation of the

findings of the World Heritage Committee.

Senator WATERS: Beyond wanting the Reef Rescue funding to be properly referenced in the World

Heritage Committee's reports, have you provided any advice to the minister about additional steps that he could

take to address the concern of the World Heritage Committee around the management of the reef?



Dr Dripps: As I indicated, Senator, we provide advice to the minister on a range of different things relating to

the management of the World Heritage area—the progress of the strategic assessment and the way in which the

recommendations might be read. In addition to the $200 million of funding, there has also been the release of the

report card and some correspondence with the World Heritage Committee around factual inaccuracies in the draft

decision.

Senator WATERS: Sure. That all goes to things that are currently afoot. Have you provided any advice to the

minister on additional measures beyond what is already being undertaken to address the World Heritage

Committee's concerns?

Dr Dripps: Senator, I have provided as much advice as I am able to. I think I have answered the questions two

times so far as best I can.

Senator WATERS: Well, you have talked about an update on existing initiatives. Have you provided advice

on additional new things that the government could do to address the concern of the World Heritage Committee?

Dr Grimes: Senator, I think this is really starting to stray into the possible policy advice given to the

government. Dr Dripps has indicated—

Senator WATERS: I am not asking what the advice was. I am just asking if it has been provided.

Dr Grimes: Dr Dripps has indicated that there has been advice provided to the minister in relation to the draft

decision that has been submitted to the World Heritage Committee. I think she has provided as much information

as we can here this afternoon.

Senator SINGH: This time last year at budget estimates, I asked about the Cascades Female Factory at the

historic site in south Hobart. I asked specifically about UNESCO and the Commonwealth. Conditions had been

placed on the visitors centre because it was anachronistic and, therefore, would need to be demolished. You took

on notice most of that question. In your response, you have provided me with the fact that there was a deed of

agreement established between the Commonwealth and the Festival of Tasmania requiring the ownership of the

site to be transferred to the state government of Tasmania but that the demolition of the fudge factory, which is

the anachronistic part of the site, be done prior to the handover to the state government in 2009. The last time I

looked, that building had not been demolished. If the inclusion in the deed of the transferring of ownership of the

property to the state government included the demolition of that building and it is part of the Commonwealth and

UNESCO's position in its World Heritage listing, what has gone on?

Ms Rankin: Senator, there is probably not much more that we can add to the answer on notice that we took

last year. The situation has not really changed.

Senator SINGH: You handed it over with that deed in place saying, 'This anachronistic site needs to be

demolished for the Commonwealth to hand it over' but did not stick to the wording in the deed? What happened?

Ms Rankin: We are continuing to have conversations with Tasmania about their undertaking that they would

do that. We do not have any way of forcing them to do it.

Senator SINGH: You had the option, I would have presumed, to have held on and not handed it over until the

requirements in that deed were met.

Dr Dripps: Senator, if I recall the answer to the question last year, that deed of agreement was made at a very

long time in the past. So the officers here are not able to explain to you why it was that the required activity did

not occur at that time.

Senator SINGH: So why did 2009 get decided as the date to do the handover without meeting the

requirements in the deed?

Dr Dripps: I do not think we have the information available here to answer the question, Senator, I am sorry.

We will have to take that further question on notice.

CHAIR: Thank you. I think that concludes the questioning for the department here. We will move to the

Office of the Supervising Scientist.

[3.14 pm]

Office of the Supervising Scientist

CHAIR: Mr McAllister, would you like to make an opening statement? I think this is your first appearance.

Mr McAllister: It is my second appearance as Acting Supervising Scientist. I will if I can, actually. I would

certainly like to acknowledge the efforts of my predecessor, Alan Hughes, whose input, I believe, to this

committee was significant over his tenure of eight years as the supervising scientist. He goes out as the second

longest serving supervising scientist. I think his input has been significant over that time.



CHAIR: I think we would all accept that, Mr McAllister. Senator Ludlam will introduce himself, as he did to

your predecessor.

Senator LUDLAM: I am always very polite. Please do pass on my regards to Mr Hughes.

Mr McAllister: I will.

Senator LUDLAM: He will be missed. I am sure you will be happy to fill his shoes.

Senator BIRMINGHAM: I do not know how much he will be missing us.

CHAIR: Yes.

Senator LUDLAM: Not at all. You have introduced yourself as the acting SS. Can you just describe what

arrangements are in place for that handover?

Mr McAllister: At this point in time, Mr Hughes is currently still on long-term leave before retiring in

February. During that process, the process of replacing the supervising scientist will be undertaken.

Senator LUDLAM: We will just get straight to it, then. Can you tell how the OSS, if at all, has engaged with

the Western Australian government on the Toro project, which is under Commonwealth environmental impact

assessment at the moment?

Mr McAllister: We have been providing significant levels of advice through the environmental assessment

compliance division as part of their EIS process and as follow-ups to some of the issues surrounding conditions in

terms of the clarification of information.

Senator LUDLAM: A number of conditions have been applied to that project before the minister has said he

will sign the final piece of paper. Are you guys in the mix of that process as it unfolds?

Mr McAllister: Yes.

Senator LUDLAM: Are you able to describe what particular elements you are advising on or what your role

is?

Mr McAllister: Most of the information we have been providing advice on has been around tailings

management in terms of free board arrangements around the tailings dam.

Senator LUDLAM: It is quite different circumstances to what you are used to dealing with in the Alligator

Rivers region—a different climate, a different geology, different final tailings disposal concepts and so on. What

are you able to tell us about the degree of confidence, noting that the minister did hold up, I think on two

occasions, his approval before it was finally conditionally granted? What are your views on the likely stability of

the tailings facility at Wiluna mine, given that it is meant to be parked across a dry water course in a seasonal lake

bed?

Mr McAllister: In terms of our advice, we have been purely advising on radiological conditions and in terms

of some of the suggestions around capping. That has been the extent of our advice, as well as some information

around best practice in terms of free boards for tailings dams.

Senator LUDLAM: Which is what exactly?

Mr McAllister: We have been providing advice around setting, I guess, the amount of space that is allocated

above the maximum operating level of a tailings dam in terms of the amount of free board for storm events.

Senator LUDLAM: Is this just a temporary structure, or are you talking about the final disposal of the

material back into the pit voids? The intention is not to leave the tailings structure on the surface; that is my

understanding.

Mr Tayler: My understanding of the plan—and I have to say I have not dealt with the physics for a little

while—is that the tailings were going to be placed into the mined out pit void so there is only that as the tailings

repository.

Senator LUDLAM: That is my understanding as well. So it is not anticipated, I would have thought, at the

end of the mine life that you would have structures that are above the existing ground level, or is that not correct?

Dr Dripps: Senator, I think you are asking questions that go beyond the questions that have been asked to the

supervising scientist division by the environment assessment and compliance division. We would be more than

happy to take these detailed questions about the conditions and the final form of the project in section 5.2. If the

relevant officers have arrived in anticipation of section 5.2, perhaps they could come to the table.

Senator LUDLAM: If you like. The conversation was going fine as far as I was concerned, but if there are

other experts in the room, I am happy for you to bring them up. That is fine.

Dr Dripps: They are not here.



Senator LUDLAM: We will just continue as we were. Is it your understanding that the company proposes to

leave the tailings structures as they are, progressively backfilled as the company moves through the deposit, and

not being lined at the base of the structure?

Dr Dripps: I think, as I indicated, Senator, these officers were consulted in the preparation of the final

conditions but did not draft the final conditions. If we could come back to those questions when the other officers

are available, that would be most appreciated.

Senator LUDLAM: I might have to draw on the advice of the chair. We have less than an hour with you. I

understand Senator Macdonald has questions. How long or how far away are those officers?

Dr Dripps: Well, the other officers are scheduled for the four o'clock to six o'clock section this afternoon,

Senator.

Senator LUDLAM: We will come back to it. Something that is probably a bit more squarely in your remit is

the EIS guidelines and expected timeline for Ranger 3 Deeps in Kakadu. Can you give us an update on the status

of that project?

Dr Dripps: Again, Senator, the environment assessment and compliance division has the responsibility for

running the assessment of that project. We do seek detailed technical advice from the supervising scientist on

relevant matters. I would not expect them to have a detailed knowledge of the timeline of the assessment of that

project.

Senator LUDLAM: Dr Dripps, even a general appreciation of the timeline would be useful. Mr Hughes was

always able to provide us with the information. I am not asking questions outside the remit of the OSS. These

officers are intimately involved in the project. I think some general answers would be fine.

Dr Dripps: Certainly. We will get the general answers. But I am just drawing to your attention that Mr

Hughes often elegantly said what I just said.

Senator LUDLAM: I guess.

Dr Dripps: Probably more elegantly.

Senator LUDLAM: Go ahead, Mr McAllister.

Mr McAllister: I would certainly back up Dr Dripps on that. We are involved in the drafting of the EIS

guidelines, but I am not aware of the actual dates for public display of those guidelines at this point in time.

Senator LUDLAM: Thanks. This might have to come in on notice. Again, you might shunt me off to the

other officers a bit later in the day. I am interested in your understanding of the actual scope of the project itself in

terms of what tonnage the company is expecting to bring back to the surface. How many millions of tonnes of ore

is the size of the project, as you understand it?

Mr McAllister: Keith might be able to back me up here. On the last advice we were given, the tonnage of ore

would be limited to 500 million tonnes.

Senator LUDLAM: Five million.

Mr McAllister: Five million, sorry. Five million tonnes of ore.

Senator LUDLAM: If it is 500, then we are having a whole different conversation.

Mr McAllister: Five million tonnes of ore.

Senator LUDLAM: As far as your office is concerned, what are the implications of the planned R3D project

for closure and rehabilitation planning at Ranger?

Mr McAllister: From what we have been provided, it has no significant implications in terms of closure.

Senator LUDLAM: I would have thought having a live underground mine operating using the same

processing plant had quite significant implications. There are no further ore bodies to be processed at that plant

apart from R3D?

Mr McAllister: The proposal as it stands still fits in the same timeline for closure. So Ranger's milling

operations need to cease by 2021. What the ore that they are extracting out of the decline is replacing is ore that

they would have processed out of existing lower grade ore stockpiles. So the impact is minimal in terms of

tailings volumes and of rock.

Senator LUDLAM: So as far as the OSS is concerned, the R3D project could go ahead and the company

could still meet its licensed closure and rehab obligations without pushing for an extension to the lease?

Mr McAllister: That is what they are proposing, yes, at this point in time.



Senator LUDLAM: Thanks. That is useful. Can you just advise us on measures taken, again within the remit

of your office and not outside of it, to stabilise cracking in the pit wall at Ranger? What is the current status of the

instability that the company had identified?

Mr McAllister: The issue of cracking of the pit wall was identified towards the end of 2012. ERA have fairly

significant radar instrumentation on the pit to determine the safety around the pit. That radar technology picked up

some acceleration in some movement in the pit. That indicates to the geotechnical engineers, from my

understanding, that there is a potential for shifting of that side of the pit. The side we are talking about is the

north-eastern or eastern side of the pit. When they identified that, they put in place some contingencies around

ensuring that that area was not at any point inundated, which may exacerbate the problem. Subsequently

following that, they constructed a levy bund outside the current access road to ensure that at periods of high flow,

Magela would not cover the area over which the cracking was occurring. Subsequently, following that, the

acceleration ceased and there has been no further significant movement to the point that we actually had quite a

significant earth tremor or earthquake—about 7.2—in the Banda Sea that was felt both in Jabiru and Darwin and

they noticed no significant movement at that point in time. We now have the situation where the pit is

substantially backfilled as part of the closeout. That has essentially ensured that the pit remains buttressed at that

point and they do not expect any further movement.

Senator LUDLAM: Ultimately, the pit will be backfilled to above the height of the instability and there

would be no possibility of a collapse or anything like that?

Mr McAllister: Yes. That is correct.

Senator LUDLAM: How far away do you think they are from being able to completely eliminate it as a risk?

Mr McAllister: I believe that they have eliminated the risk at this point in time.

Senator LUDLAM: I will come back to Ranger in a tick. Could you advise us on the status of rehab works,

including reveg, at the former Nabarlek uranium operation? Is that something that you have any visibility of?

Mr Tayler: I was out at Nabarlek most recently, just in the last dry season; access, obviously, is difficult

during the wet season. There are a few pieces of infrastructure remaining—the old oil tank and other things out at

Nabarlek. The revegetation effort is progressing quite well. Weeds were a significant challenge at Nabarlek and

UELA has put considerable resources into weed management, and to quite good effect, which is something that

we continue to encourage them to do. So that manages to keep fire out, which is the largest threat to the

revegetation there. The old camp area has been substantially cleaned up. There was a lot of asbestos and other

material there, which has been collected up and buried on site. So there are still some outstanding jobs to be done,

but over the last few years it has actually been progressing quite well.

Senator LUDLAM: Staying in the same part of the world, there was a recent federal budget allocation of $1½

million for continuing remediation works at Rum Jungle. Could you just advise us specifically on the work that is

being undertaken there and the role of OSS, if any, in that?

Mr McAllister: OSS are part of what is called the Rum Jungle working group. We assist in advice around

potential closure options, which is where the current project is at. The Northern Territory government, with the

aid of the working group, have produced a final draft of options for remediating that site. I believe that report

should be finalised in the next month.

Senator LUDLAM: Is that with the NT mines minister? Who has final sign-off on that?

Mr McAllister: The NT mines minister.

Senator LUDLAM: Do you have any sense of when it is likely that that would occur?

Mr McAllister: The release of the report?

Senator LUDLAM: Yes.

Mr McAllister: It is expected in June.

Senator LUDLAM: So the minister would have to table that once he or she had signed off on it?

Mr McAllister: I am not quite sure of the details of it becoming public or not, but my understanding is it will

be finalised in June as a report.

Senator LUDLAM: Are you able to take on notice for us whether it is your expectation that that will be a

public document? I cannot see any reason why it would not be.

Mr McAllister: That would be a question for the Northern Territory government.



Senator LUDLAM: I guess it would. It is a shame they do not come. Could you provide, staying in the same

region, an update on the activities and outcomes of the effort to rehabilitate the other former uranium projects in

the Alligator Rivers region?

Mr McAllister: If you are referring to the South Alligator Valley, yes. Three years ago, works were

undertaken in the valley to contain remnant infrastructure and waste, including a significant amount of tailings

from the South Alligator Valley mill. Those works were completed—correct me if I am wrong—three years ago.

We have been aiding Parks Australia with investigating or following up inspections of the containment to ensure

that it is meeting the criteria set by ARPANSA at the time.

Senator LUDLAM: Thank you for that. I just have a couple more. We are nearly there. Has the OSS provided

any agency response to the March 2013 report of the Queensland uranium mining implementation committee?

Mr McAllister: We have not provided a response.

Senator LUDLAM: Thank you. The Queensland report does recommend that the Queensland government

seek to engage the OSS as specialist adviser. We have recommended effectively the same for WA. It sounds as

though you are performing that role at Wiluna to the proposed state uranium mining oversight committee. Has

this been formally or informally raised with the OSS?

Mr McAllister: No. It has not.

Senator LUDLAM: That is interesting. Anything else—capacity, resourcing issues, the rest of it—is

hypothetical, I guess. Have you got a view on whether that would be a good use of the agency's time?

Mr McAllister: I do not have a view necessarily, no.

Senator LUDLAM: You are probably not allowed to answer that. It was a bit cheeky of me to put it to you.

But you have not been formally or informally approached by the government of Queensland to take part in that

process?

Mr McAllister: No. Not by the government of Queensland.

Senator LUDLAM: These are the last couple of questions for me. It is approaching the 10-year anniversary

of the Senate report into the adequacy of federal regulation of uranium mining that I think Democrat Senator Lyn

Allison chaired. Are you familiar with that report? It was 2003. I do not know what the committee would have

been called at that stage. It might have been a committee.

Dr Dripps: I am aware of that report, Senator.

Senator LUDLAM: The report was actually highly critical of the regulatory regime at Ranger. It described it

as complex and inadequate. Could you provide detail on how OSS has addressed the recommendations of that

inquiry as they had bearing specifically on the Ranger operation?

Dr Dripps: We would appreciate the opportunity to take that question on notice, Senator. I do recall extensive

conversations with Mr Hughes about this and I think previous evidence on this that we would like to be able to

refer to to ensure that we are not contradicting ourselves.

Senator LUDLAM: That would be good. If you could take it on notice, I might be a bit more specific in my

questions relating to it. As I say, it is approaching 10 years and it would be fantastic to get a review and some sort

of response from the OSS and/or the department, if that is seen to be appropriate. If you are going to take these on

notice, are there any recommendations pertinent to the operations of the OSS or Ranger that have not been

advanced or responded to by the government? I might be directing this somewhat to the minister.

Dr Dripps: My understanding is that there are not but that it is a very complicated story to point out the events

that were occurring at the same time through which those recommendations were fully addressed. But that is a

recollection, Senator, and we would prefer to take the question on notice.

Senator LUDLAM: If there could be some kind of formal response, be it from the department, OSS or the

government as a whole, I think that would be greatly appreciated. I think I will leave it there. I understand that

other senators have questions. Thanks for your time.

Senator IAN MACDONALD: The Lyn Allison committee report would have been dealt with at the time by

the government, would it?

Dr Dripps: I am sorry?

Senator IAN MACDONALD: The Lyn Allison committee report that Senator Ludlam raised would have

been dealt with by the government at the time? There would have been some response from the government,

would there? We are going back into history now.



Dr Dripps: My recollection, Senator, is that there was a response but there was also another inquiry at much

the same time that traversed similar territory. So I would like the chance to check our records and to respond on

notice to precisely what the response was.

Senator IAN MACDONALD: My questions relate to the Jabiluka activities. I understand that colleagues of

mine have discussed this at some length with you or your predecessor at previous estimates. There are quite

extensive regulations to which ERA is subject on this mine. Is that correct? There is very extensive oversight?

Mr McAllister: Are you talking about Jabiluka?

Senator IAN MACDONALD: Yes.

Mr McAllister: They have a set of conditions and environmental requirements in place, yes.

Senator IAN MACDONALD: And they are regularly reviewed by your office?

Mr McAllister: As part of the mine site TL committee process and engaging with the Northern Territory

government, yes.

Senator IAN MACDONALD: Have there been any material breaches of any of those regulations since we

last spoke about this in estimates?

Mr McAllister: None.

Dr Dripps: Senator, are you on Jabiluka or Ranger? Jabiluka is in care and maintenance at the moment rather

than an active mine.

Senator IAN MACDONALD: Indeed. Can you tell me about Jabiluka? As I understand it, it is in long-term

care and maintenance. Is that correct?

Dr Dripps: That is right, yes.

Senator IAN MACDONALD: And any proposal for development would need the consent of the traditional

owners. Is that correct?


Senator IAN MACDONALD: The brine concentrator at Ranger is, as I understand it, very important to

Ranger mine's water treatment plans. Are you aware if that project is proceeding?

Mr McAllister: Yes, it is proceeding on time and on budget, I believe.

Senator IAN MACDONALD: It is on time and on budget. Is ERA following the correct regulatory approvals

for the Ranger 3 Deeps exploration decline project?

Mr McAllister: Yes, they are.

Senator IAN MACDONALD: You keep a fairly close eye on that?

Mr McAllister: Indeed.

Senator IAN MACDONALD: Is the environment surrounding the Ranger project area something you keep a

very close eye on?

Mr McAllister: Yes. We have significant monitoring programs in place. We have a surface water monitoring

program that includes continuous monitoring in both Magela and Gulungul, the main tributaries to the Magela

floodplain. They take continuous monitoring data at about 10-second intervals. We also have biological

monitoring programs in place that study the species diversity in the aquatic environment in terms of fish

communities and macro invertebrates. We also have a fairly significant radiological monitoring program in place

that determines both impact to human health and the environment in terms of radiological exposure.

Senator IAN MACDONALD: Thanks for that. I know that the Northern Territory had a lower than expected

rainfall over the 2012-13 wet season. Do you think that ERA has the capacity to manage water should Ranger

mine still experience a heavy rainfall event in the 2013-14 wet season?

Mr McAllister: Yes. Certainly it was what we would call a dryer than normal wet season, if you can have a

dry wet season. The total rainfall was in the order of 1,200 millimetres. Significantly, one of those events was in

the order of 300 millimetres. So prior to that, at the end of March, the Jabiru area was looking towards one of the

driest wet seasons on record. That, in combination with a raise in the level of the tailings dam crest, has meant

that ERA have quite significant capacity to manage process water and pond water inventories into the future.

Senator IAN MACDONALD: So from your office, no worries about that regardless of what rainfall there is?

Mr McAllister: No. Not at this point in time.

CHAIR: Thank you. I think that concludes questions of the Supervising Scientist Division.



Proceedings suspended from 3.33 to 4.03 pm

CHAIR: I call officers from the department in relation to program 5.2, environmental regulation.

Dr Dripps: Chair, I have a correction of evidence provided this morning during the segment on coal seam gas.

I told the committee that there had been 23 projects referred to the interim and statutory independent expert

scientific committee. That is not, in fact, correct. There have been 22 projects referred to the statutory committee

for advice and 23 projects referred to the interim committee, bringing the total to 45. So I apologise for that

misrepresentation this morning.

CHAIR: Thanks, Dr Dripps.

Senator COLBECK: I will start with a procedural matter. During the last session I was given some evidence

in relation to the finalisation of the boundary of the nominated area for World Heritage listing in Tasmania. My

discussion was in the context of a letter that had been forwarded by the minister to Ms Jane Calvert, who is one of

the signatories to the Tasmanian agreement. In that letter it says:

My officials continue to work closely with the Tasmanian government and Forestry Tasmania to refine the management

boundary for nominated extensions to the Tasmanian wilderness World Heritage area. Agreed objectives of this process are to

maintain the size and values of the nominated World Heritage area.

To me, that indicates that the boundaries are not yet finalised, which is in contrast to my interpretation of the

evidence that was given to me. I seek to table the letter and ask the department to consider the evidence that was

given.

CHAIR: That is fine. Can we get resolution to accept all tabled correspondence or letters?

Senator COLBECK: If it is possible to get something back pretty quickly on that, given that particular—

CHAIR: Just be patient. All those in favour? Against? Declare it carried.

Senator COLBECK: Is it possible to get some resolution as quickly as possible, given where that issue is in

its broader process?

CHAIR: I am sure Dr Grimes can have a look at that, if it is possible and practical.

Dr Grimes: Senator, we would be happy to have a look at that in the time that we have available, noting that

officers are here giving evidence.

Senator COLBECK: I understand that. I thank the official for that. Very quickly, there has been a key

threatening nomination process for marine seismic surveys around nine species. Can you tell me about that

process? Is it here or not here? Do I go at another time?

Dr Dripps: We will just get the relevant officer up to the table, Senator.

Senator COLBECK: The nomination has been made, as I understand it. Can you just give me a sense of the

process and timelines around it, please.

Mr White: Yes, sure. The nomination will be considered by the Threatened Species Scientific Committee in

their upcoming meeting on 4 June. The committee will then provide its advice on whether or not to prioritise that

nomination to the minister by approximately early July. From that point on, the minister will make a decision as

to whether or not an assessment will be undertaken.

Senator COLBECK: So it is a nomination to an assessment process. What is the cycle around the

assessment?

Mr White: Well, it is an annual assessment cycle.

Senator COLBECK: But how long will an assessment take?

Mr White: The committee will provide a recommendation. The Threatened Species Scientific Committee will

provide a recommendation to the minister on a timeframe if it is recommending something for assessment. The

minister will make a final decision on that timeframe. It is an annual cycle that is generally published before 1

October each calendar year.

Senator COLBECK: And what is the impact of the process once something becomes accepted through the

assessment?

Mr White: Well, if something, first of all, were determined as a priority for assessment and then, say, it was

listed as a key threatening process, one important part of the decision-making is whether or not there will be a

threat abatement plan that applies to that key threatening process. A key threatening process in itself is not a

matter of national environmental significance under the act, but threat abatement plans are taken into account in

environmental decision-making under the act.



Senator COLBECK: Thank you.

Senator BACK: I would like to ask some questions, if I can, regarding the circumstance with cattle in the

north of Queensland at the moment, particularly with the opportunity for some state national parks to be opened

up for grazing under these circumstances. Can someone assist me in that process? Firstly, can I confirm my

understanding that the parks in question have in fact been at some time in the past cattle stations that have now

been with Queensland and, I think, federal government support turned into state or national parks. Is that correct?

Dr Dripps: There are a variety of properties which have been cattle grazing properties in the past. Some of

them have been gazetted as national parks in Queensland and some of them have not yet been gazetted as national

parks in Queensland. Yes, the ones that are subject to public intention at the moment have been purchased jointly

with NRS funding.

Senator BACK: So of those that have not been gazetted as national parks, there is no reason why they cannot

be used immediately to turn cattle back into them? Would that be a correct assumption?

Dr Dripps: Senator, my colleague Mr Thompson, who is responsible for this area, gave some evidence on this

yesterday. If I recall correctly, the issue that is being discussed at the moment is the fact that they were partly

purchased with NRS funding and that that funding comes with a funding agreement about the progressive

removal of stock from those areas.

Senator BACK: As I understand the position, if you could confirm it or advise me if I am wrong, the

Queensland government has now moved to actually support cattle being returned into these areas as a result of the

bushfires, the drought and the excess of cattle that were not exported to Indonesia and other markets. Is it the case

that the Queensland government favours these areas being opened again for grazing?

Dr Dripps: The Queensland government has written to the Commonwealth ministers requesting support for

that kind of proposition, yes. I believe they have passed laws as well.

Senator BACK: From a procedural point of view, would it require the acceptance of both the Queensland

government and your minister, Minister Burke?

Dr Dripps: Well, as we indicated to the committee yesterday, there is a range of advice being prepared for the

minister regarding the potential interventions that he might make on this matter.

Senator BACK: And is that being prepared by your department?

Dr Dripps: Yes. That is right.

Senator BACK: And are you able to assist us with some understanding of the factors that are being taken into

account in preparing advice to the minister?

Dr Dripps: The general factors, as we indicated yesterday, are the funding agreement for the NRS purchase

and the general obligations under the EPBC Act that exist for people undertaking actions that might have a

significant impact on a matter of national environmental significance.

Senator BACK: And would you be taking into account animal welfare significance as well as environmental

significance?

Dr Dripps: The animal welfare issues are not directly covered by the acts that we administer.

Senator BACK: Is there federal legislation at all pertaining to animal welfare that should be the subject of

consideration in preparing advice to the minister?

Dr Dripps: If there is, it is outside of this portfolio.

Senator BACK: Again, the advice that I have is that in consideration of these areas having been cattle

stations, some at least, if not most, are fairly heavily covered with buffel grass. Is that your understanding as well?

It is an introduced species. Obviously, buffel grass was introduced as a cattle feed many years ago. It was highly

successful in the Queensland pastoral cattle industry. From the advice available to me from people in the industry,

they tell me that is the case. I am just wondering if you are also of that understanding.

Dr Dripps: I do not have a detailed understanding of the vegetation that exists on those properties.

Dr Grimes: It is the case that the Queensland government, in making representations, has made that point

around buffel grass, so that has been made in correspondence from the Queensland government.

Senator BACK: I would make the point also, of course, when considering advice to the minister under the

EPBC Act, that buffel grass, once dried off, is highly flammable. I am not sure of the plant species or the

vertebrate species that would be in those areas, but I understand that gidgee is one plant species that is actually

throughout those areas and I know to be highly fire sensitive. Is that the type of thing that you would also be

taking into account in preparing advice to the minister?



Dr Dripps: We would be undertaking a desktop review of the kinds of matters of national environmental

significance that might be present—so whether there are bilbies, squatter pigeons or gidgee grass.

Senator BACK: An interesting thing about animals is they do not stand still except those that are falling

down. Time is of the essence in this circumstance. Again, the advice available to me from people who provide

produce to the industry in Queensland is they basically have run out of conserved feed. When speaking to a feed

produce provider from Clermont the other day, he gave me to understand the scale. He obviously has a contract

whereby cattle being trucked south to abattoirs are unloaded. He looks after them for a period of time, whatever

the requirement is. They get fed, watered and put back on the truck. He said to me, 'I normally deal with 30 decks

a fortnight.' He said, 'I am dealing at the moment with 180 decks a fortnight.' So that is the scale of animals being

moved south—those that actually can still stand up and be put on a truck. The prelude to my question is: how

urgently are you preparing this advice to Minister Burke, because time is absolutely of the essence? As we know,

in a significant number of instances, Dr Dripps, these are in calving cows. They are going into their final trimester

of pregnancy when they start getting dragged down by the unborn calf. Again, we are not often talking about dry

cows or younger animals, although they are also at risk. Can you just give us some understanding of the

timeframe in which this advice will be made available to Minister Burke?

Dr Dripps: As we advised the committee yesterday afternoon, that advice is being finalised with great

urgency.

Senator IAN MACDONALD: Is the minister back in the country yet?

Dr Dripps: Yes, he is, Senator.

Senator IAN MACDONALD: So he has got the advice now that we spoke about yesterday?

Dr Dripps: The department is still in the process of finalising the advice.

Dr Grimes: The department has to provide advice in two areas. One is in relation to NRS, or national reserve

system, properties and the other is in relation to EPBC Act advice. Those advices are being finalised or, in one

case, may even be close to having been finalised already.

Senator IAN MACDONALD: But, as I said to you yesterday, the minister has been aware of this since 14

May and it has taken the department until yesterday and now even today to get this urgent advice and send it

back. Senator Back has mentioned, perhaps more graphically than I did, the necessity for urgent advice. When do

you expect to have it across to the minister?

Dr Grimes: Very, very shortly. We traversed this territory, of course, yesterday, Senator, and I do not think I

have anything to add to what we covered off yesterday.

Senator IAN MACDONALD: But I am hoping that a day later the advice might have gone.

Dr Grimes: In relation to these matters, it is imminent.

Senator BACK: Thank you. I have no other questions on that.

Senator WILLIAMS: Do you have a problem with hard-hoofed animals grazing in those national parks?

Does the department?

Dr Dripps: We are interested in things that might cause a significant impact on matters of national

environmental significance. At certain stocking densities, it is well known that hard hoofed animals can have

negative impacts on some matters of national environmental significance.

Senator WILLIAMS: A lot of these parks have wild goats, feral pigs, brumbies and deer et cetera. Do you

take action to remove those hard-hoofed animals out of those national parks?

Dr Dripps: We encourage people who are managing those properties to implement management plans that

minimise the impact of those animals.

Senator WILLIAMS: Managed? National parks that I see are certainly lacking management. Thanks, Chair.

Senator IAN MACDONALD: Has Mr Burke's office been able to get back to you since yesterday on whether

he received that email at 1.54 pm on 14 May?

Dr Grimes: I do not have formal advice on that at this stage, Senator. Obviously, the email address in

question is the minister's Parliament House email address. We have referred that to the minister's office.

Senator IAN MACDONALD: Do you think we might have an answer by the time you are relieved from your

duties with the estimates committee?

Dr Grimes: I do not know, Senator.



Senator IAN MACDONALD: Senator McLucas, is there any chance that you might get the minister's office

to assist the committee by just confirming that he received that at 1.54 pm on Tuesday, 14 May? That is the letter

from the Queensland government.

Senator McLucas: I will ask the minister's office what advice they can provide the committee.

Senator IAN MACDONALD: If they cannot, for some reason, could you let us know that they are not able to

advise that and why they are not able to advise that?

Senator McLucas: I will certainly ask the question, yes.

Senator IAN MACDONALD: Thank you. That is all on that.

Senator WILLIAMS: I know Senator Macdonald raised the issue of flying foxes at the last estimates. Since

that time, my home town of Inverell has been inundated with millions of them. Who is the flying fox expert?

Dr Dripps: We have officers here, I believe, who can talk to us about flying foxes.

Senator WILLIAMS: During the summer months at Inverell in northern New South Wales where I live, the

little red flying fox has decimated plenty of the sheoaks and willows along the Macintyre River through the centre

of the town to the point where the council is now seeking funding to remove or cut trees back. They have made a

real mess of them. The ballpark to do all this work is around $40,000. I understand the little red flying fox is not

threatened but protected. Is that correct?

Mr White: Under federal environment legislation there are two species listed as threatened. One is the grey-

headed flying fox and the other is the spectacled flying fox. The red-headed flying fox is not a matter of national

environmental significance.

Senator WILLIAMS: So under federal law, the little red flying fox is not threatened?

Mr White: That is correct. It is not listed as a threatened species.

Senator WILLIAMS: Is it protected under any state laws?

Mr White: I cannot answer that.

Ms Rankin: We would have to take that on notice, Senator.

Mr White: We could take it on notice.

Senator WILLIAMS: So if that little red flying fox is not listed as threatened or is not protected, can action

be taken to move them on?

Ms Rankin: We can only answer in relation to their protection under Commonwealth environment legislation.

As they are not listed under Commonwealth environment legislation, there is nothing under our national

environmental law that prevents that. But, as I said, we would have to take on notice what their protection status

might be under state legislation.

Senator WILLIAMS: I would appreciate it if you could, please. Are you able to shed any light on what the

two national census counts have revealed as to the flying fox numbers?

Mr White: I do not have those numbers in front of me. Yes, two counts have come out to date—one in

February and one in May.

Senator WILLIAMS: Can you give me any details of those numbers through the different varieties or species

of the flying fox? You can take that on notice, can you?

Mr White: Yes. The count is being undertaken certainly in relation to the grey-headed flying fox and the

spectacled flying fox. It is a long-term monitoring project, of which the first two counts are available. They are

available publicly, so we can supply them on notice.

Senator WILLIAMS: At what point is a species vulnerable or protected?

Mr White: There is a range of criteria that need to be met under the act. Some of them are around numbers,

for instance. Some of them are around change in numbers. It only requires one of those criteria to be triggered in

order to be determined to be threatened under national environment law. They are quite stringent criteria.

Ms Rankin: It has to be listed on the national environmental threatened species list. To get listed, it needs to

go through an assessment process to see whether it meets that criteria.

Senator WILLIAMS: So going on a numbers count will determine whether they are listed on the threatened

species list. Correct?

Mr White: Well, we will be looking at the trends in numbers, not just the overall numbers.

Senator WILLIAMS: The trends in numbers?



Mr White: Yes.

Senator WILLIAMS: Who makes a decision to delist if the numbers get too high in the count of them? State

or federal? It depends on which one has listed them, I suppose?

Ms Rankin: Yes. They could be listed under both state legislation as well as federal legislation. If there were

to be a review, there is always the opportunity to review the status of species on the list, but that requires advice

from the threatened species scientific community to consider evidence about whether the criteria are still met for

either listing or listing in a different category, and then advice to the minister, who makes the final decision under

national environment law. Obviously, the states have a different process for their listings.

Senator WILLIAMS: To your knowledge, does this little red flying fox carry any of those dangerous

diseases, such as lyssavirus, et cetera? Have those diseases been known to be carried through all the species of the

flying fox?

Mr White: I believe that to be the case. I do not know definitively if it is all species. There is an issue,

obviously, that not all types of bats carry the virus.

Senator WILLIAMS: So if this little red flying fox is not on the threatened list and is not on the protected

list, do you have any advice on how to move them out of the centre of a town? Is there any protocol or procedure

that the department has taken to move them on?

Dr Dripps: There has been extensive and successful work undertaken by some of the state governments in

moving flying foxes on. A particular example that springs to mind is that of the Victorian government, who

moved flying foxes out of the botanic gardens and up the river to Ivanhoe in Melbourne. So there are protocols

and procedures for doing this available. We could undertake to provide you with some information on that on

notice, if you do not mind.

Senator WILLIAMS: So off hand you do not know how they actually did it?

Dr Dripps: If I recall correctly, it was a combination of sound, encouragement and the provision of feeding

sites at the location where the government wanted them to move to. It was quite a difficult and expensive

procedure.

Senator WILLIAMS: This is my final question. Are there any special funding areas you can point me to as a

one-off to help clean up the environmental damage, the mess, they leave behind as far as the destruction of trees

et cetera and the general mess? Do you know if there is any federal government support to assist the clean-up?

Dr Dripps: I am not aware of any funding like that. But we can take that question on notice and check for

you.

Senator IAN MACDONALD: At last estimates you told me that there was a process underway to look at

possibly delisting the spectacled flying fox. How far has that process progressed?

Mr White: That is what the national flying fox monitoring project that is underway at the moment is looking

at for both the spectacled and the grey-headed flying fox. It is getting a way better understanding of numbers

before any assessment is undertaken of whether or not it may or may not be eligible for delisting.

Senator IAN MACDONALD: Is it an offence under the EPBC Act simply to move them on by some noise,

or is the offence if you try to kill them or cull them?

Ms Rankin: I think the offence is if you take an action that is likely to have a significant impact on the

threatened species. That may vary depending on if you are attempting to move a roost on during peak breeding

periods, for example. That could constitute a significant impact, but at another time it may not. So it is quite

situation specific, I think, and we would need to make a case-by-case assessment of that.

Dr Dripps: And, as you would perhaps recall from our last outing on this topic, we have been in the process

of developing a conservation agreement whereby Commonwealth approval for those kinds of actions will not be

required if they are undertaken in a particular way. So we have been working with the state governments in New

South Wales and Queensland in particular to develop this conservation agreement so that it is not necessary for

people to apply for permits under the EPBC Act in order to manage these bats.

Senator IAN MACDONALD: We spoke about that, what, two months ago. It was February, so three months

ago. So are those agreements with Queensland and, I guess, New South Wales completed yet? Where are we at

with them?

Mr White: They are in the final stages of negotiation with the states.

Senator IAN MACDONALD: Can you tell us what is in the agreements? Will it allow states to move them

on?



Mr White: Basically, the conservation agreements are aimed at allowing the states to approve actions under

their own state regulatory mechanisms where they are consistent with the conservation agreement, which is

ultimately making sure that it meets the standards of national environment law but allowing them more flexibility

in making those decisions through the agreement.

Senator IAN MACDONALD: Is it right to say that once these agreements are signed, the Commonwealth

will no longer have an oversight or any role in their management?

Mr White: Where a particular action is consistent with that conservation agreement, there might be actions

that are still planned to be taken that are not consistent with the conservation agreement. They would need to be

referred as per the usual process. But the conservation agreement is designed to capture most of the current issues

of managing flying foxes that we are presented with now.

Senator IAN MACDONALD: In this one instance—and I am sure it happens everywhere—at Yungaburra,

these actions may have an impact on flying foxes. But I guarantee that the actions of the flying fox are having a

deleterious effect on the health and wellbeing of human beings. They cannot sleep. They cannot talk. They cannot

sell their houses. There are so many properties on the market for sale in this particular area. There is some

urgency. People are still having their health impacted because of this roost that came there after Cyclone Yasi into

a replanted area; it is not a natural forest. Nobody wants to kill them. They just want to move them on by blowing

a few horns and clanging a few tins and getting rid of them. That is why it is so very urgent that this work be done

very, very quickly. When you say the agreements are nearly finished, I will not hold you to this, but could you

give me a rough guess? Would you think a couple of weeks or a couple of months?

Dr Dripps: Just in terms of those time lines, Senator, the minister for the environment wrote to the

environment ministers in Queensland, New South Wales, the ACT, Victoria and South Australia in May last year.

There has been a pretty protracted process in receiving responses from the state governments. The revised draft of

the conservation agreement was sent to New South Wales after consultation with them in November last year.

The written comments on that draft were received on 13 February this year. So we have had several rounds of

engagement with the states on this conservation agreement and we believe that it is quite close to finalisation.

Senator IAN MACDONALD: Well, that is New South Wales. I am more interested in Queensland. I respect

that New South Wales is important. I want to put on notice this question: what is holding up the Queensland

agreement? If you can tell me that, I will use what little influence I have in Queensland to make sure the

Queensland minister addresses it immediately. I would be surprised if he is not, because I have been talking to

him and he is very, very aware of the position. In fact, he and his leader have both made commitments regarding

it. But on notice I ask you to indicate what the hold-up is insofar as Queensland is.

Dr Dripps: Yes, of course, Senator.

CHAIR: Just on this issue, I would not argue with Senator Back or Senator Williams in terms of their

knowledge of this issue. So when I am in that position, I will just go to the conversation, where there are a

number of debates taking place with PhD students, senior lecturers and academics and experts in the field. The

two issues that seem to come through in a lot of these debates is moving the bats on does not work and culling the

bats does not work. They say that if you try and cull them, there is what is called a pteropucidal effect. Is anyone

aware of what that is?

Dr Dripps: I am sorry, but I would have to look that one up, Senator.

CHAIR: Well, there you are, Dr Dripps. I am doing pretty good today, I tell you. I will quote from this article:

Achieving local eradication through mass culls is also doomed to failure. Because they migrate over long distances in

response to food availability, culling a local population of flying-foxes creates a vacant niche. This draws in more animals

from farther afield, which are then also culled. This vicious cycle has been described as a “pteropucidal black hole”.

I am sure the experts are looking at all of these issues. Would I be correct in that?

Mr White: Well, there are a number of things that are considered in the conservation agreement as it is

currently drafted in terms of the best methodologies. But I suppose these things are also being looked at through

the monitoring project, which is to get a better understanding not only of the number of flying foxes but their

movements et cetera. So there is still quite a bit that is not understood about the movement of flying foxes that we

are trying to get a better understanding of under that monitoring project.

Dr Dripps: I think it is fair to add to that comment, Senator, that the provisions of the conservation agreement

are primarily directed at moving bats at a particular time of year. There is a bat moving season, if you like, when

they are not heavily pregnant and not likely to be negatively impacted by those kinds of procedures.

Mr White: That is right. And non-lethal methods.



CHAIR: We have spent a bit of time on this. Senator Macdonald, do you have any further questions? If not, I

will go to Senator Waters.

Senator WATERS: I want to start with the issues that we touched upon earlier about the Santos and QGC

coal seam gas approvals and those water monitoring and management plans. Firstly, your useful table here reveals

that a good 2½ years after Santos have had their approval granted, they still do not have tick-off on their water

management and monitoring plan. Can you confirm that that is the same project which Four Corners revealed in

April this year, where the public servant who was drafting the Coordinator-General's report was instructed not to

write a chapter on groundwater?

Dr Dripps: I think we would have to check with the records from the Four Corners project, Senator, on the

last point.

Senator WATERS: Well, I did that earlier today and it is in fact that project. We have the Coordinator-

General—this is a state level process which has not properly analysed the proponent's claims about water—and

then the federal government, 2½ years after issuing the approval, having not yet ticked off on the water

management and monitoring program. What is going on with this industry with approvals being issued with

information lacking and still not being granted almost three years after the fact?

Dr Grimes: Senator, this was addressed by Mr Gaddes this morning. He indicated the careful and diligent

process that is being followed in the consideration of the water management plans. Clearly, we would as a

department take that very, very seriously, working through those water management plans with the assistance of

the expert panel in Queensland and, ultimately, in giving advice to the Commonwealth minister. So that is a

careful and diligent process that we are following, and it is being done in an appropriate way.

Senator WATERS: Sure. I would not seek to imply that the veracity from the department should be less; far

from it. It is just interesting that it has taken the proponent 2½ years and they still have not been able to satisfy the

department. That is a red flag there for me that perhaps they are scrambling and they cannot actually manage their

water impacts. It sounds like you are voraciously attending to that; great. I will move on to the QGC project,

which you also detail in your table. I have some questions here about what happened at the end of what you call

stage 2. The minister approves the plan against reduced requirements and varies the conditions to establish a

requirement for a stage 3 plan. I have two issues with that. First of all, why were the requirements reduced? What

were the requirements that were reduced in the conditioning of that project?

Dr Grimes: It may be appropriate for the officers directly involved in that to answer that, Senator.

Mr Gaddes: Thanks for your question, Senator. The requirements were not reduced so much as they were

staged. So the conditions remain the same. The company was not able to meet some of the requirements of those

conditions. So instead of saying, 'Well, we're going to approve a plan which is below par', to allow the company

to go ahead with some of the work for which the components of the plan were adequate, we approved that

component so they could go ahead with that part of the work. We put another plan into the conditions to say, 'You

will deliver the remaining components of the conditions by the end of'—I think the date was 31 December, and

that is when it had to be implemented by. But it delayed the timing of the delivery of certain components of the

conditions until a later stage. It was 22 December, sorry. So there was no reduction in the protection to the

environment. The expert panel specifically considered whether or not that process would reduce the protection

afforded to the listed matters. The advice was that it would not, so it was staged accordingly.

Senator WATERS: So, Mr Gaddes, they had a chance in stage 1 and it was not approved. They had a chance

in stage 2 and it was not approved. So now they get an extra chance rather than their approval being varied and

perhaps revoked? How many more chances will they get?

Dr Dripps: Senator, there are detailed requirements of those water management plans. As Mr Gaddes has

indicated, there has not been any dilution of those requirements through this process. What there has been is a

recognition that we did not know everything about the complexity of implementing those conditions at the

beginning of the process. So the process has been designed in such a way that the company can progressively

demonstrate its performance in this area.

Senator WATERS: So on that point about not understanding the complexity of the issue at hand more

broadly, again, I harken back to this insistence on the conditional approval model. How can the minister be

issuing approvals when fundamental information about how water impacts can be managed are not known, when

the department themselves acknowledge the complexity and when the proponent is not able to satisfy two stages

of a plan and has to then be given a third stage to continue to examine these impacts? How is that consistent with

the precautionary principle under the act?



Dr Dripps: Senator, as we indicated earlier, it is not uncommon to approve projects with subsequent

management plans that are required to be approved before various pieces of work are undertaken. So our role is to

identify the environmental outcomes that need to be achieved by these projects and then to ensure that an

appropriate framework of environmental management is in place before the work substantively commences.

Senator WATERS: On that point, I am interested in whether the department has either done any work itself

or sought any external advice on whether adaptive management, which is clearly what is being employed here, is

or is not consistent with the precautionary principle.

Dr Dripps: I think we would have to take that question on notice. I do not have the policy officers

immediately available to answer that question.

Senator WATERS: Would you be able to take that on notice and get back to us before the end of this

session?

Dr Dripps: I will do my best, Senator.

Senator WATERS: Thank you. That would be great. I just want to clarify, because your table here that you

handed out earlier does say that the minister approved the plan against reduced requirements. But you have just

said that the conditions were not in fact reduced. I just want to confirm. What did you mean by reduced

requirements?

Mr Gaddes: The same standard is required. It is just that each component of the conditions is delivered at a

different time. So the ones that could not have been met or were not able to be met at that time were carried over

to a later time when more information was available to inform those plans.

Senator WATERS: Thank you. I want to move now to the reef. We heard from GBRMPA yesterday that they

are now conducting their own modelling of dredging and dump spoil movement and they are now looking at deep

ocean currents and 3D modelling, which is a welcome development. They are doing that for the Abbot Point

proposal. My question goes to whether the Gladstone proposal was subject to modelling that looked at both 3D

and deep ocean current effects on dredging and dumping.

Dr Dripps: Senator, as Dr Reichelt advised yesterday, there is a project that is funded out of the regional

sustainability program that GBRMPA is undertaking on our behalf to do further monitoring. We would have to

take on notice and check the documents surrounding the approvals of dredging in Gladstone Harbour to be able to

answer the question around precisely which modelling was used to inform that decision.

Senator WATERS: Dr Dripps, is there anyone here that would be able to answer that? Given it has been

subject to such concern by UNESCO, I am sure the department is able to shed some light rather than just take it

on notice.

Dr Dripps: No. I am sorry, Senator. That decision was taken in 2010, I believe, so we do not have

documentation on that decision with us here. We can call back to the branch and give it a go.

Senator WATERS: Thank you. I appreciate your efforts in that respect. I am after the detail of the modelling

that did occur by Gladstone Ports Corporation and under the auspices of your department in order to get the

approval and whether or not it included the deep ocean current modelling and the 3D modelling, just for clarity. I

will leave that with you. Can you give me an update as to where the coastal strategic assessment is at, the one that

is being undertaken by the Queensland government?

Dr Dripps: The Queensland coastal strategic assessment? Yes, Senator. My understanding is that the

Queensland government has been undertaking quite a lot of work on their coastal strategic assessment. As you are

well aware, the Queensland government is also contemplating and undertaking changes to its planning

arrangements. That has introduced a degree of complexity into the work that their staff are doing. But my

understanding is that that work is well progressed.

Senator WATERS: And when will that be out for public comment?

Dr Dripps: I cannot answer that question, Senator. It does depend on when the Queensland government

submits that work to us and whether that work is adequately progressed to be able to go out on public exhibition.

Senator WATERS: Do they have a deadline to submit to you?

Dr Dripps: Well, the ultimate deadline of the process is that it needs to be completed in time for us to report

back to the World Heritage Committee in 2015.

Senator WATERS: So you have not given the parameters for when you would like to receive their first

version of that?



Dr Dripps: There is no legislative timeframe for a strategic assessment. I think there were some aspirational

timeframes that might have suggested that that might be out in the third quarter of this year. I am not sure whether

or not that will be achieved. It depends on the progress of the work by the Queensland government.

Senator WATERS: Do we know what is holding that up if that timeframe is not going to be met?

Dr Dripps: I think I have said all I can about the state of progress by the Queensland government on this

matter, Senator.

Senator WATERS: On the issue of strategic assessments, in response to a question on notice last time, you

advised that there are about two or three officers working on each EPBC strategic assessment. How many

departmental folk are working on that coastal strategic assessment?

Dr Dripps: On the Queensland one there are more officers. I might ask Ms Colreavy to come and report to

you on that.

Ms Colreavy: Senator, we have six staff responsible for working on the strategic assessment. My team

comprises about 14 staff overall. Six of them are specifically focussed on working on the strategic assessment

issues.

Senator WATERS: The coastal or the marine?

Ms Colreavy: Well, they cross over a lot of work. But of the people with a specific focus on coastal work,

there are three and a director. But they are supplemented from time to time depending on what comes in and

reports that are being assessed et cetera by a range of other people. So there is a core group of three staff

supervised by a director plus supplemented by others as needed.

Senator WATERS: And the numbers for the marine strategic assessment?

Ms Colreavy: It would be the same—three.

Senator WATERS: The same folk or an additional three folk?

Ms Colreavy: No. A different three.

Senator WATERS: What impacts will the recent staffing cuts have on the veracity of those strategic

assessments, if any?

Ms Colreavy: We do not expect to have any cuts to the taskforce.

Senator WATERS: Will there be any impacts on the broader EPBC project assessments or referral

assessments from those staff cuts?

Dr Dripps: Senator, as I indicated to the committee I think first up yesterday morning, there are four staff

within the environment assessment and compliance division who have been offered voluntary redundancies.

There are also potentially additional resources that were announced by the government in the budget to provide

for staff working on the water trigger. So we are not expecting a significant impact on staff as a result of the cuts.

Senator WATERS: That is good to hear. Just before we leave coastal issues, again, the advice from

GBRMPA yesterday was that as part of their marine strategic assessment, they are conducting eight reports on the

impact of primarily dredging but also dumping and that they had done four so far, which were in draft format and

had been given to certain stakeholders but not, sadly, to others. Can you advise whether the department has

received either a briefing or any information from GBRMPA about those new studies that relate to Abbot Point?

Ms Colreavy: The reports that were referred to yesterday were component parts of one overall study. So there

will be seven component subsidiary reports and one overarching final report. The so-called sharing of the report

data in the formulation of it was in the interests of testing some of the findings and getting feedback on the

validity of the findings. So GBRMPA and the researchers that were involved in the project identified parties that

they felt would assist them in developing those reports. It is part of the normal scientific exploration and

consultation. My team in the department have received the first four subsidiary reports, but we have not yet got

the four that are still under production. We are waiting to receive them. That includes the final. So the bringing

together of those findings and the summation of it we are still yet to see.

Senator WATERS: When is that due to be completed?

Ms Colreavy: We were hoping for it to be completed by the end of June. I suspect it might drift over into

early July by the time they bring together the final report and get it to us. But the end of June to mid-July should

be the finalisation.

Senator WATERS: Earlier, Ms Colreavy, you said it had been given to parties. I was only aware that it had

been given to the Queensland Ports Association for consultation. What other parties have received a copy of those

draft reports?



Ms Colreavy: I think it was Queensland Ports Association and NQBP.

Senator WATERS: Well, they are the proponent.

Ms Colreavy: They are party to it. I cannot remember. I will have to get back to you, I think.

Senator WATERS: If you could, because I am concerned that it has been a highly selective consultation so

far. I am interested in who has had the chance to eyeball it.

Ms Colreavy: Bear in mind, Senator, that these reports have been formulated for the purpose of being put out

for public consultation. There is room for further comment and for further adjustment. So all of these reports

are—

Senator WATERS: But that early input is obviously very influential. Has the department advised the minister

to wait to receive those seven components and the final report before making his decision on the Abbot Point

project?

Dr Dripps: Senator, the process of the minister making final consideration of projects is one where we brief

the minister formally when we have the required information about the impacts of the project and how that is

likely to impact on the environment draft conditions and such things. It is generally at that time that he asks for

further information if he requires further information. So we do not have a policy approach of essentially

providing him with information about every project as it comes to mind. We have 450-odd projects on the books.

In order to streamline the engagement with the minister's office, we brief him when we are satisfied with the

standard of the assessment and the draft conditions that have been prepared. Then if he has further issues of

concern, we address them.

Senator WATERS: That all sounds fine. But my question was: will the minister wait for that information

before making his approval decision?

Dr Dripps: Well, I cannot answer the question of what the minister will do at some stage in the future,

Senator. Certainly he is aware of the issues and concerns around Abbot Point and he will make the decision on

those projects when he is satisfied that all of his concerns and issues have been fully addressed.

Senator WATERS: I would have thought it would be a fairly relevant consideration if he proceeded in the

absence of that information. Anyway, I will not bore you with that now. Still on that Abbot Point proposal, I

understand that the offshore dump site has now been deselected, for want of a better word, and a new site for

dumping that three million cubic metres is yet to be specified, which seems unbelievable to me given the approval

is due to be issued in about six weeks. Will the minister require a final dump site to be specified before making

his approval decision?

Mr Knudson: The minister will have to take into account all relevant considerations in determining what the

potential impacts on matters of national environmental significance would be. In determining that, he will need to

take a look at things along the lines of the proposed site for disposal and the potential impacts related to that site.

Senator WATERS: Will you be advising the minister around his procedural abilities to hold off on his final

decision until such information is within his purview?

Mr Knudson: Our advice to the minister will be when we are at a point where we believe that the minister

can acquit his responsibilities under the act appropriately.

Senator WATERS: Sure. I would suggest that he needs to know where the dump spoil is going to go before

making that decision, but I think we have established that the process will roll out as it does. I want to ask quickly

about the Fitzroy terminal project. Some materials have been released under FOI that show that advice was sought

by the minister to GBRMPA by email on 8 August 2011. That advice was provided. The advice itself is dated 31

August. It is noted by hand as being received on 6 September. The decision on the project to make it a controlled

action was made on the 5th. So if the hand notation is accurate, the decision to make the project a controlled

action as opposed to clearly unacceptable was made before receipt of the GBRMPA advice. I am just wanting

some clarity. Is that indeed the case, or is the handwritten notation a little misleading?

Dr Dripps: Senator, I do not have the copies of the material that you have in front of you. It is the usual

departmental practice to seek advice from a range of different expert bodies in formulating decisions that are

taken under the EPBC Act. In this case, the delegate did receive advice from GBRMPA and fully consider that

advice in making the controlled action decision. That is evident in the decision brief on that matter. That advice

from GBRMPA was fully considered in making the decision at that time.

Senator WATERS: Even though it was received the day after the decision was made, according to the

handwritten notation?



Dr Dripps: I suspect that there may have been advice provided by GBRMPA to more than one person on

more than one occasion. I have personally reviewed the decision document quite recently and there is no doubt

that the GBRMPA advice was fully taken into account.

Senator WATERS: I am pleased to hear it. Why was it not heeded?

Dr Dripps: I would, again, have a different interpretation of the decision than you would, Senator, in that

regard. The views of GBRMPA about the potential impacts of the project were recognised in the decision brief.

The decision that was taken was to undertake a full environmental impact assessment, which is something that we

regularly do. So I do not consider that decision to be inconsistent with GBRMPA's advice.

Senator WATERS: Well, GBRMPA's advice was that there would be extreme consequences for both the

marine park and the World Heritage area, so I would suggest that perhaps a clearly unacceptable decision might

have been more appropriate. But evidently that is my view alone. Can I have just another five minutes, Chair?

CHAIR: Sure.

Senator WATERS: Last time, we spoke about issues regarding the Whitehaven Coal approval. Have we got

the right folk there? What is the progress of that investigation into the potentially false and misleading statements

made by Whitehaven as regards their offsets to obtain their approval?

Mr Gaddes: We generally do not provide comments on the status of investigations. I can provide you with

advice that it has gone through the preliminary stage and has been allocated to one of our specialist investigators.

But, beyond that, I could not provide you any more details without prejudicing that investigation.

Senator WATERS: Can you just tell me that again? It has gone through the preliminary stage?

Mr Gaddes: It has gone through a preliminary stage. Last time we spoke, I spoke to you about how we triage

our cases. It goes through and we make sure that there actually is a case to answer. Then after that, it goes through

into the investigation stage. It has been through the triage stage. It has been allocated to an investigator.

Senator WATERS: Does that mean there is a case to answer, under your definition?

Dr Dripps: It means that it will be investigated, Senator.

Senator WATERS: Mr Gaddes, is there a case to answer?

Mr Gaddes: The result of the investigation will reveal that.

Senator WATERS: Have the Maules Creek coalmine and the Boggabri coalmine lodged their surface and

groundwater assessments?

Mr Gaddes: That is not my area.

Senator WATERS: Sorry. Musical chairs here.

Mr Knudson: Senator, we are in the process of assessing their documentation to ensure its adequacy.

Senator WATERS: Sure. Have they lodged their surface and groundwater assessments yet?

Mr Knudson: Not their final versions.

Senator WATERS: Will they go to the independent expert committee for examination?

Mr Knudson: Senator, at this point, what we need to ensure ourselves of is that there is adequate review of

the plans to make sure that we can provide advice to the minister as to the sufficiency of those plans. That will

entail us looking at a range of options as to whether we feel that we have sufficient expertise within the division

or whether we need external advice.

Senator WATERS: And you would consider that independent expert committee to be the external advice

source?

Mr Knudson: That would be one of the potential sources of external advice.

Dr Dripps: It is one of the potential sources. I think it is worth putting on the record that it is not the role of

the independent expert scientific committee to provide post approvals advice on projects. Their role is to make

sure that the scientific matters are considered appropriately before approval and that appropriate conditions are

applied.

Senator WATERS: I am very interested in that. They are allowed to advise on the fact that conditional

approval should or should not be granted. According to your earlier evidence, a lot of the detail about how those

impacts will be managed are left until later. But the independent scientists are not being allowed to participate in

that process—



Dr Dripps: I did not say, Senator, that they are not allowed. I said that it is outside of their current role and,

indeed, their current resourcing. What we do within the division in looking at the post approvals work is look at

whether we need expert technical advice that is beyond the capability of the department to provide. Where we do,

we commission that work specifically. It is very difficult to anticipate precisely what that work might be. We

resource it on a case-by-case basis.

Senator WATERS: Will the water trigger, if it passes the Senate, change the scope of the independent

committee's jurisdiction in that regard? Will they then be able to have an involvement post approval, or is it not

contingent on that?

Dr Dripps: I do not believe that is the intention of the water trigger, Senator.

Mr Tregurtha: I will clarify a point Mr Knudson made previously in relation to whether or not the final water

management plans have been submitted for either the Maules Creek or Boggabri projects. Whitehaven Coal has

lodged draft surface and groundwater management plans with the department. We are in discussion with the

company in relation to those plans.

Senator WATERS: So we said not yet, but in fact they have lodged a draft?

Mr Tregurtha: They have lodged a plan. We are currently undertaking an analysis of the plan. I cannot tell

you now whether it is the final one or not because we are still going through that analysis.

Senator WATERS: Thanks for clarifying that. Lastly, has the minister requested advice from the department

on what steps he could take to permanently rule out industrial development in the Fitzroy delta?

Dr Dripps: Senator, as the secretary and I covered earlier, the minister has asked for a range of pieces of

advice around a range of matters that relate to the coast of Queensland, the draft findings of the World Heritage

committee, the progress of the strategic assessment and the consideration of ports in Queensland.

Senator IAN MACDONALD: I was with people in Yungaburra who are the people that most recently have

raised this with me. It was only a week or so ago. They showed me a letter that they have given me a copy of.

With my normal precise filing system, I cannot put my hand on it. It was a letter from your department. They had

written and asked if they could move the bats in the morning. The letter came back, as I recall it—someone has

just jogged my memory on this—saying, 'Well, you can, but if you have an impact on them, you're in trouble.

You have to self-assess what is appropriate and what is not.' They were sort of saying, 'Can we make a noise

between these hours?', and the letter came back saying, 'Well, you can self-assess that. We don't do that. We don't

help you. But if you've got it wrong, we'll throw you in jail.' Is that the way the EPBC Act works—that people

have to self-assess? If they are then wrong, they are the ones that are in trouble?

Dr Dripps: Senator, we do provide a range of guidance to people in deciding how to self-assess in these

circumstances. It is fair to say that the obligation of the EPBC Act is for people to refer actions for assessment if

they believe that there may be a significant impact. I would appreciate the opportunity, if we could add some

more to that, by having a look at the correspondence that you refer to.

Senator IAN MACDONALD: I will try to get it. But that is what I understood they did. They wrote and said,

'Look, give us some guidance', and the answer came back, 'Well, that's up to you. Read the act and you self-

assess. But be aware that if you get it wrong, you'll be in jail.' So you say that that does in fact occur, but you

usually do give—

Dr Dripps: There are a range of different forms of guidance available from the department on different topics,

including the opportunity to have a conversation with relevant officers. I have agreed that we should take on

notice some further investigations into the case that you refer to, Senator.

Senator IAN MACDONALD: Thanks. That is very generous. I am sorry that I am so ill-prepared that I do

not have the letter, but I will get it and make it available to you. Perhaps I might just send it to you as a senator

rather than put it in as a question on notice at estimates so that you might be able to give me a more speedy

response. Well, I will think about that. I will check with the secretariat which is the best way.

Mr Knudson: There is a part on the website that is a generic guideline that is relatively short which talks

about what a significant impact is likely to look like for matters of national environmental significance in general.

The thresholds are obviously matter by matter specific. But it does give some guidance to individuals like that

who would not necessarily be fully familiar with the act as a daily matter of their business. That would be

definitely a place to start.

Senator IAN MACDONALD: These are elderly people, mainly retirees. They are ordinary people. One of

them was a former employee of a government department in this area, I might say. But they were all confused.

They did not know, so they wrote and asked for advice and were told, 'No, we don't give advice. But you've got to



self-assess.' Anyhow, I will try to get the letter and refer it to you. My raising the issue is not so much in this

individual case. If we do have Commonwealth acts that provide for severe penalties, one would think that perhaps

people should be able to get some advice if they say, 'At six o'clock in the morning we're going to blow some car

horns and belt some tins. Is that allowed or not allowed?' They got a response saying, 'Look, sorry, you've got to

self-assess if there is an impact. If you're wrong, pack your toothbrush for jail.'

Senator HEFFERNAN: Is that a reverse onus of proof, then?

Senator IAN MACDONALD: Yes.

Dr Dripps: Senator, as I have advised, we do provide guidance on a range of different matters of national

environmental significance and a range of different industries and circumstances, so on that basis it would be

much appreciated if we could see the correspondence.

Senator IAN MACDONALD: Can you give me the advice you would give in relation to a movement on a

flying foxes?

Dr Dripps: Certainly.

Senator IAN MACDONALD: And we will see how easy they are to interpret.

Dr Dripps: Indeed.

Senator HEFFERNAN: I want to clarify that. In the regime where you have a self-assessment going wrong,

is there a reverse onus of proof on the party?

Senator IAN MACDONALD: It is.

Mr Gaddes: That letter most likely came from the compliance and enforcement branch. So the wording of the

letter is normally that if you have any uncertainty, you should refer the matter to the department for assessment

and decision. If you do not refer it, then you could be subject to substantial penalties. So generally we say to

people, 'Look, here's the way you can self-assess whether or not you need to refer it to the department for

approval. If you decide after that that you do not want to refer it, then you could be subject to penalties.' So we

provide them with advice and always say, 'If you are in any doubt, you should refer it to the department for

approval.' So it is not really leaving them—

Senator IAN MACDONALD: Thanks. I think they did ask and they were told, 'You self-assess.' Anyhow,

we will work this out. I would be interested in getting the advice you would give on the removal of bats and how

you would self-assess.

Senator LUDLAM: I have a couple of follow-up questions from questions that I was putting to the OSS

about their advisory role in helping the minister assess the Wiluna uranium project in the north-east goldfields of

WA. Dr Dripps helpfully deferred a bunch of questions to you folks, so here you are. You would be aware,

obviously, that the minister issued his conditional approval a short time ago for this project. It is the conditions

that I am most interested in getting some advice on from you now. Can you first tell us where the project is and

what your visibility of the project is at this time?

Ms Jones: The minister approved the project on 2 April. At this point, it is up to the company to progress the

conditions and submit any required management plans to the minister for approval before commencement. The

primary plan is the environment management plan, which details all of the trigger levels and compliance criteria

for surface water and groundwater and radiation requirements and incorporates a mine closure plan. So that is the

primary plan required under the conditions.

Senator LUDLAM: And how long has the company got to complete all of that documentation?

Ms Jones: Senator, it is in the hands of the company to develop that plan. The timing is up to them.

Obviously, they will have their own financial and economic timeline they are working to. But the timing is in the

hands of the company, largely.

Senator LUDLAM: So, in theory, it could take up to five years before they have to write back to the minister

and say, 'We want more time?' So five years would technically be the maximum period of time?

Ms Jones: Well, before they would need to confirm with the minister that they are able to proceed, yes,

Senator.

Senator LUDLAM: The mine closure plan is within condition 3. I guess I found it objectionable, actually,

that the company had not submitted a mine closure plan before they had posted their documents to the

Commonwealth in the first place and remarkable that it was approved without such a document sighted. How

much documentation did the company provide to the Commonwealth to give the minister such that the minister



was able to form a conclusion that the company knows how it is going to close this facility up at the end of the

mine life? How much have you actually seen?

Ms Jones: Well, these requirements cross a range of the areas of assessment of this project and are embedded

in the mine closure plan. Of course, such a plan was required at the state level as well. That is the first step. The

plan must be submitted to the department of mines in Western Australia and subsequently to us for assessment.

Senator LUDLAM: But how much work around mine closure had been assessed by the minister?

Presumably, something must have been done or he would not have had the confidence to give this thing the tick,

even a conditional tick?

Ms Jones: Through the assessment process there were assessment documentation in draft and final form.

Supplementary information was sought by the minister from the proponent on issues that cut across this matter.

To give a succinct response, I would probably have to take that on notice and come back to you, Senator.

Senator LUDLAM: Maybe if you could, yes. I am interested in the degree to which the approval conditions

side is open-ended. Does it have any lapse date at all, or is this an approval in eternity? If the company comes

back in 20 years, will it be live, or does it have a lapse date?

Ms Jones: It is really the five-year requirement. There is an expiry date of approval. This approval has effect

until 31 March 2043. That is on the front page of the actual approval decision.

Senator LUDLAM: If they do not get their plans in before the year 2043, this will have to be assessed again.

That is thinking ahead.

Ms Jones: Again, we have the five-year condition, Senator.

Senator LUDLAM: But the five-year condition is just that they need to write to the minister to say, 'Hey,

guess what? We're still keen. We'll be in touch before 2043.' There are no conditions attached to what would need

to be in that letter. I am not trying to labour the point, but that is not like a request for further approval. That is just

letting the minister know that they are still in play.

Ms Jones: There is an opportunity for the minister at that time, Senator, to look at whether the conditions still

represent best practice at that time and to consider whether conditions may be varied or otherwise.

Senator LUDLAM: A short time ago, the legislative council of the state parliament of Western Australia

unanimously passed a resolution which took me a bit by surprise. Nonetheless they did. It acknowledged that the

best practice policy of 10,000-year mine waste isolation, which is followed in the Northern Territory and applies

in Kakadu, should also apply at Western Australian uranium facilities. Can you show us where in these conditions

that resolution of the Western Australian legislative council has been met or attended to at all?

Ms Jones: The conditions refer to a requirement that the proponent and the risks must be managed to be

acceptable in the long term. Conditions 17D and 18A are examples of where that requirement is embedded in the

condition set.

Senator LUDLAM: Long-term risk. I am looking at 17D now. Where is the definition of long-term set down?

Ms Jones: It is not defined in the condition set, Senator.

Senator LUDLAM: Long-term might be 100 years. That sounds long term to me. Is your answer in fact that

there is no reference to that 10,000-year mine closure or tailings isolation clause that applies in Kakadu or that

was referenced by the Western Australian parliament?

Ms Jones: The condition set does not refer to a 10,000-year long-term definition. There has been modelling

undertaken as part of the assessment to look at the fate of surface water seepage from the tailings. It has

demonstrated that the impact would be acceptable over a 10,000-year period. But for the condition sets in the

manner you have asked me, no.

Senator LUDLAM: Acceptable over a 10,000-year period. That is taking on a remarkable degree of

confidence for people who live 10,000 years hence. Is that actual date referenced anywhere in the minister's

statement of reasons or in these conditions? I could not find it.

Ms Jones: Only in relation to modelling.

Senator LUDLAM: It is my understanding that the company does not propose to line the base of the tailings

cells as they are progressively backfilled as the company moves through the deposit. Is that your understanding,

and is it acceptable to the Commonwealth that the water seepage will just be able to drop straight through the dam

and into the groundwater?



Ms Jones: Condition 18 refers to the tailings storage facility, Senator. There is a reference in 18C to a

compacted clay liner of 300 millimetres thickness and a certain permeability. Whether that applies to the actual

floor of the facility I would need to take on notice and come back to you.

Senator LUDLAM: I can let you know, to save you the trouble of looking it up, that it does not.

Ms Jones: It is normal practice in the creation of ponds to compact in order to have a reasonably stable floor

in such a facility. The test of that will be in condition 19, where the minister has required that the storage facility

design must be reviewed by an independent scientific expert. So there is another check and balance in the system

there, Senator.

Senator LUDLAM: Would that be somebody like the OSS or a consultant to the company? Who would that

be?

Ms Jones: That party needs to be approved by the minister and is yet to be determined, Senator.

Senator LUDLAM: I hope that would be the OSS. In terms of current standards of best practice, could we

apply current standards of best practice meaning what is occurring at Ranger at the moment, where about 150,000

litres a day are falling through the floor of the tailings dam, or at Roxby, where vastly larger quantities of

contaminated water are seeping out of the base of the tailings dam, which is also unlined? Is that what the

minister refers to here by current standards of best practice? That is the prevailing status quo. Or are you trying to

improve on that performance?

Ms Jones: I do not think I can respond to that, Senator. The conditions require a best practice standard to be

demonstrated.

Senator LUDLAM: Can you tell us what that means?

Ms Jones: And world’s best practice. Again, the minister would be looking for the company to specify and

demonstrate that. Once submitted, the minister will consider whether he needs to seek advice on that or approve

it.

Senator LUDLAM: Let me phrase this in a different way. I want to get down to what standards of best

practice actually mean. Otherwise this is not worth the paper it is printed on. Do current standards of best practice

mean lining the base of the tailings dam so that water does not simply fall straight through the floor of the

facility? Would that be one example of best practice?

Mr Knudson: I would point out that in terms of providing our advice to the minister, we sought a number of

external sources of advice, including from Geoscience Australia, the Australian Radiation Protection and Nuclear

Safety Association and the Office of the Supervising Scientist. They would be in a far better position to provide

the exact details on individual best practice. We would certainly be happy to take this question on notice and

come back to you if there are particular areas of what is considered best practice that you would like to have a

better understanding of. We could come back on that.

Senator HEFFERNAN: Have you taken their advice?

Mr Knudson: It would be through the question on notice, absolutely.

Senator LUDLAM: I suspect that if I chase Geoscience Australia, they will refer me straight back to you as

soon as I refer to this project. I am not trying to be cute here. I am also not trying to cloud the issue. It is a very

specific issue. When you talk about best practice—I am actually more interested in your view; you are doing the

assessment—does that mean contaminated water laced with radionuclides and other chemical contaminants

should be allowed to fall and seep through the floor of the dam, as is current practice at other uranium mines in

Australia or not? It just means lining it. That is the question.

Ms Jones: Again, we would like to take that on notice because I am confident that this issue was looked at as

part of the assessment process. I would like the opportunity to review that aspect of the assessment and come back

to you.

Senator LUDLAM: Talk me through how the process would work. The independent scientific expert has

taken what Toro has produced, assessed it and given his or her view to the minister, who has already had to

approve that scientific expert as being an appropriate body to undertake that work. Will that assessment be put

into the public domain of the independent expert?

Ms Jones: That is a future consideration, Senator. It would be open for the minister to do so at that time.

While the conditions do not specifically specify that requirement, it will be open to him or her to consider that.



Senator LUDLAM: I will ask you to take this on notice and then we will move on. If you want to refer back

to Geoscience Australia, that is fine, I guess. What is the department’s understanding of what current standards

are best practice for tailings storage for this sort of contaminated material? What would it actually look like?

Dr Dripps: Senator, the officer has already indicated that she will take that question on notice.

Senator HEFFERNAN: With respect, surely a tailings dam, whether it is world's best practice or not, should

be a dam and not a leaking pond. Would not the most basic principle be that it should not leak?

Mr Knudson: Obviously we would have looked at—

Senator HEFFERNAN: That was a nod.

Ms Jones: Yes, Senator. That is why I am saying that you would expect that the assessment process for this

project would have looked at that.

Senator HEFFERNAN: You would expect it not to leak.

Ms Jones: That is exactly right.

Senator LUDLAM: That would be world's best practice in my view as well. You have nailed it there, Bill.

Ms Jones: In this matter, the primary concern was the movement of water through where the tailings facilities

were. The seepage of that water was less of an issue.

Senator LUDLAM: That is also my understanding of how the assessment was conducted. So this is a set of

tailings cells where the material has been dumped back below ground level across an ephemeral water course in a

lake bed in an area that floods ephemerally. That is what we are proposing here. So the company, with the

collusion of the Western Australian state government, said, 'Why don't we line the sides so that that lateral flow in

a flood event is reduced?' They have not, however, proposed to line the base of the dam, which means, as is

happening at Ranger at the moment, you get flow directly down into the groundwater mound beneath the water

course. That was more of a statement than a question.

Ms Jones: Senator, there are a range of conditions that go to the issues you have raised, including the bunding

of the bund walls to prevent surface water going into the pits. There are other aspects of the condition set that

address those issues. There are a number of requests for statements of reasons with regard to the minister's

decision on this project. The minister provided his statement of reasons on 16 May, and that has been published

on the department's website—

Senator LUDLAM: I have it right here.

Ms Jones: for everybody to reference. So the best explanation for the minister's decision is contained in that

statement of reasons.

Senator LUDLAM: I have that here.

Ms Jones: Other than that, the questions on notice will supplement.

Senator LUDLAM: I have a lawyer looking over that for me right at this point.

Ms Jones: The minister has required a capacity to apply a bond over and above what the Western Australian

government will require, albeit that is yet to be—

Senator HEFFERNAN: And when is the bond retrievable?

Ms Jones: When is the bond retrievable? I am unable to answer that, Senator, because—

Senator HEFFERNAN: You might take that on notice.

Ms Jones: There are a few steps to go.

Dr Dripps: We will take that on notice.

Senator LUDLAM: I was going to head to the same place. This is my last bracket of questions.

CHAIR: I am going to move in a minute.

Senator LUDLAM: We will wind it up. Can you describe for us, firstly, your understanding of whether the

Western Australian government requires the company to post the bond upfront rather than over the period of the

mine's life? Secondly, just outline for us, if you would, what the Commonwealth minister has asked the company

to provide over and above their state obligations.

Ms Jones: The requirements are set out in conditions 24 to 27, Senator. So, again, we are talking about a

process that is yet to be commenced. The company is developing an environmental management plan, which

incorporates the mine closure plan. The Western Australian government is yet to set the level of the bond. The



minister, in condition 25, has asked for evidence of the cost of the bond set by the WA government. The minister

has the capacity to set an additional bond—

Senator LUDLAM: Over and above?

Ms Jones: If he believes that is required.

Senator LUDLAM: So the Commonwealth has not imposed any obligation over and above the Western

Australian obligation, but they have left themselves open to do so?

Ms Jones: Correct.

Senator LUDLAM: We are taking an awful lot on faith here, are we not? We do not even know how much

the clean-up is going to cost. There is no mine closure plan. We do not know how much of a bond they will be

required to post. There is a lot being taken on faith here, considering what they are proposing to do with the water

course. Maybe this will be my very last question. The Chair has been extremely patient. In the statement of

reasons, point 47 on groundwater quality notes that tailings seepage into groundwater from the TSF could be

significantly slowed by a clay liner. Was that condition ultimately adopted in the set of conditions the minister

posted? Sorry, it is a clay liner or a high density polyethylene barrier around the TSF.

Ms Jones: Yes. That was taken up in the condition set.

Senator LUDLAM: The barrier around was? Again, I am back at the floor of the dam, I am afraid, because

that is where the water seeps out.

Ms Jones: And we are taking that question on notice, Senator.

Senator LUDLAM: That is where we are left. Thanks, Chair, for your indulgence.

Senator HEFFERNAN: I presume the base there was shale or a porous gravel. It should have been clayed

before they even thought about it. I want to go to the issue of salt. The three main mining tenement approvals for

coal seam gas in Queensland involve approximately 40,000 wells. There is great variation because of the quality

of the seams that are being mined for coal seam gas. They estimate 700,000 tonnes, which is very unequally

divided between the tenements, with Santos having the best tenement. There is environmental approval, and the

mining licence has been issued. The environmental approval has been given. Could you explain to me what they

are going to do with 700,000 tonnes of salt a year, given that the approval has been given to mine?

Dr Dripps: As we indicated this morning, the management of salt is a key consideration in the development

of the water management plans. Mr Gaddes has had the opportunity to look further into this matter since we last

spoke on it. I will just pass over to him.

Mr Gaddes: We did undertake to give you more detail about the brine management and the salt crystal

management on notice. I do not have a lot more to provide than that at this time. I am aware now that APL and

QGC are undertaking trials to reinject. I am aware that Santos—I followed up since we had our discussion—has

had some success in that regard. Their crystal salt management will be a lot easier and they will not need to store

so much.

Senator HEFFERNAN: As I said this morning.

Mr Gaddes: What I did not get to reflect this morning is that there is a period of time for them to resolve

these issues. So while there is a great deal of salt to be produced, there is a period of time for them to solve these

issues.

Senator HEFFERNAN: So the environmental approval and the commencement of mining assumes that there

will be a solution, but we do not know what the solution is?

Mr Gaddes: Well, the worst case scenario—

Dr Dripps: The environmental approval is conditional on there being a solution developed and approved by

the minister.

Senator HEFFERNAN: But the mining commenced, and that is an afterthought, as I understand it. There is

no provision. The trap that has been set for this gas is they have forward sold some of it to get the banking right

and bill Gladstone et cetera. The market has sort of semicollapsed because of the abundance of availability in

some areas where they do not give a rats about the environment. So the make-good provisions, where they get

their bond back when the well is sealed, are meaningless.

Dr Dripps: The projects were approved in 2010 with an extensive and exhaustive set of conditions, including

water management plans.

Senator HEFFERNAN: I am right across it.



Dr Dripps: They include the requirement to adequately manage salt.

Senator HEFFERNAN: They say in their response to that that they will make good. But saying they are

going to make good does not mean anything. How do you make good? How do you make good?

Senator Conroy: That is a rhetorical question. Do you have an actual question?

Senator HEFFERNAN: Settle, Minister. How do you make good the contamination between the Wiluna and

the Springbok aquifer? How do you make good that aquifer?

Dr Dripps: Senator, as we have indicated in our evidence already today, the approvals that have been given

require that the companies undertake a water management plan to the satisfaction of the minister. That water

management plan does need to include descriptions of how they intend to manage the salt. If they are unable to

find ways to manage the salt, it is unlikely that their water management plans would be developed. As the

secretary indicated earlier, while these projects are progressing, the LNG facilities on Curtis Island have not yet

been completed, so they are not mining yet.

Senator HEFFERNAN: So if there is the requirement for make good, have you done a model of the money

that would be available through the bond system?

Ms Jones: The modelling that is being undertaken is modelling of the aquifers and the degree of connectivity

and the likelihood of impact. If there are unacceptable impacts that cannot be managed, the activity will not

progress.

Senator HEFFERNAN: Prior to the change of government, I had a deep discussion with Anna Bligh and her

people about this. There is no solution. They have not got a plan. They just say, 'We will make good.' That is what

has happened in the Bass Strait. No-one is going to make it good. There is better than a 50 per cent chance of up

to a 17-metre subsidence of the coast down there and no-one wants to pick up the responsibility. The exact same

thing is going to happen in Queensland. So you say this morning—thank you for your information—that maybe

one of the options is to store it underground.

Mr Gaddes: I said the default position is to store it underground. The proponents are working on options

which are better than that.

Senator HEFFERNAN: And, per annum, approximately a million cubic metres of medium course salt has to

be stored.

Mr Knudson: And that will be the responsibility of the proponents to come forward with how they can

actually do that.

Senator HEFFERNAN: If they have to do that, they will not be able to meet their financial commitments on

the market price of gas. They have made no allowance in their sums for anything to go wrong.

Dr Dripps: They are commercial considerations for the proponents.

Senator BIRMINGHAM: I want to cover off a couple of issues quickly in the time available, if possible.

Firstly, on the legislation that is before the parliament at present, which relates to some of the issues we have been

discussing—the amendments to the Environment Protection And Biodiversity Conservation Act that will establish

a new trigger in relation to water in the EPBC Act—what is the total cost to government of implementing those

amendments?

Dr Dripps: I am sorry. Senator Heffernan was speaking. I did not hear the question, Senator Birmingham.

Senator BIRMINGHAM: Senator Heffernan is noticed even when he is not behind the microphone. What is

the total cost to government of implementing the amendments to the EPBC Act relating to the water trigger?

Mr Barker: There is an allocation in the budget indicated in the budget papers relating to the implementation

of the water trigger. It is approximately $38 million over the forward estimates. The amount that relates

specifically to the environment assessment and compliance division's function is approximately $7½ million over

the coming financial year. That includes a component for the core assessment function, a component for the

compliance function and related components for support functions for that as well.

Senator BIRMINGHAM: Thanks, Mr Barker. That is $38½ million, as you indicate, that is identified over

the forward estimates. I might come back—

Mr Barker: Sorry, Senator. I have just been corrected. It is about $34½ million. So $34½ million relates

specifically to the environment assessment and compliance function. There is also an element that relates to the

Office of Water Science as well in that. I referred earlier to the fact that the $38 million figure is a global figure

set out in the budget papers. But the amount that is involved specifically relating to the assessment function, the

compliance function and those support functions that I referenced is about $34½ million.



Senator BIRMINGHAM: Thanks, Mr Barker. That $34 million is also related to, presumably, providing the

scientific advice, information and assessment analysis that the department needs to undertake the assessments and

so forth?

Mr Barker: Yes. That is correct.

Senator BIRMINGHAM: That is $38½ million of taxpayers money in quantum to do that administrative

cost. The budget papers also indicate that the cost of the reforms will be partially offset through enhanced cost

recovery arrangements from July 2014. These changes are estimated to increase revenue by $17.7 million over

three years. Can I be clear here: is that $17.7 million offsetting the $38.5 million, or is it offsetting the costs of the

reforms in totality and, in fact, is an additional degree of funding required to implement them on top of the $38.5

million?

Mr Barker: No. It would not be on top of that figure. The cost recovery figure is projected to commence in

the 2014-15 financial year. The cost recovery relates to the assessment specific function. There is a cost recovery

impact statement that details the analysis underlying the costings for that particular function. So that is an amount

of funding that would be delivered into consolidated revenue from cost recovery and then a budget allocation of

the department to perform that specific function.

Senator BIRMINGHAM: So $38.5 million is the cost there. Then industry in future will be levied for an

aspect of that cost. Insofar as it fits into the forward estimates, it is estimated to be about $17.7 million. Thank

you. You indicated before that the cost to the department in the first year is about $7.5 million. Is that because

there is $1 million off to the Office of Water Science?

Mr Barker: That is correct.

Senator BIRMINGHAM: So essentially there is $1 million in each of the forward years to the Office of

Water Science of the four, and the rest is purely departmental administrative costs in terms of undertaking these

functions. Note that beyond the first year they bounce around, a touch over, a touch under, $10 million. Is that

expected to basically be the ongoing required cost to administer this function of the EPBC Act?

Mr Barker: On the best available information to us, that is the projected estimates that have been arrived at.

Senator BIRMINGHAM: So in terms of $10 million a year for this amendment, what is required in terms of

costs there? Presumably the bulk of that cost is in additional staff?

Mr Barker: That is correct.

Senator BIRMINGHAM: So how many additional staff are required to undertake the assessments and

associated activities?

Mr Barker: Our estimate of the additional staff, again referring to the staff in the environment assessment and

compliance division, is in the first financial year approximately 43, increasing up to around 50 in the following

years. That is an element of staff that relate to the assessment function. There would be approximately 30 once

there is a fully ramped up staffing profile to implement the water trigger and then approximately 15 for the

ongoing compliance and post approval monitoring function and then approximately five staff on average over the

out years for support functions, such as policy and policy development and training and, again, those sort of

support functions to support both the compliance and the assessment component of that.

Senator BIRMINGHAM: So 43 in the first year, ramping up to 50 in the following years, initially essentially

all of them helping to get the assessment side of things working but gradually transitioning to have fewer on

assessments, down to about 30 and 15 in compliance type activities and five working for support across both?

Mr Barker: I should also add that as with all matters of national environmental significance, assessments are

done on a whole-of-project basis so that one particular project may obviously have impacts on a number of

different areas of national environmental significance. So the assessment would be a wrapped up assessment of a

number of those things.

Senator BIRMINGHAM: Indeed. Mr Barker, to that end, what is the total cost of administering the EPBC

Act?

Mr Barker: I am sorry, Senator, the total cost of implementing the water trigger or the EPBC in total?

Senator BIRMINGHAM: The EPBC Act.

Mr Barker: I am sorry, but I do not have that figure in front of me at the moment.

Dr Dripps: We will just have a quick look in our papers and see if we can answer that question. It will be

outside Mr Barker's responsibilities.



Mr Knudson: In terms of the division as a whole—so beyond incremental funding to the water trigger—our

budget in terms of 2012-13 was $32 million.

Senator BIRMINGHAM: There was $32 million to the division, and this is the division of the department

that basically exclusively deals with EPBC Act assessment and compliance matters?

Mr Knudson: That is correct.

Senator BIRMINGHAM: So that $32 million will grow to $42 million as a result of this increase, or are you

having to take a haircut like other aspects of the department this year?

Mr Knudson: It is a fair point that if we add in the $8 million or so for the water trigger, roughly we would be

looking at a budget notionally of around $40 million for the division.

Senator BIRMINGHAM: Around $40 million, looking into the future for the cost of running the EPBC Act.

How many staff are currently in the division?

Mr Knudson: As of 30 April, we had 210 employees in the division.

Senator BIRMINGHAM: With obviously, as we have ascertained, you looking to potentially a further 50

over the forward years from adding on this additional area of regulation. Related to that, the budget papers also

show a reduction in funding. That reduction in funding goes to some of the recommendations from the Hawke

review. It indicates that $9.7 million will be reduced in funding over four years because of the delayed delivery of

the government's response to the Hawke review. Were these types of measures recommended in the Hawke

review to try to somehow streamline the operation of the EPBC Act? Would they be included in what was

envisaged to occur within that $9.7 million envelope?

Dr Dripps: There were a number of measures contained in the government response to the Hawke review that

require legislative change in order to deliver them. So they are the measures that have been delayed currently.

Senator BIRMINGHAM: Part of those measures include aspects that were intended to make the operation of

the EPBC Act more efficient or more streamlined, were they not, Dr Dripps?

Dr Dripps: Some of them were. Some of them also included the implementation of cost recovery, the creation

of a new matter of national environmental significance and a number of other things.

Senator BIRMINGHAM: So when have those measures been delayed until?

Dr Dripps: Those measures have been delayed until the next period of parliament.

Senator BIRMINGHAM: Until the next period of parliament?

Dr Dripps: Yes.

Senator BIRMINGHAM: So does that mean a new decision by whoever the government is after the

election? Is that what you are saying, Dr Dripps?

Dr Dripps: Yes.

Senator BIRMINGHAM: So there is no current commitment within government that those changes to the

EPBC Act will actually be implemented. It will be a matter for future judgement?

Dr Dripps: The legislation has not yet been introduced into the parliament, so that would necessarily be the

case. Ms Colreavy is able to provide further information to Senator Waters on the Gladstone issue, if that is the

desire of the committee. But I do not want to—

Senator BIRMINGHAM: Ask your question, Senator Macdonald.

Senator IAN MACDONALD: I found my letter. It is a series of emails, which I have given to the secretary to

table and to give to you. It has the applicant saying it has given all the details. It says the conclusion is explaining

it all—that they do not have to apply. They say to the officer, 'Do you agree?' The officer says, 'I'm unable to

provide comment. It's up to you to determine whether the action should be referred to the department. But please

note that if you get it wrong, compliance action may be taken.' It is all in that letter, but I have tabled it there.

CHAIR: There are two pieces of correspondence tabled here. One is the correspondence that Senator

Macdonald has just alluded to. The other one is a link that provides guidance on the management of flying foxes,

as requested by Senator Macdonald and other senators, from the department. So both those documents are tabled.

Senator IAN MACDONALD: That is good. I think my constituents actually had that and they referred to it.

Senator BIRMINGHAM: If we are having a brief interlude, we may as well, as long as it is a brief response,

whoever was about to give it.

Dr Dripps: Ms Colreavy has some further responses on the Gladstone dredging matter.



Senator WATERS: Thanks, Senator Birmingham. Thanks, Ms Colreavy.

Dr Grimes: Chair, in addition, Senator Colbeck had indicated previously that he wanted a reaction to a certain

matter dealing with the boundaries of the World Heritage area in Tasmania. We are able to provide further

information at an appropriate stage if the committee would like us to do that this afternoon. We are very much in

the hands of the committee.

Senator BIRMINGHAM: Not right now would be my response. After that interlude, we were just having a

look at the government's response to the Hawke review of $9.7 million—

Senator WATERS: I think we have not had the interlude yet.

Ms Colreavy: Senator, you asked about the modelling. The modelling for the western basin dredging project

was similar to the modelling that was undertaken by GBRMPA in their recent research project. So, in essence,

that was your question.

Senator WATERS: Yes. That is it, thank you.

Ms Colreavy: I have asked the staff to investigate the documents for it. Unfortunately, it is really complex.

There was certainly extensive modelling undertaken. We have got a lot of documents on the modelling. We

referred that for expert advice. We are unable to pull it together quickly enough during this interlude to actually

give you a definitive answer on what was investigated and what was not. I have a copy of the statement of reasons

that was provided. I have gone through it. I am happy to give you a copy, but I do not think—

Senator WATERS: I think I have already read that one. It does not really shed any light on that particular

question.

Ms Colreavy: No. I was just going to say I do not think it really helps you go to the technical detail of the

question. But we could take that on notice and actually provide you with an overview, if you like, of what the

modelling was and what it covered in that project.

Senator WATERS: I would appreciate that. As promptly as you can would be greatly helpful.

Ms Colreavy: We will do our best.

Senator WATERS: Thanks very much.

Senator BIRMINGHAM: So, to be clear, at present, the $9.7 million that has been stripped out is not delayed

funding; that is removed funding?

Dr Dripps: That is funding that would have been expected to have been received as a result of cost recovery

being implemented.

Senator BIRMINGHAM: Are you sure about that? I think you will find that the deferral of cost recovery

revenue relates to $17.8 million.

Dr Dripps: I am happy to check.

Senator BIRMINGHAM: There are two measures there. There is the reduction in funding for the delayed

introduction of amendments to the act, which is $9.7 million. I was going to come to the cost recovery measures,

which have been deferred to 1 July 2014, which reduce revenue by $17.8 million.

Dr Grimes: I am going off memory here, but I think they are linked. It is that the offset of the full $17 million

was considered more broadly in the budget process and is in incorporated in other budget measures that are not

linked to cost recovery as such. If you like, the department had to make up part of the gap in the funding that was

provided to the department.


Dr Grimes: I think the officers will be able to confirm that that is the case.

Dr Dripps: I just remembered.

Senator BIRMINGHAM: So $9.7 million was to make amendments to the act that may or may not have

included aspects required for the cost recovery but also included changes related to the efficient operation of the

act as well as changes related to listing practices and the addition of a new trigger and all of the things that the

government theoretically accepted as part of the Hawke review recommendations. That $9.7 million has been

withdrawn as funding to the department and there is no timeline for that funding to come back on for those

measures to be undertaken. That much is correct?

Dr Grimes: Essentially, with the deferral of the $17 million, we were asked as a department to provide some

savings to help offset that impact on the budget bottom line. Obviously the deferral has an impact on the overall

budget bottom line. There is less revenue coming in. I have not got the figures in front of me here, but I am going



off the figures you are using of $9.7 million. Anyhow, there was certainly a requirement of the department to

reduce its expenditure in order to fill some of the gap from the cost recovery.

Senator BIRMINGHAM: Which, according to the budget paper, is following a decision to delay the

introduction of amendments to the EPBC Act until 1 July 2014. It says:

The legislative amendments will support the delivery of the government's response to an independent review of the act.

Not will, but would have, I think, is the way it should read. It goes on, though:

The cost recovery measures are not being delayed indefinitely. They are only being deferred by a couple of years.

Dr Grimes: To 1 July 2014.

Senator BIRMINGHAM: That is right. So they are still happening and that revenue will still eventually

come in. What level of revenue will come in under those cost recovery measures in the budget years from 1 July

2014?

Dr Grimes: I do not have those figures with me, but we might see whether any officers have it. Otherwise we

would have to take that on notice. We are looking towards our budget staff in the rear to see if they have got those

figures on cost recovery revenue.

Senator BIRMINGHAM: If they can look into that while we continue.

Dr Grimes: They can look at that while we continue. If we can help you now, we will.

Senator BIRMINGHAM: Thank you. My concern here is the inconsistency, I guess, in the fact that measures

that would include measures to streamline or improve the operation of the act have been deferred indefinitely but

those measures that bring cost recovery actions into the act have been deferred only by a couple of years. Can the

department give any confidence that the types of changes to the act that had been envisaged and accepted,

allegedly, by the government in its response to the Hawke review will be legislated any time in the forward

estimates?

Dr Dripps: We are well advanced in the drafting of those legislative changes, and the introduction of those

changes will be subject to the views and priorities of the government.

Senator BIRMINGHAM: The department will need funding if it is to be able to enact those changes, and

that funding has been withdrawn.

Dr Dripps: We have some funding and we have the ability, to a limited extent, to reprioritise within the

existing activities of the department. But, for the purposes of the budget, all of the measures that were included in

the Hawke review were also considered and accounted for in the current budget.

Senator BIRMINGHAM: Were also considered and accounted for in the current budget. Does that mean

they could be delivered within the current budget, or does that mean the funding has been withdrawn in the

current budget?

Dr Dripps: As the secretary indicated, there is a delay in the potential receipt of cost recovery funding. That

cost recovery funding would have funded assessment activities. The funding that had previously been used by the

department to deliver those assessment activities would have been made available to deliver reform activities.

That particular sequence of events is not happening in the immediate period.

Senator BIRMINGHAM: Does the department consider that $10 million per annum to administer one new

aspect of the EPBC Act is excessive? Is there any way that could be done cheaper, or is that just the cost of such

regulation?

CHAIR: A bit of an opinion is being asked for.

Senator BIRMINGHAM: Well, in terms of administering the act and administering the amendment, is this as

low a cost mechanism as is possible?

Dr Grimes: Clearly this will be a new set of activities for us. The implementation and administration of a

water trigger will be a new function for us. We make our best estimates. Those estimates are subject to a pretty

robust budget process, including scrutiny with the Department of Finance and Deregulation through the budget

process. It is our best estimate of the costs of administration. It is not intended to be a biased estimate one way or

another but rather our best estimate on the information we have. But this is a new activity for us. We have not

done this before. We will implement with the budget that we have got.

Senator BIRMINGHAM: Until a few months ago, it was not envisaged that you would do this activity

either, was it?

Dr Grimes: This was a recent decision by the government.



Senator BIRMINGHAM: I want to quickly move to one other issue. Hopefully, you can get those cost

recovery figures before six o'clock. The department has confirmed that it is assessing an application from the

Border Protection Command relating to the Environment Protection (Sea Dumping) Act 1981 to get a permit in

relation to that act. Where is that application assessment up to?

Mr Knudson: The assessment is currently underway, Senator. In terms of what it proposes to do, it is looking

at different sites for the safe disposal of vessels. There is a range of potential sites; I believe it is 11, including two

around Christmas Island. As I mentioned at the beginning, it is currently under assessment, and that assessment is

not yet complete.

Senator BIRMINGHAM: Currently under assessment. So it was lodged, as I understand it, on 11 February

2013. Is there a timeline for assessment from there?

Ms Callister: In terms of an update of where we are up to with the process, we actually met last week with

AFMA and with the Border Protection Command. I have written to them about a number of questions that we had

in relation to their application seeking further information. In terms of the statutory timeline through the sea

dumping process, it is different to what we have with the EPBC Act, where you stop the clock and it holds it at

the current timeframe. Under the sea dumping act, you revert back to day zero. So effectively we still have quite a

lot of time under the clock to assess that process. They have also approached us in relation to a possible waiver of

the fee for that. We are looking into whether or not that would be possible or appropriate. So I would say that it is

actually progressing well and that we had some very, very constructive discussions about it last week.

Senator BIRMINGHAM: What would the fee be? What extra information have you requested?

Ms Callister: I do not have all the full details of the information we sought. It was several pages of

information about a range of things, such as how they were intending to dispose of the vessels, what they would

be taking off them and how they would be burning them.

Senator BIRMINGHAM: Could those things not have been included in the initial application?

Ms Callister: Not in the full detail that we felt that we needed to be able to fully assess it. I am just trying to

see if I can find information on the sea dumping fees, which I thought I had here. I cannot actually locate it. It

would just be the standard fees that are applicable under the act.

CHAIR: Senator Birmingham, there are a couple of corrections and statements that need to be made before

we wrap up, so if you could make this your last question, we will go back and get some clarification.

Senator BIRMINGHAM: Border Protection Command indicated that their last permit expired in 2005. Is

that correct? How is it that they have been operating for eight years without a permit? Does it mean that they have

been in breach of the sea dumping act?

Ms Callister: I am not aware when their last permit expired, so I would need to take that information on

notice.

Senator BIRMINGHAM: Well, that is what they told me in Senate estimates earlier today, so let us take

their word for it that it expired in 2005. If, according to them, they have been operating for eight years without a

valid permit and in that time they have sunk hundreds of vessels, more than 400 vessels just in the last two years

alone, according to the evidence they gave me today, have they been operating in breach of the act?

Ms Callister: As was discussed with you the last time at Senate estimates, and I think there was further

information provided to you on notice, there are actually provisions under the act that allow for the disposal of

vessels when they are under circumstances where they might cause harm or damage or risk to safety either to the

vessels or to the people involved. I think in a number of these instances these vessels are in a very poor state of

repair. So it would be appropriate for them to be disposed of at sea.

Senator BIRMINGHAM: Well, if they did not need a permit beforehand, why do they need a permit now?

Ms Callister: They have sought to get one for us to provide them with a greater range of operational options

about how they can dispose of those vessels. We are progressing with assessing their application on that basis.

Dr Grimes: In the first instance, Chair, Senator Birmingham was seeking information on cost recovery

revenue estimates. I have the current updated estimates. The figures for 2012-13 are zero. For 2013-14, it is

$160,113. The reason why there is a bit of cost recovery in those years is that there are increases in wildlife

permit fees, which are not related to legislative change. They will be through regulation or like instruments.

Revenue in 2014-15 is $7,853,951. In 2015-16, it is $12,002,943. In 2016-17, it is $14,184,504. They are our

updated revenue estimates.

CHAIR: Is there anything more?



Dr Grimes: I think Ms Rankin has a response to those issues that were raised by Senator Colbeck.

Ms Rankin: As requested by Senator Colbeck, we have reviewed our evidence in light of the 30 April 2013

letter from Minister Burke to Ms Jane Calvert. We confirm our previous advice that the Tasmanian wilderness

World Heritage boundary is settled for the purposes of the nomination. The department's answer is consistent with

the text in the letter, which states:

My officials continue to work closely with the Tasmanian Government and Forestry Tasmania to refine the management

boundary for the nominated extensions to the Tasmanian wilderness World Heritage Area. Agreed objectives of this process

are to maintain the size and values of the nominated World Heritage Area …

To provide further detail, the Australian government is currently facilitating the detailed mapping process for the

purpose of refining the boundary at the scale required for a gazettal boundary, which does not happen until after

the World Heritage Committee has made its decision. We are continuing to work closely with technical advisers,

the Tasmanian government and Forestry Tasmania to ensure that a workable management boundary is achieved.

The final adjustments to the boundary for the extension will not adversely affect the ability of Forestry Tasmania

to supply 137,000 cubic metres of high-quality sawlogs annually and will preserve the World Heritage values for

which the Australian government submitted its request to the World Heritage Committee for an extension of the

Tasmanian wilderness World Heritage area.

CHAIR: Thank you. That concludes the examination of the Sustainability, Environment, Water Population

and Communities Portfolio. I thank the minister and officers for their attendance. We will now suspend for dinner .




BROADBAND, COMMUNICATIONS AND THE DIGITAL ECONOMY PORTFOLIO

In Attendance

Management and Accountability

Mr Drew Clarke, Secretary

Mr Abul Rizvi, Deputy Secretary

Mr Ian Robinson, Deputy Secretary

Ms Nerida O’Loughlin, Deputy Secretary

Outcome 1 - Develop a vibrant, sustainable and internationally competitive broadband, broadcasting and

communications sector, through policy development, advice and program delivery, which promotes the

digital economy for all Australians.

Program 1.1 –Broadband and Communications Infrastructure

Mr Ian Robinson, Deputy Secretary

Mr Mark Heazlett, Acting First Assistant Secretary, Telecommunications Division

Mr Philip Mason, Assistant Secretary, Telecommunications Regulation Branch

Mr Daniel McCarthy, Assistant Secretary, Shareholder and Technical Advice Branch

Program 1.2 – Telecommunications, Online and Postal Services

Mr Abul Rizvi, Deputy Secretary

Mr Richard Windeyer, First Assistant Secretary, Digital Strategy Division

Mr Keith Besgrove, First Assistant Secretary, Digital Services Division

Mr Andrew Maurer, Assistant Secretary, Spectrum

Mr Brian Kelleher, Assistant Secretary, Convergence Implementation

Mr Chris Drew, Acting Assistant Secretary, National Security and International

Program 1.3 - Broadcasting and Digital Television

Ms Nerida O’Loughlin, Deputy Secretary

Dr Simon Pelling, First Assistant Secretary, Broadcasting Division

Ms Marianne Cullen, Project Director, Switchover Division

Mr Jason Dickie, Assistant Secretary, Public Interest Broadcasting Branch

Ms Ann Campton, Assistant Secretary, Broadcasting Policy Branch

Ms Sylvia Spaseski, Assistant Secretary, Broadcasting Restack Program

Corporate and Business

Mr Simon Ash, General Manager, Corporate and Business

Ms Anne Fleischer, Chief Financial Officer, Corporate and Business

Australian Broadcasting Corporation

Mr Mark Scott, Managing Director

Mr David Pendleton, Chief Operating Operator

Mr Michael Millett, Director Corporate Affairs

Australian Postal Corporation

Mr Ahmed Fahour, Managing Director and CEO

Mr Paul Burke, Corporate Secretary

Ms Christine Corbett, Executive General Manager, Retail Services

Mr Chris Blake, Executive General Manager, Corporate Affairs and People

Ms Catherine Walsh, General Manager, Human Resources

Ms Jane McMillan, General Manager, External Affairs

Special Broadcasting Service Corporation

Mr Michael Ebeid, Managing Director

Mr Peter Khalil, Director Strategy and Communications



Mr Jon Torpy, Chief Financial Officer

Australian Communications and Media Authority

Mr Chris Chapman, Chair

Mr Chris Cheah, Full-Time Authority Member

Mr Richard Bean, Deputy Chair

Ms Andree Wright, Acting General Manager, Digital Economy Division

Mr Giles Tanner, General Manager, Digital Transition Division

Ms Maureen Cahill, General Manager, Communications Infrastructure Division

Mr Andrew Kerans, Executive Manager, Spectrum Infrastructure Branch

Mr Mark Loney, Executive Manager, Operations Branch

Ms Jennifer McNeill, Acting General Manager, Content, Consumer and Citizen Division

Mr Brendan Byrne, General Manager, Legal Services Division

Mr Carsten Larsen, Acting General Manager, Corporate Services and Coordination Division

NBN Co Limited

Mr Mike Quigley, Chief Executive Officer

Mr Ralph Steffens, Chief Operating Officer

Mr Kieren Cooney, Chief Communications Officer

Mr Robin Payne, Chief Financial Officer

Mr Gary McLaren, Chief Technology Officer

TUSMA

Mr Robert Lomdahl, Chief Executive Officer

CHAIR: The committee will now commence its examination of the Broadband, Communications and the

Digital Economy portfolio. The Senate has referred the committee to the particulars of proposed expenditure for

2013-14 for Climate Change, the Broadband, Communications and the Digital Economy portfolio; and the

Sustainability, Environment, Water, Population and Communities portfolio and other related documents. The

Committee must report to the Senate on 25 June 2013. The committee has set Friday 26 July 2013 as the date by

which answers to questions on notice are to be returned. Under standing order 26 the committee must take all

evidence in public. This includes answers to questions on notice. Officers and senators are familiar with the rules

of the Senate governing estimates hearings. If you need assistance, the secretariat has copies of the rules. I

particularly draw the attention of witnesses to an order of the Senate of 13 May 2009 specifying the process by

which a claim of public interest immunity should be raised and which has been incorporated in Hansard.

The extract read as follows—

Public interest immunity claims

That the Senate—

(a) notes that ministers and officers have continued to refuse to provide information to Senate committees without properly

raising claims of public interest immunity as required by past resolutions of the Senate;

(b) reaffirms the principles of past resolutions of the Senate by this order, to provide ministers and officers with guidance as

to the proper process for raising public interest immunity claims and to consolidate those past resolutions of the Senate;

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

(1) If:

(a) a Senate committee, or a senator in the course of proceedings of a committee, requests information or a document

from a Commonwealth department or agency; and

(b) an officer of the department or agency to whom the request is directed believes that it may not be in the public

interest to disclose the information or document to the committee, the officer shall state to the committee the ground

on which the officer believes that it may not be in the public interest to disclose the information or document to the

committee, and specify the harm to the public interest that could result from the disclosure of the information or

document.

(2) If, after receiving the officer’s statement under paragraph (1), the committee or the senator requests the officer to refer

the question of the disclosure of the information or document to a responsible minister, the officer shall refer that

question to the minister.



(3) If a minister, on a reference by an officer under paragraph (2), concludes that it would not be in the public interest to

disclose the information or document to the committee, the minister shall provide to the committee a statement of the

ground for that conclusion, specifying the harm to the public interest that could result from the disclosure of the

information or document.

(4) A minister, in a statement under paragraph (3), shall indicate whether the harm to the public interest that could result

from the disclosure of the information or document to the committee could result only from the publication of the

information or document by the committee, or could result, equally or in part, from the disclosure of the information or

document to the committee as in camera evidence.

(5) If, after considering a statement by a minister provided under paragraph (3), the committee concludes that the statement

does not sufficiently justify the withholding of the information or document from the committee, the committee shall

report the matter to the Senate.

(6) A decision by a committee not to report a matter to the Senate under paragraph (5) does not prevent a senator from

raising the matter in the Senate in accordance with other procedures of the Senate.

(7) A statement that information or a document is not published, or is confidential, or consists of advice to, or internal

deliberations of, government, in the absence of specification of the harm to the public interest that could result from the

disclosure of the information or document, is not a statement that meets the requirements of paragraph (I) or (4).

(8) If a minister concludes that a statement under paragraph (3) should more appropriately be made by the head of an

agency, by reason of the independence of that agency from ministerial direction or control, the minister shall inform the

committee of that conclusion and the reason for that conclusion, and shall refer the matter to the head of the agency, who

shall then be required to provide a statement in accordance with paragraph (3).

(Extract, Senate Standing Orders, pp 124-125)

Australian Broadcasting Corporation

[19:02]

I welcome the Honourable Senator Stephen Conroy, Minister for Broadband, Communications and the Digital

Economy and portfolio officers. I now call officers from the Australian Broadcasting Corporation. Mr Scott,

would you like to make an opening statement?

Mr Scott: No, thank you, Chair.

Senator LUDLAM: Mr Scott, you would be aware that the Greens recently supported the parliament in

passing an amendment to the ABC's charter, partly to defend your online activities. I think this is something that

you have advocated for in public in various fora. Can you tell us what material difference, if any, that will make

to the services that ABC provides online?

Mr Scott: Senator, as you would be aware, the ABC charter was, as I understand it, written in 1982 and

passed in 1983 in a pre-digital world. We always felt that the activities we took on in the online space were valid

under the previous charter but, every now and again, it would be put to us that it was not. We now are in a place

with the digital media services recognised the way they are in the charter that clearly all the activity that we have

done in recent years is absolutely core and essential to what it means to be a public broadcaster. So that means our

host of online services, the apps that we have rolled out, the service like iview—which has proven to be

immensely popular—are all clearly central to what it now means to be a public broadcaster in the digital era. This

charter resolution makes that absolutely clear and of course greenlights our ability to prioritise and develop this

online service in this way. So I think it is a good endorsement for the work that we have done and, again, it helps

us to set our strategic direction around continued investment in online and mobile services. All the data that we

see demonstrates enormous growth in the desire of the audience to consume content at a time they want, on a

device they want and in the format they want. Particularly when it comes to the consumption of our content on

mobile phones and tablets, we are seeing extraordinary growth.

Senator LUDLAM: Thanks for that. I might come back to that towards the end if there is time. I want to ask

you about another thing that has been raised recently of which you may be aware and about which you have made

your views known in the past—a campaign that may or may not eventually emerge from the Victorian Right of

the Liberal Party to privatise the ABC and the SBS. Could you give us your headline views on that idea?

Mr Scott: It was an issue that had a very brief burst of publicity and was immediately ruled out by the Leader

of the Opposition, the shadow communications minister and a number of others on the frontbench. I must say

that, in my time as managing director of the ABC, I have identified absolutely no public sentiment for privatising

the ABC. As you know, under our charter we operate in areas of broad appeal and specialist interest. We have

strong accountability to the public and to the parliament through the Auditor-General and various other ideas. I

must say though that the kinds of things we do as a public broadcaster are clearly things that the private sector

would not be in a position to provide. It would be highly unlikely that a privatised ABC would be able to make



the same kind of investment in high quality news and current affairs, high-end drama, children's content and

providing services to regional and rural areas. A privatised ABC would greatly affect the diversity of content and

the investment in content that is available on Australian screens.

We know, because we survey it, that nearly 90 per cent of the Australian public believe that the ABC provides

a valuable or very valuable service. Around 70 per cent of Australia's tune in, listen, watch or log onto our

services every week. It is viewed globally as an outstandingly successful model of public broadcasting and there

is no reason to change any of the fundamentals that have underpinned this now for 80 years.

Senator LUDLAM: I might just correct you there. I believe the opposition communications spokesperson

said he thought it was a dumb idea, to paraphrase him. But the Leader of the Opposition said he thought it was a

debate worth entertaining.

Mr Scott: I do not have his quote here and, of course, he can speak for to himself. Bu my understanding was

that he immediately dismissed it as an idea.

Senator LUDLAM: Obviously the ABC does not run at a profit. What would be the consequences of

privatisation? Are there any similar broadcasters anywhere in the world where the private sector has been given

the opportunity—

Mr Scott: Not that I can recall. There are other broadcasters around the world that take advertising—and, of

course, there is the SBS model here.

Senator LUDLAM: We can wind that back.

Mr Scott: But if you look at the broadcasters that are like the ABC, the big national public broadcasters that

take advertising, my study of them has suggested that they fundamentally change the nature of the broadcaster.

You are no longer providing content for citizens and for audiences, you are providing content to attract

advertisers. It fundamentally change the nature of the content that you create, or purchase, and deliver, and

fundamentally it dilutes the impact and quality of the broadcaster. Certainly in my time in the role there has never

been any sentiment or desire to put advertising on the ABC as well.

Senator LUDLAM: Good, I am glad to hear you reaffirm that. I have one last question on this and then I will

leave the topic. If the ABC were to be privatised in whole or in part, would you have to shift your content

emphasis towards broader mass-market appeal and—

Mr Scott: Yes. I think what you can see if you look across the media landscape now is that, when you are

driving a media organisation for profit, you make decisions that are in the interests of the shareholder return.

When a program that might be of good quality, that might be distinctive, is not driving the profits, the

consequence is that the programs disappear. There are umpteen recent examples of this. You can look at the

demise of the Bulletin. You can look at the demise of the Sunday program on Channel 9. You can look at the

cutting of investment in journalism at newspapers around the country. These are all examples of the case that,

when the profit motive is driving the decision making of commercial media entities—as it should; it is their

responsibility to deliver back to shareholders—they will make their decisions in terms of the shareholders. What

we do at the ABC is make decisions in terms of citizens, our taxpayers, who are the audience that funds us. So

you get a totally different range of decision making when you have got a commercial entity or a privatised media

entity than you do when you have got a public broadcaster that is delivering this content to be of value to the

public and to citizens.

Senator LUDLAM: Thank you. To be continued. As I understand it, there are a number of coalition MPs who

have signed up to a Facebook group proposing to privatise the ABC. So I am not quite as sanguine as you appear

to be that the idea is necessarily dead and buried. But we will see.

I want to ask you about the production facility in Perth. Could you provide us, on notice if you wish, a

breakdown on how the ABC Perth production facilities are being used, with particular regard to co-production

ventures, the time that it is rented to external entities, the time it is standing empty—I think there are two big

stages there—and the time it is being used purely for in-house ABC.

Mr Scott: Yes, we will get that on notice for you.

Senator LUDLAM: This is probably before your time, but did the ABC know when it was constructing those

facilities that it really had no intention of continuing their use?

Mr Scott: It was opened in 2003 and that was before my time. I understand that a deal was struck, if we go

into the history of it—and I think this is documented. There was a lot of debate at the time as to whether a studio

should be built, and the decision went back and forth a bit it. Part of the thing that pushed in favour of the

decision was a deal with ScreenWest to make a number of productions in Western Australia. So it was a funding



deal that was done together with the state government of Western Australia. That funding has not continued at the

same level, I think it is fair to say, but those were the factors that gave rise to the decision to build a studio. I will

give you another example. When we built the new building in Brisbane we did not build an equivalent television

studio there, but we are building a television studio as we do our new building in Melbourne.

Senator LUDLAM: We have discussed RN in the past and the loss of the drama unit and the value of some of

Radio National's specialist radio programming, which is also of a very high standard. Could you provide us with

an update as to what has happened with the creative audio unit?

Mr Scott: I saw a reference to it the other day. Let me take that on notice and come back to you on that.

Senator LUDLAM: So you are not sure what has happened to that?

Mr Scott: I believe it is developing as planned and as announced—I think that was the reference I saw to it—

but I will have to come back to you with more detail.

Senator LUDLAM: How much has RN spent on outsourcing programs in the last financial year? I understand

it is in the order of a quarter of a million dollars.

Mr Scott: 'Outsourcing programs'—what do you mean by that exactly?

Senator LUDLAM: As opposed to in-house production, how much does Radio National spend on contracting

or subcontracting?

Mr Scott: Again, I would have to check that. If you look at public broadcasting around the world, on radio it

is often a mixed model. The vast majority of our content is developed in house, but that is not to say that there are

not talented Australian producers who do not actually want to be staff members for us that can develop a season

of radio content, and we are happy with that in the mix.

Senator LUDLAM: I get that.

Mr Scott: I can come back to you with the detail on it.

Senator LUDLAM: I understand. I am not necessarily speaking about co-production. I mean buying in things

like This American Life.

Mr Scott: Our model on Radio National and NewsRadio does allow us to buy in some content. I would be a

great defender of the policy that allows This American Life to go to air. It is regarded around the world as one of

the finest examples in the genre of factual storytelling. It is very popular online as well; we have a good audience

response to it. I think it is a pretty reasonable thing to have as part of the mix. There has always been a level of

repeats on Radio National; that has been part of the programming. I am happy for us to put some programs like

This American Life into the mix. We will bring details of that to you.

Senator LUDLAM: I am not offering a critique of that particular program, by the way; I was just using it as

an example. Could you provide us with the proportion that RN spent on that kind of content?

Mr Scott: Yes.

Senator ABETZ: Does the ABC stand by the Four Corners story 'Hacked', which was broadcast on Monday

night, and are there now any qualifications or additions to be made to the program?

Mr Scott: I am aware of the debate around it and I asked questions late this afternoon. My understanding is

that the ABC stand by the thrust of that story. If there are specific issues that people want to raise about that story

for us to subsequently investigate, we will of course do that under our complaints process. But I am aware of none

of those specific matters at this point.

Senator ABETZ: Are you aware of a recent university study in regard to journalists' political leanings, by

Folker Hanusch, to be printed in the next issue of the Australian Journalism Review?

Mr Scott: I am aware of the research, I am aware of the report in The Australian and I am aware of the

academic's comments on that report.

Senator ABETZ: Despite the admittedly limited sample size do you have any sense—

Senator Conroy: That is quite a vicious bite!

Senator ABETZ: Do you mind, Minister! Mr Scott, do you have any sense that the recent survey which found

that 41 per cent of ABC journalists said they would vote for the Greens, 32 per cent for Labor and 15 per cent for

the coalition generally reflects ABC journalists' political leanings?

Senator Conroy: He could not possibly know.

Mr Scott: No. There are about 1,000 journalists who work across the ABC in news, radio, rural divisions and

others. The ABC pool—



Senator ABETZ: You have given me an answer and I accept that it was a very limited sample size.

Senator Conroy: Frankly, I was shocked by that survey!

Mr Scott: Senator Abetz, you asked me about the survey and I think I need to put it in context. You have

studied it. I think it is there to say that, if we have 1,000 journalists and 34 were contacted—which means that 14

identified themselves as Green—

Senator ABETZ: I think more were actually contacted but 34 responded.

Mr Scott: So 14 out of 1,000 identified themselves as Green. Like the academic, I would not be drawing

meaningful conclusions from such a small sample.

Senator Conroy: I was shocked!

Senator ABETZ: Do you have any concern about bias at the ABC?

Mr Scott: I would draw your attention to a much bigger survey commissioned by The Australian in February

this year.

Senator ABETZ: I am asking about you. Do you have any concerns?

Senator Conroy: Malcolm Turnbull gets on far too often, doesn't he, Senator Abetz? You would agree with

that!

Mr Scott: There was a poll that said the vast majority of people do not believe there is an issue of bias at the

ABC. I appreciate that there might be some people who believe there are issues—

Senator ABETZ: Including your former chairman, Mr Newman, who might be in a position to know.

Mr Scott: I also understand that, from time to time, people will have issues with certain programs, coverage

of certain issues or certain interviews. But the Australian public, who fund us and watch us, indicate in survey

after survey that they overwhelmingly believe that we do a good job around fairness, balance and impartiality.

There is also research that demonstrates that, overwhelmingly, the ABC is regarded as the most trusted media

institution, and that is regardless of the political affiliation of those who have been polled. The reality is that some

of the criticism that has been pushed at us is by people who are pushing certain political, commercial or other

agendas. But I have never said in all my appearances here that we are flawless in our performance and that from

time to time we do not live up to the standards that we set for ourselves. But do I believe it is an overwhelming

problem? No, I do not.

Senator ABETZ: You are aware of the answer to question No. 12 from the February estimates about ABC

employees and contractors breaching your own social media policy on social media platforms. Yes, there were

comments against Labor politicians and coalition politicians but surprise surprise there were none against Greens

politicians. Once again, I suppose, that is just another sample to be discounted!

Mr Scott: The only thing I would say is that the ABC is the absolute leader in the use of social media in the

Australian media landscape. We have hundreds of social media sites.

Senator ABETZ: Then why does it never offend against the Greens?

Mr Scott: Senator, I am really happy to engage with you, as I always am, but if you ask me a question I would

like the opportunity to answer it.

Senator ABETZ: That is a fair comment.

Mr Scott: We have literally hundreds of Twitter accounts and Facebook accounts that are providing a constant

feed of updates through the day every day. Probably hundreds of thousands of messages are going out on those

accounts. To go to the answer to your question about breaches that have been identified, we found a total of six.

We are not flawless and I have never said that we are. But if you are going to draw sweeping conclusions from

such a tiny sample, I think that is overstating it. I would not be drawing those conclusions from this data.

Senator ABETZ: Do you believe that any serving member of parliament would want a 'race war' with

Australia's Indigenous community?

Mr Scott: I do not understand the context of that question.

Senator ABETZ: But can we be agreed that that is quite a ridiculous proposition?

Mr Scott: I would like to know the context of the statement; it is clearly an issue that you are referring to.

Senator ABETZ: Why do we need to contextualise it. Do you believe, in your knowledge of public affairs,

that there might be any parliamentarian currently serving who would want a race war with Australia's Indigenous

community?

Mr Scott: I would not have thought so.

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CHAIR: Senator Abetz, these are estimates for the ABC. I think you are drawing a long bow in not

contextualising it. I think Mr Scott is entitled to understand the context as to the ABC in what you are asking.

Senator ABETZ: All rights, let's contextualise it. Why then on 5 May this year would your recently appointed

fact-checker, Mr Russell Skelton, have retweeted 'Abetz and Christian fundamentalists want race war. Begins in

September'?

Mr Scott: Who originally tweeted it?

Senator ABETZ: Marcia Langton. Russell Skelton retweeted it.

Mr Scott: Firstly, Mr Skelton was not an employee of ours at the time. Also, if you go to my account, you will

see that I place on my account—and many of our staff place on their accounts also—no suggestion at all that a

retweet is an endorsement of a view. Often a debate is raging and is circulating. A retweet is not necessarily an

endorsement at all. Sometimes it is can be almost the opposite—'can you believe what is being said here?'—and it

is kicking it into the debate. I am certainly not going to sit here and judge that behaviour as suggesting that any

retweet done by any ABC staff or any journalist is necessarily or tacitly an endorsement. Among people who are

familiar with and understand how social media operates and look at the guidelines that is pretty commonly

understood.

Senator ABETZ: Why would you retweet something if you fundamentally found it offensive or disagree with

it?

Senator LUDLAM: For precisely that reason.

Senator ABETZ: It is amazing how the Greens assist the ABC in answering!

Mr Scott: I would like to explain it but not in this context. Let me explain to you how social media works.

Senator ABETZ: I know how it works. I am only asking why your employee would retweet.

Mr Scott: Let me tell you why I would put that up on my account. Sometimes you see extraordinary things

online, you see bewildering statements made by people, and you think it is something that those who follow you

should be aware of and should be engaged in and you should let the debate rage. I would think that those people

who today retweeted Eddie McGuire's comments were not endorsing Eddie McGuire's comments, they were

putting those comments into wider circulation for debate. That is how it works.

Senator ABETZ: Yes, but Eddie McGuire actually said something and I did not. I only happened to find out

about this yesterday. I find it highly offensive and, of course, it is completely and utterly without foundation. And

yet your Mr Fact-Checker has gone about retweeting it.

Mr Scott: If you have issues with what people are saying about you on social media, you are not alone. That

is the social media experience that we have all had.

Senator ABETZ: 'Race war' might just be in a little bit of a different category, with great respect.

Mr Scott: I am not going to those facts—

Senator ABETZ: Very conveniently not!

Mr Scott: Nor am I going to talk about individual retweets by people. This person was not even employed by

the ABC at the time, so I cannot comment on that. I can talk about how social media operates. Often retweet are

not endorsements and they are not viewed as endorsements.

Senator ABETZ: Can we believe that Mr Skelton will be impartial when checking the public statements of

politicians when just last July he tweeted 'Abbott's extremism on display'? Are we to assume this is a display of

impartiality by Mr Skelton?

Senator Conroy: It could have been factually accurate!

Mr Scott: I am happy to talk about the fact-checking unit if you would like to talk about that.

Senator ABETZ: No, I am asking you about a specific tweet.

Senator Conroy: It could have been very factually accurate, Senator Abetz!

Mr Scott: I am not going to sit here and go through the tweet history of all our staff, let alone people who do

not work for us. But I can tell you what the fact-checking unit will do.

Senator ABETZ: I did not ask that, Chair.

Mr Scott: But that you did ask how—

Senator ABETZ: This is a deliberate winding down of the clock by an experienced participant at these

committees.

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Mr Scott: Chair, I was asked about—

CHAIR: I will tell you my view on this. Senator Abetz, you have raised the linkage between the fact-checking

unit and individuals and tweets.

Senator ABETZ: Not the unit, the fact-checker personally.

CHAIR: Mr Scott, in my view, is entitled to go to that issue.

Mr Scott: Let me tell you why I am confident he will do a good job. The fact-checking unit is to test

statements, to look at the evidence that is on the record, to come to a conclusion about whether the statement is

true or false and to provide information that is clear and accessible to audiences. It is to look at the evidence and

the data that is on the record and then to communicate that in a way that will be clear and accessible. It is not

expressing opinions. It is not criticising opinions. It is checking significant claims using credible sources and

providing transparent and accountable information that will be available on our website and through news

programs—and there will be accountability for that performance. Mr Skelton is a very—

Senator ABETZ: Chair, come on!

CHAIR: Mr Scott, I think you have explained it pretty well. Senator Abetz obviously wants to keep on

questioning.

Senator ABETZ: You talk about individual tweets, Mr Scott—and that smile acknowledged it, Mr Scott; I

appreciate that—

Senator Conroy: In my view that tweet is likely to be completely factual and true!

CHAIR: Order! Senator Abetz.

Senator ABETZ: Thank you. Can I ask about this tweet from your fact-checker, which is also about Mr

Abbott: 'No statesman, with no style'. Is this also indicative of an objective mindset?

Senator Conroy: No, an accurate one. A factually accurate one. That would check against the facts!

Senator ABETZ: The way the minister says it I think tells the whole story for us. What about last August,

when Mr Skelton tweeted 'Mr Abbott was revealed to be the shameless opportunist that he is and he was red

faced. Windsor nailed him to the floor'? Is that another clear exhibition of the absence of bias by Mr Skelton?

Senator Conroy: I am confident that that was a factually accurate statement!

Mr Scott: His job will be to test statements against objective facts. I am confident that he has the capacity to

do that.

Senator ABETZ: You know that his job includes—and the advertisement said so—'the editor will, amongst

other things, deliver engaging content that builds a reputation for accuracy, impartiality and clarity'. Impartiality is

one of the very conditions that the ABC set down for this job, and here we have tweet after tweet after tweet

indicating the complete opposite—namely, impartiality.

Senator Conroy: In your biased view.

Mr Scott: The difficulty of this analysis is that journalists come from different backgrounds and have different

views on a range of issues. It is how they do the job.

Senator ABETZ: We will get to that later.

Mr Scott: The question is: is this the kind of person who will be able to test statements, draw a conclusion on

whether a statement is true or false, be able to find the evidence and bring it, and to be accountable for that.

Senator BIRMINGHAM: And to be impartial, Mr Scott.

Senator Conroy: It is completely factually accurate!

Mr Scott: He will be judged on the work that is done and the evidence that has accrued. There is a team of

people doing this. It is not simply a one- or two-line judgement is passed down, it will be what evidence is

brought to bear. He is testing the evidence.

CHAIR: Mr Scott, you have made that point on a number of occasions. Senator Abetz.

Senator ABETZ: What about Mr Skelton's wishful tweet about a Nielsen poll 'Abbott now a liability, a

proverbial albatross'?

Senator Conroy: That would be factually accurate as well!

Senator ABETZ: Mr Scott, how can you credibly maintain that Mr Skelton will bring impartiality to this

sensitive and newly created role?

Mr Scott: He will be judged on his work.

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Senator ABETZ: What about your impartial fact-finder making it his personal business to cross swords with

Mr Abbott when he responded directly to a tweet from Mr Abbott about repealing the carbon tax by tweeting

'Don't you have to get elected first?' You might be surprised to learn that Mr Skelton's prolific attacks are not only

confined to Mr Abbott and me. Can you tell me why Mr Skelton would have recently retweeted the accusation

that Senator Joyce is 'a dense, opportunistic carpetbagger' as well as another tweet suggesting that 'the electors of

New England were fools if they elected Senator Joyce'?

Senator Conroy: Both would be factually accurate! What is the problem?

Senator ABETZ: These are just part of the series of offensive Skelton tweets about Senator Joyce.

Senator Conroy: It is you biased political view that they are offensive.

Senator ABETZ: Mr Scott, we could be here all night. I have here more than a dozen examples of Mr

Skelton's tweets denigrating Liberals such as Senator Brandis, Scott Morrison, Joe Hockey and other current and

former Liberal leaders.

Senator Conroy: He knows his facts, doesn't he!

Senator ABETZ: So how can you credibly maintain that Mr Skelton is impartial and a suitable choice to be

the ABC's fact-checker? I will give you a few examples: 'Gordon nails Brandis'; 'Morrison, the LP's one-trick

pony'—

Senator Conroy: Absolutely factually accurate at all points! What is your problem?

Senator ABETZ: 'The Liberal bird-brained backbencher slams Gestapo data retention'—

Senator Conroy: There are many different definitions!

Senator ABETZ: that was about Mr Ciobo. 'Joe's not the sharpest pencil in the box when it comes to

numbers'; 'Rudd wept and Julia triumphant'; 'The honeymoon will be too long for the monk'—all these from Mr

Skelton. Are you still saying you will not comment on individual tweets? There are dozens and dozens of them

showing a partiality against the coalition.

Senator Conroy: In your biased view.

Senator ABETZ: Mr Scott, do you understand that we in the coalition do not accept that this man will go

about his task with impartiality given his past track record of complete and utter partiality, including some quite

offensive tweets? What I would invite you to do is take all of these tweets on notice and come back to the

committee and explain how this builds confidence in the community's mind that Mr Skelton will go about his task

with impartiality. I will table those for the committee.

Mr Scott: I will take that on notice. Let me simply say in response to the broad thrust of that that Mr Skelton

is a very experienced and award-winning journalist. We thought, on the criteria that were spelt out, on his ability

to provide and lead a team that is testing statements, coming to conclusions and providing the evidence behind

that, that Mr Skelton is an appropriate person to lead that division. Finally though, the performance of that

division will be the responsibility of the ABC. It will be the responsibility of the news division that delivers it.

There will be a number of people who work in it. Finally, as editor in chief, I am responsible for that outcome. So

I expect that the real test of Mr Skelton's professionalism in undertaking this role will be the performance of the

unit over time. That is a matter I suspect will come to the attention of this committee and we will discuss in the

future. But fundamentally the test of any of our journalists is: how do they act in the role? Mr Skelton has only

been working with us for a matter of days; the test will be how he performs in the role. I understand your qualms

about the appointment and I understand your concerns at some of those tweets. But fundamentally the judgement

will be on the performance of the role: is he seen to be fair, balanced and impartial; does he act without fear or

favour; and is the evidence accrued to back up the judgements that are made by that unit?

Senator ABETZ: Is this the same award-winning journalist that has been twice criticised—once for a one-

sided story about the Aboriginal intervention and a second time in relation to his Age story 'A town without hope',

about Aboriginal degradation in Balgo'? Skelton did not go to Balgo, and that story was accompanied by pictures

of a camp 300 kilometres away. My source? The ABC's Media Watch. In addition, is this the same award-

winning journalist who has been accused of grossly inaccurate journalism and even making up interviews?

Mr Scott: I am not aware of that detail. In the 20 years of Media Watch a great number of journalists have

come to its attention. Mr Skelton is an experienced and award-winning journalist but, finally, he will be held to

account for delivering to the ABC's editorial policies, which are the highest standards that operate for the practice

of journalism anywhere in the country. There is a full accountability mechanism around that. Part of that

accountability mechanism comes from the work of this committee. If there are concerns about the performance of

that unit, I am sure they will generate attention here.

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Senator ABETZ: Yes, but it will all be too late after the election.

Mr Scott: Sorry, in what respect, Senator?

Senator ABETZ: Now let me compare all those opinions about coalition members by your independent,

impartial fact-finder with his views on the Prime Minister. What would you say about this tweet: 'Extraordinary

times. JG at last behaving like a PM. ALP vote up, not down. Beware the pundits'? Isn't this shameless barracking

pure and simple?

Senator Conroy: You just have a biased view on it, Senator Abetz.

Mr Scott: Senator Abetz, I really think there is little point in going through a whole series of tweets—

Senator ABETZ: What about this tweet: 'Another take on Julia Gillard PM: grace under pressure'?

Senator Conroy: A factually accurate statement!

Senator ABETZ: That is one Kevin Rudd would not even agree with. This is just cheer squad stuff from the

person you have now appointed as an allegedly impartial fact-finder. Do you still believe, given all this evidence,

that Mr Skelton is a suitable appointment to this task?

Mr Scott: We will judge him on the work that he does.

Senator ABETZ: Would it surprise you to learn that Mr Skelton has sought to walk away from his

endorsement of the highly contested assertion that 97 per cent of scientists believe in human induced climate

change? I am only talking about the percentage figure not the issue of climate change. He only walked away from

it after being challenged by the reputable foundation chair of environmental engineering at the University of

Tasmania, among others. We have the tweets. Mr Skelton said 'Yes, there really is 97 per cent scientific

consensus on global warming' and then when challenged he lamely sad 'Not my facts. They belong to somebody

else'. So what sort of fact-checking does he do when he is willing to tweet stuff without knowing its veracity and

then, when he is picked up on it, simply says 'Not my facts'? Do you know what, that last tweet occurred on 22

May. I think he might have already been your fact-checker at that stage. Does this indicate a prejudice on a

controversial issue, and a lack of intellectual integrity, or not?

Mr Scott: We will judge the performance on the performance. We have guidelines in place; we have editorial

oversight on the operation of that division. And, finally, I think it will be a matter for review over time.

Senator ABETZ: And all these Tweets, some of which I accept were undertaken prior to his appointment—

Mr Scott: He has only been with us for a couple of days, so you have recounted nearly all of them.

Senator ABETZ: You told me not to interrupt, and I graciously accepted your admonition. Let's make that a

two-way street.

Mr Scott: Certainly Senator.

Senator ABETZ: All these Tweets I have read out now appear under the Twitter account 'Russell Skelton,

Editor, ABC Fact Checking Unit, Sydney, Australia.' Can you point me to where Mr Skelton says, on his Twitter

account, that just because he Tweets something it does not necessarily mean that he endorses it?

Mr Scott: I expect it will be there imminently.

Senator ABETZ: Yes, it will be there very, very, very shortly. But can you not see why the coalition, as a

major player at this election, at a minimum, is concerned about the credentials and clear bias of Mr Skelton?

Mr Scott: As you know, I speak regularly to MPs and senators from both sides of parliament. I think there

have been questions about a fact-checking unit: should we create a fact-checking unit, and what role will it play?

There has been apprehension, irrespective of personalities, as to why we are doing this. We think it is a

contribution that can be played there. But, finally, it will be judged on its performance. The staff there will be

judged on their performance. And I just think you need to keep in mind that it is not a one-word verdict that is

handed down; the evidence that is used to back that verdict is also handed down. So I cannot think of anything

that will be more open and transparent. People will be able to come to their own judgements.

Senator ABETZ: Oh, this is very transparent, I agree!

Mr Scott: But let's hear about the performance of the unit, Senator. The performance of the unit will be

transparent. The evidence that is behind its judgements will be there for all to see, and people will come to a

judgement as to whether they feel that that has been fair, accurate and balanced or not.

Senator ABETZ: Do you really believe that this prolific expression of bias qualifies Mr Skelton to hold this

position where impartiality is such a vital quality and ingredient and make-up of the individual that gets to

undertake that role?

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Mr Scott: Let's just dig into what—

Senator Conroy: You might want to be seeking to intimidate, Senator Abetz, but that is your character

assessment—nothing more. It does not hold as a fact at all; it is just your own biased attempt to intimidate.

Mr Scott: Senator, I just say broadly that I have experience in two major Australian media organisations now

but I know a lot of journalists who work in a range of media outlets. Journalists have views; journalists have

perspectives; journalists vote. The test is not what their views are, what their perspectives are or how they vote;

the test is how they do their work.

Senator ABETZ: And how they Tweet.

Mr Scott: The test will be whether Mr Skelton can execute this job with fairness, balance and impartiality.

You will be able to come to a judgement on that. But just because he may have held some views or made some

comments does not say that he cannot now—or has not in the past—executed his journalism with fairness,

balance and impartiality.

Senator ABETZ: Your own media watchers pinged him.

Mr Scott: What that suggests is that he is not perfect; I am yet to find the journalist who is.

Senator ABETZ: Writing stories about places you have not visited!

Mr Scott: I am not across the detail of that. But, I must say, a mention in dispatches on Media Watch is

something that many a journalist in the country has had to deal with over the past 20 years. I am not saying he has

a flawless track record; I am not aware of those issues you raise. What I do know is that he is a respected and

highly accredited journalist, and the test will be: can he execute his job with impartiality?

Senator ABETZ: Let's go to execution of his job. How on earth, given Mr Skelton's public denigration of Mr

Hockey—that he is 'not the sharpest pencil in the box when it comes to numbers'—

Senator Conroy: That is so seriously factual it is indisputable!

Senator ABETZ: How can Mr Skelton possibly claim to be unbiased and fairly assess the coalition's

economic statements—

Senator Conroy: John Howard demoted him—

CHAIR: Order, Senator Conroy.

Senator Conroy: He was actually demoted by John Howard.

Mr Scott: Working upstairs, along the corridor in the press gallery, are many journalists, many of whom write

opinion pieces and commentary and analysis, sometimes quite withering, of different politicians' performance

over time. What I would simply say is that they may have a view about a certain performance at a certain time.

Does that mean that they are all disqualified from exercising judgement that is fair, balanced and impartial?

Senator ABETZ: But this is a general judgement. It is not about whether Joe Hockey stuffed up here or there.

Mr Scott: You do not know that, Senator.

Senator ABETZ: This is a general comment that he is not the sharpest pencil in the box. That is just personal

denigration.

Senator Conroy: It is just a colourful and accurate description.

Mr Scott: I am not here to defend the previous Tweet. I am not sure you are aware of the context of that

particular Tweet.

Senator ABETZ: I am absolutely aware of all of them, and you will get them at the end of this estimates to go

through and then hopefully reconsider this appointment. Isn't it a fundamental requirement that the position of fact

checker be filled by a person without any perceived biases? Here there is the task of not only actual bias but also

perception of bias.

Mr Scott: Yes.

Senator ABETZ: That is why a lot of people in various positions say: 'I will disqualify myself from a

particular position or decision making because of the perception of bias. Albeit I believe I would not be biased,

the perception of bias is such that I should remove myself.' Now, with this track record, how on earth could

anyone assert that there is not at least a perception of apprehended bias? How on earth could you not come to that

conclusion?

Mr Scott: I think people will come to a conclusion on the performance of the unit when they look at the

product that is produced by it, which includes all the evidence that is around that. The operation of this fact-

checking unit is not just on political matters; it will be on a range of matters that are brought out.

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Senator ABETZ: Can we go to another matter?

Mr Scott: The judgement will be on the performance of the unit and the evidence that is brought forward.

Senator Conroy: It will be tough job. To analyse a coalition policy you need a fact.

Senator ABETZ: Is it a medical fact, Mr Scott, that marijuana smoking does not impact on lung health?

Mr Scott: It is not an area I have given close study to.

Senator ABETZ: I thought you might say that. So, can I ask: would it surprise you if someone tried to

propagate the view that smoking dope does not compromise lung health? And, in that context, can you explain

why Mr Skelton Tweeted, 'Pot smokers don't puff away lung health: study'. Really, Mr Scott—

Mr Scott: Was there a link to the study?

Senator ABETZ: Wouldn't Red Skelton have been a better choice than Russell Skelton for this position?

Mr Scott: Was there a link on that Tweet to that study?

Senator ABETZ: Yes, there was. But the British Lung Foundation completely debunks that assertion. And,

what's more, the ABC's own health and wellbeing page contradicts that which Mr Skelton is seeking to propagate.

So, what is the fact? Is it what ABC has on its health and wellbeing page, or is it that which Mr Skelton seeks to

Tweet?

Mr Scott: Well, I am not in a position to comment.

Senator ABETZ: It is quite obvious that you are not, and it is very difficult for you, I understand. So can I

ask: how did we end up with Mr Skelton? Firstly, was Mr Skelton known to you prior to his engagement in the

role of fact checker?

Mr Scott: I have known Mr Skelton. He was a senior journalist at Fairfax, and I knew him—

Senator ABETZ: So he was known to you?

Mr Scott: Yes. I would simply say—

Senator ABETZ: Thank you. So, did he ever raise—

CHAIR: Senator Abetz, please let Mr Scott finish.

Mr Scott: Mr Skelton is known. He is one of the best-known journalists in the country. He is known by

thousands of people. But I can tell you that I did not interview him for the job, that the position was advertised,

that I understand that Mr Skelton applied, that we convened a selection panel, and that Mr Skelton was viewed as

the outstanding candidate for the job.

Senator Conroy: He's just not a cultural warrior for you guys, is he?

Senator ABETZ: Did Mr Skelton ever raise the idea of a fact-checking unit with the ABC prior to his

appointment?

Mr Scott: Not with me.

Senator ABETZ: With anybody else? Take that on notice, please.

Mr Scott: I can tell you that the idea did not come from Mr Skelton; the idea came from me, working with our

director of news, as we were putting together our tri-funding submission.

Senator ABETZ: The job advertisement for the editor of the fact-checking unit said. 'The editor will lead and

manage the unit to deliver engaging content that builds a reputation for accuracy, impartiality and clarity'.

Mr Scott: That is exactly right.

Senator ABETZ: Clearly, Mr Skelton is not impartial, is he?

Senator Conroy: In your biased opinion.

Mr Scott: But, as I said, the judgement of the unit will be whether in fact the content it produces is fair,

balanced and impartial. And it is the same with any journalist, irrespective of their personal views, irrespective of

what they said. The question is, can they produce content that is fair, balanced and impartial? And we will know

that when we see the material that is produced.

Senator ABETZ: All these Tweets, and many, many more, show that Mr Skelton is incurably biased.

Senator Conroy: In your biased view. Stop trying to use Senate estimates to intimidate.

Senator ABETZ: This appointment will cause you and the ABC a degree of grief. Did you actually fact check

Mr Skelton prior to his appointment and come across all these Tweets?

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Mr Scott: I am not aware of that. What I can say, though, is that there was certainly an interview with him and

discussion and understanding of his record. But fundamentally, if I accept your premise, the same principle

applies for every journalist. If in fact you are saying that if there is a journalist who supports the coalition, a

journalist who supports the Labor Party, a journalist who supports the Greens, then therefore they are

disqualified—

Senator ABETZ: Why do you need a journalist to be a fact checker?

CHAIR: You would have to close News Limited down!

Senator Conroy: I can name at least a dozen former Liberal staffers and former Liberal MPs on radio! The

proposition is absurd.

Senator ABETZ: Can you stop the mutual admiration society?

Mr Scott: You put a proposition, Senator. I am saying, though, that the test of Mr Skelton's impartiality comes

with the product the unit produces. You are expressing scepticism about his ability to do that. I am saying he has a

very strong record of professionalism. I am saying that we will judge his performance on the outcome of this unit

and I expect that that will be a matter that you will pay close attention to, as will I.

Senator ABETZ: But if people want to have confidence in the decision making, you have to get rid of

apprehended bias.

Senator Conroy: In your apprehended-biased view.

Senator ABETZ: It is not good enough for a Supreme Court judge to say, 'I am not going to disqualify

myself; wait for the decision and see if I am biased'. It is too late.

Mr Scott: But Senator, I have—

Senator ABETZ: That is why, when people set themselves up—

CHAIR: Senator Abetz, I am just going to indicate to you that we have been going for—

Senator Conroy: Tedious repetition is a breach of standing orders.

CHAIR: We have been going for 35 minutes on this one issue. I do not think you are making much progress,

other than starting to lecture.

Senator ABETZ: I will let the public make an assessment of that.

CHAIR: Well, let the public make that determination.

Senator Conroy: We all heard you threaten the ABC. Don't worry; we all heard you!

CHAIR: Order! I am trying to get an idea of timing—

Senator ABETZ: I have another topic, and I will try to get through it as quickly as possible. Short answers

would be very helpful. So, let me move on to this Vote Compass. You are aware of the dubious history of

howshouldivote.com, which was set up by GetUp! Are you aware of that, Mr Scott?

Mr Scott: Not particularly.

Senator ABETZ: I would have thought when you set up something like Vote Compass you might have

informed yourself of—

Mr Scott: We informed ourselves by talking to the Canadian Broadcasting Corporation, who did it, and then

the Wall Street Journal, which used Vote Compass in the last presidential election. We have spoken to a lot of

people who have used this process in the past.

Senator ABETZ: All right. Let us move straight to the Canadian Broadcasting Corporation. You are

modelling yourself on that?

Mr Scott: No, but we paid attention to it. They were one of the first organisations to use it. It has had a

number of iterations since, one example being in the Wall Street Journal. It has also been used in Europe. Our

version of it will be different to theirs. We have learned a bit from the Canadian experience, so we have not just

picked it up and dropped it in this environment.

Senator Conroy: Did Karl Rove run the one on the Wall Street Journal? Has he called Ohio yet?

Senator ABETZ: I will quote from Antony Green's blog about the Vote Compass:

For that reason we know some Vote Compass participants will be surprised by where their attitudes line up in relation to

the political parties. As we stress, Vote Compass is not a how-to-vote tool.

But in a sense it will lead people, potentially, to change their vote, won't it, if they put in certain information and it

tells them that their views are more aligned one way or the other? Hold that thought, because when Canadian

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Vote Compass model that you say informed you was used by Queen's University political science professor Kathy

Brock she found that even though she completed the survey three times using three distinct strategies she was

aligned each time with the Liberal Party. In Canada the Liberal Party is in fact the left wing party. Each time, no

matter what she put in—and she is a professor of political science—it just happened to spit out exactly the same

thing that the GetUp compass did when Andrew Robb tried it. It just seems that these compasses always tend to

point to the west or to the left, no matter what information you put in.

Mr Scott: Why do you think that the Wall Street Journal picked it up and used it?

Senator ABETZ: Pardon?

Mr Scott: Why do you think that the Wall Street Journal picked it up and used it if they did not think that it

was a credible tool?

Senator ABETZ: If you want to start asking questions, we can change positions. Let us move on.

Senator Conroy: I thought that it was a very pertinent point.

Senator ABETZ: There was a premonition by Mr Green that people will be surprised because, no matter what

they put into this Vote Compass, it always goes to the west; always goes to the left.

Mr Scott: What is your question, Senator? Do you have a question on Vote Compass?

Senator ABETZ: Yes. How are you going to make sure, seeing that you say that you know nothing about

GetUp's—

Mr Scott: I have not studied it.

Senator ABETZ: But you do know about the Canadian one, which always skews the needle of the compass to

the left or to the west. How can we be assured that yours will not have the same design fault?

Mr Scott: We are not designing it. It is a partnership that has developed. We use a group of independent

academics—

Senator ABETZ: Oh, great!

Mr Scott: who provide—

Senator ABETZ: Can you mention those names?

Mr Scott: I can get those names for you.

Senator ABETZ: Quickly? I am sure that they are online.

Mr Scott: I am not sure that they are online. But I can provide you with background on it. The situation is that

this has proven to be—and the CBC version of it was quite an early version of it—a useful tool. We get the

policies from the parties. The policies are provided by the parties rather than by us.

Senator ABETZ: And if we do not provide the policies?

Mr Scott: A lot of those policies would be on the public record, of course, Senator.

Senator ABETZ: What about the Greens, who have already indicated that they will not be announcing

policies but just making general statement? How are we going to deal with that?

Mr Scott: I am not sure, Senator. There will be—

Senator ABETZ: This is going to be telling people how their vote should be or is aligned.

Mr Scott: It is not.

Senator ABETZ: Is aligned.

Mr Scott: Yes. It will actually provide a more in-depth exploration around the policies of the various parties. I

must say that—

Senator ABETZ: You claim that it is in depth. Professor Brock said that it is a gimmick that impoverishes the

level of discussion in our democracy. That is her considered view.

Senator Conroy: No, that is called the Australian.

Mr Scott: That may have been an academic's view. Our reading of it in the context of how it was used in

Canada and then subsequently in the other places that it was rolled out—and it was most recently used by the

Wall Street Journal—is that has proven to be a popular and engaging way of encouraging people to think about

policies in the context of the election campaign.

Senator ABETZ: Will the Vote Compass tell voters if they can actually trust a party to implement its

policies? Surely, you would agree that that is a fundamental consideration? When people say, 'There will no



carbon tax' and that then aligns you to the Labor Party or they say, 'We will turn back the boats,' on the day of the

election on the front page of that terrible News Ltd paper only then to immediately dismantle the policy after the

election—

Senator Conroy: How about saying after the election, ''I considered resigning for misleading the Australian

public but I decided on balance not to?' That is a quote from Tony Abbott.

Senator ABETZ: Doesn't that make my point, Minister?

Senator Conroy: Tony Abbott lied to the Australian public.

Senator ABETZ: You are unwittingly making my point. Thank you very much, Minister. Can Mr Scott now

answer?

Mr Scott: Any tool has its limitations. I expect that this will more look at issues like education policy, health

policy, tax policy, environmental policy. The different policies that are on the record will be there and it will

allow—

Senator Conroy: We will have to get the ABC policy.

Mr Scott: voters to be able to interact with it. We look forward to ABC policies if they are released as well.

Senator ABETZ: If a party does not release its policies, what happens? And who is going to determine what

the actual policy of a party is? Will it have to be signed off by party headquarters that this is the actual policy that

you can put on the compass or is it going to be—

Mr Scott: I am not sure if we are getting into core or non-core issues here. I am not sure. I will have to come

back to you on that.

Senator ABETZ: You do not have to worry about core and non-core issues. Mr Howard had to, because there

was a $10 billion black hole.

Senator Conroy: Oh!

Senator ABETZ: You have been given $10 million extra by a Labor government that has been the most

partisan government—

Senator Conroy: Write that down!

Senator ABETZ: in recent history to fund this Vote Compass and to fund—f

CHAIR: Senator Abetz, I am going to move to someone else if you are going to continue to preach your point

of view.

Senator Conroy: All you are here to do is hector and intimidate—

Senator ABETZ: Why didn't you get Senator Cameron as a fact checker?

CHAIR: I would be a very good fact checker.

Mr Scott: I will come back to you on the precise detail of it works. There are questions that we need to deal

with. We will come back to you. Part of the guidelines that we are looking to create are to do with what is official

policy and what are other statements that are being made. There will be a standard around that. We think that it

will be a valuable tool. We expect that we will be judged on it. I take comfort from the fact that an organisation

like the Wall Street Journal, after looking at the experiences elsewhere—

Senator ABETZ: If you get it wrong, how do we appeal it?

Mr Scott: We will be held to account for our—

Senator ABETZ: Yes, after the election when it is too late. That is the problem with this.

Mr Scott: It is part of the coverage. We are going to put policies up online. We believe that there will be

benefit to come from this. We think that there is desire from a section of our audience—

Senator ABETZ: You—

Mr Scott: to get involved in a more in-depth discussion. This is part of the feedback that we had after 2010.

People wanted more focus on policies. This provides a mechanism for doing that.

Senator ABETZ: Will Mr Scott take these, please.

CHAIR: He already indicated that he would.

Mr Scott: Yes, I did.

Senator ABETZ: You have? Thank you very much. Thank you, Chair.

CHAIR: I want to take you through a couple of issues, Mr Scott. The ABC are an independent organisation?



Mr Scott: Yes.

CHAIR: You make the decisions in terms of employment and people allocated to work?

Mr Scott: Absolutely. We are totally independent.

CHAIR: Are you aware of any other broadcasting organisation in the country who does a tweet check before

employment?

Mr Scott: No. I have never heard it raised before.

CHAIR: Do you think that this is something for the future?

Mr Scott: As a broad question, this has been raised. It has been more in association with younger people, with

the kinds of social media histories that people are spelling out through tweets and Facebook posts and the like.

But I have not been cognisant of us doing it.

CHAIR: Mr Skelton has now been the subject of quite a forensic investigation by Senator Abetz. Mr Skelton

has just taken the job up, has he?

Mr Scott: Yes, in recent days.

CHAIR: You say that he will be judged on his capacity to undertake the job as described and deliver.

Mr Scott: Like any journalist, he will be judged on the content that he produces and the tests that apply to

that—fairness, balance and impartiality—that exist under our editorial policies will apply to him as we everyone

else. As we know and have discussed at this committee quite often, we have senior journalists who have worked

for the Labor Party. We have senior journalists who have worked for the coalition. We have people who have

gone to work as staffers on either side. Their track record and history is not relevant. What is relevant is whether

they can do the job and deliver content that is fair, balanced and impartial. That is how Mr Skelton will be judged

as well.

CHAIR: In my view, the issues of fairness, balance and impartiality is not something that permeates the

media—and not just the ABC; the print media as well.

Mr Scott: There is no doubt that the ABC has more comprehensive and rigorous editorial policies than other

media organisations and a self-regulatory framework that exists nowhere else in the Australian media. We take

this very seriously. It is part of the responsibility of the board under section 8 of the ABC Act to ensure that our

performance is to these editorial standards. That is a key thing that makes the ABC different. Our board is not

trying to drive a share price to deliver a profit and a return to shareholders; they are trying to uphold the standards

and the accountability that are spelt out in the ABC Act. They are part of the safeguards and part of the

reassurance that the public can have around our commitment to those journalistic standards.

CHAIR: My concern with this, as a former union official—if you did not know—is whether Mr Skelton

getting a fair go here? I would ask—

Senator Conroy: It was just an attempt to intimidate. It was blatant intimidation.

CHAIR: Given the performance from Senator Abetz, will the politic attacks on Mr Skelton, provided he does

his job in the manner that you expect, be a problem for his continued employment?

Mr Scott: We will judge Mr Skelton on his performance. He is a very professional and very experienced

journalist. The proof of the pudding is in the eating. I suspect that people will look at the work of that unit and

make their judgments accordingly. But he is a very experienced journalist. I am sure that he has been criticised in

the past. He will just put his head down and do the best job that he can in these circumstances.

CHAIR: And he will be treated in the same manner as other ABC employees?

Mr Scott: Absolutely.

CHAIR: Good. I hope he joins the union if he is not already a member.

Senator BILYK: I have a couple of questions. I want to go back to the issue of the production unit in Tassie

being closed. Do you have a final number on how much the redundancies cost?

Mr Scott: I will get that on notice for you, Senator.

Senator BILYK: Out of all of that, there was going to be one position left. Has that been filled?

Mr Scott: I think so. Again, I will come back to you on that point.

Senator BILYK: Could you take that on notice and let me know. I was wondering whether it had been filled

and whether in fact Mr Skelton might be based in Tasmania.

Mr Scott: No, he will not be Tasmanian based.



Senator BILYK: He is not? So that is not that position.

Mr Scott: No. The unit will be—

Senator BILYK: Tassie will gets its own—

Mr Scott: We were creating—

CHAIR: Now we have dragged Senator Abetz into sanity, I think!

Senator BILYK: I was just thinking of the two issues.

Mr Scott: There is a Landline position that we are creating there. I will get you an update on that.

Senator BILYK: Okay. Thank you. In the public hearing of the ABC diversity inquiry in Hobart there was a

quite a lot of discussion regarding the large number of hours of BBC programming that appears on the ABC.

Given that you have lost the contract with the BBC from July 2014—

Senator Conroy: There will be holes in the schedule.

Senator BILYK: how do you expect to fill the programming void? Do you see it as an opportunity to

program more Australian content?

Mr Scott: Yes and no, I think. If you look at the BBC contract, one of the things it has delivered us over the

years is a volume of content. We pay quite a lot for that, but it does produce hundreds of hours of content on our

schedule over a year. The general rule is—and this is part of the tension, I think, that has underpinned the issues

of internal-external production, coproduction and the like—that it is actually a lot cheaper to buy content than it is

to make it. We would probably purchase a top-quality British drama for about 25 per cent of what it would cost

for us to contribute to making it in Australia. If in fact we were to take that BBC money and put it into domestic

content, we are going to have a lot of blank airtime.

That is not to say, though, that we are not looking pretty carefully at the mix of content that we will be making

and purchasing and trying to get that right. There might be some increase, but it is not simply a case of taking that

BBC money and putting it into domestic production, because we would be way short.

I would say a few things about the BBC contract. I think it is important for people to understand that not all the

British content we have shown has been BBC content, so programs that are very popular like Grand Designs,

Midsomer Murders and Doc Martin are not covered under this.

Senator Conroy: Doctor Who.

Mr Scott: Doctor Who is, of course, important to the minister. I have assured him that we have the rights for

Doctor Who across all time and space—

Senator BILYK: I know the minister would be very upset if that were not the case.

Mr Scott: We have all time and space continuums covered in this market for Doctor Who, so that continues.

Senator Conroy: ABC funding is safe.

Mr Scott: There are a range of independent producers that we can acquire content from, not just in the UK but

in other markets in Europe and the US as well. We were disappointed in the BBC's decision and we were

disappointed that, after 50 years of being an outstanding distributor of their content for them, making this their

strongest market anywhere in the world, we were not even given an opportunity to talk with them about this

contract. But they make their decisions—

CHAIR: It wasn't because you knocked back the job, was it?

Mr Scott: No, Senator—

Senator Conroy: I think there was a bit of tit for tat there!

Mr Scott: That is not true, Senator. So we were disappointed. Finally they will come to their judgment as to

the kind of audience that will see that content now on pay TV, which has a penetration of about 30 per cent

compared to the ABC, which has a penetration of 100 per cent. It will be seen by a smaller audience. We may yet

still engage with the BBC around purchasing some of that content for a second run, but we are unsure about that

at the moment.

But we are confident there is a lot of content out there. Television, of all the entertainment sectors, is very

vibrant. There is great content coming out of the US and Europe, and the content that is working best for us, that

we get the strongest response from, is our Australian content. The new drama telemovie that we are rolling out,

Cliffy, had great audiences when we showed it on Sunday night. So our priority is the Australian content and we

want to do as much as we can afford to do whilst filling our schedule.

Senator BILYK: So you are not going to have just half-hour episodes of blank air?



Mr Scott: No. There will be television on, I can assure you of that.

Senator BILYK: Can you tell me a bit more about ABC's digital platforms and what they have to offer

people.

Mr Scott: Absolutely. This was an important part of the triennial funding that was delivered by the

government in this budget. Part of that funding was to provide money for the online delivery of our digital

content.

Senator BILYK: How much did you get for that?

Mr Scott: We got $30 million over three years. I think this was an anachronism, really, in our funding model.

We had been always funded for radio distribution and television distribution. They are the big towers that you see

that allow us to beam it out so everyone can hear the radio and see the television, but we had never been funded

for digital delivery—and the growth in digital delivery is very large, very significant, for us. That is delivery of

content on our websites, our apps and our online services like iView. iView is a good example: iView plays are

up 86 per cent in the last 12 months—and it is not just Senator Conroy, either; others are watching it as well.

Senator BILYK: Senator Bilyk as well.

Senator Conroy: I am not all of that. There are only so many episodes of Doctor Who you can watch.

Mr Scott: Yes indeed. But what has really been very significant about that is that it is only a little over a year

ago that we put iView out on tablets and mobile phones, and now the traffic we are getting on mobile represents

well over 50 per cent of the iView traffic. So, as we see the growth of smart phones ever increasing—60 per cent

going through 70 per cent, and 90 per cent in two years time—we just know that more and more of our audience

are going to be wanting to consume our content on mobile phones and on tablets. There is a significant cost that

goes behind that, and this funding helps us to meet that demand.

There are other things we want to be able to do. We have an Android app for iView in development. We have

further services we want to be able to deliver. The public want us to be able to increase the bit rate. One of the

interesting challenges of this is that you can improve the services you are delivering, but what we are also trying

to manage is just how fast that demand take-up is as well. So we will try to balance that budget well. We are very

grateful for the funding that has been provided. We think it is a very important moment for our audiences. We

have been real leaders in Australian broadcasting in this digital space, and this will allow us to maintain that

leadership.

Senator BILYK: I just want to go back again to the position in Tassie—that one position.

Mr Scott: Yes.

Senator BILYK: If the position has not yet been filled, or the person has not yet started, can you give me a

time line in your response as to what that might be.

Mr Scott: We will come back to you on notice.

Senator SINGH: Last time we were together I asked you whether the ABC was centralising film archive

footage in Tasmania.

Mr Scott: Yes.

Senator SINGH: You said that you had to take that on notice. I have now received the answer to question No.

7, which actually shows that the ABC started centralising its film archive at least five years ago.

Mr Scott: Yes, that is right.

Senator SINGH: I am amazed that you had to take that on notice last time, that you were not aware of the

centralising of ABC's film archive footage, which started in 2008. That is quite amazing.

Mr Scott: Senator—

Senator SINGH: I have not got to the question yet. Brisbane, Perth, Adelaide and Melbourne—there is none

in Canberra or Darwin—have been and are being centralised to Sydney. Now that we know Tasmania is, why

have you decided to centralise film archives in Sydney? Surely the rent in Sydney would be higher than any one

of the regions where the ABC has a presence, such as Tasmania, WA or South Australia. Why is everything

outside of Sydney and Melbourne being dismantled and taken back to the ABC in Sydney?

Mr Scott: Mr Pendleton manages this area. I think he is the appropriate person to answer your question.

Mr Pendleton: The film archive has been brought back to Sydney because of the very nature of the content

itself. The film in particular requires—



Senator SINGH: I know that. But why does it have to be in Sydney? That same climatically controlled

environment and all the necessities for storing film footage, and I can understand is a very particular operation to

do so, could happen anywhere. It does not have to happen in Sydney.

Mr Pendleton: But the ABC's facilities for our film archive were built in Sydney, back in 2002. The vaults on

our level 3 archive services, specifically designed to manage our film, were designed into that building. The

equipment to convert that film to digital format resides in Sydney and nowhere else within the country.

Senator SINGH: Because you have chosen to make it in Sydney. That is what my question is. Why?

Mr Pendleton: It was always in Sydney.

Senator SINGH: But in 2002 nothing had been centralised.

Mr Scott: But in 2002 most of the material was in Sydney. There was more in Sydney than anywhere else. A

building was commissioned—

Senator SINGH: I don't know about that. If you add up all the regions.

Mr Scott: There was some in many states but none in Canberra and Darwin. But a very significant asset was

held in Sydney. A new building and facility was being built in Sydney and a decision was made to make the

capital investment there. The decision then having been made, and Sydney being able to hold the entire facility, it

would be duplicative to replicate that around all the states. If the facility was there in Sydney, not to use it in that

way would I think be a questionable use of the assets. That is why the call has been made. There have been

broadcasters around the world, including the ABC, that have not treated their film archive well. There has been

deterioration and content has been lost. We have had difficulties with this in the past. That is why this strategy has

been in place. It is only the film. I was in Tasmania only last week and there is other significant archival content

that remains in Tasmania, including a lot of the news footage. Some of that stuff will be digitised over time to

make it accessible by our staff anywhere. But where are we going to keep the perishable film content and digitise

it? That is Sydney.

Mr Pendleton: The centralisation of this film makes the content available to program makers down in

Tasmania, whereas—

Senator SINGH: I am not denying any of that. I am asking why it has to be centralised in Sydney. Are you

aware of this view of the ABC being an organisation that is based out of Sydney. In fact, it is known as—

Mr Scott: There is a tension that we have to try to manage. I understand that. I have visited—

Senator SINGH: Are you aware of that, Mr Scott.

Mr Scott: I have visited every state and territory capital of the ABC in the last six weeks. I talk with staff. Am

I aware of that perception, from time to time? Yes. I am also aware of the tension that we have a responsibility to

be efficient and effective. So if in fact there is this facility in Sydney that was planned and built over a decade

ago, then to be efficient and effective and say you have to put it in one place—it would probably be negligent of

us not to use the facility that is there.

In our discussion, do we look for opportunities to deploy staff or groups of staff outside Sydney and

Melbourne? Yes, we do. In fact, important services are delivered out of Adelaide: our payroll and financial

services staff operate from there. Part of our international broadcast team operates out of Adelaide. So we do look

for that kind of opportunity. But there are efficiencies that come with centralisation, as well. So holding that

tension is I think a unique challenge for us as a public broadcaster.

We clearly do not centralise everywhere. We have 60 local radio bases out there. But we do try to find a

balance between efficient use of resources and also recognising that we are a national broadcaster.

Senator SINGH: With the recent closure of the whole Tas production unit, how much of the file footage that

would have been located there has been archived to Sydney, and how much has not been?

Mr Scott: Does the content of the final paragraph answer your question: 3,700 cans are moving to Sydney and

Hobart archives still house and manage the 9,109 videotapes in the collection, the digital archive of one-inch

tapes and the news service, as well? So some has gone to Sydney but a significant amount still remains in Hobart.

Just the film has gone, not the videotape.

Senator SINGH: I am talking about film.

Mr Scott: The film has gone. All the film is coming into one place.

Senator SINGH: Was any film thrown out during the closure of the production unit?

Mr Pendleton: No, I am not aware of any film being thrown out.



Senator SINGH: Could you take that on notice?

Mr Pendleton: Yes.

Senator SINGH: How was the closure of the production unit handled.

Mr Scott: I think we have discussed this. There was—

Senator SINGH: How was it dismantled? What happened?

Mr Scott: Are you talking physically or about the staff?

Senator SINGH: Physically.

Mr Pendleton: The movement of the tape?

Senator SINGH: What happened to everything?

Mr Scott: I was there last week. There are some empty edit suites at the moment. We are looking at how that

facility is best used. Some of that facility was at end of life. Other parts of it will be redeployed and used for

spares. The operations unit is currently working through that now.

Senator SINGH: What happened to the editing suite?

Mr Scott: The editing suite is still there at the moment. As I was briefed on it last week, we are looking

through to see. I got the impression that some of that edit suite will be moved elsewhere in the country, but it is

largely at its end of life and it might be used for spares, I think—

Mr Pendleton: Spares.

Senator SINGH: I presume the ABC has some kind of strategy when it closes down parts of its operation,

whether it happened in WA or in Tasmania, and you would seek to ensure that things are done in a systematic

way so that certain file footage, for example, that is of value I am sure to the ABC, and certainly to the broader

community, is looked after, filed and archived in the appropriate way.

Mr Pendleton: If you are talking about the technical equipment of the facilities itself—the edit suites that are

down there—by and large most of that equipment is at end of life. It will be—

Senator SINGH: What do you do when it is at end of life? Do you throw it out?

Mr Scott: If there were still production there it would be part of the capital replenishment process as we went

through and refreshed the facilities. Those facilities will not be refreshed. Because of extending the life of our kit

the way we do, we will take a lot of that stuff and use it for spares in other facilities around the country.

Senator SINGH: Can you provide the committee with details of what happened with the closure of that unit,

and whether things were taken as spares.

Mr Pendleton: I do not think we have taken anything out of there yet, but it is certainly being considered.

Senator SINGH: Mr Scott was there last week. I think he would know what it looks like.

Mr Scott: People were working on that last week when I was there. I was told that, as Mr Pendleton said, a lot

of that equipment was at end of life and that—

Senator SINGH: But even if something is at end of life you do not necessarily throw it out.

Mr Scott: No.

Mr Pendleton: No.

Senator SINGH: It could be used for community broadcasting, radio and what have you. It is not necessarily

at the complete end of life.

Mr Pendleton: We re-purpose it.

Mr Scott: And we often try to re-purpose it. We can give you the detail around that. The work around that

planning was going on when I was there last week.

Senator SINGH: I would like the details. That would be great.

Mr Scott: Yes.

Senator SINGH: Getting back to something Senator Bilyk was talking about, which is the very disappointing

loss of the BBC contract to Foxtel. Obviously there are BBC programs that you will lose now, like In the Thick of It and Silent Witness and the like. You obviously have this new triennial funding.

Mr Scott: Yes.

Senator SINGH: You now have a hole with some of these BBC programs that will not be aired on ABC,

which is disappointing for some viewers I am sure. There is an opportunity here is there not for there to be more



Australian content to be aired now that you have to fill this with something? Or are you just aiming to fill it with

more British or European content from elsewhere, because I think I heard you say to Senator Bilyk in your answer

that there was no thought about your actually looking at Australian content to fill this.

Mr Scott: That is not what I said. I said that we are looking at the mix. I said that there is a difficulty, though,

given that on ABC1 we have I think 250 hours to fill. Given the money we paid for the BBC contract and given

that Australian production is much more expensive than purchasing content that is made elsewhere, we have a

problem to solve. We have a problem in that we have to fill the schedule and we do not have more money

available to fill the schedule, so there will be this sweet spot there. This is an issue that our new director of

television, who starts on Monday, will be addressing, but I have discussed it with the television executive and the

acting head of television now.

We are open to the prospect that there might be some more programs that we could commission but the

fundamental challenge we face is not our levels of Australian production. We have had a very significant

increase, say, in the levels of Australian drama in recent years, thanks to the funding provided by the government.

It is now 80 hours of new Australian drama, up from 20 hours just a couple of years ago. The challenge is that if

in fact you just try to do more of that, if you try to replace Call the Midwife with an Australian drama like that

then the money you have spent on the BBC contract is not going to go very far and you are going to have

scheduling problems.

Senator Bilyk wanted an assurance that there was not going to be blank time on the television. We have to fill

it, so I would hope that we would be able to do some Australian production, but the vast majority of that money

will go on—

Senator Conroy: VFL, Tassie Football League.

Senator SINGH: That is a very good example, Minister.

Senator Conroy: You could show more of the doggies. The doggies are still in the AFL, aren't they?

Mr Scott: The vast majority of it will go on acquisitions, because that is how we can make our schedule work.

Senator SINGH: You may have to take my next question on notice. How much does the ABC currently

spend on BBC programs?

Mr Scott: This contract was worth around $15 million per annum.

Senator SINGH: The ABC was spending $15 million per annum on BBC programs?

Mr Scott: Yes.

Senator SINGH: And you are saying that it is going to be too costly to fill the gaps—

Mr Scott: I am saying that that was delivering hundreds and hundreds of hours of content.

Senator SINGH: Sometimes there are re-runs as well.

Mr Scott: But that is how the schedule comes together. An hour of quality Australian drama, just with us

paying a licence fee, costs about $450,000 an hour. A program like Cliffy, which we showed last Sunday night,

costs much more than that. So that eats into your $15 million very quickly, and we have hundreds of hours of

content we need to fill.

We have spent about $240 million on television, of which about $35 or $40 million is on acquisitions. The rest

is on our making and creating things. That $35 to $40 million we spend on acquisitions provides hundreds and

hundreds of hours of content. If in fact you were just trying to replace that with Australian content you would

need three, four, five or six times as much money as we are currently paying on the BBC contract to fill that gap.

So it is a problem we want to solve.

Our instinct, I want to assure you, is that given the chance and the opportunity—with the exception of Dr Who

for the minister!—our aim is to do as much Australian content as we can possibly do, given the budgets we

operate under.

Senator SINGH: I think it is your charter. It should not just be your aim—it is called the ABC, not the BBC.

Mr Scott: The charter talks about programming of wide appeal and specialist interest. ABC television has

been on-air now for more than 55 years. In every one of those 55 years international content has been a part of the

service we have delivered and it has been very popular with the Australian public. I am pleased to say, though—

and this is one of the things I would say about the BBC contract—it would have been a decade ago that some of

our very top rating programs came out of the BBC contract. That is now no longer the case, I think. Some of our

most popular international programs do not come from that contract, but some of our most popular, highest-rating

programs are ones that we make at the ABC or commission at the ABC. There is a great thirst for quality



Australian content, which we are helping to meet. We need to find many hours of programming with the absence

of the BBC contract, but it is not as though we have lost programs that we view as the crown jewels. Our crown

jewels are our Australian content in this era.

Senator BIRMINGHAM: Firstly, I want to deal with the principles. Senator Abetz dealt with some of the

points of detail around things like fact-checker and Vote Compass. Fact Checker purports basically to decide on

what is or is not factually correct, and in doing so will deal with often contentious matters. Vote Compass will

purport essentially to tell people which party they best align with once they have answered a few questions—

Senator Conroy: Christian Kerr has already left. You have missed the story—it has gone to print—

Senator BIRMINGHAM: Don't these types of activities risk the credibility and the reputation of the ABC.

Aren't these the type of activities that are better left to commercial enterprises that can blatantly—

Senator Conroy: Let's let The Australian do a fact check—

Senator BIRMINGHAM: take a side if they want to, because that is their commercial right. It is not the

ABC's commercial right—

Senator Conroy: That is true. The Australian has a right to be the Liberal Party's cheer squad—

Senator BIRMINGHAM: and the ABC should be protecting its reputation at all times. Isn't this an

unnecessary risk for the ABC?

Mr Scott: That is an interesting question. I think it is one we have considered. We have looked at this at an

executive level and, also, both of these factors have been considered by the board. I would say on fact-checking

that we view this as complement to a lot of the other work we are doing. As I said earlier, the ABC has been the

absolute leader in social media. I think by creating News24 we have helped add to the frenzy that can be the 24-

hour news cycle. Assertions can be made very quickly and distributed very widely in this time in a very short

period of time. With the amount of spin, online commentary and claim and counter-claim that there is out there,

often around what is truthful, what are the facts, we thought that there was a benefit for our audience that would

come to bear by having a specialist team that we could put to one side and, when the audience really does not

know which way is up around some of these things, because of all the contesting claims around what the facts

actually show, to have an independent group that actually goes and looks at the facts and reads the reports to

provide some analysis. Some people have said to me on this, 'Isn't this what journalists are meant to be doing

anyway?' And of course they do. Our long-form current affairs teams are doing this kind of work. But we felt it

was an important addition in the news service we are providing to have a specialist team to do this. I say to you

that we will do it in an ABC way that will be quite different to some of the other fact-checking operations that are

going to go on out there that—

Senator Conroy: I could be accurate—as opposed to the one going at the moment!

Mr Scott: the commercial broadcasters might develop. We will be far more accountable for the work of that

than any other organisation because of the accountability mechanisms that are built into the ABC. But, if you are

asking whether in fact—

Senator BIRMINGHAM: And when somebody takes issue—

Senator Conroy: I can understand why you are terrified of a fact-checking operation.

Senator BIRMINGHAM: with the determination of the facts by the ABC fact checker, the ABC will be

dragged into a debate over the issues and the position the ABC has taken on the issue rather than the ABC simply

reporting what other people have said.

Senator Conroy: The job is not just to report what Malcolm Turnbull said. I know it happens a lot, but that is

not its job.

Senator BIRMINGHAM: This will be the ABC taking a position on the facts.

Mr Scott: I would say to you to look at Four Corners over 50 years. Four Corners through its investigative

reporting has attempted to dig into deep and complex issues and to find the kernel of truth in those issues. As

Four Corners has done that there are some people who have taken exception to that, but that is the nature of

journalism. The nature of journalism is not simply to say he said this and she said this; it is an attempt to dig and

to discover where the truth lies. I think part of the risk of the 24-hour news cycle is that we simply retreat to he

said, she said, one the one hand, on the other hand element. There is some of that reporting that goes on in the 24-

hour news cycle, and we do that too.

Senator Conroy: Extensively.



Mr Scott: But is there a role for digging? I simply say, to provide you wish some reassurance, is that it is not

just that a judgement is reached but that the thinking, rationale and facts behind that are then accrued. I expect that

there will from time to time be debate around that, and let that debate happen, but I can tell you there is debate

around our programming all the time. We do not always with a Four Corners, a Lateline, a 7:30 or a background

briefing seek the path of no controversy; we seek the path of good, robust journalism. That is why there might be

some risk in execution. There is risk in execution with a lot of what we do. We are confident that, with a good

team, good leadership and good policies, we should be able to execute it well.

Similarly, around Vote Compass: we thought very seriously about this. We talked with academics around the

world. We looked at how it had rolled out everywhere. I felt that, after the 2010 campaign, where there was very

serious criticism of the way the 24-hour news cycle dominated all levels of media coverage and the thirst there

seemed to be from some in our audience to dive deeper and engage with policy, we needed to look for some

mechanisms that enabled that. There was some controversy around the CBC element, but that was an early

rollout. The model has been fine-tuned since then. I really think that, if it were endemically biased against the

right as Senator Abetz had suggested, there is no way an organisation like The Wall Street Journal would have

embraced it, endorsed it and used it in the US campaign.

Senator BIRMINGHAM: That sort of makes my point there. That is a matter for the judgement of a private-

sector organisation to decide how they want to play a card.

Mr Scott: I am saying that, when we do the risk management of it, we have looked at the experience

elsewhere. Is there benefit for providing opportunities for some members of the audience who want to engage

more substantively around policy issues? We think there is.

Senator BIRMINGHAM: You do not need to give them a compass or a guide at the end of the day to engage

more substantively on policy issues. There are many ways you could provide deeper coverage of policy without

saying, 'And, by the way, that's where you stack up in how you should vote.'

Senator Conroy: If any ordinary Australian says, 'I want to work out which party will deliver a real NBN,' the

obvious vote pendulum is very simple. That vote compass will point to the Labor Party. It is just that simple. If an

ordinary bloke goes, 'I support the NBN,' it will just point straight at the Labor Party.

Senator BIRMINGHAM: Nobody could undermine your case than the guy sitting to your right, Mr Scott.

Mr Scott: I can assure you that Vote Compass is not going to—

Senator Conroy: Straight at the Labor Party.

Senator BIRMINGHAM: Is that how Vote Compass is going to work?

CHAIR: Order!

Mr Scott: Vote Compass in the incarnation that we are rolling out does not tell people how to vote.

Senator BIRMINGHAM: To a different issue quickly: how many times has Radio Australia's signal into

Asia been jammed over the last 12 months?

Mr Scott: I would have to check on that. My experience on this here and also in other media outlets is that

signals or website can go down or disappear from time to time and then come back. We are given no notice when

they go down and we are given no notice when they come back. It is a mystery to us in some respects.

Senator BIRMINGHAM: Is there a level of frequency?

Mr Scott: No. I would say it is at best from time to time.

Senator BIRMINGHAM: What does 'from time to time' mean?

Mr Scott: Two or three times I can recall over recent years. Often it emerges as a transmission issue. This is

short wave.

Senator BIRMINGHAM: Was there an issue earlier this year?

Mr Scott: There was an issue this year. For a period of time it went down and then came back.

Senator BIRMINGHAM: How long a period of time?

Mr Scott: Ten days or two weeks—something like that. I can check that and put it on notice.

Senator BIRMINGHAM: Ten days or two weeks is a rather long period of time to have your signal down.

Mr Scott: Yes, but, as I recall, there were numbers of international broadcasters whose radio signals could not

be heard in China for a period of time. We were simply aware that ours came back.

Senator BIRMINGHAM: The BBC said at the time that these actions were indicative of a well-resourced

country such as China. Is that something the ABC shares?



Mr Scott: We do not know a great deal about it. I think that, clearly, the ability to block websites or to block

short-wave transmission shows a level of technological capability. We can make our assumptions on what has

caused that even though I do not think it is always straightforward to know what a particular trigger was for that

level of intervention.

CHAIR: It could have been Menzies House!

Senator BIRMINGHAM: We wouldn't be blocking the signal into China though!

Senator Conroy: No, you'd just be installing someone's equipment!

Senator BIRMINGHAM: Mr Scott, you and Mr Spiegelman were in China a couple of months after the

nearly two weeks of signal blocking. Did you raise the issue with any authorities in China?

Mr Scott: It did not specifically feature in our discussions. We had been looking—and did—to sign a number

of memoranda of understanding with Chinese broadcasters, which creates opportunities for our radio and

television content to go to far broader audiences in China. There were formal and informal discussions around and

ease of distribution of content. The strategy that we have pursued over a number of years has been around getting

landing rights for Australia Network. One of the things we are now working more extensively on is delivering

blocks of our content to be delivered on Chinese broadcasters. Mr Spiegelman and I went to a location north of

Beijing where ABC Children's Television is doing a joint production with Central China Television. I expect that,

when that program lands, it will instantly find an audience far greater than any Australian television program

made in the 50-plus years of television in the country. So that was the focus of the planning of that meeting.

Senator BIRMINGHAM: Surely there are pretty limited prospects of getting landing rights for the Australia

Network in China if in recent times they have been blocking the Radio Australia signal for up to two weeks.

Mr Scott: You put a deep science and strategy to it. I would simply say that the BBC's radio service was not

available in China for that time but BBC Television does have landing rights. So one does not necessarily follow

the other at all.

Senator BIRMINGHAM: Okay. Last issue: is Mr Ross still covering technology issues for the ABC?

Senator Conroy: Oh, here we go!

Mr Scott: He is the editor of the technology and games section, yes.

Senator Conroy: Malcolm's intimidation continues to work at full. I am glad to see you are just his pawn.

Senator BIRMINGHAM: In response to some of Mr Ross's writings Media Watch looked at this matter on

11 March. Mr Bruce Belsham, head of ABC Current Affairs—

Senator Conroy: Keep running the intimidation routine.

Senator BIRMINGHAM: was quoted as 'having discussed with Mr Ross the importance of providing a

diversity of perspectives and the importance of analysis being underpinned by accurate information. He is aware

of the need to ensure this.'

Senator Conroy: He has been, and the truth hurts.

Senator BIRMINGHAM: Has he been counselled by ABC management?

Mr Scott: I understand there were discussions with him on his editing of the site.

Senator BIRMINGHAM: Has he been counselled on more than one occasion?

Mr Scott: I am not sure of the specifics of it. I would say that he reports into a line of the news division, so I

imagine there is ongoing discussion on the performance of the site and an ongoing discussion around his editing

of the site. That is the kind of editorial oversight that exists around every program for every editor.

Senator Conroy: Stop trying to intimidating him out of fact checking the proof of what fraudband Malcolm

Turnbull is offering to the Australian public. Just keep going, Senator Birmingham. You used to actually believe

in a few things, but clearly intimidation of ABC staff is high on your list.

Senator BIRMINGHAM: I believe you are an idiot. Honestly, this is the most unprofessional conduct I have

seen by a minister in any of these estimates over the three days.

Senator Conroy: You just sit there and keep intimidating ABC journalists on Malcolm's behalf, and you want

to talk about professional conduct?

Senator BIRMINGHAM: What is intimidating about what I have asked? I quoted Media Watch, and Mr

Scott confirmed the guy is being counselled. Honestly!

CHAIR: Okay—



Senator Conroy: Malcolm with the glass jaw. The truth really hurts.

CHAIR: Order, Senator Conroy!

Senator BIRMINGHAM: You are the precious one here, mate.

CHAIR: Senator Birmingham, you should note bite. You know what happens. Senator Williams.

Senator WILLIAMS: Thank you, chair. Mr Scott, I asked some time ago ABC television would ever

consider reintroducing a northern New South Wales bulletin each evening. Did that ever make any progress? I

think you said at the time it was something worth considering.

Mr Scott: What I think I indicated to you at the time was that fast broadband and digital media gives more

opportunity for us to distribute local video news conference and find audiences with it.

Senator Conroy: Except under their plan, to correct you. If you are going to use the copper, it is really going

to struggle.

Mr Scott: I think the prospect is of us being able to use digital television spectrum to do that and to break it in

for part of the state. Over time, there will be more localised video content. One of the things we were funded for

in the budget was for more state based current affairs coverage. We are keen that we get the local news element

right and deliver it to the biggest audience that we can.

Senator WILLIAMS: Good. Disregard Senator Conroy; of late, when the Sydney Swans have been thrashing

Collingwood, he gets very much on edge and quite intolerant!

Senator Conroy: It is all right; he's got me there! I'll have to shut up for at least five minutes now!

Senator WILLIAMS: Is the ABC going to broadcast from a tally room at the federal election?

Mr Scott: We are still working on that. It is a very interesting question.

Senator WILLIAMS: I notice some of the commercial channels will not be.

Mr Scott: We want to deliver the best service we can for audiences. We traditionally get a very big audience

on election night. Some of the state elections have moved away from the tally room. I think the last leader to

appear in the tally room goes back 20-plus years, so we will look at that and review that over time. We will let

people know when we have come to a final decision.

Senator WILLIAMS: On the election issue: ABC regional radio services is compelled to keep an accurate

log of political stories they run after the writs are issued—in other words, to see the balance on the record.

Mr Scott: Yes. We debate about it and still record share of voice, but the other thing we do is keep a log or

diary of where offers for interviews were made, because sometimes share of voice can get out of kilter because

one party or another does not want to be interviewed or want to appear on air. So we keep a pretty comprehensive

log of those matters.

Senator WILLIAMS: If someone lodged a complaint if they thought someone was being biased, how do they

complain and how speedily is that complaint dealt with bearing in mind the election would be just around the

corner?

Mr Scott: We do significant monitoring of our election campaign. You will see on our website that we have

good processes for people to lodge complaints. There is a 60-day window, but I appreciate that, if there were a

contentious issue during an election campaign, we would try to fast-track some of that.

Senator WILLIAMS: On another issue, earlier this month the ABC suspended rugby league caller David

Morrow for alleged racist comments before a game although that suspension has now been lifted. Was there no-

one on the studio panel in the broadcast who could have cut the remarks before they went to air? Have you

inquired into that?

Mr Scott: There was clearly a difficulty in the communication about that. He was live on air. The way that

radio operates, we go in to delay when we are dealing with the public. There is a seven-second delay and there is

somebody there ready to press the dump button on that. But often our broadcasts are not in delay.

CHAIR: I wish we could do that in Senate estimates.

Mr Scott: In fact, when our broadcasters are on air they are not in delay. We go into delay for that part so that

is why we could not have done anything.

Senator WILLIAMS: I think they are looking at a 14-second delay when they interview Senator Conroy.

How many complaints did you receive and what was the nature of those complaints about Mr Morrow?

Mr Scott: I would have to take the tally on notice. There were a number of concerns raised and I can get the

precise number.



Senator WILLIAMS: Could you also get the comments in support of Mr Morrow.

Mr Scott: I think I should add that the investigation is now complete. Mr Morrow has accepted these actions

were in breach of the editorial policies, the code of conduct and the ABC values. He has apologised for that.

There have been some consequences that have been noted for that. They will work their way out.

Senator WILLIAMS: I am of the opinion he is very popular. He has apologised. He is the best radio rugby

league caller you have. And now he is banned from calling NRL finals and State of Origin matches. I suppose we

all say things in life we wish we had not at some stage. Would it be considered at some time in the future that

David Morrow would be back calling NRL finals and State of Origin matches?

Mr Scott: As I understand it, that is for this year.

Senator WILLIAMS: So he may be back next year?

Mr Scott: Yes, that is right.

CHAIR: Senator Williams, could you have a talk to Senator Abetz about that set of values?

Senator WILLIAMS: Yes I could. I would like to hear him even call some AFL when the Swans are

thrashing Collingwood again.

Senator McKENZIE: Mr Scott, I have questions about how well resourced you feel the ABC is to deliver

that high-quality service. Would you say you are pretty well resourced?

Mr Scott: We get given a lot of money but we do a lot with it. We can compare the volume of our output

across domestically four television networks, five radio networks, a host of digital radio services and other online

services such as iview. I think we represent great value for money.

Senator McKENZIE: I think regional Australia would agree. Are there any areas you would consider

understaffed in the organisation?

Mr Scott: I am sure if you spoke to our staff they could identify many areas they feel are understaffed. We try

to manage this well. Broadly, a significant point is I saw some figures a little while ago that said the ABC has 25

per cent fewer staff than it had 25 years ago. If you compare the ABC now to 25 years ago, with less money in

real terms, with far fewer staff we create far more content.

Senator McKENZIE: You do. I am just conscious of time. I only have you for eight minutes and I have

already put a lot on notice. I appreciate that workplace has changed in 25 years.

Mr Scott: What we try and do is manage the workload of our staff so that with we are managing the output to

the staff that we have. If we had more staff and more dollars we would be able to create more output and invest it

in programming.

Senator McKENZIE: I want to be clear, from a management perspective, there are no significant issues of

understaffing either in geographies or in areas within the organisation?

Mr Scott: I can come back to you on notice on it. I think all our divisional heads would like more staff. I think

all our production teams would like more staff, but we manage best we can. The issue that remains a challenge for

us—the minister is across this and aware of this—is around capital. We are conscience that to be the kind of

broadcaster we are now in a digital era puts very significant demands on our capital budget. We are concerned

that we need more capital funding to fund the footprint of local radio stations and the eight state territory capitals

that we put out. We have had independent reports that have validated that. That is a matter we raised with the

previous government, we have raised with this government and we will continue to raise in our budgetary

negotiations.

Senator McKENZIE: I am taking it out of the PBS that you have got an average staff of 4,542. Could you let

me know on notice—unless you can get it quickly—how many staff are employed in the 51 regional radio

stations.

Mr Scott: We will take that on notice, yes.

Senator McKENZIE: I would also like a breakdown of full-time, part-time and casual. For those casuals, I

would like the average number of hours worked per week.

Mr Scott: We will get a team to work on that.

Senator McKENZIE: I am sure the statistics will be somewhere quite easy to find. In the regional radio

context, when you are delivering this diverse, high-quality service what happens when you cannot staff your local

radio stations—in times of staff going on holidays, for instance, or sickness or accidents?



Mr Scott: What we will sometimes do is just broaden the footprint of where the broadcast goes, so sometimes

an adjoining local radio station's program will go across. One area I would say we are watching and we are

concerned about is the increased demand that emergency broadcasting has brought to the ABC over the last

decade. I think it is true to say that there was not a weekend from the beginning of November to the end of March

that we were not emergency broadcasting somewhere in the country. Of course this hits us at the peak of summer,

which is a time when a lot of our staff are normally away. There seem to be more emergencies, and those

emergencies are declared earlier, and this has put us under significant pressure, particularly in radio and in

regional radio—remote areas as well.

Senator McKENZIE: Can you talk us through what broadening your footprint looks like on the ground?

Mr Scott: I will give you an example from New South Wales of how it works every night. The local radio

program out of 702 Sydney also goes to 1233 Newcastle, 666 Canberra and all through New South Wales. What

may happen if someone is away, and we cannot get a replacement in or the budget is particularly tight, is that a

local radio station on, say, the mid-north coast of Queensland would go into Far North Queensland and the

broadcaster would know that they are travelling all that way and their program would be tailored accordingly. We

flex that way quite often. We have national programs on local radio, we have state-wide programs and we have

programs that go into more than one local radio area.

Senator McKENZIE: Yes, I understand that in the evenings that tends to happen.

Mr Scott: And it will sometimes happen at breakfast or morning.

Senator McKENZIE: You said budgets are tight. Could you flesh that out?

Mr Scott: For example, emergency broadcasting is expensive. We can bring in extra staff, we can bring staff

in from leave, we have to fly them around—that comes out of the radio budget. If there is no more money in the

radio budget for that, sometimes Mr Pendleton provides supplementation but sometimes we have to make these

budgets work.

Senator McKENZIE: I am assuming that is program 1.1 on page 64. What proportion of the radio budget is

dedicated to or has been spent, maybe in the last 12 months, on emergency broadcasting? You are saying it comes

out of that?

Mr Pendleton: Yes.

Mr Scott: It comes out of that. Sometimes there is additional money that we have had to provide quarterly to

top it up.

Senator McKENZIE: I would like to see over time, since you have had that increased responsibility, what

impact that has had on your budget bottom line.

Mr Scott: Yes, we are happy to provide that.

Senator McKENZIE: In terms of how often you have had to increase your footprint—and I am thinking

particularly of morning radio in regional areas specifically, not Tony Delroy into Bendigo—

Mr Scott: There is no bigger footprint than Tony Delroy.

Senator McKENZIE: You are not telling me anything I do not already know! How often does that occur?

Mr Scott: I am sure we can give you a sense of that.

Senator McKENZIE: Mackay residents waking up to Mount Isa and Bendigo waking up to Ballarat might

seem quite close together when you have got the big map, but they are very distinct communities with very

diverse needs. In the ABC's desire to grow their digital footprint and the different technologies they are using to

communicate their news to us, it is very important to remember that you do not just operate in your five city

metropolitan markets. Your greatest percentage of listeners are in regional Australia and they deserve to get a

quality service.

CHAIR: We have run out of time, Senator.

Senator McKENZIE: I look forward to getting your answers. If there are 30 seconds, I have direct

representation from a member in my party room who is most concerned about spending public money—

CHAIR: But Senator Abetz is already here!

Senator McKENZIE: No, actually, this is a true Bourke-ian representation moment. I would like to know the

amount of public money that has been spent on the program Minuscule.

Mr Scott: It is an acquisition.

Senator McKENZIE: It is and it is a French program.



Mr Scott: No program divides our audience more with passionate supporters and those who detest it. Which

category does your question come from?

Senator McKENZIE: I cannot tell you that, but please note: there are seven credit slides in what is less than a

five-minute program.

Mr Scott: Animation does that. I thank you for—

Senator McKENZIE: Details of the cost of this French program in public dollars would be appreciated.

Mr Scott: Yes, Senator.

Senator McKENZIE: And also an explanation of why your major presenters—your big names; your Tony

Joneses of the world—are on salary packages.

CHAIR: Mr Scott, you should take that on notice. I am glad the National Party are interested in Minuscule—I

am not surprised.

Committee Suspended from 21:02 to 21:22

Telecommunications Universal Service Management Agency

CHAIR: Welcome, Mr Lomdahl. I am not sure if this is your first appearance.

Mr Lomdahl: Yes, it is.

CHAIR: Welcome to estimates. Also, broadcasting have indicated that they have a problem with telephones

interfering with the microphones, so please try to keep mobile phones away from the mikes. We have lost all of

Senator Abetz's tirade against the ABC because of bad communications—only kidding! Thank you for attending

today, Mr Lomdahl. Would you like to make an opening statement?

Mr Lomdahl: Thank you, Mr Chairman and Senators, I have a very brief introductory statement. The role of

the Telecommunications Universal Service Management Agency is to administer contracts and grants to ensure

that all Australians have reasonable access to universal telecommunications and public interest services. TUSMA

commences a process of moving to a flexible and innovative contract based model. Tonight I would like to update

the committee and provide some background about my role. I commenced as the permanent CEO of TUSMA in

November 2012. The role of the CEO is to manage the day-to-day operations of TUSMA. My staff and I provide

advice to the chairman and members, who are responsible for decisions about TUSMA contracts and grants. We

operate in a transparent and accountable manner. We will publish the first TUSMA corporate plan by 30 June this

year. We have set out details of the contracts we administer on our website and report on the performance of

contracts in our annual report.

A key focus in our first year has been the competitive tender for the National Relay Service, which is an

Australia-wide phone service for people who are deaf or have a hearing or speech impairment. After the

completion of a successful tender process, the minister announced two new service contracts: one is for the

operation of the National Relay Service and the second is for supporting outreach and communications services.

The new contracts take effect from 1 July 2013. They continue and improve existing services and allow us to

introduce new services. The improvements include a two-way internet relay service, a smart phone application, an

improved website and extended helpdesk hours. The new services are an SMS relay service, including access to

emergency services, a video relay service and web based caption telephony. The new services will be provided

within the existing National Relay Service budget, highlighting the value and innovation that is possible through a

competitive tender process. News services will deliver major improvements to the national relay service that will

make a real difference to people who are deaf or have a hearing or speech impairment. Services will be rolled out

from 1 July progressively to allow users to become familiar with each service as it becomes available.

Our other priorities for this year include continued management of standard telephone service and payphones

under the universal service obligation; and emergency call services and safety net arrangements for the NBN. The

safety net arrangements mean people who have basic telephone services will be assisted to migrate to the fibre

network, and we will also support communications to make sure they are adequately informed of their options.

Under the TUSMA agreement with Telstra, regulatory determination set out the performance standards for the

USO services, and we will report on outcomes later this year.

Finally, I would like to note the contribution of our acting chairman and acting CEO and provide some details

about our new chairman Mark Darass. On 23 February the minister announced the appointment of Mr Darass for

a four-year term. Mr Darass was the Deputy Chairman of Australia Post. He is special counsel with Sparke

Helmore Lawyers, a director of John Holland Engineering and has been a member of the Takeovers Panel since

early 2012.



Finally, I would like to take the opportunity to acknowledge the contribution of the acting CEO Sylvia

Spaseski and the acting chairman Peter Harris to the establishment of the agency. Mr Harris and Ms Spaseski set a

strong direction for the agency and recruited a team of enthusiastic and professional staff who I have the pleasure

of working with. Thank you for the opportunity to update the committee.

Senator McKENZIE: Telstra has contractual obligations to provide telephone services to all Australians. Is

TUSMA aware of any instances of Telstra failing to provide telephone services to a premise because the NBN is

to be switched on at that premise in the near future?

Mr Lomdahl: I am not aware of a specific example but, if there is a specific example, then I would be happy

to take up the example and investigate it.

Senator Conroy: Could you just explain?

Senator McKENZIE: My question was is: TUSMA aware, not am I aware—

Senator Conroy: No. I just wanted you to, if you could assist the committee, explain the context of your

question.

Senator McKENZIE: The context of my question is: I would like to know if TUSMA is aware of where

Telstra has failed to provide a telephone service as a result of the NBN being about to be connected. My

understanding of the answer was: they are not immediately aware but are going to check whether they are aware.

Senator Conroy: I am seeking clarification on whether or not, for instance, it was the NBN was about to be

connected the next day or within three months, six months or 12 months? There is a policy reason for asking for

that context, because it depends on whether or not it is a particular period of time. Telstra have some exemptions

but must provide a telephone service in most cases, depending on what the exemptions are so that is the context I

was seeking to understand from you, Senator McKenzie. It is a fairly broad question in the way you have phrased

it. There are occasional cases that I am made aware of where customers are told by representatives of Telstra that

no, they are not going to connect and then, after some discussion, it is determined what the legal position is. There

are criteria.

Mr Lomdahl: There are regulatory determinations that Telstra must meet under the universal service

obligation, so we would be happy to investigate any particular case.

Senator McKENZIE: Thank you but I am asking if there are cases. I am more than happy, if you have made

decisions that that were well within the bounds of the regulations and common sense prevailed, for you to set that

out and if there are other instances where that may not have been the case. What is the process for people to

complain about Telstra not complying with its contractual obligations in relation to the provision of a standard

telephone service?

Mr Lomdahl: There are a number of avenues open to customers who have got complaints.

Senator McKENZIE: I have never had to make one so, if you could just outline them for me, that would be

great.

Mr Lomdahl: The usual process is that customers are encouraged to directly contact their retail service

provider. If they do not get satisfaction through that avenue, they have the option of going to the

Telecommunications Industry Ombudsman. In relation to the performance standards that I oversee through the

contracts, they could certainly draw breaches to my attention and to the attention of TUSMA. Similarly, ACMA

polices regulatory standards. So dissatisfied customers could contact ACMA in relation to those matters. There

are a wide range of avenues open to people who have problems with their services.

Senator McKENZIE: How does TUSMA work with the TIO to ensure that Telstra is complying with its

contractual obligations?

Mr Lomdahl: We have had a number of initial discussions with the Telecommunications Industry

Ombudsman. As we get the point where we are assessing Telstra's performance, I envisage that we will sit down

and consult with them. We have certain duties in legislation to provide them with information about our activities.

So we see that there is an opportunity to consult with the Telecommunications Industry Ombudsman about

performance of the contractor under the contracts.

Senator McKENZIE: So there is the opportunity to have that conversation. Do you have regular—

Mr Lomdahl: We have had several conversations with the Telecommunications Industry Ombudsman so far.

Senator McKENZIE: Who were they instigated by—you or them?

Mr Lomdahl: I have visited the TIO and we have had a number of meetings with them. Both parties are

interested in having that conversation and dialogue about the outcomes for customers with the



telecommunications service, whether Telstra is meeting its obligations under the TIO scheme and whether Telstra

is meeting its obligations under the various regulatory determinations that it has to meet.

Senator McKENZIE: Is Telstra subject to penalties for not complying with its contracts with TUSMA?

Mr Lomdahl: There are provisions in the contract which require them to notify us of a material breach. We

can ask them to take action to rectify breaches. We have the right, if they do not rectify them, to withhold

payments to them. So there are performance clauses. In the case of an extended failure to comply with the

conditions of the contract, there are more drastic solutions even leading to the termination of the agreement. But

there are a range of mechanisms in the contract for us to address any failures.

Senator McKENZIE: They are the ones that will actually let you know? They notify you?

Mr Lomdahl: We have regular contact with Telstra to discuss their performance. If we are aware of breaches,

we will draw those matters to their attention and ask, 'What steps are you taking to rectify these matters?' or 'What

is the situation in this particular case?'

Senator McKENZIE: Where do you gather that information from so that you can actually walk in to your

conversations with Telstra with that?

Mr Lomdahl: This is our first year of operation. We are endeavouring to set up contact with appropriate

stakeholder groups and community groups.

Senator McKENZIE: Such as?

Mr Lomdahl: For example, in the last couple of weeks I have been to the Local Government Association of

Queensland. I visited the Isolated Children Parents' Association and the New South Wales farmers' federation. We

have programs that we are endeavouring to roll out. That is a mechanism. I would also encourage groups or

consumers that have problems with their telecommunications that are relevant to our responsibilities to contact us

directly. In relation to things like the National Relay Service, we are setting up formal consultative arrangements

with groups representing the deaf community to make sure that they are involved in the provision of the service

and can give us feedback on the quality of the service. So I see that there are a range of mechanisms that I can put

in place to get feedback directly as well as receiving the official reporting from Telstra.

Senator McKENZIE: According to the DBCDE's guide to migration of voice-only services, 12 months after

NBN services are activated there is a first stocktake period where regional service providers have to identify the

remaining voice-only customers who have not migrated over to the NBN yet. Given that the NBN presented

material to the joint NBN committee indicating that eight sites had been activated for a period of greater than 52

weeks, can you tell me how the migration is tracking?

Mr Lomdahl: Our responsibilities are in relation to what is called fibre serving area modules that are being

disconnected. The first of those are being disconnected in May of 2014, working back from May 2014 by six

months, through retail service providers we will be sending letters to consumers with voice services, because

those are the sorts of consumers that we are responsible for under the safety net arrangements. We will be sending

letters to those consumers informing them that they need to take action to connect to the NBN or their service will

be disconnected. We also be funding telephone calls to priority assistance customers, those are customers with

medical conditions, to make sure that that contact is followed up. After those activities, if customers have not

moved, we were also going to fund a further contact program to make sure that the customer is adequately

informed. That will be in addition to all of the communication activities that the NBN will be undertaking, so we

will be at the end of quite an intensive communication process in those areas.

Senator McKENZIE: In October 2012 the NBN Co. informed that the first disconnections of roughly 25,000

houses would be occurring in November, despite the fact that some sites have already been connected to the NBN

for 32 months. Is there a reason why the first disconnections are going to happen after the September election?

Mr Lomdahl: I could not comment on—

Senator CONROY: I do not think Mr Lomdahl can comment on either the timing of the federal election or—

Senator McKENZIE: Is there a reason why the first disconnections are going to happen after September?

Mr Lomdahl: That is a matter for NBN Co.

Senator CONROY: You might want to ask them.

Mr Lomdahl: I have got responsibility for contacting customers when these dates are set by NBN but I have

no control over their schedule.

Senator McKENZIE: As of November, approximately 25,000 premises will be the first to be disconnected

from Telstra's legacy copper network—four sites in Armidale, Brunswick, George Town, Kiama, Kingston, South



Morang, St Helens, Townsville, et cetera. Some of these sites, as of March 31st, have take-up as low as 15.7 per

cent, specifically that relates to South Morang in Tasmania.

Senator CONROY: And how long had that been open?

Senator McKENZIE: I am not aware of that. So my question is: do you have a comment to make around why

the process of migration of services has been slow in these areas, given that you are going to be tasked with the

shifting? You have outlined a staged communication process to make that happen in conjunction with the

communication that the NBN Co. will be conducting. I guess you would be watching these closely to have some

understanding of why people shift and how best to shift them.

Mr Lomdahl: It is my understanding that the first release sites for those FSAMS that will be disconnected

will be disconnected in May 2014 In the lead-up to those events, we will be working with the retail service

providers to make sure that we are contacting the voice-only customers that have not disconnected. I am really not

in a position to comment on take-up rates; it is a matter for the NBN Co.

Senator CONROY: Sorry, can I just clarify, which areas were you referring to? Can you just tell me the

suburbs again?

Senator McKENZIE: Four sites in Armidale, Brunswick, Deloraine, George Town, Kiama, Kingston, South

Morang, St Helens, Townsville, Triabunna and—

Senator CONROY: I think you are probably working on some older—

Senator McKENZIE: I might be.

Senator CONROY: or a little bit out of date now figures, that was the only point I wanted to make. I mean I

am happy to, I think, and I am sure Senator Birmingham is familiar with it. This is an NBN Co. presentation to, I

think, CommsDay, which I suspect has slightly more updated figures than March. I am guessing, I cannot quite

see.

Senator McKENZIE: That is fine, Minister. My question actually goes to TUSMA's role in assisting in the

migration. That was merely an example of issues of migration and what thinking TUSMA had put into migrating

people across. I think it is a fair enough question. I may have used an out-of-date example—

Senator Conroy: It is a fair question. You confused me because you described South Morang as being in

Tasmania. That is what really threw me.

Senator McKENZIE: Yes, I did. I thought it was a suburb of Melbourne.

Senator Conroy: Yes, it is. I suspect you are referring to South Hobart. That was why I specifically said,

'What date?' I was thrown because South Morang has not been on that long. I just needed to clarify that because it

did genuinely confuse me.

Senator McKENZIE: Thank you.

Mr Lomdahl: Our task is to identify the voice-only customers who have not migrated and to make sure that

they are contacted in a timely way and then to follow up those who still have not migrated after we have

undertaken the first rounds of contact.

Senator McKENZIE: The reasons why they have or have not migrated, or convincing them of the virtues, is

not something that has played a part in your thinking of the communication strategy?

Mr Lomdahl: We want to have the clearest possible communication to those customers, and we will work

with the retail service providers and NBN to get any understanding of why people may not have migrated and

tailor messages appropriately. It is really a matter of having the simplest to understand kind of communication to

people saying, 'Well, if this service is going to be disconnected you won't have a telephone service. Please do

something.'

Senator McKENZIE: That is pretty clear.

Senator Conroy: One of the other reasons that I did start asking questions of you, Senator McKenzie, was

that I thought your characterisation, particularly if it was based on outdated information, was just fundamentally

wrong in terms of take-up. They are world leading take-up rates.

Senator BIRMINGHAM: They might be world leading, Minister, but 'world leading' is a description, not a

fact, and you might try to address that.

Senator Conroy: They are world leading if you compare it to dial-up, ADSL, HFC or even Verizon fibres.

Senator BIRMINGHAM: Do you want to tell us the take-up rate for South Hobart?



Senator Conroy: I do not have it handy because I got confused between South Morang being in Hobart, and

South Hobart.

Senator McKENZIE: Can I have the take-up rate for Morang and South Hobart.

Senator Conroy: I will see if I can find the information during the course of the evening for you. I am just

looking at a very interesting chart here that NBN Co. published.

Senator BIRMINGHAM: I have seen plenty of NBN charts over the years. Most of them do not come true.

Senator Conroy: This is a reporting of fact.

Senator McKENZIE: Has TUSMA begun paying any RSPs for reasonable connection costs? Can you please

tell me how many instances this payment has been incurred. What are the total costs for payments to RSPs to

date?

Mr Lomdahl: We have not started paying retail service providers at this point. We will be paying them after

they undertake the activities, which will be at those milestone dates I mentioned before. The first round of activity

would be November of this year.

Senator McKENZIE: When you say 'activity', does that mean completion of work? Or is it a culmination of

work that is occurring now for the RSPs?

Mr Lomdahl: It will have to be following them undertaking the work and whatever review and audit

processes we put in place. We are negotiating the arrangements at the moment, and when they are finalised I

would be in a position to tell you the payment arrangements. But, of course, we would have to make sure the

work is undertaken and appropriately tested.

Senator McKENZIE: DBCDE's guide to migration of voice-only services states that RSPs can seek

reimbursement from TUSMA for reasonable connection costs incurred in connecting eligible voice-only

customers to voice-only services on the NBN fibre network. Is TUSMA aware of how other incentives for voice-

only service providers may affect their inclination to migrate users?

Mr Lomdahl: I am not sure of the nature of the question. Are there other incentives being put in place by

retail service providers to get customers to take up their offers?

Senator McKENZIE: Yes. That is one aspect of the question, and what impact and have you done any

analysis?

Mr Lomdahl: We have not done any analysis of that. I have to say a lot of the activity to date that you see in

the market has been about attracting customers to take up broadband and bundle offers. That has been the main

focus of the activity that you see in the market to date.

Senator McKENZIE: According to an analysis by JP Morgan there are few incentives for existing voice-only

customers to migrate to voice-only services on the NBN. Current Telstra voice only services start from $22.95 a

month, but JP Morgan's analysis states: 'An NBN voice-only service would cost the provider about $24.30 a

month in NBN charges. In a competitive market, providers are likely to offer voice as a low-cost upgrade to a

broadband package or encourage them to use a VoIP phone or an analogue telephone adapter over their

broadband service. Meanwhile, a basic mobile plan can be had for around $30 a months. In this context, we

cannot see enough space in the price spectrum for voice only. Customers will migrate to broadband plus voice,

broadband only with VoIP or mobile.' Does TUSMA share the view that the incentives for voice-only customers

are stacked against migration to the NBN?

Senator CONROY: You are now asking an opinion of the officer and it is a longstanding practice that you

cannot ask for an opinion.

Senator McKENZIE: Okay.

Senator CONROY: It may be that you want to rephrase the question.

Senator McKENZIE: Could you comment on JP Morgan's assessment of the market?

Senator CONROY: No. Mr Lomdahl's job is not to comment on merchant bank's view of the world. He is

here to answer your questions about Senate estimates. If you would like me to answer, I would just say they are

wrong.

Senator McKENZIE: Thank you, Minister—how novel.

Senator CONROY: Perhaps, you might get a chance tomorrow to ask Mr Quigley or the NBN officers what

the switchover is like, how many people have already switched over to voice only et cetera, so you get some

factual information as opposed to speculation from a merchant bank.



Senator McKENZIE: I asked a question earlier about the incentives. Mr Lomdahl mentioned that he was

aware of incentives out in the market. It will play into the conversation he is going to have to have with citizens

around the migration and I would appreciate his perspective. And I am assuming if he is wanting to make that as

successful as possible on your behalf for the NBN then he will have had to have done some analysis.

CHAIR: Senator McKenzie, you are asking for an opinion.

Senator CONROY: He can give you a factual analysis of how many people have moved from X service to Y

service and things like that. But to ask him what does he think about—

Senator McKENZIE: Has TUSMA done any analysis along similar lines?

Mr Lomdahl: We take a rather defined view of our responsibilities—namely that we would have to contact

customers who have not migrated. If there are any insights to be gained on why they have not migrated, we will

take that on board. But it is a bit early in the process for us to comment on that.

Senator CONROY: You are probably expanding their purview of responsibility a little bit, but it is a very fair

question.

Senator McKENZIE: You will be looking at that between the letter and this follow-up.

Mr Lomdahl: If there are any insights into why people have not migrated that can help us shape the

communication, perhaps because they speak a foreign language or a particular demographic group, then that

would help us tailor the communications. That is the sort of thing that I have in mind.

Senator McKENZIE: Thank you.

CHAIR: Thanks Mr Lomdahl. That concludes the discussion with TUSMA. I now call officers from the

Australian Communications and Media Authority.

Australian Communications and Media Authority

[21:49]

CHAIR: Mr Chapman, would like to make an opening statement.

Mr Chapman: No thank you.

Senator BIRMINGHAM: I want to get through a range of issues tonight so we will bolt through some of

them quickly. Can ACMA provide a progress report on the development of the plan to transition wireless

microphones out of the 700 megahertz band?

Ms Cahill: We have been working with the wireless microphone community since 2010 and the

announcement of the realisation of the digital dividend. Since that time we have provided a raft of information in

relation to the possibilities of use of the mobile digital dividend for wireless microphones. We have provided

information on our website in relation to the progress report as well as an indicative channel plan, which gives an

indication where the white space—which is how the wireless microphones are used—can be used into the future.

We have also more recently updated a LIPD—low interference potential devices—class licence, which indicates

how long wireless microphones can be used in the digital dividend spectrum. We have also indicated and

provided links on our website to the department's website which provides the restacked timetable. We have been

working very closely with the sector for two years and have provided advice and assistance.

We are also in the process of updating further information in relation to supply to the market of equipment. We

will be requiring suppliers to provide information in relation to the availability of the equipment to be purchased

and for how long it can be used in the digital dividend. There is a lot of information currently out there. We are

very on-board in relation to providing the transition plan that was required by the committee recently.

Senator BIRMINGHAM: What is the budget for this transition plan?

Ms Cahill: The budget for the transition plan is that it will be absorbed within the current operating budget of

the communications infrastructure division. We have not identified a separate budget. Through the course of our

normal consultations and any major activity associated with spectrum refarming or changing is part of our

ongoing activities.

Senator BIRMINGHAM: And you believe that communications with users of such services and equipment

can be met within your existing arrangements?

Ms Cahill: We are being very innovative in our approach. One of the more recent innovations we have used is

to use the eBay and Google ad words. If you type in 'wireless microphones' the first thing that comes up on the

site is information about the ACMA's process and the use of those devices. They are very cost-effective means.

Significant members of this community will reach through our website electronic means as well as direct mailouts

to peak bodies. We feel that is sufficient.



Senator BIRMINGHAM: How, for example, would a typical school music teacher be advised that their

equipment may need to be replaced?

Ms Cahill: The ACMA is going to produce a series of Q&As, which we will provide to the full raft of people

who are actually captured and use wireless microphone. We will be doing major mailouts to school associations,

parents and citizens associations, churches and other community groups. We also will be directing those people to

our website as well as the website of the suppliers of wireless microphone equipment, who will be providing

details on exactly where by state or by postcode wireless microphones can be used, which make and model can

still be used in relation to the transition.

Senator BIRMINGHAM: What expertise will be made available to assist schools or anybody else to ensure

that they have the right equipment and are able to operate on the right band for their devices?

Ms Cahill: We have been working closely with the suppliers of the equipment, so firstly those who will be

supplying the equipment to the market will be required to provide information to new purchasers. We also

encourage, as part of our mailout and web information, current users to deal with the suppliers or go to their peak

group in the state who will provide advice on the make and model of the equipment that the person has, whether it

can still be used, and if it can still be used how it might be retuned and if it cannot be reused, what options there

might be for new equipment.

Senator BIRMINGHAM: What is the average value of such devices that might be held and is there any

financial assistance that anybody may be able to access as a result of them becoming redundant?

Ms Cahill: Given the wide and disparate use of this equipment, we are talking about professional industry

sectors where equipment could cost into the many tens of thousands of dollars to a piece of equipment that you

might purchase from a local supplier which might cost you $25. It is very difficult with any accuracy to provide

you with the information you request.

Senator BIRMINGHAM: Is there any waste strategy in place to deal with the removal and disposal of this

equipment?

Ms Cahill: Not at this stage, no.

Senator BIRMINGHAM: Has the ACMA looked at that or is it in discussions with the environment

department or anybody else?

Ms Cahill: We have not had direct discussions with the environment department.

Senator BIRMINGHAM: Will you be looking into it?

Ms Cahill: We certainly will.

Senator BIRMINGHAM: How many individual users visit the ACMA website every month?

Mr Chapman: We will have to take that on notice—I am not sure.

Senator BIRMINGHAM: Okay, but the type of advertising you are undertaking through Google and

otherwise will be attempting to drive people to your information services as well?

Ms Cahill: Yes it will.

Senator BIRMINGHAM: Does the ACMA believe there are any suburbs or business districts where

insufficient spectrum will be available following the restack for the continuance of normal business use in this

type of area?

Ms Cahill: No, we are fairly confident that the processes put in place will ensure that there is still, as we have

committed to do, a transition path for wireless microphone users. It may be that some will have to retune

equipment, it might be that some will have to purchase new equipment, but in terms of the material spectrum that

would have been available it is comparable, in terms of volume, to what is available now.

Senator BIRMINGHAM: Have there been any concerns from industry about whether appropriate spectrum

is going to be available?

Ms Cahill: There have been concerns from industry in relation to certainty around where the spectrum might

be available rather than, I would believe, the amount of spectrum. There have been concerns expressed about lack

of clarity about where exactly these white space devices can operate.

Senator BIRMINGHAM: Have the successful bidders, such as they are, for the 700 megahertz spectrum

been advised by ACMA of the extent of the users of wireless microphones that could still be trying to use that

spectrum after 1 January 2015?



Ms Cahill: As part of the process of disclosure in relation to the information provided to potential bidders,

there was information provided that there is a clearance process around wireless microphones. Certainly it has

been out in the public domain that there is a clearance process around wireless microphones.

Senator BIRMINGHAM: When you say a clearance process, what is the commitment or otherwise that has

been given to Optus or Telstra that they will take possession of clear spectrum, free of interference from these

devices?

Ms Cahill: The ACMA's amendment in relation to the low-powered devices means that at the end of

December 2014 wireless microphones will not be able to be operated as a licensed product. Use will be illegal.

Senator BIRMINGHAM: So you are going to prosecute the local music teacher or parish priest who is

illegally using their wireless microphone—no.

Ms Cahill: The ACMA has a graduated approach. We would assist in relation to making sure that everybody

is complying with the requirements of the licensing frameworks.

Senator Conroy: We are confident we will have resolved that, but here is your big chance, Senator

Birmingham: would you like to make an election commitment about some funding for the transition—here is your

big chance. Come on! Chance your arm.

Senator BIRMINGHAM: Are you, Minister?

Senator Conroy: Chance your arm. Come on. Just say you are going to put X dollars on the table if you get

elected.

Senator BIRMINGHAM: I did not think you were, Minister.

Senator Conroy: It was your big chance to steal the show.

Senator BIRMINGHAM: ACMA has made frequent references to the ability of some wireless audio devices

to be retuned. What proportion of devices currently operating the 700 megahertz band are realistically capable of

being retuned?

Ms Cahill: I would have to take that on notice. I do not have the details.

Senator BIRMINGHAM: Are you acting on advice when you talk about the potential for retuning; and is

there a realistic belief that it is a significant enough part to hold out that hope for people?

Ms Cahill: There is a raft of equipment, as I have said, that ranges from very sophisticated equipment used by

professional production houses that have significant tune ranges. The details of that I do not have but I will take

that on notice.

Senator BIRMINGHAM: You talked before about a graduated approach to compliance. What is that

graduated approach that will be applied in this instance?

Ms Cahill: The ACMA's general approach in matters of areas of unlicensed operation or in breach of licensed

conditions is that we work, firstly, to educate the person who is the licence holder and to achieve compliance. A

lot of the time it is because people are unaware of their obligations, so part of that is the education role. We can

escalate, should it be a matter that is of a grievous nature, and we can issue a penalty in lieu of infringement, a

penalty in lieu of prosecution. We can under the Radiocommunications Act—

Senator Conroy: We are confident we will be able to avoid any of those sorts of issues, Senator Birmingham,

and, any time you want to make any commitments about it, feel free to take to the microphone. We are confident

that we will avoid any of those sorts of issues.

Senator BIRMINGHAM: Thanks, Senator Conroy. I am delighted in your confidence and I am pleased to

know that you are confident. It was a rather factual question that I think Ms Cahill was answering in terms of

what the graduated approach to compliance is. I think Ms Cahill was almost at the end of her answer.

Ms Cahill: I will clarify: I was just responding in terms of the general approach, and of course there are other

mechanisms that we could use. Our first approach, however, is to achieve compliance through education and

awareness with all licence holders.

Mr Chapman: Expressed another way, Senator, we typically, right across the full range of what we do,

communicate, we tolerate, we educate and we escalate and the ultimate actions taken are very dependent on

circumstances. In this particular case, what you are alluding to is that there will be many, particularly

professionals, who are doing it in an amateur way. We find many examples where class licence usage cuts across

APRA artists spectrum licensing and we approach it in an escalated way with sympathy and understanding for

circumstances. That is our usual practice and that is what we would do if this circumstance arose.



Senator BIRMINGHAM: With regard to newly imported equipment, I understand there is or will be a

labelling requirement in place. When will that requirement be put in place—or has it already been?

Ms Cahill: We are in the throes of finalising the discussion paper on that. We expect to release that in the next

two weeks. We expect that that will come into force by August this year.

Senator BIRMINGHAM: So by August this year it will be a requirement for newly imported equipment to

carry some type of—

Ms Cahill: Advice to purchasers.

Senator BIRMINGHAM: Is there a strategy for existing stock and stock that will be imported prior to

August this year?

Ms Cahill: We have been made aware by the major suppliers into Australia that they have not been importing

equipment that is going to be impacted by this matter. They have been working to ensure that that product is not

available to the market. We do not have a direct strategy in relation to the equipment that has been supplied that is

already out there, so that is where we are going to use our education awareness roles.

Senator BIRMINGHAM: Just to be clear, the major suppliers are not importing stuff that will not work

anyway?

Ms Cahill: That is what they have indicated to ACMA in our discussions with them.

Senator BIRMINGHAM: For the sake of completeness or surety, you are still going ahead with a labelling

requirement in any event?

Ms Cahill: That is right.

Senator BIRMINGHAM: Will it be a labelling requirement with a limited life applying through the

transition period but then lifted? Or will it be something that will continue until a future ACMA or government

decides to remove it?

Ms Cahill: It will continue until there is a future decision to remove it.

Senator BIRMINGHAM: Is there a reason why it needs to be ongoing? Once you get to a certain point,

surely it can be lifted easily enough and not remain as a regulatory burden?

Ms Cahill: I am sure that will be the case. At this point, however, it is hard to predict exactly how long we

may need that regime in place. We will, as with all our regulatory instruments and regimes, review that as, in this

case, the issue matures and we transition.

Senator BIRMINGHAM: Has any consideration been given or is any consideration being given to pairing

the 733 and the 748 megahertz sections to create a 25 megahertz band available for wireless audio devices, even if

it is just as an interim measure until relisting of spectrum for auction?

Ms Cahill: I would have to take that on notice. I am sorry, but I do not have the details.

Senator BIRMINGHAM: Moving along, can I just quickly deal with a couple of tender questions. ACMA

published a tender to do with economic analysis of commercial broadcasting program requirements for a cost of

$79,639 on 12 April 2013. What is the purpose of this tender or project?

Ms McNeill: The purpose of this research is to inform an inquiry that we are conducting. We have called it the

'contemporary community safeguards inquiry'. The idea behind it is to establish the core principles that should

guide the content of broadcasting codes in a contemporary environment. We see the economic research as being a

valuable input because it will help us assess the costs of the current regulatory obligations in codes. So it will be

an important input into that inquiry's process.

Senator BIRMINGHAM: Who is undertaking it?

Ms McNeill: I think the tender has been let to PwC.

Senator BIRMINGHAM: Is there any requirements of the broadcasters in terms of their participation in this

or is PwC simply looking at it on the basis of the codes and information provided by ACMA?

Ms McNeill: They will use a range of inputs, but we are seeking input from the broadcasters.

Senator BIRMINGHAM: Will the study be made publicly available?

Ms McNeill: No decision has been made on that but, given that it is informing the inquiry and the inquiry will

have a public-facing output, my expectation currently is that the outcomes of the research at least will be evident

in the course of the outputs of that inquiry.

Senator BIRMINGHAM: On 3 January ACMA published another tender for a contract value of $37,800 for

a digital citizenship consultancy. What is that?



Dr Wright: Part of our Cybersmart remit is to look at the role of Australians in an increasingly digital society

and digital economy. This research focuses perhaps less on responding to problems that have emerged and more

on the positive approach to educating citizens on identifying the types of offline ethics and principles that guide

their lives that translate into the online world and then matching the tools that we have in our Cybersmart program

to those. For example, you could take a quiz on how cybersmart you are or how good a digital citizen you are. If

you got two out of five you would then be directed to particular resources that would help you skill up in that

area. If you get six out of seven you are directed elsewhere. If you get 10 out of 10 basically we just direct you to

have a look at Tagged because it is fun.

Senator BIRMINGHAM: That contract period, in theory, is complete. So you have received information to

inform your work there, Ms Wright?

Dr Wright: Yes.

Senator BIRMINGHAM: Is that work being released to the public?

Dr Wright: We are looking to release it shortly. I think it will be midyear. At the moment we are mapping, for

example, our own resources best to the various pillars of cybercitizenship to see how it can be a living program

where people can further enhance their skills to participate in the digital economy and digital society. I think we

are one to two months away from launch.

Senator BIRMINGHAM: I await the launch with bated breath. What is the status of the television regulation

of live odds betting, from ACMA'S perspective?

Senator Conroy: Can you just be a little clearer? Do you mean the registration process going ahead at the

moment—

Senator BIRMINGHAM: I mean the processes that currently exist in terms of the code being developed and

changed. There are changes to the code underway. Indeed, there were updates from the industry and the

government in the last week on what will be in and what will be out and where it is at in terms of becoming a

formally recognised part of the code.

Senator Conroy: I am not sure Mr Chapman would have received a letter from me yet, but I have written to

Free TV just confirming what to the Prime Minister announced on Sunday. I think Free TV have indicated that

they will submit a revised code to ACMA. But I doubt ACMA has received that yet. So I am not sure they can

give you much of an update. Perhaps there is something Mr Chapman might be able to add.

Mr Chapman: I will let Ms McNeill lead.

Ms McNeill: I can articulate for you what the current code provisions are around gambling promotions, but

none of those are directed specifically at live odds. As the minister has made clear, we have not received any

proposed codes for registration since the minister made her announcement last Sunday.

Senator Conroy: I should just say that officers have let me know that we did copy the letter that we sent to

Free TV to Mr Chapman.

Senator BIRMINGHAM: Have ACMA had any cause to have discussions with Free TV since Sunday's

announcement by the Prime Minister about the timeline for presentation of a revised code?

Mr Chapman: I have spoken, as has Ms McNeill, to the chief executive of Free TV. He has indicated to me

that they are going to be working expeditiously to get us a code seeking registration. I acknowledge that. We

likewise will, upon receipt, work expeditiously to go through the various steps we are required to under section

123 of the Broadcasting Services Act. The short answer your question is, yes, I have spoken to the chief executive

of Free TV.

Senator BIRMINGHAM: How quickly can Free TV do that within a regulatory framework? Is there a

mandatory consultation period, et cetera, that will still apply?

Senator Conroy: Before Mr Chapman jumps in, could I indicate that a letter sought the broadcasters to

submit the revised code by 10 June. Notwithstanding that, I am sure Mr Chapman will outline the ACMA

process. We have also indicated we expect it to be in force, at least voluntarily, while the final parts of the

registration are done by the TV stations themselves.

Senator BIRMINGHAM: Sorry, Minister, you got a little quiet towards the end. You also expect it to be in

force by regulation or voluntarily if the regulation cannot be in force.

Senator Conroy: There is a process which Mr Chapman or Ms McNeill will take you through.

Senator BIRMINGHAM: Is that an expectation by 10 June as well?



Senator Conroy: We have indicated to the TV stations that we expect them to start enforcing it once they

have submitted it.

Senator BIRMINGHAM: And it has to be standard by 10 June?

Senator Conroy: Yes. Then there is the process which Ms McNeill will take you through now.

Ms McNeill: Senator, in response to your question concerning a mandatory consultation period, there is no

mandatory consultation period under the Broadcasting Services Act. Before the ACMA can register a code it has

to be satisfied that members of the public have been given an adequate opportunity to comment on the code. It is

an interesting situation in which we potentially will find ourselves because each of the broadcaster groups, I think,

has been out to public consultation on a proposed code in relation to live odds already. Once we have the revised

proposed codes we will be able to make an assessment about whether members of the public have been given an

adequate opportunity to comment on them.

Senator BIRMINGHAM: Minister, have you had any conversations with Premier Weatherill about his

proposals for South Australia and how they may interact with, or conflict with, the federal proposals that you have

outline?

Senator Conroy: I have not spoken to Mr Weatherill. I think officers may have been in touch over the last

week or so.

Senator BIRMINGHAM: Perhaps on notice of sorts you can ensure that before we get to the broadcasting

section of the department tomorrow, which is probably the relevant place to ask those questions of

communication between your officers.

Senator Conroy: I am aware there have been communications.

Senator BIRMINGHAM: I am sure your office can ensure you are briefed by whatever time we get to the

section tomorrow.

Senator BILYK: Last week was National Cyber Security Awareness Week, can somebody update me on

what ACMA did in regard to that?

Dr Wright: Yes, I would be delighted to do that, Senator. One of the things that we published last week was

what was considered some positive news on young people's actions in relation to managing their digital reputation

and their digital footprint. Our research has shown us that the majority of 12- to 17-year-olds are actually setting

their profiles to private on social networking sites.

Senator BILYK: Even if they should not be on them until they are 13.

Dr Wright: Increasingly private messaging is being used by teens. For example, for 16- to 17-year-olds in the

period that we were in the field, 89 per cent of them were using private messaging during that period. We are very

pleased with this outcome. As you know we devote a number of our resources and programs to assisting young

people to manage their digital reputation. We were very pleased to have the positive feedback that these programs

are assisting. I refer, for example, to the fact that we have resources on our website. Since the launch of that

cybersmart website in the middle of 2009 we have 2.6 million visits to the site. We get about 73,000 visits a

month and that is steadily rising. We have particular resources that do educate and empower young people. For

example, we have Zippep's Circus for the littlies. We have Hector's World, NetBasics and the Cybersmart

Challenge suite of activities for young people to explore those issues in relation to privacy and digital reputation.

We feature in all our lesson plans and our presentations to schools information in that area. In fact, we are very

frequently told by teachers—especially in upper primary and lower secondary school—that after one of our

presentations to students the young people say, 'The first thing I'm going to do tonight when I go home is put my

settings on private.' We think that that is a pretty good outcome.

Senator BILYK: Was the research that you mentioned done by ACMA or independently?

Dr Wright: The one on digital reputation that I just referred to was commissioned research. We have plans to

release the full research report midyear, but we particularly wanted to highlight those positive results at this time

when there is a lot of focus on kids and their security concerns. Overall, it is a broad study. It particularly focused

on young people and social networking. We commissioned that research and we will use it as a lens over the

resources that we have to work out what we should refresh, what we should discard and what we need to develop.

This research will be a major follow up to the Click and connect report that was released in 2010. We know that

many other entities and organisations in the cyber space in Australia drew very heavily on that research to shape

programs and messaging. We would anticipate that this research study will have a similar effect.

Senator BILYK: Is the outreach program still going strongly?



Dr Wright: It is going very strongly; in fact, it is going so strongly that we have just had a revamp of that

professional development training that we provide free to teachers. It is a day session. We now have a foundation

module and we have moved to some customised modules so that the particular schools can choose out of the

series of modules which are the ones that focus most on their issues. We want to offer that extra choice and

flexibility. We are piloting that this term.

Senator BILYK: Where will that be piloted? Have you targeted some schools or a specific state?

Dr Wright: All the schools that we will be visiting at that time will have that choice. It is a pilot in the sense

that we will then assess who it is working and whether those additional modules are hitting the spot. As you

know, the content of our day long professional development programs are usually completely refreshed every six

months.

Senator BILYK: Do you have any statistics with you—and if not, could you take this on notice—about how

many schools that you have been to since the beginning of the financial year?

Dr Wright: Overall, since we launched the program we have approached 76,000 teachers. We will reach 700

teachers in those face-to-face day long presentations per month.

Senator BILYK: I know that you do this, but I just want to check that you still do it. I have attended some of

it. Do you do things for parents as well? Is that still running?

Dr Wright: Yes, we do that. Through those school presentations to parents, we reach about 1,600 parents a

month through those various schools.

Senator BILYK: Okay. It sounds like great work. The other thing that I wanted to ask about was the citizen

conversation forums. Can someone tell me what they are going to be about and how the public can get involved? I

do not think that they have started yet.

Ms McNeill: This takes us back into the territory of the contemporary community safeguards inquiry that I

flagged earlier. In fact, the ACMA has conducted two citizen conversations over the last couple of years. Both of

them had a focus on young people. One was focused on young people in a changing media world. The other was

focused on children's television. But we have an exciting program of citizen conversations coming up in June.

There are six public events, which we invite anyone who is interested to participate in, either in person at our

Sydney officer. They will be webcast and there will be an opportunity to participate through social media.

The first day sees two conversations, one dealing with classification and the time shifting audience and the

second one dealing with decency and the regulations in broadcasting around content that ought not be broadcast.

The second pair of citizen conversations are focused on the news and facts side of things. They are focused on

accuracy but also on fairness and the presentation of viewpoints. The third paired citizen conversation day will

see one session focused on privacy protections and broadcasting and a second one focused on advertising in a

changing media world. They are the conversations. I have the dates to hand for all readers of Hansard who might

be interested in attending.

Senator BILYK: Can you apply to go or do you have to be invited to attend?

Ms McNeill: The registrations are open on our website. If we are deluged with hundreds of subscribers, which

we would be delighted with, then we might need to make some difficult calls. But registrations are open at the

moment. The dates for each of the sessions are as follows: 6 June is the classification and decency pairing,

Tuesday 18 June is the accuracy and fairness and balanced viewpoints pairing and 25 June is advertising and the

changing world and privacy pairing.

Senator BILYK: Thanks for that.

CHAIR: Just on that one on decency, I always get a bit concerned that it is code for stifling different points of

view. Who are the speakers? Are there different points of view on this?

Ms McNeill: There will be different points of view on this. I do not have the speaker panel list to hand, but I

think that it has already been published on our website.

CHAIR: I tried to find it but I could not.

Ms McNeill: For both the classification and the decency sessions there are a range of views. We have what

you would call libertarians and we have people with a particular interest in the protection of children. We—

CHAIR: They are not the two opposite ends. Being a libertarian does not mean that you do not protect

children.

Ms McNeill: Indeed.



Senator BIRMINGHAM: I refuse to let you embarrass your wife by talking about 50 Shades of Grey again,

Senator Cameron!

CHAIR: Thanks very much! I am still in trouble.

Senator BILYK: You are never out of trouble.

Senator SINGH: I will come to your aid and move right along. I wanted to pick up on some questions from

Senator Birmingham in relation to the government's new announcement of the new limits on sports betting

advertising during TV broadcasts. The process has been fairly well canvassed. Obviously, it is in a bit of a

holding pattern or waiting situation until new codes are presented to ACMA. Have you received complaints about

gambling ads that are broadcast? Do you know how frequently gambling ads appear during live broadcasts of

sport? Do you have any kind of data in that regard and particularly on how frequently gambling ads appear during

times when children would be watching—children's viewing times?

Ms McNeill: In answer to the question about whether we receive complaints in this space, I can tell you that

in the calendar year to date we have received 22 email complaints about gambling advertising in sports

broadcasts. That is the first part of the question. We do not currently have information available about the

frequency or intensity of gambling advertising.

Senator SINGH: Okay. Has ACMA done any work looking at whether gambling or gambling advertising is

harmful or detrimental to certain members of the population, namely children?

Ms McNeill: We have in fact commissioned some qualitative research into community standards and attitudes

about live odds and gambling advertising, but not into what you I think that you are describing as the social harms

potentially associated either with gambling or the promotion of gambling activities.

Senator SINGH: What is the qualitative research that you have done?

Ms McNeill: It is in the field at the moment.

Senator SINGH: When are you hoping that you will have that?

Ms McNeill: We are expecting top line results imminently. We would expect to have an analysis of those

results available within weeks.

Senator SINGH: You provided some kind of guidelines or terms of reference or the like to whoever is doing

the research.

Ms McNeill: Yes. That is right. It is a relatively modest undertaking. A series of questions have gone out to

quite a significantly sized group, but I do not have the numbers with me.

Senator SINGH: Okay. You did not think about looking at whether there are harmful effects? That did not

come into the picture?

Ms McNeill: Not by way of canvassing the community. That is a more scientific undertaking. It is much more

likely that that style of information would be available through literature research rather than through a

community survey.

Senator SINGH: Okay. Thank you.

Senator LUDLAM: Do we have the right people at the table to ask about uses of section 313 of the

Telecommunications Act to block website?

Senator Conroy: Are you still hunting for that central agency that is coordinating it?

Senator LUDLAM: Maybe I have found them. I have been waiting for this all week.

Mr Chapman: When you say 'the right people', Ms McNeill has a tangential exposure to 313, so I will let her

lead.

Senator LUDLAM: Ms McNeill, we will try to keep this on message. Please go ahead.

Mr Chapman: On what aspects?

Senator Conroy: If you were to ask a question, that would help.

Senator LUDLAM: Yes. I will. Is anyone in ACMA aware of the extent of the use of section 313 of the

Telecommunication Act to block websites? Start with the AFP. We know that ASIC is doing it. Who else is doing

it?

Ms McNeill: The knowledge that I have is gleaned from a meeting convened by the department recently at

which a number of agencies were represented.



Senator LUDLAM: All right. I was not at that meeting, so that would be a really good place to start. When

did it occur and who was there?

Ms McNeill: The meeting occurred on 22 May.

Mr Chapman: Before we go on—

Senator Conroy: That was a meeting convened by my department, I think. The questions are probably best

directed to them. They are coming up shortly, as in tomorrow morning, so we could—

Senator LUDLAM: The department?

Senator CONROY: Yes.

Senator LUDLAM: That is okay. I am not asking ACMA to answer any questions outside its ambit. Because

Senator Conroy was kind enough to inform us on Monday night that no-one is in charge, I need to go agency by

agency to find out who knows what. That is what I am doing.

Senator Conroy: Have you used any?

Mr Chapman: We have no direct responsibility for 313 notices. I frankly think that having been invited to a

meeting not organised by the ACMA, it is not appropriate for us to relate second hand what we gleaned from that

meeting.

Senator LUDLAM: Okay. Does ACMA have any formal or ongoing role in the AFP's use of these notices to

compel ISPs to block against the Interpol list; the 'worst-of' list?

Ms McNeill: It has no formal ongoing role.

Senator LUDLAM: Is that purely between the Federal Police and the service providers?

Ms McNeill: It is. The only way in which potentially the ACMA could be drawn into that is by reason of its

role in administering and enforcing the Telecommunications Act.

Senator LUDLAM: These notices are being issued pursuant to your aim with that—is that correct?

Senator Conroy: It is not the ACMA's act.

Mr Chapman: We are not responsible for every line and provision in that act. We have a number of

responsibilities that reside within that act. Those provisions in that act actually empower other federal and state

enforcement agencies, and we are not one of those.

Senator LUDLAM: I shall leave it there. We will pick this up in the morning with the department.

Senator BIRMINGHAM: I go to the issue of the spectrum auction that was recently completed. Mr

Chapman, you were recently quoted as describing the spectrum auction as flawless. How can you suggest it is

flawless when the outcome clearly did not deliver the results that the government was seeking?

Mr Chapman: The ACMA is charged with the responsibility of the most effective allocation and use of

spectrum in the national interest. Those objectives are set out in the Radiocommunications Act. We have just

released, through the auction program, 200 megahertz of spectrum for wireless broadband. It is the realisation of

about a 10-year program, when you think back to the start of digitalisation. The comments that you are alluding to

are accurate and they are attributed to me. I was talking about the ACMA's execution against our role. We

planned the planning of the digital dividend spectrum in a 700-megahertz band; we released 126 megahertz of

spectrum, the largest quality digital dividend released in the world; we worked to refarm the 2.5-gigahertz

spectrum. As you would be aware, 700 megahertz and 2.5 gigahertz have strong complementarity. We devised an

auction program through the combinatorial clock auction that had the capacity to allow package bids and

therefore not stranded assets, and it had the internal capacity to deal with both low demand and high demand

scenarios. We developed the software auction methodology. We had a risk that there would be poor engagement

with potential participants in view of the CCA complexity. I think we effected a very tight and highly engaging

stakeholder strategy to overcome that risk. We started the auction program and completed it within the

foreshadowed time period. We released 200 megahertz of spectrum. My consultations with those participants

confirmed the professionalism of what the ACMA did in that role. So, from my perspective, we executed

flawlessly.

Senator LUDLAM: Thanks, Mr Chapman. I appreciate that the ACMA had to operate within the directions

of the government as well in doing so. I pick up on one statement you made, just to get an understanding. You

said that one of the risks was poor engagement in view of the CCA complexity. Could you explain that, for

knowledge as much as anything?

Mr Chapman: The CCA, the combinatorial clock auction—



Senator Conroy: How long do you have?

Mr Chapman: software program is the leading and most enhanced auction software methodology that can be

employed. It has some leading-edge features that can be intimidating to people who use it for the first time. It can

suppress an understanding of the way in which participants should work their way through the clock rounds, the

supplementary rounds and the assignment rounds. That can lead to some unexpected consequences. That was the

case in our auction. We worked our way through the clock rounds, the supplementary round and the assignment

round. I was at pains to establish with each of the participants their level of comfort about their knowledge, the

nuances of that process and the various strategies they may employ. They each confirmed to me that they were

thoroughly satisfied with that stakeholder engagement and that they felt very comfortable going to the process.

Indeed, after the process they felt that they got what they bargained for and that the process was seamless and

flawless.

Senator BIRMINGHAM: Is it accurate to say that optimal utilisation of spectrum is a policy objective?

Mr Tanner: It may be semantics, but we are principally engaged, through the Radiocommunications Act,

with the most efficient allocation and use of spectrum in the national interest. If you are talking about what I am

talking about, then the answer is yes.

Senator BIRMINGHAM: Is it the most efficient and appropriate allocation of spectrum not to utilise it?

Mr Tanner: The principal objective I just outlined is not the only objective set out in the

Radiocommunications Act. ACMA generally is injuncted to work consistently with government policy, and

ACMA also recognises that the government of the day has, through the minister, the prerogative to arbitrate, if it

sees it is necessary, between the risk of not selling all the spectrum and the risk of selling the spectrum for an

inadequate return to the public purse—consolidated revenue. There are no easy answers to that trade-off. ACMA

was cognisant of those right throughout. There is a very healthy balance between ACMA's role and the

government's ability through formal directions to make the ultimate judgment call.

Senator BIRMINGHAM: Numerous commentators, not just those associated with any particular company in

the process, have been predicting there may be a failure to successfully sell all the bundles of spectrum prior to

going into this auction for some time in advance of it, and they have been highlighting concerns such as the dig

market and the lack of participants, and of course, related to that, the setting of the reserve price by the minister.

Did ACMA express concerns in the lead-up to the auction? Are there concerns that it may fail to—

Senator Conroy: Officers at the table are not in a position to go to the content of advice.

Senator BIRMINGHAM: Then you can tell us, Minister.

Senator Conroy: You can ask, 'Did you give advice?'

Senator BIRMINGHAM: Did you receive advice, Minister?

Senator Conroy: I am not going to reveal to you advice that is passed backwards and forwards from ACMA

to the government. But the government made its decision after Vodaphone indicated it would not be participating.

So there was a very strong chance there would be only two participants in the auction for the 700, as turned out to

be the case.

Senator BIRMINGHAM: Mr Chapman, once the minister accepted the reserve price, were there additional

steps that you tried to take to facilitate a successful auction process, given the reserve price that had been set?

Mr Chapman: You might need to help me out with that question, Senator. I am not quite sure what you are

trying to tease out of me.

Senator BIRMINGHAM: Did you do or try to do anything different in the conduct of the auction process,

following the minister's intervention in setting the reserve price against the recommendations of ACMA, that you

would not have done had ACMA's recommendation for the reserve price stood?

Mr Chapman: I have just consulted with Mr Tanner who, as you know, was the general manager responsible

for the digital transition division and had conduct of the auction within his bailiwick. We think the answer to your

question is no. We were cognisant always that we needed to provide a system that had the inbuilt agility to deal

with high and low demand scenarios that dealt with a reserve price established by us or by the minister. I cannot

think of one thing we changed, in the overarching construct of what we did, that was affected by the minister's

formal direction on reserve price.

Mr Tanner: We were clearly cognisant, and the government was cognisant after communications from Voda

in September last year, of the real risk of unsold lots. Our combinatorial clock auction, like any worthwhile high

spaced allocation system of allocating spectrum, deals with an imbalance, with supply exceeding demand by

basically functioning so as to sell at the reserve price. The CCA was as ready to deal with the contingency of



unsold lots as it was to deal with any other contingency. Once we had the reserve price we had the auction ready

to go and the auction proceeded. It has built into its system the capacity to deal with that contingency. We were

aware of that, but there was nothing to change inside the auction.

Senator BIRMINGHAM: Is there a difference, as some commentators have said, between the use of a

starting price mechanism in an auction versus a reserve price mechanism in an auction? Was it a change in

historical practice at ACMA to opt for a reserve price type mechanism?

Mr Tanner: I was not in those organisations at the time the auctions were run, but my understanding is that

the Australian Communications Authority and the Spectrum Management Agency, which are the antithesis of this

part of ACMA's function, conducted a series of often very major auctions during the late 1990s and early

noughties. A couple of those options were very lucrative. ACMA and the SMA did use starting prices. Basically,

as I understand it, those starting prices perform the function of reserve prices. I understand that, at least in some

cases, they were often relatively low compared to the reserves we use today. You see very wide variations in

reserve prices overseas in more recent auctions. There is not a lot of difference between the starting price and the

reserve price, but the starting prices used in some auctions were considerably lower.

Senator BIRMINGHAM: Would that be an attempt to attract more bidders to the process?

Mr Tanner: When you are setting a reserve price you are doing a number of things, but the critical thing is

balancing two risk. One is the risk you will not settle all your property—and you will potentially do that if you

pitch your price high and if there is low demand—and the other is that in a shallow market, a market where there

is not a lot of demand relative to supply, you will cause the lots to be sold at a return which is unreasonable for

the vendor.

If you want a generalisation about spectrum auctions around the world, what you do see quite frequently is

that, where there is confidence that demand is going to exceed supply, there is a preference to set reserve prices

relatively low and allow the auction bidding to set the market price. The bidders learn a great deal about the

valuation of other bidders from watching the behaviour of the auction. So, if you are relatively confident there is

going to be an excess of demand over supply, you will find that the administrations tend to pitch the reserve

relatively low and let the bidders do the work. If there are grounds to believe that there is going to be a surplus of

supply over demand, the reserve price is pitched higher if your concern is that the properties not all go at a fire

sale and the vendor be dudded.

In our present option I would make the observation with the 2.5 lots, there was considerably more evidence by

September, October, November last year that there was a surplus of demand over supply then there was for 700

was for seven hundred. The reason for our pessimism about 700 was the withdrawal from the auction of one of

three mobile players in the country. In those circumstances, I guess, we had a considerable apprehension that

demand was shallow and may not outstrip supply at any reasonable price. With 2.5, we did have such an

apprehension.

When you look at the reserve prices you will find that the ACMA actually set a lower reserve, relative to

international values obtained for 2.5 than the minister set for 700. That is quite a predictable thing to see in a

scenario when you are anticipating that the supply is too large for demand at the time the auction is being held.

Senator CONROY: If I can add—just because you have drawn attention to commentary, which continues to

be misinformed, partially due to Mr Turnbull and yourself—Vodafone, as I have stated already, I think

withdrew—

Senator BIRMINGHAM: There are far bigger experts than me in this one, Minister.

Senator CONROY: Vodafone withdrew in October and November, I think, as the Mr Tanner indicated—they

did not indicate the publically, but they did indicate that to us. And, if I can quote you from Mr Russell who now

runs Optus in Australia, he said:

'We required 700[MHz spectrum] for core 4G coverage—in-building coverage in metro and broader geographic coverage in

regional,' Russell said on a media call as Optus released its financial results for the quarter ending 31 March.

Our view from the start was that 10MHz of spectrum would be more than adequate in terms of delivering that capability.”

He goes on to say:

The coverage element is more than satisfied by the 10MHz of 700 …

So commentary is just that: commentary. The hard facts are that there were two bidders and, as Optus have

indicated afterwards, they were probably only looking for 10.

Senator BIRMINGHAM: So, Minister, are you confident you got the optimal result out of your interventions

in this?



Senator CONROY: I am sure that Treasury and Finance would have preferred to have more bidders. It is

always the case but it was an auction and, as Mr Chapman said, it was very efficiently run. In Australia we have

three now—four possibly, as a new entrant did actually purchase some of the spectrum, despite clamouring

analysis. I remember breathless analysis from you, Mr Turnbull and others saying there would be no bidders. But

there were two bidders and—three? Three in the other?

Mr Chapman: Three and the 2.5.

Senator CONROY: Three and—2½. So commentary, which you are quoting from beforehand, is, you know,

fish-and-chip wrapping today.

CHAIR: Thanks, Senator Birmingham. I have got some questions now on the issue of consumer service by

ACMA. I have just been looking at the Ofcom website and done a comparison with yours—Ofcom is the UK

regulator. They have what they call their price accreditation scheme logo. Are you aware of that? They do what

they describe as rigorous, independent audits for companies who provide advice to consumers about the best deal.

Are you aware of that?

Ms McNeill: Senator, I do have some knowledge of this. I understand it is an accreditation scheme so that

rather than, for example, the regulator doing its own assessment of the best deals, they accredit companies to

publish information about the best deals—typically in telephony, I think.

CHAIR: There are six companies in the UK: two are accredited for mobiles; two are accredited for digital TV

and cable, landline and broadband services; and two do broadband services on their own. I just had a look at it,

and you would have some confidence that the regulator is saying: 'Here's where you can get a decent comparison.'

Because one of the most complicated things, I suppose—and it is getting more complicated with packages—is

getting a decent deal for all the telecommunications equipment that you are using.

Has ACMA given any thought to providing such a service to consumers here? I looked for companies that are

providing this advice and there is a range. I would not have a clue if any of them are a bit like the health

companies that just do a deal with a number of health funds and they really spruik the health funds. It is an issue

we should have a look at. If you have not had a look at it, do you have the capacity to do something like that? Do

you think it would be appropriate and is it within your remit to do something like that?

Ms McNeill: The difficulty that consumers face, as you say, when they are making choices between complex

products and services ought not to be underestimated. It is something we are acutely conscious of that the agency

traversed when it conducted its Reconnecting the Customer inquiry. Coming out of that inquiry were a raft of

code improvements which enhance transparency and make it simpler for consumers to compare offerings across

providers. That includes not only through the critical information summaries that providers are obliged to now

provide to people, which allow comparison between providers across the key information that those summaries

contained, but also pricing information. The cost of a two-minute call, a SMS and a megabyte of data can all be

directly compared. I accept they are a different proposition from commercially available sources or endorsement

of the sources, but we think that they are important improvements in transparency.

CHAIR: Where are you doing these?

Ms McNeill: These were outcomes which are embedded in the Telecommunications Consumer Protection

Code. A series of very significant improvements over the previous version—

CHAIR: The companies have got to comply with these?

Ms McNeill: That is correct.

CHAIR: This is different from what I am talking about, as you are aware. What I am talking about is that

Ofcom provide a service that says we have looked at these comparison companies, we have given them our seal

of approval so you can go there confidently and know that you are dealing with a reputable company. One click

on the Ofcom website will take you to this area you would think would be safe, regulated and available to

consumers. Would that be something that is in your remit? Is it something you should look at? Is it a service you

should provide to consumers in Australia? I think there is a proliferation of companies that say we can get you the

best deal but that do not tell you they only do the best deal for a number of companies at a price—that is the

problem.

Mr Chapman: When we launched our Reconnecting the Customer inquiry 2010-11, it led to the enhanced

Telecommunications Consumer Protection Code 2012, which is now the most complete, holistic, advanced

consumer protection in telco space in the OECD.

Behaviour economics and people's inability to adequately process comparative information, which is in part

what you are alluding to, was at the forefront of what we did. We took the most pragmatic course we could within



the confines of our act. One of the things that occured to us at that time was the production of league tables. It is

not an idea that we have let go of. We decided, to be honest, to approach it in stages. We have now got the TCP

code bedded in. We have been very active in the auditing and enforcement. And I think there is a mindset change

within the telcos in Australia. They, I think, are very grateful the race to the bottom in customer care is over. You

will have seen, over the last several months, each of the chief executives of the major telco companies talk about

the new telco company for them is owning the customer and keeping the costumer—

CHAIR: I have heard all these anecdotes before, Mr Chapman. Owning the customer does not really turn me

on, I must say, when it comes from some companies.

Senator Conroy: I am not sure we need to know what turns you on, Senator Cameron, but we appreciate the

sentiment!

Mr Chapman: What I was going to finish that observation with was that we concluded at the time that we did

not necessarily have the legislative remit and the protection afforded by legislation to be seen to be endorsing

companies or to be accrediting. That was my recollection from 2011. What I would like to do is take your query

on notice and give you a better answer.

CHAIR: Could you also look at Ofcom and what their legislative capacity is to deal with it? If we have a

problem, we should deal with. I think consumers need that support from ACMA to get a decent deal.

Mr Chapman: Certainly, Chairman, I will do that.

CHAIR: Thanks very much. Once again, it has been very interesting.

Senator Conroy: Sorry, I think we have just got some information.

Ms McNeill: Sorry, Senator. There is just one matter that I wanted to clarify while we had the opportunity,

and it might be appropriate to draw it to Senator Ludlam's attention. Earlier in the evening in response to a line of

questioning, there was a question raised about whether the ACMA could rely on section 313 of the

Telecommunications Act and seek assistance from carriage service providers for the purposes specified in that

section. The answer is that we can but have not done so. I just wanted to clarify that matter.

CHAIR: Thank you.

Senator Conroy: Chair, before you conclude, it has been noted that the process of the auction was, as Mr

Chapman said, first class. I just wanted to particularly note that. For those of us who are not aficionados and do

not quite follow it as closely as Mr Tanner does, the process was overseen by him and, as has been noted, it was

an excellent process. I did have to, at various times, get trapped in a room with Mr Tanner. With the amount of

planning, preparation and organisation that went into something like that auction, it is easy just to tick it off and

say, 'Great,' but I think Mr Tanner deserves some recognition for doing a very first-class job in pulling it together

over many years. It is not something that happens easily, so I just wanted to put on the record appreciation for Mr

Tanner's—

Senator BIRMINGHAM: I think those of us who have been confused—

Senator Conroy: I was trying to be kind, Senator Birmingham.

Senator BIRMINGHAM: appreciate fully his professionalism, skills and knowledge.

CHAIR: Especially on the clock auction.

Senator Conroy: I think we should have special estimates just on the clock once more.

CHAIR: Thanks very much, Mr Chapman, and I thank the officers. I thank the minister and all officers for

their attendance. The committee will continue examination of this portfolio at 9 am tomorrow morning. Senators

are reminded that written questions on notice should be provided to the secretariat by close of business

Wednesday, 12 June. A resolution to accept all documents has been moved and passed.

Committee adjourned at 23:03

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