senate · 1998-01-21 · mr anthony cowley chair—i declare open this public hearing of the...

COMMONWEALTH OF AUSTRALIA

SENATE

Official Committee HansardFINANCE AND PUBLIC ADMINISTRATION LEGISLA-

TION COMMITTEE

Consideration of Estimates

THURSDAY, 20 NOVEMBER 1997

CANBERRA

BY AUTHORITY OF THE SENATECANBERRA 1997

INTERNET

The Proof and Official Hansards of the Senate and the House ofRepresentatives debates, and the Proof and Official Hansards of

committee hearings are available on the Internet

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CONTENTS

THURSDAY, 20 NOVEMBER

Department of Finance and Administration—Program 4—Corporate Services. . . . . . . . . . . . . . . . . . . . . . . . . . . 496Program 6—APS Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502Program 8—Commonwealth Grants Commission. . . . . . . . . . . . . . . 548Program 5—Commonwealth Civilian Superannuation Policy. . . . . . . 550Program 9—Commonwealth Superannuation Administration. . . . . . . 550Program 7—Ministerial and parliamentary services. . . . . . . . . . . . . 557Program 4—Corporate Services. . . . . . . . . . . . . . . . . . . . . . . . . . . 593Program 7—Ministerial and parliamentary services. . . . . . . . . . . . . 595Program 12—Australian Electoral Commission. . . . . . . . . . . . . . . . 625

Thursday, 20 November 1997 SENATE—Legislation F&PA 493

SENATE

Thursday, 20 November 1997

FINANCE AND PUBLIC ADMINISTRATION LEGISLATION COMMITTEE

Portfolios: Parliament; Prime Minister and Cabinet; Finance and Administration

Members: Senator Gibson(Chair), Senator Murray(Deputy Chair), Senators Heffernan,Lundy, Ray and Watson

The committee met at 9.09 a.m.

DEPARTMENT OF FINANCE AND ADMINISTRATIONProposed additional expenditure, $157,853,000 (Document A)Proposed additional expenditure $27,220,000 (Document C)Consideration resumed from 14 November.

In AttendanceSenator Minchin, Special Minister of State

Department of Finance and AdministrationMr Len Early, Deputy SecretaryMr John Mackay, Deputy Secretary, APS ServicesMr Paul Goodwin, Branch Manager, Budget Policy and Coordination

Program 4Mr Daryl Wight, Branch Manager, Human ResourcesMr Martin Bowen, Branch Manager, Accounting ServicesMr Helmut Simon, Acting Branch Manager, Information ServicesMr Mark Molloy, Branch Manager, Support ServicesMs Julia Burns, Branch Manager, Support ServicesMr Rod Gibson, Branch Manager, Support ServicesMr Simon Ash, Branch Manager, Finance

Program 5Mr Graham Millar, Branch Manager, Commonwealth Superannuation GroupMs Sandra Wilson, Branch Manager, Commonwealth Superannuation Group

Program 6Mr John Mackay, Deputy Secretary, APS ServicesMs Julie McKinnon, First Assistant Secretary, Domestic PropertyMr Arthur Gallery, Branch Manager, Domestic PropertyMr Vic Adams, Branch Manager, Domestic PropertyMr Trevor Barrell, First Assistant Secretary, Overseas Property

FINANCE AND PUBLIC ADMINISTRATION

F&PA 494 SENATE—Legislation Thursday, 20 November 1997

Mr Paul Migus, First Assistant Secretary, Contract ManagementMr Ian Woonton, First Assistant Secretary, Business ClosuresMr Arthur Hardy, Branch Manager, Business ClosuresMr Ken Sweeney, Branch Manager, Removals Australia

Program 7Mr Bill Peel, A/g General Manager, Ministerial and Parliamentary ServicesMr John Gavin, Assistant General Manager, Entitlements and ReportingMr Neil Smail, Assistant General Manager, Security and SupportMr Phil Gouldson, Assistant General Manager, VIP TransportMr David Medley, Manager, FinanceMs Sue Whisker, Senior Officer, Entitlements and ReportingMr Paul Ferrari, Senior Officer, Entitlements and Reporting

Program 8Commonwealth Grants Commission

Mr Dick Rye, ChairmanMr Bob Searle, Secretary

Program 9ComSuper

Ms Christine Goode, CommissionerMr John McCullagh, Assistant Commissioner, Business Management Branch

Program 10OGIT

Ms Dianna Banks, Assistant Secretary, Telecommunications and Government SystemsMs Anne Steward, Assistant Secretary, Strategic Planning and PolicyMr Steve Fielding, Project Director, Year 2000 Project Office

Program 11OAS & IT Outsourcing

Mr Mike Hutchinson, Chief ExecutiveMr Peter Elliott, Business ManagerMr Simon Lewis, Acting Executive Director, Aviation and Defence IndustryMr Robin Renwick, Acting Senior Director, Aviation and Defence IndustryMr Tony Eaton, Acting Senior Director, Aviation and Defence IndustryMr Clive Davidson, Executive Director, TelstraJan Mason, Senior Director, TelstraMr David Yarra, Senior Director, TelstraMr Jonathan Hutson, Acting Executive Director, Trade SalesMr Mark Heazlett, Senior Director, Trade SalesJudy Hurditch, Special Adviser, Trade Sales



Mr Ross Smith, Executive Coordinator, IT OutsourcingMr Mike Herron, Assistant Secretary, IT OutsourcingMs Gillian Marks, Executive Director, IT OutsourcingMs Trixie Makay, Acting Assistant Secretary, IT OutsourcingMr Tim Stafford, Director, Administration, IT Outsourcing

Program 12

Australian Electoral Commission

Mr Bill Gray, Electoral Commissioner

Mr Andy Becker, Deputy Electoral Commissioner

Mr Phil Skinner, Assistant Commissioner, Corporate Services

Mr Paul Dacey, Assistant Commissioner, Development and Research

Mr David Kerslake, Assistant Commissioner, Industrial Elections and Funding andDisclosures

Mr Tim Pickering, Assistant Commissioner, Information Technology

Mr Brien Hallett, Director, Information

Program 13

Australian National Audit Office

Mr Ian McPhee, Acting Auditor-General

Mr W. Nelson, National Business Manager, Financial Audit Business Unit

Mr John Meert, Group Director, Performance Audit Business Unit

Ms Gwyn Thompson, Executive Director, Corporate Management

Mr Gordon Mackney, Chief Finance Officer, Resource Management and AnalysisDepartment of Finance and Administration Observers—

Mr Bernie HackettMr Geoff RossMr Anthony CowleyCHAIR —I declare open this public hearing of the Finance and Public Administration

Legislation Committee. Today we are continuing our consideration of the additional estimatesin respect of the finance and administration portfolio. We are to resume at program 4, but thereare a couple of general questions which result from the minister’s advance which was tabledyesterday. Prior notice of that was given previously. Welcome, Minister and officers from thedepartment. Are there any general questions on the advance?

Senator ROBERT RAY—Just trying to close down one of the items we raised last time,Mr Goodwin: we asked you about the advance to the minister and reconciliation, et cetera.They were tabled yesterday in the Senate. They have been referred as always to estimatescommittees, and five have already completed their deliberations. Mr Goodwin, on page 288when you were asked whether this was the thing you said, ‘Not to my knowledge.’ And thenI really admired your next words: ‘I could be corrected on that’, which is very smart. Haveyou been corrected on that just a little?



Mr Goodwin —I certainly have, Senator.

Senator ROBERT RAY—Would you like to explain what the normal procedure is, whyyou did not meet the deadline, and what the circumstances were.

Mr Goodwin —The normal procedure is that we complete the section 36A document andpass it to the National Audit Office for checking and clearance. Once that process iscompleted, we have it printed, send it to the minister for clearance, and subsequently it istabled.

Senator ROBERT RAY—So any delay on this occasion was for the same reason we oftenhave with annual reports—it really does require the Auditor to clear it and you are reliant onhis timetable?

Mr Goodwin —Senator, the delays on this occasion do relate to the clearance process. Wesend it to the National Audit Office as a matter of practice. I am advised that it is not arequirement for the audit office to clear it but it has been normal practice for us to do so. Thedelays have occurred in that process.

Senator ROBERT RAY—Are you going to promise to be better next year?Mr Goodwin —We certainly do, Senator.Senator ROBERT RAY—Minister, I have one other question that may relate to a question

I asked previously and in another program. I thought I would do it here in case there is someproblem definitionally that you can work out before we get to that program. My question is—and maybe Mr Mackay coming from DAS or someone else will be able to assist: has thereever been a practice in the former Department of Administrative Services to have somethingthat is called an off-file note?

Mr Mackay —Not to my knowledge, Senator.Senator ROBERT RAY—I was just wondering whether between now and when we get

to program 7 some inquiries could be made as to whether that was ever a practice. There areimplications in terms of FOI and a whole range of other things if there is a practice of off-filenotes. It may not be. I am not making an allegation. But I would just like it checked whetherthat was ever such a practice in the Department of Administrative Services, because it isrelevant to a question we will go to later.[9.14 a.m.]

Program 4—Corporate ServicesSenator FAULKNER—Minister, could I ask the officers at the table to give me a brief

update of how things are going in terms of the proposal to move DoFA or part of DoFA tothe Administrative Building co-located with the department of the environment?

Mr Ash —The process of moving the department to the Administrative Building is still onschedule. There is a leased space in that building which will house around 450 staff. Pendingthe completion of the refurbishment, the intention is still to move 450 staff from theDepartment of Finance and Administration into that building. That space is not sufficient tohouse the entire department, which means that there will be staff left in the Alinga Streetbuilding, which formerly housed DAS, and/or in the longer term some staff will be movedback into the Treasury building when it has been refurbished.

Senator FAULKNER—I gather from your answer to the question that you have not madefinal decisions in relation to the location of all staff in the new DoFA. Are some issues stillbeing considered in relation to the location of staff?



Mr Early —There are two separate issues here. One is where we put people in the shortterm, and that is really rapidly being addressed now. The second is the issue of where we putpeople when the Administrative Building is refurbished and it is time for us to move in. Wehave not made final decisions on the latter as yet, basically because we are focusing on theformer.

Senator FAULKNER—Perhaps you could again very briefly let me know where you areup to in terms of the immediate arrangements that are coming into play.

Mr Early —If I can make a general comment and then pass to Mr Ash for the detail. Whatwe are looking to do with accommodation arrangements in the short term is get both a sensiblelocation of our people in terms of the Treasury building and the Alinga Street building, andalso as part of that process try to get as much as we can the creation of one department. Oneof the things we want to avoid is an ex-Finance and an ex-DAS situation. We want to endup, obviously, as soon as we can with a Department of Finance and Administration. Let mepass to Mr Ash, who can give you the detail.

Mr Ash —We are currently scoping some options to bring all ex-DAS staff who were notlocated within the Alinga Street building to within either the Alinga Street building or theTreasury building. In the same process we are going to see what options there are—and againit is going to be really dependent on the cost, given that we will be occupying the Treasurybuilding for approximately only a further 12 to 13 months—to move at least one of the ex-DAS units from Alinga Street into the Treasury building and to move one of the Treasurybuilding units into Alinga Street to get a mix between the staff of the former departments, asMr Early was saying.

Senator FAULKNER—Just so I am clear on this, the Alinga Street building is the buildingin Civic where the DAS executive, at least, was all located?

Mr Early —That is correct.

Senator FAULKNER—I was not ever sure what the name of the building was.

Mr Ash —It is 111 Alinga Street.

Senator FAULKNER—We will call it the Alinga Street building for want of a betterdescription. When will the Alinga Street building be vacated in terms of officers of theDepartment of Finance and Administration?

Mr Early —At this stage that really is an unanswerable question because it may not bevacated. The accommodation that we have been discussing thus far would have us occupyingthe Administrative Building and the Alinga Street building post-December next year. We havehad some very preliminary discussions ourselves. We have asked our officers to start lookingat whether it would be an option to move the people who would be at that point in time bein Alinga Street to the Treasury building once that Treasury building is refurbished. I think—and Mr Mackay would be able to answer this more than I—that would be four or five yearsaway. Whether that proves a viable proposition, it is far too early to tell.

Senator FAULKNER—I understand from what you are telling me that, nevertheless, therewill be a significant amount of space that was hitherto occupied by the former DAS in theAlinga Street building by the end of 1998. Would that be correct?

Mr Early —I am told there will be up to one floor vacant. So if the image is of a buildingvirtually empty, that is not the expectation.

Senator FAULKNER—What sort of lease was DAS locked into in that building?



Mr Ash —I understand the former department had signed a 10-year lease in April this year.Senator ROBERT RAY—They did not anticipate themselves being abolished.Mr Early —Was that a comment, Senator?Senator ROBERT RAY—Yes, it was.Senator FAULKNER—So, obviously, considerations about that leased space are an

important part of your planning?Mr Early —Absolutely, Senator.Senator FAULKNER—Let me know how you are approaching it in a general sense.Mr Early —Again it is a bit too early to tell. But if we were to decide that it would be better

to have our people in the Admin Building and the Treasury building—the attraction of thatis obviously proximity—then we would need to find a commercial solution for the space weare currently leasing in Alinga Street. So part of the analysis that we will need to undertakeis an analysis of the cost of that lease and what alternative options we might have to subletit or deal with it otherwise.

Senator FAULKNER—On the one or two occasions when I was invited down to the AlingaStreet building, I noticed that there was quite significant refurbishment going on. I was notsure who had been responsible for that, whether it was the building owners or whomever.Perhaps you could just explain to me whether the former DAS had any involvement in thatrefurbishment.

Mr Mackay —It was the building owner who was renovating the building.Senator FAULKNER—So there were no cost implications in those renovations for the

former Department of Administrative Services?Mr Mackay —Not that I am aware of—no direct cost implications.Senator FAULKNER—Where have MAPS been traditionally located?Mr Mackay —They have been in Alinga Street for at least the past 10 years.Senator FAULKNER—Are they still in Alinga Street?Mr Mackay —Yes.Senator FAULKNER—All of them?Mr Mackay —The vast bulk of them.Senator FAULKNER—Mr Mackay, let me just narrow it down: have there been any recent

changes in terms of location of any MAPS staff?Mr Peel—The Canberra based MAPS staff are essentially all in Alinga Street. There are

a number located in the ministerial wing of Parliament House and there are other staff inregional offices. But the core MAPS staff are in Alinga Street.

Senator FAULKNER—Just so I am clear on this: whom do we have in the ministerialexecutive wing here?

Mr Peel—There is a small group of people who actually manage the ministerial wing ofParliament House, which is a responsibility of MAPS. They look after the communicationssystems and so on in the ministerial wing.

Senator FAULKNER—Has that establishment changed over the time or is it fairly constant?Mr Peel—No, it is fairly static.



Senator FAULKNER—What about arrangements with the department of the environmentin terms of who gets what in the Administrative Building? Can you just tell me how you havegone—who has won the battle for the turf war over there in the new Administrative Building?

Mr Ash —You are asking about who is located on what floors in that building?Senator FAULKNER—Have you come to an agreement with Environment Australia about

these matters?Mr Ash —Yes, we have. That was a number of months ago.Senator FAULKNER—Can you tell me what the outcome is?Mr Ash —I will try to picture the building. If you split the building in half vertically, the

end closest to the Edmund Barton Building—or Kings Avenue I think it is—is all thedepartment of the environment and the top two storeys of the building are all department ofthe environment. The previous Finance was going into an area on the ground to third flooron the Treasury building end of the Administrative Building.

Senator FAULKNER—I assume that, in an agreement like that, there would be some formof signed agreement or contractual agreement with Environment Australia?

Mr Ash —There is no actual agreement with Environment Australia. The former Departmentof Finance had negotiated a lease with the building owner as opposed to having a formalagreement with the department of the environment. I understand the building owner thensought tenants for the remainder of the building.

Mr Early —We obviously had discussions with Environment so that we could makemutually suitable arrangements for the building. They were entirely amicable and Finance,as always, was extraordinarily helpful and cooperative.

Senator FAULKNER—If I could take you to the second paragraph on page 37 of theannual report:. . . the facilities and systems used to communicate electronically with the Minister for Finance and hisstaff have been substantially upgraded and new methods for managing the Minister’s correspondence havebeen adopted.

I am just interested in the updates and improvements—what you have been able to achieveand what it might have cost you.

Mr Ash —That is referring to a system within the department called PALMS, which is aministerial liaison system built on a Lotus Notes product.

Senator FAULKNER—How do you spell PALMS?Mr Ash —P-A-L-M-S.Senator FAULKNER—The traditional way. I did not know whether it was just another

acronym and obviously it is.Mr Ash —It is an acronym. I know that P is parliamentary, L is liaison and M is ministerial.

I am not quite sure what A stands for but I assume it is parliamentary and liaison ministerialsystem.

Senator FAULKNER—Don’t ask us for a contribution as to what it might be.Mr Ash —As to the exact costs, I would have to take that on notice.Senator FAULKNER—If you could provide that. But I want to be clear that this paragraph

I read relates only to PALMS and that there are no other aspects.Mr Early —If I can just have a look at the reference, yes, that is correct.



Senator FAULKNER—Are there running costs in relation to PALMS? I do not reallyunderstand what PALMS is.

Mr Ash —Basically, PALMS is an electronic system that deals with tracking ministerialcorrespondence from the minister’s office back into the department and back again. It looksafter question time briefing and parliamentary question tracking. It replaces manual systems.

Senator FAULKNER—Is it a software package, effectively?Mr Ash —It is an application built on the Lotus Notes product—Lotus Notes being a generic

software package.Senator ROBERT RAY—How often have you failed to meet the 30-day deadline in the

Senate for answering questions on notice? Do you know that?Mr Ash —I could not tell you, no. I would have to take that on notice.Senator FAULKNER—You might take on notice the issue I raised in relation to the costs

of the new system and any aspects of what was contained within the annual report that youactually have not reported to us. At least in a general sense I think I understand what PALMSin this context might mean.

Senator ROBERT RAY—When it comes to answering questions on notice, do you everseek advice from the Department of the Prime Minister and Cabinet if it is a generic questionacross all departments to get guidance as to how to answer it?

Mr Early —As we said the other day, it really depends on the nature of the question.Sometimes we would. Sometimes we would not.

Senator ROBERT RAY—Is that in the PALMS system at all?Mr Ash —That particular component, no, it is not.Senator FAULKNER—On page 38 of the annual report, it says:

Under the auspices of the Corporate and Business Services program, discretionary grants in the form ofcorporate sponsorship were made to support a conference for postgraduates in economics and business,a training course for public sector managers, and a research project on financial management practicesin the public sector.

Mr Early, could you give us a little more detail about what this means?Mr Early —Certainly, Senator, to the extent I can, and I will take the question on notice

in respect of the three of them. The only one of which I am aware is the conference forpostgraduates in economics and business, which was a $500 grant to a Western Australianuniversity to organise such a conference. That is a grant we have made for a couple of years,and we have let the relevant university know that we will be reviewing it before we go onnext year.

Senator FAULKNER—Did you say $500?Mr Early —Yes.Senator FAULKNER—Typical Finance generosity there!Mr Early —It has no bounds, Senator. One of the others—I actually do not know which

is which—is a $25,000 grant, I think, to the Australian Accounting Research Foundation. Iunderstand that the financing of that is a cooperative venture between at least some stategovernments and the Commonwealth to get some research done into public sector financialpractices. I simply do not know about the training course. I will have to take that on notice,but they are not big sums of money.



Senator FAULKNER—Thanks for that information. That is helpful. Could you take onnotice who received those discretionary grants? What was the basis? What were the criteria?Were they competitive in nature? How did they apply? For what purpose were they given?

Mr Early —Sure.Senator FAULKNER—That would be helpful information. From what you have told me,

it does not sound as though it is going to break the bank over there.On page 8 of the annual report there is a reference to AWAs ‘being offered to other Finance

staff in specific circumstances’. What are the specific circumstances? I am not interested herein individuals, obviously, as you would appreciate, but you might indicate what that means,the level of the officers involved, why and perhaps the progress and status. I just want tounderstand in a general sense what that referred to.

Mr Early —In a general sense, we stand ready to use AWAs where essentially it is in theinterests of the organisation. The specific instance which is most clearly the one where weare prepared to use, and are using, them is in respect of specific projects. So, if we have a highpressure project with a particular life where we want to get very good performance, we areprepared to sign an AWA with the people who work on that project.

Typically, it replicates what would be in our certified agreement, if it got voted up, butprovides a bonus for successful completion of that project. Essentially, it enables us to givepeople who are working on a particular project a very targeted incentive for delivering thatproject on time, on budget, at high quality and so forth. We do use it for other particularindividuals, but they do not fall into a class and they really go to the particular circumstancesof individuals, which I take it you are not asking me to go into.

Senator FAULKNER—No, I was just asking in a general sense. I certainly do not wantto ask about individuals, Mr Early.

Mr Early —That has been the use for them thus far. I presume it says we are proposing touse them for the SES. I did not look at that paragraph earlier, but I presume the specific wasin addition to that.

Senator FAULKNER—Yes, it does. The disbandment of the Information ManagementCommittee is really the only other issue I wanted to touch on in this program. What did theInformation Management Committee do?

Mr Early —Unfortunately, very little. I can say that because I chaired it.Senator FAULKNER—You did not consider replacing the chair, Mr Early?Mr Early —I think I will let that one pass, Senator. We had a long process of looking at

the future of Finance, which we finished doing around August last year, and we talked aboutthat at this committee meeting last year. One of the things that we identified in that analysiswas that we needed to be better at managing our information. So we established theInformation Management Committee, the objective of which was to develop an informationmanagement plan.

That committee started by looking at the business needs of the Department of Finance andworked back to what information was required to enable us to deliver those business needsmost effectively. The problem we had was that the committee was an off-line committee. Itwas not a line management committee. The line management areas that were needed to supportthat committee had other priorities which were more immediate and important at that stage.Most notably, they were looking at the desktop we had in the department. After working forabout three months and making some progress, but certainly not progress that was adequate



for that time, we decided that we were better off pausing that process until we hadimplemented the desktop and then reinstituting it as a line management function. That is itin a nutshell.

Senator FAULKNER—But you did not consider trying to overcome some of the problemsthat you identified as an alternative approach to disbandment?

Mr Early —Yes, we did. But we came to a view that that simply was not going to work.It is the classic management issue. When you put resources into something that has notworked, do you throw more resources into it? We judged that, if we did, we would simplybe using those resources unproductively. Therefore, it was better to take a pause. That is notto say that the issue was not important to us. We made a judgment as to priorities at the time.

Senator FAULKNER—I appreciate that. What about the functions that you speak of?Where do they lie now, effectively?

Mr Early —They lie within corporate. In terms of progress since, we then had theoutsourcing of our IT, which meant that those resources were occupied on that activity as well.I am not sure whether we have gone a huge distance into progressing that task further.[9.41 a.m.]

Program 6—APS ServicesSenator ROBERT RAY—The next tranche of questions deals with domestic property and

overseas property. I understand from earlier evidence given at the estimates committee thatthe Department of Administrative Services has been selling off a lot of property on the basisof guidance from government. Has the department or government received any offers tomanage their property estate with guaranteed returns? In other words, did they receive bidsto, rather than sell it off, manage it independent of government and give a guaranteed return?

Mr Mackay —I am not aware of any, Senator. I will take that on notice and check.Senator ROBERT RAY—Who might be? I understand that at least two such offers were

made.Mr Mackay —I will have to take it on notice. I think I would know about it if it happened.Senator ROBERT RAY—Perhaps my question is not clear. Do you understand what I mean

by the question? As an alternative to selling off the whole estate, offers were made to thegovernment—I concede that they may have gone to the ministerial domain—to manage thewhole estate with guaranteed returns. It would require no up-front money in terms of theenormous amount of money that has been spent to get these properties ready for sale withcommissions, et cetera. There was also the suggestion of a properly audited trust account.

Mr Mackay —All I can say is that I will take it on notice. We did outsource a large partof the property management in a competitive process. To at least some extent, we followedthat model. For the last two years, while we have been going through the various processes,it has been common knowledge that we were about to sell, outsource or do something fairlydifferent. A lot of unsolicited players approached us at various times. The bottom line of allthat was that we considered what we thought was the best way to go. We had to go throughsome sort of a public process. There were others who offered to come in and buy the wholeestate in one bang.

Senator ROBERT RAY—How many such offers, either solicited or unsolicited, came into buy the whole estate?



Mr Mackay —I cannot recall the precise details, but certainly one or two were drawn tomy attention. It was no more than, in some cases, agents coming in saying that they knewsomebody who would buy the whole estate.

Senator ROBERT RAY—It was never contemplated inasmuch as you would have had toindividually prepare them, pay consultants fees, commissions and all the rest?

Mr Mackay —It was considered by the Commonwealth Property Committee when it lookedat the various options of how best to market the estate. The collusion, I suppose, was twofold:first, that you would get a better return if you marketed it in the packages, and that conclusionwas drawn after much consultation with the private sector and others; and, second, even if youdid sell it in one lot you would still have to go through most of the same sort of work, thedue diligence work which is the real time consuming and relatively expensive work when youare selling assets of that kind.

Senator ROBERT RAY—What has the role of the Macquarie Bank been in the overallstrategy to dispose of Commonwealth property?

Mr Mackay —We went out for expressions of interest for somebody to help us manage theentire sales process. Macquarie Bank was selected out of that open public process. So theyare managing: oversighting everything from the due diligence process, dealing with planningissues that might arise, managing a panel of marketing and sales experts. Their job from goto whoa is basically to deliver the sales on time and to budget.

Senator ROBERT RAY—Is there remuneration on the basis of a set fee, commission,success fees or what?

Ms McKinnon —They get a small set fee and a larger incentive on conclusion of sale. Itis set at roughly industry average.

Senator ROBERT RAY—So at any stage is how much we have paid Macquarie Bank fortheir overall services in this going to be released or is a claim of commercial-in-confidencegoing to be made?

Ms McKinnon —I should imagine that we would have to gazette the answer to that questionat the time the sales are concluded and Macquarie Bank has been paid.

Senator ROBERT RAY—Yes, if in each individual sale the overall costs are put out. ButI am wondering if at any stage there is going to be a compilation of just how much thedepartment has paid Macquarie Bank for the totality of their work in this regard?

Mr Mackay —I cannot think why that would be commercial-in-confidence. Prima facie Iwould say that we are probably required to do it through the gazetting process.

Senator ROBERT RAY—Take it on notice for about three years time. Take it on noticebut I do not insist on an answer if there are commercial inhibitions, but I would not mindknowing how much has been paid to Macquarie Bank on this property stuff from 1 July 1996through to what you regard as a convenient date, let us say, 1 October this year, if that ispossible. If it is commercial-in-confidence I understand that it may not be possible to answerthe question.

Ms McKinnon —I think it is structured in terms of an incentive pro sales. By October wemay not have sold—

Senator ROBERT RAY—I think you can anticipate the question may be asked severalmore times in the future. It is all very well to sell property, but we would like to know howmuch is the cost of selling the property in terms of refurbishment, which does not happen very



often I understand, fees, preparation and consultants, so we can see what the ratio is to seewhether it is value for money.

Mr Mackay —Our broad expectation is that it would be in line with commercial equivalents.Senator ROBERT RAY—I understand that. It still may not answer the philosophical

question of whether the government is best owning property or renting it, which has alwaysbeen an ongoing debate, and that is just one factor in making a judgment on that.

Senator FAULKNER—Who currently comprises the Commonwealth Property Committee?Mr Mackay —There are four members of the committee. I chair it. Mr Early is on it. Mr

Peter Delaney and Mr John O’Grady have been on it since the commencement.Senator ROBERT RAY—Mr Early was on it in his capacity as Finance representative

before the formation occurred.Mr Early —Yes.Senator FAULKNER—I think the reason for your chairing it is pretty self-evident. But

what about Mr Delaney and Mr O’Grady? Effectively, what is the basis for their appointment?Mr Mackay —They are private sector consultants who have been selected for their particular

expertise in various areas of financial analysis particularly, on the one hand, and dealing withlegal and property marketing issues, on the other hand.

Senator FAULKNER—I see. So as consultants they are paid for their work on the CPC?Mr Mackay —Yes.Senator FAULKNER—What are members of the CPC paid?Mr Mackay —I would have to check that. There is a daily rate which both of the private

sector people are paid for each day of meetings. The committee meets about once a month.So there is a daily rate for that with some normal costs involved when there are air fares orvery occasionally there might be an overnight stay involved.

Senator ROBERT RAY—Is the daily rate set by the Remuneration Tribunal?Mr Mackay —No, it is not.Senator ROBERT RAY—Set by the department?Mr Mackay —Yes.Senator ROBERT RAY—What is the normal daily rate set by the department?Mr Mackay —I do not think there is a normal daily rate.Senator ROBERT RAY—So a specific decision had to be made in the case of these two,

did it? When do you think we will be able to have the answer to Senator Faulkner’s questionabout how much per diem?

Mr Mackay —It is a rate of $2,000 per day.Senator ROBERT RAY—Pardon—$2,000 a day?Mr Mackay —That rate would obviously recognise not simply the fact that they sit in a

committee for the day but are also required to go through quite a bit of preparation. There isa lot of editing and commenting on documents outside of session where there is not a specificfee.

Senator ROBERT RAY—That is not really a per diem rate. You are really paying forexpertise. Is that not what you are saying?



Mr Mackay —That is right. It is just how we strike the return.Senator ROBERT RAY—Did you say it meets once a month?Mr Mackay —Around about, yes.Senator ROBERT RAY—So that is $24,000 a year or maybe $22,000 because they

probably would not meet in January.Mr Mackay —The committee met more regularly certainly at the peak times when we were

preparing a report or something like that. Generally, I think it would average out at somethinglike that.

Senator FAULKNER—It would be useful—and I do not expect you to have this at yourfingertips, Mr Mackay—to know when Mr Delaney and Mr O’Grady were appointed to theCommonwealth Property Committee.

Mr Mackay —They were appointed when the committee was set up which, as I recall, wassomewhere between 12 and 18 months ago. The committee is scheduled to wind up at somestage in the first half of next year.

Senator FAULKNER—Could we have a list of dates on which the committee has met sinceits establishment?

Mr Mackay —Yes, I will take that on notice.Senator FAULKNER—How was the decision made to appoint Mr Delaney and Mr

O’Grady to this particular committee?Mr Mackay —My recollection is that the then DoF suggested one and the then DAS

suggested the other.Senator ROBERT RAY—So these were departmental recommendations to ministers?Mr Mackay —I think so. If that is not right I will correct it on the record.Senator ROBERT RAY—My question is to both Mr Early and Mr Mackay, but to Mr

Mackay first. On what basis did you come up with these particular individuals?Mr Mackay —I would have to check that. I was not personally involved at this particular

time.Senator FAULKNER—Can you help us, Mr Early?Mr Early —I was not personally involved in the selection.Senator FAULKNER—Let us go back a step. Mr Mackay, could you tell me which of these

gentlemen was recommended by the then DAS and which was recommended by the then DoF?Mr Mackay —My recollection is that Mr O’Grady came from the DAS side and Mr Delaney

came from the DoF side.Senator FAULKNER—Mr Early, would you or an officer here be able to assist us with

how DoF came forward with that recommendation? Was the then Minister for Finance askedby then Minister Jull for a nominee to serve on the Commonwealth Property Committee? Itis a process question. I am interested in understanding how the DoF was asked to nominatesomeone and what process you undertook to find a suitable person to serve.

Mr Early —I would have to take that on notice. We do not have the people here who wouldhave that knowledge. I am aware that there were discussions between the two departmentsessentially to try to find a set of people who would in aggregate contain the requisite skillsto be able to provide the sort of advice that the government was looking for from the



Commonwealth Property Committee. The process issues you are talking about, I am afraid,I would have to take on notice.

Senator FAULKNER—Would we be able to get a fairly speedy response to that question?

Mr Early —I will try to do that.

Senator FAULKNER—I would appreciate that. That would be helpful.

Mr Mackay —My other recollection of the process is that it was not a straightforward matterto find people because we clearly wanted people who did not have a conflict of interest.Therefore, if you went into the traditional property market or even the banking sector youwould inevitably have people who might be involved in owning properties and all sorts ofother arrangements. We were looking for people who were at arm’s length.

Senator FAULKNER—I agree with you that that is an important issue. I assume that inrelation to Mr Delaney that would have been worked through with the then Department ofFinance and with Mr O’Grady with the then DAS. When you said that these gentlemen wereprivate sector consultants, what do you mean precisely?

Mr Mackay —Mr Delaney is the principal of a company called Oxley Corporate Finance.

Senator FAULKNER—And he is a consultant. Is that a property company?

Mr Mackay —I suppose you would call it a merchant banking company. They are financialanalysts essentially.

Senator FAULKNER—Who is the principal of Oxley Corporate Finance?

Mr Mackay —Mr Delaney.

Senator FAULKNER—What about Mr O’Grady?

Mr Mackay —He is a principal of a law firm in Adelaide—I do not have the name of that.How we handled the conflict of interest, as I recall, was we asked them for a declaration upfront that they had no conflict of interest. In the arrangements that we came to with them theywere required to accept that they could not be involved in any way whatsoever with the salesprocess if they were the arms-length adviser.

Senator FAULKNER—So you could absolutely assure the committee that Oxley CorporateFinance has won no work from the OPG, the DPG or the former AEM? You could beabsolutely confident that that is the case, obviously?

Mr Mackay —I could be absolutely confident that we put in place steps to make sure thatthere was no conflict of interest. I know for a fact that they had been engaged by DASpreviously in a totally different capacity in connection with Dasfleet. Whether they had someinvolvement in the predecessor to the Commonwealth Property Committee I am not sure, butin terms of this exercise they were required to be at arm’s length.

Senator FAULKNER—What work has Oxley Corporate Finance won from the OverseasProperty Group?

Mr Mackay —I am unaware of that. If I could just leave that until we get to the OverseasProperty Group, I would be quite happy to pick it up then, but I am not aware of any.

Senator FAULKNER—Okay, I am happy to leave it until we get to the Overseas PropertyGroup but it is germane to this line of questioning. I think it is an important matter for us toclear up. I am sure we can ask it in a short while but it would be useful to understand now.What work has Oxley Corporate Finance won from the former Australian Estate Management?



Mr Mackay —I would have to take that on notice. I am not aware of any, but they may havein the past. Having worked for Australian Estate Management in the past and certainly workingfor Overseas Property Group, I cannot imagine how that would necessarily be a conflict ofinterest. We would be more concerned if they were operating on behalf of one of the buyers.

Senator ROBERT RAY—You are jumping to conclusions. No-one has alleged that yet.Senator FAULKNER—You are jumping a long way ahead. I do want to know at this

point—we will leave the OPG, but we will come back to it, let me assure you; it would beeasier to do it now, but we will come back to it—about Australian Estate Management andI want to know about the tender processes if there was any work, so I would like to clear thatup if we could now. That is an important issue, I am sure you would agree with me, and wejust want to get this straight.

Mr Mackay —We are not aware of any work they did for the former Australian EstateManagement, but I will take it on notice and check it.

Senator ROBERT RAY—If you do, can you also check that there was a proper tenderprocess before the work was awarded?

Mr Mackay —I will certainly check what process was used.Senator ROBERT RAY—I mean, if they got work, was there a tender process?Mr Mackay —Yes.Senator ROBERT RAY—It is always the ‘if’.Senator FAULKNER—I am not suggesting there was any work done for the Domestic

Property Group, but did Oxley Corporate Finance do any work for the Domestic PropertyGroup? Domestic Property Group is at the table now.

Ms McKinnon —I am not aware of any either.Senator ROBERT RAY—Just getting back to this daily fee—and this can go to either Mr

Early or Mr Mackay—have you got any equivalent committees where you are paying $2,000a day?

Mr Mackay —The only one I could think of—and I am not sure what the paymentarrangements are—is a thing called the National Procurement Board. That would be the onlyother one I could think of in the former DAS.

Senator FAULKNER—Mr Early, how does $2,000 a day compare to the per diem rate forthe Department of Finance?

Mr Early —I am not aware of any equivalent committee we have got where we pay a perdiem.

Senator FAULKNER—Do you have a standard per diem rate in the department?Mr Early —Not that I am aware of. If we hire expertise, we basically look at what we need

to pay to get the expertise we require, so it would be done on a case by case basis.Senator FAULKNER—What is the sort of range you have in the former DoF?Mr Early —It is an unanswerable question.Senator FAULKNER—I do not know why it would be.

Mr Early —I cannot think of—

Senator FAULKNER—Let me just make it clear. With respect, you have said you havegot no committee—I appreciate that; that is helpful—and no per diem rates at that level. That



is useful information, but I would have thought it would have been an answerable questionto understand what the range of per diem rates is in the former Department of Finance.

Mr Early —Again, the only way that I can interpret the question to make it one that I couldget an answer to would be if it was, ‘What is the range of per diem rates that the Departmentof Finance has paid to consultants that it has hired in the past?’ and that is not an answer thatI have available to me now.

Senator ROBERT RAY—Do you know how much the members of the board of theReserve Bank are paid per annum?

Mr Early —That is a question you would have to direct to Treasury.Senator ROBERT RAY—I just thought you may have known from your knowledge.Mr Early —No, I do not know offhand.Senator Minchin—If they engage a QC, it would cost them a lot more than $2,000 a day.Senator ROBERT RAY—Yes, but a lot of people serve on boards as a public service, and

I have known a lot of people give an enormous amount of time to boards for much less than$2,000 a day.

Senator FAULKNER—How much are members of the ACT Working Party that wasannounced by Mr Jull paid?

Mr Mackay —Nothing.Senator FAULKNER—Why is that?Ms McKinnon —I think they volunteered.Senator FAULKNER—It compares very unfavourably with Mr Delaney’s and Mr

O’Grady’s per diem rate.Senator ROBERT RAY—I think Ms McKinnon was about to say ‘for the love of the job’.Ms McKinnon —That is exactly right.Mr Mackay —They were all people who had various interests and they were really

representing their organisations.Senator ROBERT RAY—Could you tell us the members of the ACT Working Party?Mr Mackay —They were the head of the ACT MBA; the head of the—Senator ROBERT RAY—I mean their names, and their positions. That would be good if

we could have that.Mr Mackay —The people involved were Mr Mick Lilley, under Treasurer with the ACT

government; Mr Bernie Bryant, head of the ACT Master Builders Association; Mr MarkBlinksell, from the Property Council of Australia; Mr Richard Swinbourne, Australian Instituteof Valuers and Land Economists; Mr Keith Burnham, National Capital Authority; DianneGayler, Department of Transport and Regional Development; Mr James Wain, Departmentof Finance and Administration; and then we had a chair basically drawn from the DomesticProperty Group, who was most recently Ms Julie McKinnon.

Senator FAULKNER—How many times have they met?Ms McKinnon —While I chaired it, they met twice, but they had met on a number of

occasions prior to my arrival, probably on at least three to four occasions before the last two.Senator FAULKNER—This may be difficult for you to answer: do you have an idea which

property Mirvac manage in the ACT?



Mr Mackay —We could not answer that without taking it on notice. Before we go on, I havejust realised that we did have two paid consultants who contributed to the ACT Working Party;that is, Mr Paul Street from a company known as J.G. Service Pty Ltd and Mr Dennis Morrisof P&O Facilities Management. They were paid to contribute certain analyses to thecommittee.

Senator ROBERT RAY—Who chairs Mirvac?Mr Mackay —I am sorry, I do not know.Senator ROBERT RAY—Does anyone know?Ms McKinnon —No, Senator.Senator ROBERT RAY—Can you describe what Mirvac is precisely, so that I can

understand whether the department has any responsibility here.Ms McKinnon —To the best of my knowledge, I think they are a private sector company—Senator ROBERT RAY—Yes, but do they have some relationship back in terms of advice?Ms McKinnon —No, not as far as I am aware.Senator FAULKNER—What about Mr Webster? He is the chair of a Mirvac trust, I think.

Could someone explain what association he might have with the Minister for Finance andAdministration? You are probably able to answer this, Senator Minchin.

Mr Early —I have no knowledge of that, Senator.Senator FAULKNER—Sorry, Mr Early. I asked Senator Minchin.Senator Minchin—I am completely unaware of any relationship. I think you mean the

former Liberal Party member, do you? Is that the Webster you are talking about?Senator FAULKNER—Yes.Senator Minchin—I have absolutely no knowledge of what, if any, relationship they have,

either personal or—Senator FAULKNER—Has he had discussions with Mr Fahey? He is the chairman of a

Mirvac trust, is he not?Senator Minchin—I do not know.Senator FAULKNER—Has he had formal discussions with Minister Fahey?Senator Minchin—I do not know.Senator FAULKNER—Could you establish that?Senator Minchin—I can ask Mr Fahey whether he has ever had discussions with a Mr

Webster.Senator FAULKNER—Well, with the Mr Webster even.Senator ROBERT RAY—On property issues; not on political preselections.Senator Minchin—Nothing to do with the Southern Highlands. I am happy to take that on

notice.Senator FAULKNER—I think part of Mr Webster’s seat from a previous incarnation

intersects with Mr Fahey’s current federal seat. I am quite certain, given the history ofpreselections and after redistributions in New South Wales, they certainly would havediscussed other matters. But that is not the import of the question.

Senator Minchin—I am happy to find out what information I can.



Senator FAULKNER—What is the reporting process for the CPC? I think we have hadat least one formal report from the Commonwealth Property Committee, have we not?

Mr Mackay —It has reported to the minister about three times, most recently in the lastweek or ten days.

Senator FAULKNER—What is the status of those reports, Mr Mackay? Does the committeemake its reports public, or is it tasked to report to the minister?

Mr Mackay —In the past, at least on some occasions, we have released the executivesummary but not the detailed report on any occasion.

Senator ROBERT RAY—What is the intention this time?

Mr Mackay —It is an issue that has not been addressed.

Senator FAULKNER—Hitherto you have released two executive summaries; would thatbe correct?

Mr Mackay —One clearly, to my knowledge, but I am pretty sure there were someadditional ones. The minister has made some detailed announcements on the outcome of themost recent report.

Senator ROBERT RAY—This is to do with property issues in the ACT as well?

Mr Mackay —Particularly, yes.

Senator ROBERT RAY—Yesterday AAP had a report on Mr Fahey announcing a strategyto ensure viability and certainty to property investors in the ACT. Is that speech availableanywhere?

Mr Mackay —Yes, I am sure it is.

Senator ROBERT RAY—Sometimes they are put out in press releases and we get themtwo or three days later. I have not seen their speech yet.

Mr Mackay —It was only given on Monday night.

Senator ROBERT RAY—I am not sure how accurate this AAP press report is. Can yougive us a quick executive summary of what is happening with the ACT property market? Wedid ask questions on this on other occasions.

Mr Mackay —There are five key initiatives: new principles to encourage Commonwealthdepartments and agencies to show preference in the ACT for existing buildings or refurbishedbuildings; a package involving the market testing of the refurbishment of Benjamin Officesand the provision of new or refurbished accommodation for the Australian Bureau of Statisticsand demolition of the Cameron Offices; testing the potential for sale of Anzac Park East andAnzac Park West for re-use but not as offices; offering for sale the Campbell Park Offices,Juliana House, Fishburn House in Woden and the Woden car-park building; finally, testingthe saleability or, failing that, the demolition or mothballing of Guardian House, ScarboroughHouse in Woden, the George Knowles and Hinkler buildings in Barton.

Senator ROBERT RAY—What is the current vacancy rate for government-owned buildingsin the ACT, for both reasons of refurbishment, including a total figure, and then lessrefurbishment?

Ms McKinnon —It is approximately eight per cent minus some of the buildings that are notbeing occupied at the moment—the admin building, Scarborough House and those buildings;between six per cent and eight per cent.



Senator ROBERT RAY—What is the philosophy behind this? Were those viewpoints put,maybe at a previous estimates committee hearing, that the property market in Canberra wasa trite depressed? Are you trying to manage it more, rather than unload everything at oncenow?

Mr Mackay —That is correct. We are trying to manage it, as we always have done.

Senator ROBERT RAY—You would acknowledge the dollar per square metreage hasprobably gone down by 40 per cent or 50 per cent in the ACT?

Mr Mackay —It has certainly reduced reasonably substantially, yes.

Senator ROBERT RAY—Do you expect it to come back?

Mr Mackay —You are asking me to make a prediction. I am sure it will come back; it isa question of when.

Senator ROBERT RAY—You do make predictions. You sign 10-year leases on behalf ofyour department, which last about five months.

Mr Mackay —Yes.

Mr Early —As a general comment, we are all well aware that property markets move upand down with the business cycle. One thing that one learns about business cycles is that theydo move up again. Another thing that one learns is that people get very pessimistic whenmarkets have turned down.

Senator ROBERT RAY—Mr Early, what we are trying to establish here and in laterquestions is: what is the correct philosophy, at one end of the extreme or the other, or maybemeeting in the middle, of ownership and leasing; what are the economics of it; and how arethe calculations done? I know a lot of this is to do with interest rates as well, but I have neverreally seen a case made conclusively either way for owning the property or selling it. If thatis not the case and ad hoc decisions are made, I am just looking towards what the philosophyis, what the total costs are, what consideration is given to this in future. I understand that youcannot predict with absolute accuracy what a property market is going to do.

Mr Early —Senator, before the Commonwealth Property Committee made recommendationsto government for the strategy for domestic property, it had undertaken detailed financialanalyses of each of the buildings that was under consideration, and it made its recommenda-tions in the light of those very detailed analyses.

Senator ROBERT RAY—But constrained by the guidelines, surely, of the propertyprinciples?

Mr Early —The Commonwealth Property Committee works for the government and worksin the framework that the government provides.

Senator ROBERT RAY—But there is a big difference between a weight-for-age race anda handicap race.

Senator FAULKNER—Minister, I think you would agree that the government, all the waythrough really, has defended its property sell-off. The government has always denied theopposition’s concerns that we had a real fire sale on our hands here, and that this would havea very adverse impact on the domestic economy in Canberra in particular. I note that as lateas 20 October, Mr Jull said in the House of Representatives:The savings in the property portfolio and the investment opportunities in Canberra are absolutelyenormous.



We now have a rescue package on our hands. It does not appear as if the rhetoric was correct,Minister.

Senator Minchin—The announcement made by Minister Fahey on Monday has receivedan overwhelmingly positive reaction in the ACT. We were talking about vacancy rates andI notice Richard Ellis ACT Managing Director, Mr Gordon Scott, said:. . . the move brought a "much-needed injection of positivity" into the Canberra market-place and hadlong-term potential to reduce vacancy rates by up to 5 per cent.

The Property Council said:. . . we think the decisions are a sensible outcome. They deliver some certainty in the market and offersome new construction and relocation opportunities.

Clearly, in discussing this initiative, it has received an enormously good reception in the ACT.I would have thought you would support it.

Senator FAULKNER—I do not support the government’s policies in this area, and thatis on the public record. Let us not get too bogged down in that. What are you saying thevacancy rate is now?

Senator Minchin—I am reading from the coverage of this issue in theAustralian FinancialReviewwhich said:The Property Council said the ACT’s office vacancy level rose from 8.6 per cent at the start of the yearto 10.3 per cent in July.

The council’s president goes on to say:. . . we think the decisions are a sensible outcome. They deliver some certainty in the market and offersome new construction and relocation opportunities.

As I said before, Richard Ellis’s Managing Director said it had the potential to reduce thevacancy rate by up to five per cent. I am merely conveying to you the industry reaction.

Senator FAULKNER—Can you or one of your officers tell me what the vacancy rate isnow? What are the latest figures you have? I think it is appropriate to exclude properties thatare under refurbishment, which is how you have provided these figures to me before.

Ms McKinnon —Are you talking only about Commonwealth properties or the full ACT-Canberra market?

Senator FAULKNER—In Canberra.Ms McKinnon —It varies. As the minister pointed out, there is currently between 10 and

12 per cent across the market in the ACT, depending on who is being quoted at the time.Senator FAULKNER—So it is not six to seven per cent? This is the whole point of the

question. I am trying to get it clear.Senator Minchin—That was the vacancy rate. The federal government occupies about 65

per cent of the ACT’s office stock.Senator FAULKNER—I am asking about the vacancy rate across your own property estate.

Sorry, are we talking at cross-purposes here?Ms McKinnon —Yes, I think we are.Senator FAULKNER—I apologise if there is a misunderstanding. What I am keen to know

is: what is the vacancy rate now across the Commonwealth’s property estate? Previously whenI have asked this question you have usually provided me with a figure—properly, in myview—that excludes properties under refurbishment. I am sorry if I did not ask that questionclearly before or it was misunderstood.



Ms McKinnon —Is this total Commonwealth-state, not just the ACT?Senator FAULKNER—I am interested in the ACT, and I would be interested in the total

figure for the Commonwealth estate.Ms McKinnon —Across the Commonwealth estate as at 1 November, the vacancy figure

with the exclusions you mentioned was 6.4 per cent. In the ACT at the moment it isapproximately, I think, eight per cent for our properties, but I would have to check that figure.

Senator FAULKNER—When I asked this question in the estimates in August, I wasinformed that the vacancy rate as of 30 June across the estate was 10.8 per cent. Have yougot a copy of the estimatesHansardof that date? I take you to page 141.

Ms McKinnon —There was a figure quoted of 10.8—Senator FAULKNER—That is right. What did that refer to?Ms McKinnon —I think that did not exclude the properties under refurbishment. If you take

out the properties under refurbishment, at 30 June it was approximately eight per cent.Senator FAULKNER—Have you got theHansardthere with you?Ms McKinnon —No, I have not got the actualHansardwith me, I don’t think.Senator FAULKNER—There is an exchange here between me and Mr Deegan and Senator

Robert Ray and Mr Deegan, who was then the relevant Commonwealth officer at the table.I asked a question about aCanberra Timesarticle. This is page 141. Are you with me now?

Mr Mackay —No, I have not got it.Ms McKinnon —Was this dated 4 June?Senator FAULKNER—No, this is 19 August estimates. You will probably be provided with

a copy of theHansard.Mr Mackay —I have got it now.Senator FAULKNER—This is page 141 of theHansard, Mr Mackay. It is really the

exchange at the top of that page ofHansardwhen I referred to aCanberra Timesarticle aboutAPC figures for Canberra office vacancies doubling from 5.9 per cent to 10.3 per cent andasked Mr Deegan effectively if he could supply information.

Mr Mackay —I think that figure would have included things like the Taxation Office, whichwe have subsequently sold. We have sold a couple of other buildings in the ACT which werefully tenanted, and therefore that would change the figure. I am just not sure at which stagethe Admin Building and the refurbishment of—

Senator FAULKNER—I think it was a figure that Mr Deegan gave excluding propertiesunder refurbishment. That related to a figure across the properties estate nationally, did it—the10.8 per cent?

Ms McKinnon —I understand so.Senator FAULKNER—So you are saying to me the equivalent figure now is 6.4 per cent?Ms McKinnon —That is right, and a number of leasing deals have been done since June.

Also, the sale of the King William Tower building in Adelaide has helped reduce that vacancyrate.

Senator FAULKNER—And at 6.4 per cent nationally, and the figure for the ACT?

Ms McKinnon —I thought at the moment it was approximately eight per cent, but I willhave to check that.



Senator ROBERT RAY—That is excluding the Administrative Building in East Block?

Ms McKinnon —It is excluding all the major refurbishment and the buildings that are not—

Senator FAULKNER—I just thought if you could give a precise figure as at 1 Novemberfor the estate nationally you might be able to give a breakdown, Canberra obviously beinga very significance component of that. But I would appreciate it you could take that on noticeand perhaps give me a figure for 1 November. The comparison I am trying to draw, just soI understand what is occurring, is between the exchange I have noted with you in the estimatesthat took place last August.

Senator ROBERT RAY—You would not recall, Minister, would you, former SenatorMichael Baume going absolutely over the top when it was a two to three per cent vacancyrate? That was before your time, I take it?

Senator Minchin—Yes, I cannot recall him making an issue of that matter.

Senator FAULKNER—With the sorts of comments that the government has made, SenatorMinchin and, as I say, Mr Jull’s latest foray into the debate on 20 October—admittedly onlyas a government backbencher; I acknowledge that—it seems to me the savings in the propertyportfolio and the investment opportunities in Canberra are absolutely enormous. Why therescue package, Minister? That is the question. Things are going so well. It is a question Iwould not direct to a departmental officer; there is a slight political spin on it.

Senator Minchin—As the officers are saying, we are dealing with these run-down oldbuildings in Canberra and what we should do with them. As I have said, the packageannounced on 17 November has met with an overwhelmingly positive response in the ACTbecause it is a specific purpose package to deal with the buildings in question and what thegovernment should do with them. It is separate and apart from the overall management of theproperty estate.

Senator FAULKNER—The point is, Senator Minchin, that the government’s policies haveeffectively led to an assault on the Canberra property market; that is what has happened. Allthe fears of those locally who had concerns about property rents and prices as a result of thegovernment’s policies were realised. Is that not the truth of the matter?

Senator MINCHIN —We are dealing here with a plan announced by Minister Fahey to dealwith these 12 old buildings which were left to us, and which were a problem that we had tofix up. As I have said, the plan that the minister announced has met with great support fromthe ACT property industry and the ACT itself. Even theCanberra Times, which rarelyeditorialises in our favour, has welcomed the way in which we are dealing with these 12 oldbuildings.

Senator FAULKNER—Minister, as you know, that is not an answer to my question, butlet’s not get bogged down on it. I think the proof of the pudding is in the eating. We mightmove on.

CHAIR —Does that finish program 6?

Senator FAULKNER—No, it doesn’t.

Senator ROBERT RAY—What does the department propose for the accommodation needsof the Australian Bureau of Statistics?

Mr Mackay —That was part of the minister’s announcement on Monday. Basically, thereare two buildings close by each other in Belconnen. One is Benjamin Offices, which isoccupied principally by Immigration—but with some others—which requires some fairly major



refurbishment. The other one is Cameron Offices which, all advice indicates, is beyond theend of its useful life and, therefore, ought not to be used for office accommodation in thefuture.

The proposal is that we combine both of those buildings and seek expressions of interestfrom the private sector to literally buy both sites to develop them against a set of criteria whichwe will put to them. One of the criteria will be that you cannot use Cameron Offices for officeaccommodation. Logically, that would mean that they would demolish Cameron as part of theproposal, or possibly have it for some other use.

Senator ROBERT RAY—What is the department doing about what you call the specialpurpose estate, which is identified as those that would be kept and not disposed of? How areyou going to manage that? What are the criteria that define it?

Ms McKinnon —In terms of the special purpose and industrial estate, we have just startedto concentrate on and examine the issues in relation to that estate as to what the best purposeor use for it is. In many cases, some of the estate will be tested against ownership principlesand whether we retain or sell, and others will probably be looked at in terms of issues thatrelate to remediation of sites. We have a large number of sites that need to be examined interms of contamination. So it is an ongoing process of review, and that process has commencedand is in its early days. We certainly will be reviewing all of that part of the estate.

Senator ROBERT RAY—What about Campbell Park? Is it basically being vacated byvarious departments?

Mr Mackay —It is still substantially occupied by the Department of Defence. The minister’sintention is to offer that to Defence on a priority sale basis at market valuation. If they do notwant it, the intention is to offer it to the open market.

Senator ROBERT RAY—There is a different philosophy in government here. It is finefor Defence to own all their buildings but not for other departments. Have you ever put it toDefence that they should sell all theirs and lease them back?

Mr Mackay —In fact, Defence are selling quite a number of theirs.Senator ROBERT RAY—They are disposing of building surplus. Are they selling any off

in Russell?Mr Mackay —I am not sure, Senator.Senator ROBERT RAY—So they are not really doing that. I am just wondering why there

is a different philosophy in government. Do you know about that, Minister?Senator Minchin—No. I cannot answer that off the top of my head, Senator Ray.Senator ROBERT RAY—It seems to me that the philosophy is that you sell off buildings

because it is a better economical deal to go leasing, yet you are proposing to sell a buildingto the Department of Defence, another arm of government.

Ms McKinnon —I think, in relation to the Department of Defence, Senator, that it is onlythe commercial office estate that will be examined in terms of ownership or retention. Theoption of actually talking to Defence as the sitting tenant is an important one. Whether theyhave options for that building that might involve a different and longer term use that is notsolely accommodation is an issue that we have to talk to the tenant about first.

Senator ROBERT RAY—You have behaved absolutely appropriately. I am just wonderingabout the philosophy. I don’t think we will get an answer to that. Is the DFAT building upfor a proposed sale?



Mr Mackay —Yes, it is.Senator FAULKNER—Will you tell us where that process is up to, Mr Mackay?Mr Mackay —The due diligence process has largely been completed, and my expectation

is that it will be advertised for sale within the next few weeks, with a sale completion certainlysome time before the end of this financial year.

Senator FAULKNER—Is it possible that the DFAT building could be sold to overseasinterests?

Mr Mackay —Whoever buys it would be required to meet the Foreign Investment ReviewBoard guidelines.

Senator ROBERT RAY—So if the KBG can meet those, they can buy it, can they? Thatwas the intent of Senator Faulkner’s question. This is a specific purpose designed building,security secured. Are you saying it can go into a foreign ownership?

Mr Mackay —It may well be able to, at least conceptually, go into a foreign ownership.However, the sale arrangements make very clear those areas of the particular building that theowner would have access to on an escorted basis and those areas they would have no accessto whatsoever.

Senator FAULKNER—But hang on. Has anyone in the government, any minister in thegovernment, thought about the issue of the appropriateness or otherwise of this building beingowned by overseas interests? Sure, you are saying that the new building owner might not beable to get into certain parts of the Department of Foreign Affairs and Trade building, but letme ask you whether any minister, either responsible for the sale process or the minister forforeign affairs, has indicated that with the sale of this building there are some very seriousand special concerns and serious implications?

Mr Early —Certainly, the Commonwealth Property Committee has recognised and discussedthe sensitivities to which you allude. It has in effect given instructions to the Macquarie Bankthat those sensitivities are to be managed in the process of sale.

Senator FAULKNER—But how, Mr Early?Mr Early —And it has obviously drawn those sorts of sensitivities to the attention of

ministers.Senator FAULKNER—But how is it going to be handled in the sale process?Mr Early —Mr Mackay may be better placed to talk the detail than I, but the advice we

had was that the government would explicitly have advice from the Foreign Investment ReviewBoard as part of the process of considering that sale.

Senator FAULKNER—That would occur automatically, depending surely on the cost ofthe building, wouldn’t it?

Mr Early —Sure, but I was going to go on to say—Senator FAULKNER—Well, I mean, really—Mr Early —that in addition Macquarie Bank have been asked to look at structuring the sales

document so that the government has an option to sell other than to the highest bidder.Senator ROBERT RAY—Not even the Thatcher or Reagan governments flogged off their

Department of Defence or Foreign Affairs buildings. I just think it is a total lack of nationalpride to have a purpose-built Foreign Affairs Building that you sell off to some private ownerand rent back.



Senator FAULKNER—That the Liberal government was keen to name after one of its—R.G. Casey.

Senator Minchin—You spent all the taxpayers’ money on building the building.

Senator ROBERT RAY—What we did was bring it in $40 million under projected cost.

Senator Minchin—Terrific.

Senator ROBERT RAY—Now you would not have the admin. building and those othersto move your department into—the environment department and all the rest. You would nothave all that. But you sell it off! It is nothing to do with the officials—there is no need to lookat us.

Senator FAULKNER—But what are the special constraints, Minister, on government? MrEarly tells me about the FIRB guidelines but, depending on the amount of money concerned,it would automatically be a matter for FIRB for any foreign interest anyway, surely. That istrue, isn’t it, Mr Early? That would give no-one any—

Senator Minchin—In terms of FIRB?

Senator FAULKNER—Yes. That would give no-one any sense of confidence.

Mr Early —I am not an expert on FIRB obviously, but the advice we had in theCommonwealth Property Committee was that the foreign investment guidelines do not applyformally to the Commonwealth government, but the government obviously has the option ofseeking the advice and acting in the light of that advice, if it chooses to do so.

Senator ROBERT RAY—But that advice in any event is only advice to the Treasurer. Hecan overturn it at any time. So if Treasury and Finance are driving the flog-off, how are theygoing to take the other criteria into account? They do not exist in FIRB. Security matters,national pride—none of those exist.

Mr Early —Senator, I can only repeat what I said before, and that is that the CommonwealthProperty Committee had asked/instructed Macquarie Bank to establish the sale of the R.G.Casey Building so that, firstly, government would have access to advice from the ForeignInvestment Review Board and, secondly, government would have the option of not acceptingthe highest or any tender if it deemed it in its interests to do otherwise.

Senator FAULKNER—But what has Mr Downer informed Mr Fahey about this—or evenat a departmental level. I know you cannot comment on that, Mr Early. You may care not to.But you might care to explain to me what involvement and engagement Department of ForeignAffairs and Trade officials have had with these sorts of concerns. How have you engaged withthem? Or has Mr Downer done the usual trick of just not really bothering to get down to thenitty-gritty of important issues and letting it all go through to the keeper?

Mr Mackay —Senator, it was a government decision which was made following the normalconsultation processes.

Senator FAULKNER—So what you are saying is that Mr Downer is in the cart. He ishappy for it to be flogged off—possibly to overseas interests.

Senator ROBERT RAY—It does not come anywhere within the special purpose estate?No consideration was—

Senator Minchin—This was one of the most unpopular decisions your government evermade. if you wanted to get a vote before the last election, just go around and tell people howyou spent 200 million bucks building Gareth’s gazebo in Canberra.



Senator ROBERT RAY—First of all, it was not $200 million. It came in $40 million under.Secondly, you had the work force working in foreign affairs having to be moved out becauseof degraded buildings. Sure, it was a good, cheap popularist campaign for you to run. Thosethings are done by oppositions—we understand that. We are almost tempted to do it ourselveson occasions.

Senator Minchin—We made a policy decision to sell it, all right?Senator ROBERT RAY—But do not confuse cheap popularism with rational bringing

together in a property development. But for all that, you just want to flog it off to some privatedeveloper.

Senator Minchin—What on earth is wrong with that?Senator ROBERT RAY—That is all you want to do: flog it off to get the money. You are

not taking anything else into account, but to get a bit of cheap money in.Senator Minchin—You tied up all that taxpayers’ money in that building and we are going

to sell it.Senator ROBERT RAY—It is not a matter of tying it up.Senator Minchin—It is government policy to sell it. We can find out some of these process

questions for you, if you like, but it is government policy to sell it.Senator ROBERT RAY—You tell me this, Minister: where is the crossover point between

the sale price and the amount of rent you pay on these sorts of buildings? How far out intothe future is the break-even point—you say this is tied up—between the amount of rent youhave to pay and the amount of capital you get in selling it in the depressed property market?You tell me that.

Senator Minchin—I am advised that that analysis was done for every property. I cannottell you off the top of my head, but that analysis was done.

Senator ROBERT RAY—Tell me for the R.G. Casey Building. You are the expert on theR.G. Casey Building now, you tell me.

Senator Minchin—I am merely pointing out to you what the government policy is and howmuch adverse reaction your government got for the decision you made.

Senator ROBERT RAY—Only because of your cheap popularism—no other reason.Senator Minchin—It hardly needed prompting, I can assure you. There was an automatic

reaction to it and it is government policy to sell it.Senator ROBERT RAY—Why don’t you flog off this building we are sitting in?Senator Minchin—If you want to know all the details of the analysis that was done in

relation to R.G. Casey, that can be supplied I presume, subject to commercial-in-confidencerequirements, of course.

Senator ROBERT RAY—What is the difference between this building and the R.G. CaseyBuilding? What is the formula in regard to the R.G. Casey Building?

Senator Minchin—The formula?Senator ROBERT RAY—If you are saying you cannot answer that, I will stop the

questioning there.

Senator Minchin—That can be taken on notice because there are obviously commercialconsiderations.



Senator ROBERT RAY—What is the general formula, your general calculation, in thedisposal of property in terms of the money you are getting in less the up-front fees andeverything you are paying, the amount of rent you pay out? Where in the future do we startgoing into the red on this, if you like? Have you done those calculations?

Mr Early —The short answer to your question is yes, we have done those calculations. TheCommonwealth Property Committee had, as I think I briefly mentioned before, detailedfinancial analyses going out into the future of each of the buildings that it was looking at. Itmade its recommendations in light of those analyses.

Senator ROBERT RAY—You have mentioned the Commonwealth Property Committee.What is this 15 per cent rate of return figure?

Mr Early —As you are aware, the Commonwealth property principles talk about governmentowning property where the rate of return is in excess of the social opportunity cost of capital.The rule of thumb that was used in the analyses was a rate of return of 15 per cent.

Senator ROBERT RAY—Can you name one domestic property or equity trust that isgetting that rate of return? Can you name one?

Mr Early —That is not my area of expertise.

Senator ROBERT RAY—But surely it was taken into account when that impossible hurdlewas set at 15 per cent. I am sure you cannot name one equity group or one property groupthat is getting that rate of return.

Mr Early —With respect, the government took a decision which it asked the CommonwealthProperty Committee for advice on how to implement.

Senator ROBERT RAY—Thank you. Minister, can you name one domestic property groupor equity group that is getting that rate of return? It is all a question of how high you set thehurdle. If you set an impossible hurdle, then no building can survive it and, therefore, you flogeverything.

Senator Minchin—Many times I wish I were in property development rather than politics—

Senator ROBERT RAY—That is the only thing we share with you.

Senator Minchin—But, regrettably, I am in politics, so I obviously cannot answer thatquestion.

Senator ROBERT RAY—Are you saying to me, Minister, that that is a question that shouldnot be taken seriously?

Senator Minchin—I cannot answer your detailed questions; all I can do is talk aboutgovernment policy, which is to sell properties according to the details of that policy and theprinciples established, because it does not believe that it should have its money tied up inbuildings.

Senator ROBERT RAY—Minister, we might come back to this, but for your own sakeso you understand what I am saying I will go through it. It is fine to say you look at all thisand it is fine to say you will see whether you want taxpayers’ money tied up, but we wantto know what is best for the taxpayers’ money not in one year or two years but over a five-to-10-year period. The critical thing is that, if you have set the 15 per cent threshold that is justnot existent out there in the commerce area, you have set the wrong threshold and, therefore,everything that flows from that is an unfair assessment and an unfair judgment.



The counter accusation then would be: you have set it at that because you have a philosophyof flogging it irrespective of any other circumstances and economic rationale. But we willcome back to it.

Senator FAULKNER—Minister, what is the government’s policy in relation to selling theDepartment of Foreign Affairs and Trade building, the R.G. Casey Building, into foreignhands? What is the government’s policy in relation to that particular issue?

Senator Minchin—I will have to take that on notice. I have not been involved in the wholepolicy decision making process in relation to that building—the terms of sale—

Senator ROBERT RAY—Minister, you are here to represent government policy. It is notjust your own personal knowledge. We understand that that will always be limited by howmuch experience you have had so far, et cetera. You just cannot say it is not within yourpersonal knowledge. Can any official help you here?

Senator Minchin—I cannot answer the question in relation to the terms and conditionsimposed upon that sale, I am sorry. I will get that information for you, but I cannot answerthat question now.

Mr Mackay —There certainly will be stringent security requirements imposed as part of thesale and they would be very similar to the security requirements we would specify whenForeign Affairs is moving into a leased building overseas, as it does on many occasions.

Senator ROBERT RAY—So if an Iraqi building society put in a bid, it is the best one andthere are no security concerns, they can have it. Or if an Iranian building conglomerate putsin, we will just sell our Foreign Affairs building to them. Is that what you are saying?

Mr Mackay —I do not believe that was what was said at all.Senator FAULKNER—What was said?Senator ROBERT RAY—Where are the limitations? We are looking for the limitations.Senator FAULKNER—Minister, this is important enough for you to actually answer a

question on what the government’s policy is. Mr Mackay has said that we will be stringentabout security concerns. I do not think that is going to put anyone’s mind at rest. But, surely,in terms of the sale of a building occupied by Australia’s Department of Foreign Affairs andTrade there are some national interest questions. I have just received a copy of AlexanderDowner’s speech at the opening of the building when he said:

Now, as Minister for Foreign Affairs, at the opening of the Department of Foreign Affairs and Trade’simpressive new headquarters, I have ensured this building not only represents the future but also capturesAustralia’s rich diplomatic history. Australians must understand and celebrate their history: pride in ourpast helps us face the future with confidence.

You are sitting there and seriously telling this estimates committee that you cannot rule out,or certainly will not rule out, and do not have a clue about the government’s policy in relationto our foreign affairs and trade building being flogged off to overseas interests. You arekidding, Minister, aren’t you?

Senator Minchin—Your political hyperbole is fascinating.Senator ROBERT RAY—You don’t like a touch of political—Senator Minchin—I have not been briefed on the terms of that sale. I will get any

information that I can for you.

Senator FAULKNER—Can I ask at a departmental level, given that the minister does notknow what the government is doing—this is the Prime Minister’s right-hand man—



Senator Minchin—Don’t be ridiculous, Senator Faulkner.Senator FAULKNER—You don’t have a clue what the government is doing.Senator Minchin—You know I have not been briefed on the sale of this building.CHAIR —Senator, you have been on this—Senator Minchin—Don’t be ridiculous.Senator FAULKNER—It is not ridiculous. Given that you do not know what the

government is doing, let us find out what is happening at the departmental level.Senator Minchin—I said that I do not know what the terms of that sale are.CHAIR —The minister has already offered to answer your question and he will come back

about it.Senator ROBERT RAY—Mr Chairman, the distinctive point here is that the minister says

he does not know what the terms of the sale are. I accept that that is going to be gone off andgot. But, beyond that, there is still a philosophical question that Senator Faulkner is trying toestablish as to whether it is appropriate for the building to go into foreign hands, which mayor may not be related to the terms of sale.

CHAIR —The minister has responded to questioning along that line and said that he hasnot been briefed on it but he will look into it.

Senator FAULKNER—All right. What we have to do then—because we have establishedthat the minister does not know what the government policy is and there are no two waysabout it: he says that and I say that—is focus on what the departmental officers at the tablecan tell us about this important issue. Mr Mackay, you were telling us about some of thesecurity issues. I would be the first to acknowledge that they are important and I think everyAustralian would be concerned about it. Can you tell the committee how you are dealing withthose issues of concern?

Mr Mackay —In the first place, we, as the current owners of the building, have a detailedlease in place with the Department of Foreign Affairs and Trade.

Senator ROBERT RAY—How long?Mr Mackay —Of the order of 15 years. That lease specifies those areas where we may have

literally unrestricted access to, some areas where we can have restricted access to and someareas where we cannot have any access at all. In fact, they do not only bind us but they alsobind our agents who look after that building, P&O Facilities Management.

Senator FAULKNER—The new owner obviously would need to sign up to those accessarrangements; is that right?

Mr Mackay —The new owner would buy that building which would include that lease andwhich would have those restrictions built into the lease.

Senator ROBERT RAY—And the naming rights would be retained?Mr Mackay —I do not recall. I would have to take that on notice. I cannot recall it having

been an issue.Senator ROBERT RAY—You are probably aware that, historically, where the Russian

embassy is in Washington, in the early 1980s they renamed it Solzhenitsyn Street so that allmail would have to be addressed there. I am just worried about naming rights if someone buysa building and renames it. I will not be so crass as to consider what we might rename it, butthat might be a concern.



Mr Mackay —If that had been an issue, I am sure I would be aware of it and I am not. ButI will take that on notice. My expectation would be that there would be a requirement to retainthe existing name.

Senator FAULKNER—What stage is the sales process up to, Mr Mackay?Mr Mackay —We are just a few weeks away from going to the market.Senator FAULKNER—Traditionally with a sale of a building of this size, would you be

interesting overseas buyers in the normal course of events; what is your normal approach inthat regard?

Mr Mackay —There would be quite a bit of overseas interest in a portfolio of $800 million.Senator FAULKNER—I understand that but, specifically in relation to this building, what

are your plans?Mr Mackay —Several of our marketing people have overseas connections, but I am not

aware of the precise nature of them.Senator FAULKNER—I assume what you are saying to us—and please correct me if I

misunderstand you—is that your sale plans include overseas promotion of the sale; would thatbe a fair summary of the situation?

Mr Mackay —I think the answer is the whole portfolio would be promoted, particularly inAsia.

Senator FAULKNER—Sorry, particularly—Mr Mackay —In Asia but there will be some promotion elsewhere.Senator FAULKNER—You say the whole portfolio would be promoted in Asia and

elsewhere, and I understand that, but what I am driving at is whether the department of ForeignAffairs building, the R.G. Casey Building, would be highlighted. I mean, it is one of the jewelsin the crown, isn’t it, as part of that portfolio? That is the issue.

Mr Mackay —I would have not described it that way, but it is certainly quite a substantialbuilding.

Senator FAULKNER—How would you describe it?Mr Mackay —I would describe it as a building with a long-term tenant, which I would have

thought would be of great interest to large institutional investors in Australia—the super funds,et cetera.

Senator ROBERT RAY—Wouldn’t this building be exactly the same?Mr Mackay —I have not analysed this building, Senator.Senator ROBERT RAY—You have not done any analysis on this building yet? I am just

trying to find out what the difference in philosophy is. There are fewer security concernsaround this building than there are at the other one.

Mr Mackay —The philosophy is drawn from the Commonwealth property principles, andthey were applied by the Commonwealth property committee—the two key criteria beingheritage and financial return.

Sitting suspended from 11 a.m. to 11.17 a.m.Senator FAULKNER—I want to go to an issue that Senator Ray had raised previously

which went to the cross-over point in relation to rents received from that part of the propertyestate that had been sold off. There was a lot of questioning, certainly Mr Mackay would



recall, at the last estimates committee about this. It really went to paragraphs 65 and 66 ofthe report of the Domestic Property Task Force, published in August 1996. There was asignificant amount of questioning of Mr Mellors, Mr Godfrey and Mr Deegan.

Minister, what I was trying to establish at the time was how short term is the benefit to thetaxpayer of the fire sale of 57 Commonwealth buildings? What are the long-term costs to thetaxpayer of the sell-off? When does the cross-over between profit and loss occur, which is theissue that Senator Ray was raising earlier specifically in relation to the R.G. Casey Building?

Previously we discussed the table on page 16, paragraph 66, of the property report. Whatthat table indicated, I think, was that the positive effects of the total budget would expire afterseven years and that by 10 years there would be a net increase in outlays of $350 million. Inother words, over a 10-year period the net cost to the taxpayer of the sell-off would be $350million. There was at the time a lot of discussion of a more contemporary estimate of costs,but that was not subsequently provided to us.

What I would be interested in receiving, if that were possible, is a more recent estimate ofthe effects on the budget of the property sell-off. Mr Mellors said this was possible. Thatwould be useful from the committee’s point of view.

Senator Minchin—Mr Early advises me that we can take that on notice and see whatinformation we can give you.

Senator FAULKNER—I see. Could I have an indication about how the recent estimatesdiffer? In what direction are they moving? I assume that sort of work would be at someone’sfingertips.

Mr Mackay —This is in terms of the value of the $800 million of buildings?Senator FAULKNER—In terms of when we meet that cross-over point. I could go back

to the estimates record of the last hearing, but I wonder if there has been any more workprepared in relation to the accuracy of the table that we had presented at paragraph 66 of theDomestic Property Task Force report.

Mr Early —As we have mentioned a couple of times, the Commonwealth PropertyCommittee did detailed financial analysis and provided advice to government, or it is probablymore accurate to say that the Department of Finance and Administration provided advice togovernment on the budgetary impact of that. That advice is obviously in cabinet material andwe cannot really help you with that here. We are more than happy to take the question onnotice and have a look at what we can do that ministers would be comfortable with us puttingon the record.

Senator FAULKNER—Can you explain to me in layman’s language how you calculatethe SOC rate?

Mr Early —Do you mean how we calculate the social opportunity cost of capital?Senator FAULKNER—Yes.Mr Early —As you would be aware, the social opportunity cost of capital is a complex

concept which is not easily quantified in a precise point figure. The Commonwealth propertycommittee took the Commonwealth property principles and looked at what was a pragmaticway of analysing the buildings against that concept. There were a range of views on what thesocial opportunity cost of capital might be, but there was agreement that that rate would beno less than 15 per cent. So the analysis was done at that 15 per cent rate on the basis thatif we were recommending to government that a building be sold and the social opportunitycost were higher, then that recommendation would still remain an appropriate one.



Senator FAULKNER—Would it be more accurate to say that the Domestic Property TaskForce applied a 12 per cent social opportunity cost rate or believed that was the appropriaterate?

Mr Early —I think you probably would have to direct that question elsewhere. The decisionon the Commonwealth property principles, to my recollection—and others might reassure methat I am correct or otherwise—was a decision the government took following the report ofthe Domestic Property Task Force. That report, as I recall, was one of the inputs to thegovernment’s decision.

Senator ROBERT RAY—Was that calculated on July 1996 prices?

Mr Early —What was calculated, I lost the thread?

Senator ROBERT RAY—The eventual 15 per cent.

Mr Early —When one is calculating discount rates what one needs to look at is long-termrates rather than rates at a particular point in the business cycle. In looking at what was theappropriate rate to use for analytical purposes we had regard to what we thought were long-term rates rather than point market rates which would be the normal sort of approach.

Senator FAULKNER—So I can be clear, obviously the budget projections were based ona particular social opportunity cost rate. That is correct, is it not?

Mr Early —There are two different concepts here. Obviously, I have to talk in principlewhen I talk about budget numbering. As you would be well aware, budget numbers are basedon our best estimate of financial flows over the budget period and often further on into theout years. That is a separate issue from the social opportunity cost of capital. The socialopportunity cost of capital is essentially an analytic tool to enable government to decidewhether or not it wishes to own the particular property. It is the rate of discount which isapplied to the financial flows to enable the government to determine the rate of return on thebuilding exceeds or is less than that threshold rate.

Senator ROBERT RAY—Is that related at all to the experience in the private sector?

Mr Early —The social opportunity cost of capital is a concept which is essentially beddedin the government’s rate of time preference for money. When people are looking at the privatesector, then they are looking, in essence, at a rate of return which will provide a sufficientmargin over their cost of capital to adequately recompense them for risk and obviously providea profit. They are two separate exercises.

Senator ROBERT RAY—So you would always expect the private one to be higher thanthe social cost of capital?

Mr Early —My expectation—and you would probably get different views on this fromdifferent people—would be that the social opportunity cost would be higher. Normallygovernments have more social uses for capital, which they see as highly worthwhile, than theyhave capital to meet them. Normally the cut-off for outlays projects of any government areat a rate of return that is higher than rates in the private sector.

Senator ROBERT RAY—I am not sure this question is properly related here, but wouldthat in part also be determined by what government does with the revenue from sales in theshort term—that is, whether you retire debt or you put it into recurrent expenditure becauseyou do get to a point where the amount of rent you are paying several years down the trackis not necessarily related back to revenue you got from the sale of buildings?



Mr Early —I accept that. In principle, the analytical tool is to look at the financial flowsyou get from the sale of either an individual building or the buildings en masse. You can doit either way. The analytical tool is to look at the costs of preparing the building for sale, therevenue of the sale, the direct cost of the sale, the best return you can get from the money withyour use of it—which can obviously be retiring debt—and the fact that you will have to outlaymoney for rent rather than having rent as an internal transaction within government.

What the social opportunity cost does is discount the financial flows back to find the netpresent value of those financial flows. It is a net present value concept. In circumstances wherea committee has been told that the government wants to own property if the rate of return isgreater than the social opportunity cost, if the discount rate is greater than that cost, then thecommittee presumably would draw the government’s attention to that and recommendretention, and conversely.

Senator ROBERT RAY—That was an extremely lucid explanation. I have been waitinga long time to hear that. We have got to that point and I think that is fine. You may not beable to answer this, but in terms of the structure of government, commercial-in-confidence andadvice to cabinet, how do we as an estimates committee investigate and check that that is thecase, when some of the information, maybe quite properly, cannot be made available to us?How can we test, firstly, that you have met those criteria and, secondly, that all the factorsyou have put in are properly weighted and balanced?

Mr Early —Obviously, there are limits to which I can respond to that. There are difficultiesin the short term in making a lot of the detailed financial material available because we arein the throes of selling the building.

Senator ROBERT RAY—Yes, I understand that.

Mr Early —I think we said earlier that we will take on notice the question of financial flowsfor the building as a whole and see what we can appropriately and properly bring back to thecommittee. I think also we could ask government to think about what may be able to bereleased post sale when at least the commercial considerations would have been put aside. Butagain that would be a matter for government to decide rather than us.

Senator ROBERT RAY—We do not want to do anything to interfere in the sales processor get information that could be used by the bidders. I understand that to be the point. It alsocomes back to the fact that we have to try to satisfy ourselves that all these criteria have beenproperly applied to a building before it is put out to sale, so it is a bit of a chicken and eggargument. It may be best resolved by us putting a reference through the Senate to have thewhole government property sales program looked at by a references committee. That givesyou an opportunity then to prepare submissions, taking all these things into account, and havethem explored at that level. What do you think, colleague?

Senator FAULKNER—I think that is probably a good idea and it would mean we couldat least stop getting estimates committees bogged down. I suspect that would be an advantagethat everyone would see. Maybe even the minister would embrace a general reference like thatas a reasonable idea in the circumstances.

Senator ROBERT RAY—Hansardcan record ‘No comment’.

Senator FAULKNER—The idea of the social opportunity cost, how is it best described?Is it a social opportunity cost ‘tool’? What is the best word to use? I just want to get the rightnoun.

Mr Early —I think I would use ‘concept’.



Senator FAULKNER—Concept, thank you—the social opportunity cost concept. It is animportant measure effectively trying to establish whether any particular project is a positiveone for the community and for government. That is its application, as I understand. Is thatright, Mr Early?

Mr Early —I would have said that there is a difference between the rate at which you decidewhether something was positive for government to do on the community’s behalf and whethersomething was positive for perhaps business to do. As Senator Ray mentioned earlier, thediscount rate that developers would apply to property ownership is a lower rate than the socialopportunity cost of capital and that reflects the fact that governments are capital constrainedand have at the margin projects which they see as socially worthwhile which they are unableto implement. That is a phenomenon of every government that I have ever had any doingswith in the Department of Finance or anywhere else for that matter.

Senator FAULKNER—But how important was the social opportunity concept—perhapsMr Mackay is best to answer this—and its application in terms of providing advice from theDomestic Property Task Force to government on the sale of Commonwealth buildings? Is itan absolutely fundamental test that was applied?

Mr Early —If I can make a general comment first and Mr Mackay would have moreknowledge of the detail. Again, my very clear recollection is that the Domestic Property TaskForce was a group which predated government taking its policy decision on the Common-wealth property principles. The government considered that report, took its decision and thenthe Commonwealth Property Committee provided government with advice on how it shouldobtain its property services given that set of principles. So the principles, as I recall it,postdated the Domestic Property Task Force and were fundamentally the instrument whichenabled the Commonwealth Property Committee to turn the Commonwealth property principlesinto financial analyses which we could then provide advice to government against. I do notknow whether I put that very clearly, but that is it.

Mr Mackay —As I said, we have tabled, I think in this committee before, the Common-wealth property principles and one of those was exactly this test. So straightforward financialanalysis was undertaken on each of the properties and the assumptions there obviously takeinto account the current lease rates and the assumed value of the building and it does becomevery much a mathematical exercise from there on. But of course the Commonwealth propertyprinciples had some other tests that had to be met. So the task of the Commonwealth PropertyCommittee, having established and had those principles ticked off by government, was literallyto measure that part of the commercial office estate against those principles and come backand make recommendations to government.

Senator FAULKNER—Both those contributions are helpful in trying to understand thisprocess. If I understand you correctly, Mr Mackay, the tests—to use your words and I thinkthey are words I used also—are applied to each individual building effectively?

Mr Mackay —That is correct.

Senator FAULKNER—One of the key issues, obviously, if you apply the test, is what theactual social opportunity cost rate is. I would like to understand this. Clearly the outcome ofthe test is different depending on what rate is applied.

Mr Mackay —That is correct.



Senator FAULKNER—Paragraph 65 of the public report of the Domestic Property TaskForce—I assume that might be called the public report because there might be a report whichwas not public. Is that the case?

Mr Mackay —That was an earlier task force that proceeded the Commonwealth PropertyCommittee. That task force commenced some work, the government decided that it wantedto establish the Commonwealth Property Committee and to establish a set of principles. Myrecollection is that the principles were established after that report had been completed andthe Commonwealth Property Committee was a successor to that committee.

Senator FAULKNER—As DAS, as it then was, and now DoFA applies the socialopportunity cost test to the sale of each building that is proposed for sale in the Common-wealth estate, the question is: what social opportunity cost rate was applied in that test?

Mr Early —I will probably partly repeat what I said before, which means I did not makeit clear enough. The concept of social opportunity cost is complex. There is no answer whichsays the social opportunity cost of capital is X. What the Commonwealth Property Committeedid early in its deliberations was to look at advice that it had on what that rate should be.Essentially, that advice was—and I am speaking with two hats here because partly that advicecame from the Department of Finance obviously—that it was not possible to put a precisenumber on what the social opportunity cost of capital was but the judgment of the peopleproviding the advice was that the rate was certainly no less than 15 per cent.

The Commonwealth Property Committee decided to do its financial analyses against a rateof 15 per cent. The reason for that was, if the committee using a rate of 15 per cent advisedthat a building should be sold, then that would be the correct decision if the rate were higher.In other words, if it were a higher rate, you would be more likely to sell the building than ifit were a lower rate. So by picking a rate that the advisers were confident was a lower bound,we made sure that we were not providing advice to government to sell buildings which, onthe principles they had given us, it would not be appropriate for them to sell.

Senator FAULKNER—So the rate applied—because the information you had available toyou was that it was no less than 15 per cent—was 15 per cent in the context that you haveexplained.

Mr Early —The rate applied was 15 per cent and it was picked because it was the lowerbound of the advice, correct.

Senator FAULKNER—So that rate was applied across the board, as I understand it, to eachand every Commonwealth building that has been sold or is proposed to be sold?

Mr Early —That is correct.Senator ROBERT RAY—The rate on the R.G. Casey Building was 11.7, is that right?Mr Early —Again, Senator, we would be reluctant to put those numbers into the public

domain for reasons we have talked about earlier.Senator FAULKNER—This is quite a complex issue, but I would like to understand when

that particular decision was made about the application of 15 per cent in the circumstancesthat you have outlined and who made it?

Mr Early —The decision was made ultimately by the Commonwealth Property Committee.It was made very early in its deliberations at one of its first few meetings. Again, Mr Mackay’srecollection may be better than mine. It was made on advice essentially from the Departmentof Finance and the Department of Administrative Services and that advice was along the linesthat I have been talking about.



Senator FAULKNER—Would you be able to supply that information, Mr Mackay?Mr Mackay —In terms of when the Commonwealth property principles were—Senator FAULKNER—Mr Early has answered the question as to who made it, which was

the Commonwealth Property Committee. That is helpful. The only issue remaining in myprevious question is when it was made?

Mr Mackay —I would have to take that on notice.Senator FAULKNER—Did it postdate the publication of the public report of the Domestic

Property Task Force in August 1996?Mr Mackay —Yes. I believe the time was October 1996 that the principles were confirmed.Senator FAULKNER—If I can take you back to the report which we have available to us—

that is, the public report of the Domestic Property Task Force—paragraph 66 tabulates thedetails of the impact of the social opportunity cost rate at a figure of 12 per cent. Are youaware of this, Mr Early?

Mr Early —I probably was at one stage. I am certainly not aware of it now.Senator FAULKNER—This is the purpose of my questioning. What has been made

publicly available, although I hear today there may be an executive summary of at least oneand possibly two other reports from the CPC which may go into this issue, I do not know.Mr Mackay, can you help me with that?

Mr Mackay —I cannot recall whether they go into the detail of it, Senator.Senator FAULKNER—Would you be able to provide without delay those executive

summaries of those two CPC reports that have been made publicly available?Mr Mackay —Yes.Senator FAULKNER—I would appreciate that. We have this made available and we have

the Domestic Property Task Force report of August 1996. For the record, who were membersof the Domestic Property Task Force?

Mr Early —I do not know the answer to that, Senator. No doubt one of my colleagues will.Senator FAULKNER—All I know from here is that Mr Godfrey was the chair.Mr Mackay —Yes, he certainly was the chair. I am sorry, I do not have a copy of that with

me, but I am surprised that it is not mentioned.Senator ROBERT RAY—Is it in the appendix?Senator FAULKNER—I do not believe so, but I was looking at the appendix in relation

to working out the social opportunity cost. I actually have found it; Senator Ray has been ableto direct my attention to it.

Senator ROBERT RAY—I knew it was there.Senator FAULKNER—That is very kind of you. Is Mr Barnes still working for DoFA?Mr Mackay —No, he is not. He was part of the Australian Property Group that was sold.Senator FAULKNER—Is Mr Beare still part of DoFA?Mr Mackay —No, he is not.Senator FAULKNER—Mr Deegan is not part of DoFA?Mr Mackay —No.Senator FAULKNER—Mr Godfrey, we know, is not part of DoFA. Mr Nicholson?



Mr Mackay —Yes.Senator ROBERT RAY—Does he work for the department?Mr Mackay —He is a departmental liaison officer.Senator ROBERT RAY—So he is currently seconded to Mr Fahey’s office?Mr Mackay —Yes.Senator FAULKNER—I see.Senator ROBERT RAY—So he is not strictly under your control?Mr Mackay —No.Senator FAULKNER—Is Mr O’Grady, commercial lawyer and chairman of the commercial

law firm Fisher Jeffries, the same Mr O’Grady whom we were talking about before?Mr Mackay —That is correct.Senator FAULKNER—Were there sitting fees for Mr O’Grady for the Domestic Property

Task Force?Mr Mackay —There would not have been sitting fees. I think there would have been a

consulting fee.Senator FAULKNER—Can you tell me what the consulting fee was for Mr O’Grady for

the Domestic Property Task Force?Mr Mackay —I would have to take that on notice, Senator.Senator FAULKNER—Do you know if it was around $2,000 a day?Mr Mackay —I imagine that it would have been of that order, yes.Senator FAULKNER—It will be interesting to make that comparison. Thank you for that.Senator ROBERT RAY—In terms of the corporate memory of your department, of the

six—one of whom is obviously an outsider—there is no-one left. The other five have all gone?Mr Mackay —That is correct.Senator ROBERT RAY—I have heard of the death seat in trotting, but this committee was

not one to be on!Senator FAULKNER—Mr Nicholson has found a place.Senator ROBERT RAY—I am sorry. He will be back with you at some stage?Mr Mackay —Yes.Senator FAULKNER—That really means it is difficult for me to establish why the

Domestic Property Task Force, in paragraph 66, uses a table applying a 12 per cent socialopportunity cost rate and not a 15 per cent social opportunity cost rate.

Mr Early —As I have intimated in my comments before, I personally believe a 12 per centsocial opportunity cost rate is far too low. The analysis which was done by the CommonwealthProperty Committee chose 15 per cent as the minimum figure that we thought could reasonablybe the ballpark figure. The social opportunity cost rate of 12 per cent is much nearer acommercial rate than, in my judgment, the social opportunity cost rate.

Senator FAULKNER—The trouble is we have a group of people who were tasked toundertake a certain function, decided to provide public information—which is helpful—on a12 per cent social opportunity cost rate, acknowledged that at a 15 per cent social opportunitycost rate more revenue would be raised for the budget, but then said:



The higher incidence of divestment and the more significant the withdrawal of investment from propertyby the Commonwealth, the more negative will be the total budget effect in future years, because thegovernment will be paying rentals in the private sector. Such payments reflect to a large extent the costof capital not currently included in the forward estimates.

That is what the Domestic Property Task Force said at the top of page 16, at the second dotpoint. Is that right?

Mr Early —It is not a statement with which I would agree. One needs to divide one’scomments into two groups. First of all there are the financial flows. It is quite clear that, ifone takes any sum of money and uses it to retire debt, where that debt is expressed in a fixedinterest rate and the alternative use of that capital is to provide a flow of services the valueof which will increase with inflation, then, totally irrespective of the rate of discount you use,you will get an answer that says that the financial effect on the budget becomes more negativethe further you go out. The reason for that is blindingly obvious—that is, the forgone valueof services increases with inflation, and the obtained benefit from debt retirement stays fixed.If that is what it is saying, the statement is unexceptionable, but also not particularlyinteresting.

The more interesting concept, and the one which the Commonwealth Property Committeeimplicitly has been trying to grapple with, is to look at the alternative uses that governmenthas for capital. The concept of government having a social opportunity cost of 15 per centimplies that government has social and other uses for its capital which would return that rateto the community.

If that assumption is right, then quite clearly, if the current investment has a rate of returnless than that, the benefit to the community from selling that asset and putting the capital toalternative use is both positive and grows with time. I have probably been more complex thanI need to there, but the short answer to your question is that it all depends, and it is not astatement I would put my name to.

Senator ROBERT RAY—Okay. We are obviously not property experts on this side of thetable—that has become obvious by the questioning we have had—but this 15 per cent is thenapplied to each building, is it?

Mr Early —That is correct.

Senator ROBERT RAY—Mr Mackay, have you found one building that has survived the15 per cent test?

Mr Mackay —I do not think so.

Senator ROBERT RAY—Not one?

Mr Mackay —There may have been one or two, but small numbers—put it that way.

Senator ROBERT RAY—Do you know, Mr Mackay, why Mr O’Grady signed up to 12per cent in the task force and then 15 per cent on the CPC?

Mr Early —If I can be not quite flippant, I think Mr O’Grady had better advice before himin the latter instance than the former.

Senator ROBERT RAY—But what worries me about that answer—I accept it—is that wethink he was paid for his advice as a consultant to the first committee. I am sure he is publicspirited, but he was not just there for that reason. We think that in fact he was paid for aconsultancy on that.



Mr Early —The advice on the appropriate social opportunity cost rate primarily—andappropriately, in my view—came from the Department of Finance in consultation with theDepartment of Administrative Services, not from private sector consultants.

Senator ROBERT RAY—Can we presume from that answer, which I agree with, that hewas paid to consult on other matters? Was he? He never gave advice on this particular matterbecause he was not the expert. He was paid as a consultant for other advice, was he?

Mr Mackay —That is the assumption that I would draw. I was not at the earlier committeemeeting, so I do not know.

Senator ROBERT RAY—But just getting back to this, the Commonwealth PropertyCommittee establishes a principle by which all buildings will be judged—we are not talkingabout every building you own, but the big ones—and no official at the table can nominate abuilding that survived that test. Are you looking?

Mr Mackay —I would like to take that on notice.

Senator FAULKNER—Can you say, Mr Mackay, whether a number of buildings soldwould have survived if it had been applied? If you know they have not survived the 15 percent test, could you say whether they would have survived the 12 per cent test?

Mr Mackay —I am sure there would have been some buildings within the range, mostcertainly.

Senator FAULKNER—What does that say to you, Mr Early, about your earlier advice?

Mr Early —It says nothing whatsoever.

Senator FAULKNER—Given the table, Mr Early, that we have been talking about atparagraph 66 of the report of the Domestic Property Task Force, one assumes somewherewithin the bowels of your department there would be a similar table which should tabulatethe impact of a 15 per cent social opportunity cost rate. Would that be right?

Mr Early —It is not entirely clear to me what that table is. If it is what it seems to be, thenit is probable that that analysis does not exist. But we have already said that we are preparedto take on notice a question and come back to the committee with a financial analysis of thesale of the buildings en masse. I can only repeat that we would be prepared to do that.

Senator FAULKNER—Let me go back to the start when I outlined to Senator Minchinthe crossover point—to use the words, very useful ones, I think, that Senator Robert Ray usedearlier in the estimates hearing—between profit and loss. I accept you are distancing yourselffrom this table, Mr Early; I acknowledge that. What this particular table says is that thecrossover point effectively is the financial year 2003-04. I think it says that, doesn’t it?

Mr Early —To be honest, I am not at all sure what the table does say. The lead-in to it saysthat the following table details the precise effects on the total budget of applying a 12 per centSOC rate. If it does what that lead-in suggests, then what it is telling us is the net present valueof the impact of sale in each of those years discounted to the present at 12 per cent. That isnot a particularly helpful concept if that is what the table is providing.

Senator FAULKNER—Doesn’t it really say that there is a positive value to the budget untilthe year 2003-04, after which the sale of the Commonwealth’s building estate, that this tablerefers to, becomes a very significant impost to the budget? That is layman’s language, but thatis what that table tells me, Mr Early. I admit that I am a mere mortal in these matters. Do youthink that it is unreasonable for me to come to this conclusion?



Mr Early —I do not think it is at all unreasonable to come to that conclusion, but I am notactually sure that it is correct. Let me try to explain without complicating the issue. I am notat all sure whether these relate to actual cash or the net present value of that cash discountedat 12 per cent. I am not entirely sure what the table is telling us, but it seems to me that themost reasonable interpretation is that it is telling us that the cash flows to the budget turnaround at that point and become negative afterwards. The critical issue, which is implicit inthe analysis that the Commonwealth Property Committee did, is whether the aggregate of allof those through time is a positive or a negative figure.

Senator FAULKNER—That is a critical issue, I agree with you. It seems to me to belogical that, at some point, if you like, you reach the crossover point. That is not illogical toyou at all, is it?

Mr Early —I think it is almost inevitable if you compare ownership of a building, whererents will increase through time broadly with inflation, with retirement of debt, where thefinancial flows will be fixed in dollar terms through time, yes.

Senator FAULKNER—Let me now ask this question: where is the crossover point if a 15per cent social opportunity cost rate is applied, effectively, I believe, contrary to the adviceof the Domestic Property Task Force, by the new CPC of the Commonwealth? Can someonetell me what is the crossover point with a 15 per cent social opportunity cost rate, as opposedto 12 per cent? According to this table, it is the year 2003-04. What is it with a 15 per centsocial opportunity cost?

Mr Early —I will make a couple of comments on that, Senator. I have only the one pageof this report, but I do note that the Domestic Property Task Force, as I read this, is not sayingthat 12 per cent is the social opportunity cost. It is saying that here would be the effect ofapplying a 12 per cent rate. It is essentially saying that, assuming the rate is 12 per cent, hereis the analysis.

Senator FAULKNER—But it is saying that the higher the incidence of divestment and themore significant the withdrawal of investment from property by the Commonwealth, the morenegative will be the total budget effect in future years because the government will be payingrentals to the private sector. It is saying that definitively, clearly and categorically. I know youare not signing up to it.

Mr Early —And, in my view, also incorrectly.

Senator FAULKNER—I acknowledge that. I know you are not signing up to it. But theyare saying that.

Mr Early —Yes. Again, I need to couch my reply in terms of if the table at paragraph 66is showing what I think it is, then the crossover point in that table would be unaffected bythe discount rate that was being used. Let me hasten to add that that is not in any sense sayingthat I think that analysis is correct, because I simply do not know.

If this table is doing what I think it is, it is looking at the cash flow in each year anddiscounting that cash flow, using the social opportunity cost of capital. If it is doing that, thendiscounting a negative figure at whatever rate will still leave it a negative figure, anddiscounting a positive figure at whatever rate will still leave it a positive figure. If that iscorrect, then the crossover point would be unaffected. The numbers would obviously change,but the crossover point would not. That is predicated on me correctly understanding what thetable is doing.



Senator FAULKNER—I come back to my question about the crossover point with a 15per cent social opportunity cost rate. Before I ask that, I would like to know whether thedepartment of finance at any stage drew the attention of the then Department of AdministrativeServices or the Domestic Property Task Force, or anybody else who was responsible for theproduction of this report, to the fact that you did not sign up to this? Was this a problem forthe Department of Finance when you got hold of it and had a look at it?

Mr Early —I suppose the Department of Finance gets many reports that it does not entirelyendorse.

Senator FAULKNER—But this is pretty important in terms of your role. You may get lotsof reports that you do not comment on. It was never my experience when I was a minister,I might say. The Department of Finance seemed to have their finger in every single pie I hadmy finger in, I can tell you. I think it is probably just lucky for others if that is not the case.

Did the Department of Finance do anything about this material after it came to yourattention? You are saying that you do not sign up to it now. You may have only just beenapprised of it now, I don’t know, but I would like to understand what the response of thedepartment of finance was to the report when it was received.

Mr Early —I can’t recall that, Senator. We have been advised that the Department ofFinance had a person on the committee. That person would have expressed their views, whichthey may or may not have discussed with other people. I presume the committee’s report, asis the wont, is an amalgam or compromise between the various committee members.

Senator FAULKNER—Did Mr Nicholson sign up to this report?Mr Early —I can’t formally answer that. If he was on the committee, then presumably he

had a role in its preparation.Senator FAULKNER—Could you find out whether he did sign up to it?Mr Early —Yes. I will take that on notice.Senator FAULKNER—Can you find out whether Mr Nicholsen, or anyone else in the

Department of Finance at the time when this report was prepared, made any comment aboutthese important issues? That would be useful to understand, too.

Mr Early —I can tell you that I had discussions with Mr Mellors, whether it was at that timeor thereabouts, in which I put a fairly strong view as to what the appropriate social opportunitycost of capital was, and it certainly was not 12 per cent.

Senator FAULKNER—Mr Mackay, can you tell me what is the crossover point at a 15per cent social opportunity cost rate?

Mr Mackay —I think Mr Early has answered that in terms of his interpretation of that table.The crossover point would not change, if his interpretation of that table is correct. In termsof overall for the estate, you have to recall that that domestic property task force was dealingwith a range of other properties, so there was not a straight comparison between the propertiesbeing dealt with by both committees. So I would have to calculate that.

Mr Early —Again, Senator, that is part of the matter we have taken on notice to have a lookat what we can provide you with by way of financial analyses of the sales of the building atlarge.

Senator FAULKNER—Can I ask you specifically whether the crossover point for a 15 percent social opportunity cost rate is 4.8 years and those calculations in fact have been doneinternally in your department.



Mr Early —Senator, I cannot answer that question. I do not know. I will take it on notice.As I said before, to the extent that there have been such calculations done, they would havebeen done as part of a cabinet submission to government and I cannot comment on that now.But I am happy to take on notice the question of what advice we can provide to the committeeon financial analysis, including the crossover point.

Senator FAULKNER—I see. I would appreciate it if you could provide us with thatinformation, because I certainly understand that the departmental briefs very much go to thatfigure and I want to be satisfied that this information has not been covered up in any way.We can explore it anyway at a later stage. But if there are those departmental briefs and youdo find them, perhaps, Minister, you could take on notice whether that information could beprovided to the committee. I normally do not ask questions on notice that go to a lot of work.I try not to ask departments for an unreasonable amount of work. If it does not exist—I believeit does exist—or if for some reason it cannot be found, perhaps we could have a table coveringsome of these issues and applying the 15 per cent social opportunity cost. Then I think wewill be able to fully investigate the budget impact that that might have. But I suspect that thatis a job for the next estimates committee.

Senator Minchin—I am happy to take that on notice.Senator ROBERT RAY—On a different subject, what is happening to the budget decision

on the introduction of user pays for fire services in Commonwealth buildings? Is that goingto have an adverse effect on the ACT fire brigade? Has this policy put any members of thecommunity or public servants at risk?

Mr Mackay —As you know, Senator, that announcement was made by the government—thatthe user pays for fire services would come into place from 1 July next year. We are goingthrough the various administrative preparations to put that decision in place.

Senator ROBERT RAY—Have there been representations that this will adversely affectthe ACT fire brigade?

Mr Mackay —Not to my knowledge, Senator.Senator ROBERT RAY—On a different topic altogether, has there been anything raised

about the use of the Commonwealth’s compulsory acquisition powers in respect of the proposalfor a VFT?

Mr Mackay —Again, not to my knowledge. There may well have been some informaldiscussions, but I am not aware of it having been raised in any formal way.

Senator ROBERT RAY—What is the current status of the Commonwealth propertyregister?

Ms McKinnon —The Commonwealth property register is currently being prepared. Thereports from agencies have just been received, and it is a matter of incorporating those intoa database. So it is at early stages, but we have just been compiling the information receivedfrom agencies. It is not at a stage that is usable yet. Some of those agencies did not returnthose forms until the end of October.

Senator FAULKNER—I noticed on page 18 to 19 of the additional estimates budgetstatements that extra money had been requested for the sale of old Brisbane airport. I justwondered why that was the case and why it was not on the list that was announced on budgetnight.

Mr Mackay —It is not part of the commercial office estate, which was the focus. It is partof the industrial and special purpose estate which we have been gradually managing and selling



off over some years. It was a piece of surplus property which required some work to be doneto prepare it for sale, and the funding, as I recall, was for that purpose.

Senator FAULKNER—What about the clean-up and remediation costs of the main streetestate in Armidale? I just wondered what that was for.

Ms McKinnon —Yes, it has been an ongoing project of remediating the soil and actuallyremoving the soil. I think the contaminated soil was part of an estate that the Commonwealthowned. It has been an ongoing process to remediate that soil. It has involved taking that soilaway, which was the only option. It goes back I am not sure how many years, but it is a longtime.

Senator FAULKNER—Fair enough. Thanks for that. How are we going on the issue ofnaming a building after Sir William McMahon?

Mr Peel—I am not aware that there has been any public announcement.Senator FAULKNER—There has not been a public announcement. I was just wondering

what was happening internally in the department about that. I am not aware that the PrimeMinister has made a public announcement. Has your attention been drawn to the estimatescommittee that considered the Department of the Prime Minister and Cabinet and where weheard about an exchange of correspondence on these issues?

Mr Mackay —It certainly has been an issue that has been raised between the former Ministerfor Administrative Services and the Prime Minister. But I believe no announcement has beenmade.

Senator FAULKNER—Mr Howard wrote to Mr Jull on at least one occasion about this,isn’t that the case?

Mr Mackay —I can simply confirm that I do not disagree with the evidence that theDepartment of the Prime Minister and Cabinet gave when it was last before this committee.

Senator FAULKNER—How many letters were received from the Prime Minister on thisparticular issue?

Mr Mackay —I think there has been some correspondence back and forward on a numberof occasions.

Senator FAULKNER—I know that, but I just wondered how much. I know that the PrimeMinister is very interested in this. I just wondered how many times he put pen to paper.

Mr Mackay —I could not answer that; I do not know.Senator FAULKNER—I am surprised you do not know. I thought you might have checked

this after the Department of the Prime Minister and Cabinet estimates process.Senator ROBERT RAY—Have you made any arrangements for inspections of the Pitt

Street building for any interested parties in this matter?Mr Mackay —I would have to check that.Senator FAULKNER—What does it cost to rename a building like Sydney Central? Is that

its current name?Mr Mackay —Yes, it is.Senator FAULKNER—Were you involved in the discussions with Treasury in relation to

naming rights of their new building after Sir William McMahon?Mr Mackay —No, I was not.



Senator FAULKNER—So you are not aware of that issue at all?Mr Mackay —No, I am not.Senator ROBERT RAY—Have you put the 15 per cent social cost test to this building?Mr Mackay —To which building?Senator ROBERT RAY—The one in Pitt Street.Mr Mackay —Yes, we have and it is on the market.Senator ROBERT RAY—So you better get in soon, or are naming rights reserved for the

Commonwealth?Mr Mackay —It is possible to contractually lock in naming rights when you sell a building.Senator ROBERT RAY—It would depress the value very substantially though, wouldn’t

it? You can pass.Mr Mackay —That is not a judgment that I would share at all.Senator FAULKNER—We could have a situation where the Prime Minister at last gets

a building named after Sir William McMahon in Sydney Central, the building is flogged andsomeone renames it.

Mr Mackay —I am saying that that would not be possible because it would be possible tocontractually lock that in, as you could easily lock in the name of the R.G. Casey Building.

Senator FAULKNER—Yes, of course. But are you looking at locking in the specificnaming rights after Sir William McMahon in one or more of your sale processes?

Mr Mackay —We would look as a matter of course in all of the sales as to whether wewould want to lock in naming rights.

Senator FAULKNER—Mr Mackay, thank you for that. That is helpful information, butthat was not an answer to the question I asked. I asked specifically: are you in any of yourcurrent activities or negotiations surrounding the sale of any buildings in the Commonwealthestate looking at reserving naming rights for Sir William McMahon and possibly making somecontractual obligations as a result?

Mr Mackay —I feel uncomfortable about discussing this. It is on record that there has beensome correspondence on this, but the fact of the matter is that there has been no announcementand I feel very uncomfortable about pre-empting whatever the government might decide andthe timing for when it might want to announce such a decision.

Senator FAULKNER—Who would make this decision?Mr Mackay —It would be made by ministers.Senator ROBERT RAY—Which minister of the two—Fahey or Minchin?Senator Minchin—It wouldn’t be me.Senator FAULKNER—He is quick to say it was not him. I think it is a reasonable question

to ask, Mr Mackay. But if you are concerned about it, I will not push it. How muchdepartmental time and resources have been involved in this obsession of the Prime Ministerabout having a building named after, of all people, Sir William McMahon?

Senator Minchin—You do not need to accept the premise of the question.

Mr Mackay —That aside—Senator FAULKNER—But you would, Minister, wouldn’t you?



Senator Minchin—No, I do not accept the premise of the question at all, Senator.

Mr Mackay —There has been some routine correspondence back and forward. I do not thinkit would be substantial at all.

Senator ROBERT RAY—Can I have an updated report on the current situation in co-locating the Consul General and UN Ambassador in New York.

Mr Barrell —The design work is under way for the fit-out of a co-location, in a lease whichwas taken out a couple of months ago in the Mobil building in New York.

Senator ROBERT RAY—Are we allowed to know what the cost of the lease is at thisstage?

Mr Barrell —I do not have it with me but I will provide it to you.

Senator ROBERT RAY—Can you give me a ballpark figure?

Mr Barrell —I cannot even recall that; I have seen it. I expect it is in the order of a coupleof million dollars a year.

Senator ROBERT RAY—About $2 million a year. Are we bearing the fit-out costs?

Mr Barrell —They are yet to be identified in terms of the design work being done.

Senator ROBERT RAY—What is the estimated cost of the design work?

Mr Barrell —Probably about $50,000.

Senator ROBERT RAY—We are talking Australian dollars here and not US?

Mr Barrell —Yes.

Senator ROBERT RAY—Then there will be a fit-out, presumably based on the designwork?

Mr Barrell —Yes.

Senator ROBERT RAY—Do you have any rough estimate of what the fit-out will cost?

Mr Barrell —No, not offhand, but I would assume it would be about a million and a halfdollars.

Senator ROBERT RAY—That is just the sort of ballpark we are looking for, not theprecise dollar. Can you tell me what the amount of square metres office space is?

Mr Barrell —No, I do not have that information. I can get it to you within about 15 minutes.

Senator ROBERT RAY—It is my understanding that Mr Baume has put in for 4,000 squaremetres; does that ring a bell?

Mr Barrell —No, Senator, it does not.

Senator ROBERT RAY—Do you know how many staff Mr Baume has to accommodatein this building?

Mr Barrell —No, I do not.

Senator ROBERT RAY—Can you see if it is just two?

Mr Barrell —No, there are two floors. I remember seeing an early design sketch—I wouldimagine there would be 50 or 60 on two floors.

Senator ROBERT RAY—This is people?

Mr Barrell —Yes.



Senator ROBERT RAY—Are you aware of how many actually work for the Australianconsul in New York as compared with the UN Ambassador?

Mr Barrell —No, I just do not have the details. But, as I said, I can acquire it within about15 minutes.

Senator ROBERT RAY—I would be interested to find out whether Mr Baume has askedfor 4,000 square metres, just for himself and two other staff members. Do you manageBeakman Place?

Mr Barrell —Did we manage it?Senator ROBERT RAY—Yes, do you own it, manage it, rent it?Mr Barrell —No, not any more. I believe it has been sold.Senator ROBERT RAY—It has been sold off?Mr Barrell —Yes.Senator ROBERT RAY—Who sold it off?Mr Barrell —I am sorry, I have been in the chair in this job for three months and I do not

have the background details—Senator ROBERT RAY—Not as sorry as we are. This is not your fault, but the lack of

corporate knowledge that has been displayed before this estimates committee on the DASside—apart from an occasional intervention by Mr Mackay—is appalling. How can we waiton answers to questions when we have a whole range of follow-up questions? The wholecorporate knowledge has been destroyed. It is not your fault, Mr Barrell, but it is mostunsatisfactory.

What we have here—just so you understand it—is a former distinguished chairman of theopposition Waste Watch Committee, who used to drive you and all your colleagues mad foryears nitpicking about expenses, blown almost millions in New York on himself on luxuriousaccommodation.

Senator Minchin—These are just political assertions. This is an estimates committee. MrBarrell will get you the information.

Senator ROBERT RAY—I just thought I would put it in context so that Mr Barrell wouldunderstand the lack of corporate knowledge; I am just trying to increase it. Here we had anabsolute ferret of an individual charging after the most minuscule costs of public servants, butthe moment he gets his finger in the honey jar—

Senator Minchin—That is just a political assertion that you seek to make and waste timeof this estimates committee making them. We will find that information for you.

Senator ROBERT RAY—I want to know whether taxpayers’ money is being wasted hereon a political appointment.

Senator Minchin—That is a reasonable inquiry, and we will get that information to you.Senator ROBERT RAY—When it is going to cost us $2 million to rent this building and

$1.5 million to update it. If it is only him and two staff, I want to know whether taxpayers’money is being properly spent.

Senator Minchin—The premise is utterly hypothetical. We will find out the informationand get it to you.

Senator ROBERT RAY—I will just say this to you, Minister: some of these things shouldnot be quite so hypothetical. We should be able to get answers to some of these factual ones



about the cost of rent, cost of design and the potential cost of fit-out. I think Mr Barrell hasbeen very helpful by rather than just taking it on notice giving us a ballpark figure.

ACTING CHAIR (Senator McGauran) —Can you now move on to your next set ofquestions.

Senator ROBERT RAY—I will now move on from New York to London. I have read anarticle written by Michelle Field on page 13 of thePanoramamagazine dated 8 November.It is an overview of what we plan to do in London. Could we have a summary of that? It talksabout the properties we are going to dispose of, et cetera. I do not know if you have read thearticle.

Mr Mackay —Yes, I have.

Senator ROBERT RAY—Could you give us an overview firstly on what you are goingto do and, secondly, on how accurate the article was?

Mr Barrell —There are no current plans to sell Stoke Lodge. This has been considered bygovernments a number of times over the years and the decision has been taken for it to remainin public ownership.

Senator ROBERT RAY—Why?

Mr Barrell —I am not sure the reasons that governments take those decisions.

Senator ROBERT RAY—I see. This is one that costs about $700,000 a year to rent, yetit is valued at $14 million. I wonder how the social opportunity cost applies to this one.

Mr Mackay —Senator, we will be moving on to review the overseas estate when we havefinished the commercial estate. I guess we would have a look at all sorts of properties. I amnot sure that the principles would necessarily be the same—they would be very close though.

Senator ROBERT RAY—I am just wondering what the difference is between selling thehigh commissioner’s residence and the foreign affairs building, that is all. You are saying notmuch.

Mr Mackay —I suppose the issues would be fairly similar. There are all sorts of issues. Inmany places, there is just not a commercial market so you cannot run the commercialprinciples; in other places, you have been given land on a favoured basis by the country and,therefore, it would not be appropriate or maybe even impossible in some cases to sell.

Senator ROBERT RAY—Could I put it to you, Mr Mackay, that in a lot of these cases—and you almost put your finger on it—it is an absolute insult to the host country to flog offthe property that you own in it. It would cause all sorts of problems. I would put it to you thatit has already occurred in a couple of instances in South-East Asia—albeit at a very good pricefor the property, I admit.

Senator Minchin—That is not an appropriate question for Mr Mackay.

Senator ROBERT RAY—Minister, would you like to take it?

Senator Minchin—No, but obviously it is not an appropriate question for Mr Mackay asto whether a foreign government feels insulted if we sell a particular property. How on earthcan he possibly answer that?

Senator ROBERT RAY—I thought Mr Mackay could answer that.

Senator Minchin—I am not an expert on foreign governments and their particular reactionsto particular decisions by other governments in relation to property.



Senator ROBERT RAY—But you are being paid to represent a minister here and givesome answers.

Senator Minchin—So you want me to run through every country in the world where wehave a property and tell you whether that government will feel insulted or not by a particularaction of this government?

Senator ROBERT RAY—I thought Mr Mackay in his answer was trying to differentiatewhat principles may be applied to overseas property, if you were listening, as opposed todomestic property.

Senator Minchin—But you asked him a question about whether other governments wouldfeel insulted. How on earth can he answer that?

Senator ROBERT RAY—That was one of the things. There are other reasons why youwould retain property overseas that you would not in Australia. I was asking whether one ofthose reasons is the problem of disposing of property overseas and its effect on the hostcountry. I thought that was what he was alluding to.

Senator Minchin—Mr Mackay may be able to enlighten you.Senator ROBERT RAY—If you want us to go through the evidence of protests by foreign

governments on sales of overseas property, we can. The most recent incident was in Singapore,I believe. Was it in Singapore or KL that we disposed of a property recently?

Mr Mackay —We sold a large property in Singapore about 18 months ago.Senator ROBERT RAY—Were you aware of any protest or any other issues raised by the

Singaporean government that was in the press here about that?Mr Mackay —No, I do not recall that at all.Senator ROBERT RAY—We are trying to establish whether there are going to be

consistent property principles overseas or here. If Mr Mackay is saying there are specialreasons overseas, I am not challenging that. I am just trying to find out what they are, andI might well agree with you.

Senator Minchin—My understanding is that the government has not established thoseprinciples.

Mr Mackay —That is right. We have not established them yet. We are proposing to establishthem shortly.

Senator Minchin—And you cannot anticipate that.Senator ROBERT RAY—But you do not have a view, Minister.Senator Minchin—I am not involved in the decision making in relation to property

principles of overseas properties, no.Senator FAULKNER—But you represent the minister who is. That is the point.Senator Minchin—But the decision has not been made. No decision has been made.Senator FAULKNER—What is Mr Hitchcock’s current position within the Overseas

Property Group?Mr Mackay —He is an OPG officer posted in London.Senator FAULKNER—He was quoted in this article as saying:

The Overseas Property Group has been in existence for 20 years and, ever since its creation, its policyhas been to increase ownership as much as possible and reduce the overall rent bill. It goes back throughLabor policy to the earlier Liberals.



Then he goes on to say:The only reason the government will keep property is if it’s in the national interest or if it’s performingat an exceptionally high level. The expression is the social cost of capital—

there it is again—which is described as a 15 per cent yield, which is very high. In China, perhaps a 15 per cent yield ispossible but not in the Western world, not that I am aware of.

Would you agree with that, Mr Early?Mr Early —I agree with almost nothing in that article, Senator.Senator ROBERT RAY—That has canned that one.Senator FAULKNER—One thing we have established is that we do not know of one

building in Australia that has met the test. That is something that we do know. How typicalAustralia is of the Western world I know not. But officials at the table have not been able topoint out one building, not one, that has met the test.

Senator Minchin—They are not in a position to supply you with that information.Senator FAULKNER—That is partly true, but Mr Mackay knows of no building that has

met that test. The implication of the evidence—and you would have heard it as I have,Minister—is that probably no building has met the test. So maybe we are very typical of theWestern world, and just maybe the 15 per cent social opportunity cost needs to be looked atin a great more detail than we have so far at this estimates committee. That is not a viewshared by the Overseas Property Group?

Mr Mackay —I agree with Mr Early. I agree with very little of that article as well. The factof the matter is that we have not yet determined how we will go about reviewing the overseasestate. Clearly, there will be some sort of a financial hurdle but, just as in the case of Australia,there will be all sorts of other tests that one would apply.

Senator FAULKNER—Are there any preliminary plans to sell any of the OPG estate inLondon?

Mr Mackay —No.Senator FAULKNER—Are there any preliminary plans to sell any of the estate in Great

Britain?Mr Mackay —No. We turn over residences all the time. Over a period of about 10 years

we have been reducing the number of owned residences in London simply because London,for normal diplomatic purposes, has a sophisticated market and it is easier and more flexibleto rent property than it is to own it. So we have sold a number of blocks of apartments anda number of houses over about a 10-year period.

Senator FAULKNER—Has the Overseas Property Group, or any other part of DOFA, beenasked to look at the appropriateness or otherwise of the sale of any part of the estate in GreatBritain?

Mr Mackay —No.Senator ROBERT RAY—Are there any plans to give back to DFAT responsibility for the

overseas estate?Mr Mackay —That is a matter for ministers to decide.Senator ROBERT RAY—Has this been around in the ether without getting any of the nitty-

gritty detail of who may have advised whom?



Mr Mackay —I know of no plans to do that.Senator ROBERT RAY—What is morale like in the Overseas Property Group in the

section you run?Mr Barrell —In recent times, we have reviewed matters internally with regard to functional

arrangements. There have been adjustments made and worked through with the staff. Therewere some concerns and uncertainties at times in the past over the things you said may havebeen in the ether. They concerned the question of where the group might be lodged and withwhich department and so on. There has been the move from the Department of AdministrativeServices to the Department of Finance and Administration. The same staff who were workingin DAS are now working in the Department of Finance and Administration. There are no majorplans for change. As a result, in my judgment, morale is quite reasonable and is improving.

Senator FAULKNER—How many staff do you have in the OPG at the moment, MrBarrell?

Mr Barrell —About 50 in Canberra and about 20 overseas.Senator FAULKNER—Of your Canberra establishment, how many of those staff are on

sick leave?Mr Barrell —About three or four, from memory.Senator FAULKNER—If you had eight per cent on sick leave, would that be an unusually

high percentage, do you think, Mr Early, or would that be a stock standard proportion?Mr Early —I do not know. Obviously, you could not reasonably draw conclusions when

talking of numbers like four people.Senator FAULKNER—What about the engagement of consultants? Let us take the last six

months. How many consultants have been engaged in the last six months?Mr Barrell —I cannot speak for the last six. In the last three, I have engaged one consultant

for an internal functional review. I have employed two contract engagement staff as well.Senator FAULKNER—With the consultant on the internal review, who determined the

terms of reference for that review?Mr Barrell —I did discuss with some of my staff how we would preferably function to meet

the demands facing OPG.Senator FAULKNER—Was this person selected by a competitive tendering process?Mr Barrell —No, he was not. It was a choice based on prior experience with a range of

similar business support in DAS over the years.Senator FAULKNER—Who made that decision, Mr Barrell?Mr Barrell —I did.Senator FAULKNER—Why did you decide that was more appropriate than a competitive

tendering process?Mr Barrell —I needed to place reliance on the skills that I wished to acquire for the

purposes of that review.Senator FAULKNER—How did the skills of this consultant come to your attention?

Mr Barrell —Over the years, from when I was managing other commercial businesses inDAS.

Senator ROBERT RAY—Who is doing the internal tender?



Mr Barrell —A consultant called John White.Senator ROBERT RAY—I suppose that he is getting $2,000 per day like the others, is he?Mr Barrell —No. Less.Senator FAULKNER—How much?Mr Barrell —It is $1,800, from memory.Senator ROBERT RAY—It was ballpark, I suppose.Senator FAULKNER—He is getting $1,800 per day. How many days are you expecting

this consultancy to run for, Mr Barrell?Mr Barrell —Probably less than 50 or around 50 maximum.Senator FAULKNER—Are there any other costs from the consultancy to the Common-

wealth that we should be aware of?Mr Barrell —He has some reimbursables in terms of accommodation and travel.Senator ROBERT RAY—He is not local?Mr Barrell —No, he is not.Senator ROBERT RAY—Where is he from?Mr Barrell —He is from Brisbane.Senator ROBERT RAY—We would not be paying his travel costs to Canberra and back,

would we?Mr Barrell —Yes, we are.Senator ROBERT RAY—Surely that should come out of his consultancy costs.Mr Barrell —Most consultancies are based on a daily rate plus reimbursables.Senator ROBERT RAY—So he is reimbursed for his travel. Does he get a per diem travel

allowance overnight?Mr Barrell —His overnight travel is paid.Senator ROBERT RAY—This is going to cost well over $100,000.Mr Barrell —I expect that it would reach $100,000.Senator FAULKNER—When was this consultant engaged?Mr Barrell —In about late September, from memory.Senator FAULKNER—When do you expect the consultancy to be concluded?Mr Barrell —Within probably about two weeks.Senator FAULKNER—Mr Early, in the Department of Finance, would a short-term

consultancy at such a high cost normally go out to competitive tender?Mr Early —The Department of Finance does not have a lot of experience in such

consultancies.Senator FAULKNER—As a matter of principle, though?Mr Early —One puts these projects out to tender if one thinks that the benefit from the

tender will exceed the costs.Senator FAULKNER—But we are talking about, one would hope, an intensive consultancy,

given the costs over such a short time frame. You are talking about a six-figure sum in total,I would have thought. Is that right, Mr Barrell? What do you expect this to cost?



Mr Barrell —I expect it to come close to $100,000.

Senator FAULKNER—This is a six-figure sum. Is it appropriate to have a competitivetendering process for this sort of thing?

Mr Early —The short answer to the question is that it all depends. It depends on thecircumstances of the case. The things that one would normally take into account in makingthat decision are the urgency of the task, the time that one would lose in going to tender andthe likelihood of getting a better result from the competitive process.

Senator FAULKNER—Are there other people associated with the Overseas Property Groupwho have significant travel allowance claims? Is this par for the course?

Mr Mackay —In terms of other consultants?

Senator FAULKNER—Other consultants or anyone else associated with the OPG.

Mr Mackay —There would be all sorts of people who would be on various travellingallowances when they are travelling, yes.

Senator ROBERT RAY—I have missed something here. What exactly is Mr John Whitedoing?

Mr Barrell —He has reviewed the operations of the Overseas Property Group for me. Hehas worked the staff in the organisation through a series of workshops to identify the tasksand the goals which face those staff in undertaking their work. He has assisted them to identifytheir priorities and goals and is working with them at the moment to implement their approachin their business plan to the business, so they can effectively meet the responsibilities that ithas.

Sitting suspended from 12.46 p.m. to 2.04 p.m.

CHAIR —There are one or two questions on program 6, and then we will do theCommonwealth Grants Commission.

Senator ROBERT RAY—We were talking with Mr Barrell about plans to co-locate theConsul-General and UN administration. We went through some of the costings. Have you beenable to find any information?

Mr Barrell —Yes. The location is at 150 East 42nd Street in New York. A 16-year leasewas taken out on 1 August this year. It is two contiguous floors. The area is 46,476 squarefeet or 4,320 square metres with a 180 square metres of storage in the basement. The rent inthe first year is nil. The rent in the second year is $1.58 million and the third year $2.25million and then minor increases after that. The number of staff altogether is 40. There area significant number of separate offices and conference rooms, particularly oriented aroundindividual functions in that location and the ever present security issues at consulates.

The fit-out cost is offset by a significant landlord contribution, which is leaving theAustralian government with a net cost of about $1.5 million in fit-out for the two floors. Ingeneral terms, the savings over the lease period versus the two leases of existing separatefacilities, which are some distance apart from each other, is about $9 million over the 16 yearsof the lease. The administrative efficiencies that come from co-location are additional to that.The fit-out documentation is well under way and negotiations are going on at the present timefor commencement of fit-out so that it can be finished by about March. Given that one of theleases of the existing facilities expires in January, there is a bit of pressure on time to ensurethat at least part of the work is done by that time.



Senator ROBERT RAY—You mentioned 40 staff, but you do not have a breakdownbetween staff for the Australian Ambassador to the UN and Mr Baume.

Mr Barrell —The UN mission has 14 A-based and seven locally engaged staff and theConsul-General—a bit of imprecision on this—has three or four A-based staff and 15 LES,which is a total of 39 or 40.

Senator ROBERT RAY—That raises more questions than you have answered, but not atthis estimates committee, I suspect.

Senator Minchin—More related to Foreign Affairs.Senator ROBERT RAY—I suspect so, Minister.Senator Minchin—The standing staffing has been at the Consul-General for many years.

Whether there is any decrease or increase are all questions I would have thought you shouldput to Foreign Affairs.

Senator ROBERT RAY—Has Mr Baume sent to you correspondence on the divvy up ofthe accommodation?

Mr Barrell —Not to OPG. We have had some correspondence from the senior administrativeofficer about the mechanics of us undertaking the design and documentation work and theconstruction work. In our contact with Mr Baume he has been very specific on this to mystaff—that is, he does not require anything more than and would not tolerate anything morethan the standard of facilities that career diplomats are entitled to.

Senator ROBERT RAY—I think PM&C, rather than your department, is the moreappropriate spot to pursue representations made by Mr Baume. This is more curiosity—theOverseas Property Group no longer provides accommodation for the UN ambassador and theConsul-General. Is that right?

Mr Barrell —Again, that is an area which I do not have specific detail for. We do own twoapartments in Beakman Place. We have owned them from 1963 and 1967. Their currentvaluations are $4 million and $6 million respectively.

Senator ROBERT RAY—I know we have not sold those so I presume that is where thetwo are. I do not know whether you know, but there is always a tradition that when one movesout the other goes and steals all the best furniture, but that person only has to wait until thenext one moves out and then they go back and steal the best stuff back.

Mr Barrell —I am not steeped in the culture. It is one of those corporate memory issues.Senator ROBERT RAY—If I may digress, Minister. I went there once and had an Afro-

American driver. When we pulled up, I said, ‘Is this Harlem?’ I thought he was going to havea heart attack.

Senator FAULKNER—Mr Barrell, are you still on an interim transfer?Mr Barrell —I think that is a question better answered by the department than by me.Mr Mackay —I feel uncomfortable about dealing with individuals.CHAIR —Questions about individuals should not be allowed here.Senator FAULKNER—I read a newspaper article—Senator Minchin—I would have thought that it is only appropriate to ask his current status.

Senator ROBERT RAY—The intention is not to go to that point. I do not think you needto be so sensitive.



Senator Minchin—He is happy to talk about his current status.

Senator FAULKNER—There was a newspaper article headed ‘Live in Brisbane work inCanberra—and guess who pays?’ in theCanberra Timeson 19 December. I will not directthe question to Mr Barrell. It was basically, it seems to me, a report of an interview with MrMellors about Mr Barrell. It is in that context that I ask the question. This business hasreceived publicity and that is why I raised this.

Senator Minchin—Mr Early might want to say something on the issue you have raised.

Mr Early —Rather than repeating the detail of what you are referring to here, let me saythat there have been discussions between Mr Barrell and the Department of Finance andAdministration. Mr Barrell has not received and will not receive from the Department ofFinance and Administration allowances of the kind that were referred to in that article. I wouldfrankly prefer to leave it there. I am happy to take it privately perhaps.

Senator FAULKNER—I hear what you say. Are you actually suggesting to the committeethat since the formation of the Department of Finance and Administration there are changedarrangements? Is that the import of what you are saying?

Mr Early —I would prefer not to allude to what might have been before. I can happily talkabout what is happening now. There is now no such arrangement.

Senator FAULKNER—The term ‘transfer’ is part of accepted Public Service arrangementsthat are come to quite properly with staff. There is nothing exceptionally unusual in this, isthere?

Mr Early —I am not suggesting that there is anything unusual or inappropriate about whathas happened in the past. I am simply telling you that the arrangement that obtains now isdifferent and that that has been discussed and agreed between Mr Barrell and the department.

CHAIR —I do not think we should pursue this matter about an individual further in thiscommittee.

Senator ROBERT RAY—Let us not do it with an individual. Let us just pursue the generalprinciple of paying allowances to people who basically do not live in Canberra or who shuttlebackwards and forwards. What is the general departmental attitude to that?

Mr Early —It is a very difficult question to deal with in general given the context in whichit has just been raised.

Senator ROBERT RAY—I agree.

Mr Early —The Department of Finance and Administration intends to take an attitude tothese arrangements that will be fair to the officers concerned, that will be entirely reasonableand appropriate when looked at through the eyes of the taxpayer and that will withstandscrutiny in any forum, including this one.

Senator ROBERT RAY—The only relevance to this is that we have been trying to gothrough the arrangements for a consultant, Mr John White, who charges the Commonwealthnot only the consultancy fee but the cost of travel and per diem coming from Brisbane. Shouldthere be a different regime for consultancy from what you would normally apply to employeesof DoFA?

Mr Early —I can only repeat that the Department of Finance and Administration will ensurethat it pays people appropriate allowances and allowances that are reasonable in all thecircumstances. That will apply to both consultants and employees of the department.



Senator ROBERT RAY—Before lunch, Mr Barrell mentioned the internal consultancy,et cetera. You also mentioned a second point about one or two more consultants doingsomething else.

Mr Barrell —There are a couple of contract employee engagements.Senator ROBERT RAY—What is a contract employee engagement?Mr Barrell —Somebody who works in-house for an agreed rate.Senator ROBERT RAY—How many of those have we got?Mr Barrell —I think there are two at the moment and they are on short-term arrangements,

after which they disappear. They fill in a particular need or a skill that is not available in theshort term.

Senator FAULKNER—What functions are they undertaking?Mr Barrell —One is looking after the restructuring of the way in which we manage the

owned estate and the other is looking after some financial work, just doing accounting workwithin the place.

Senator ROBERT RAY—They are sort of like temporary employees—Mr Barrell —Yes.Senator ROBERT RAY—But we do not call them consultants?Mr Barrell —No.Senator ROBERT RAY—Mr Early, why aren’t they consultants?Mr Early —It is not an area where I have expertise. I am sorry.Senator ROBERT RAY—The only point is there is a requirement, I think, on government

usually in the annual reports to list the consultants used and I think there is some reportingmechanism to parliament that lists consultants. I am just worried about departments being ableto employ temporary people on the description Mr Barrell has given us that means they willnot fall within the guidelines of consultants and we will never know about them.

Mr Early —Again, I think you would have to direct that sort of a general questionelsewhere. It is not something I have expertise in.

Senator FAULKNER—Is Mr Mark Wailes undertaking some consultancy for the OPG?Mr Barrell —He is one of the contract engagees I mentioned restructuring the way we

manage the overseas estate.Senator FAULKNER—So he is one of the two?Mr Barrell —Yes.Senator ROBERT RAY—At what level do you pay these people? How do you approach

fixing a price to pay for them?Mr Barrell —Usually by a rate from an agency where we pick them up.Senator FAULKNER—I did not hear what you said.Mr Barrell —Usually at a daily rate or a weekly rate that is asked for by a placement

agency. If we regard it as reasonable, we take them; if we don’t, we won’t. If you have a needfor a short-term accountant or something like that, you might see one of the accountancyplacement firms in the community and say, ‘We want somebody for two months,’ or threemonths or whatever it is.’



Senator FAULKNER—These are normally paid on a daily rate or weekly?Mr Barrell —Daily rate but not at the levels we have been discussing today. Ultimately,

you might end up paying at some of the senior officer ranks or the equivalent.Senator FAULKNER—And possibly again there are some travel entitlements if necessary?Mr Barrell —No.Senator FAULKNER—You mean no in an absolute sense or no in the specific case.Mr Barrell —No travel entitlements in this particular case. Generally, those are locally

engaged.CHAIR —That finishes program 6. We will now move on.

[2.19 p.m.]

Program 8—Commonwealth Grants CommissionCHAIR —I understand there are only a couple of questions on this program, then we will

do programs 5 and 9 together.Senator FAULKNER—Mr Searle, your memorandum went over like a lead balloon, didn’t

it?Mr Searle—I cannot say everyone was overly pleased with it; that is all.Senator ROBERT RAY—We are not going to keep you long, but can you just give us an

overview of the sorts of tasks you perform and your relationship with Treasury and maybeat more distance with Finance, so we understand how well you fit in this new organisation.

Mr Rye—Could I begin with that. Our main task is to recommend to government how todistribute the general revenue grants, as you know. In that regard, we work very closely withthe states and the two self-governing territories. We also regard the Commonwealth Treasuryas a client and we treat them on all fours with the state people who are usually also Treasurypeople. In that regard, we have meetings with them, we take submissions from them and wevisit the states for discussions of various kinds. In all those processes, the CommonwealthTreasury is often there as an observer or a participant.

Senator FAULKNER—Mr Rye, were you asked for your views about the appropriatenessin terms of the changes to departmental structures that have occurred? Was the GrantsCommission in a formal sense asked for a view about where you thought it most appropriateto be placed?

Mr Rye—There was no approach either formally or informally. There have from time totime been discussions of a very informal kind about the appropriate home for the commission.You might recall that its original home was the Prime Minister’s portfolio. That was changedin the early 1970s to the Special Minister of State when various functions were hived off fromthe Prime Minister’s outfit, and subsequently we went to DAS.

The reason for our being with the DAS portfolio was essentially the perception ofindependence that that gave to the commission. Now that there is no, as it were, portfolio ofa like kind available in which to place us, there were, I suppose, three possibilities: Treasury,Finance or back to Prime Minister and Cabinet. Personally, I do not think there is much tochoose between any of those.

On a perceptions basis, the states might feel more comfortable with us elsewhere than inthe Treasury for the reason that I mentioned earlier; that is, that the Treasury is a client of ourson the same footing as the states. There is no particular problem with being part of Finance.



From the commission’s viewpoint, our only concern is that the independence and integrity ofthe commission is respected, whatever the portfolio in which we happen to be placed.

Senator ROBERT RAY—Minister, is the department that you part represent only goingto give the Commonwealth Grants Commission the independence to operate without direction?

Senator Minchin—To the extent I am able to formally put a position, I can assure thecommittee that the commission will be given the independence which it is traditionallyaccorded.

Mr Rye—I can elaborate on that, Senator. We have had discussions already. I have talkedto the secretary to the department and my officers have been in contact with officers of thedepartment. I am very happy with the way arrangements are working out and what is proposedfor us. We can elaborate on that, if you wish.

Senator ROBERT RAY—No. It is just that we have a slight problem with OGIT not onlygiving advice to all government departments but then being involved in decisions in theDepartment of Finance and Administration. As long as you believe your autonomy is protected,we are satisfied.

Senator FAULKNER—The memorandum we spoke of which had been discussed previouslyat another estimates committee was effectively to staff at the commission. Is that right?

Mr Searle—That is correct.Senator FAULKNER—I am interested in understanding whether the commission had been

asked by government whether it had a view about the appropriateness of its placement giventhe abolition of DAS, but you have indicated that that was not the case. You just read it inthe newspaper, did you?

Mr Rye—We got some sort of message, as I recall. Bob might have a clearer recollectionof precisely what happened.

Mr Searle—I first read of the possibility of DAS being wound up on the morning ofSaturday, 4 October.

Senator ROBERT RAY—Don’t worry; that was as early as the news ever got out.Senator FAULKNER—In terms of what that might mean for the Commonwealth Grants

Commission itself and in terms of formal process, how was your new home communicatedto you?

Mr Searle—I received a copy of the Prime Minister’s press release on Tuesday morning,7 October, which indicated that the commission would be going to the new Department ofFinance and Administration.

Senator FAULKNER—Was this after the press release was made public?Mr Searle—Yes.Senator FAULKNER—So you found out after the press release of the Prime Minister was

made public by reading the press release?Mr Searle—That is correct.Senator FAULKNER—Could you not do any better than that, Senator Minchin?Senator Minchin—I apologise. I did not follow the exchange that led to your question.

Senator FAULKNER—Let me remind you. What we have heard in evidence from theCommonwealth Grants Commission is that they established what their new departmental home



was by reading the Prime Minister’s press release after it had been made public and distributed.I just asked you: couldn’t the government do a bit better than that?

Senator Minchin—I am sure governments could always do better in a lot of areas. I do notknow what appropriate procedures have been pursued in the past where departmental changesof that kind have been made or what the established procedures are.

Mr Rye—I suppose we are regarded as a very small fish in this rather large pond that hadto be distributed in different ways. I personally did not feel terribly affronted by not gettingadvance notice of where we were going.

Senator FAULKNER—We feel affronted on your behalf.Mr Searle—I do not think it was any different from treatment in previous changes to

administrative arrangements.CHAIR —That finishes program 8. Thank you, gentlemen. We will now do programs 5 and

9. I understand there has been agreement to do those together.[2.28 p.m.]

Program 5—Commonwealth Civilian Superannuation Policy

Program 9—Commonwealth Superannuation AdministrationSenator CONROY—On the issue of the closure of the PSS to new Public Service

employees from 1 July 1998, will this measure be given effect with a proposed choice of fundlegislation?

Mr Millar —The intention is that the choice of fund arrangements that apply to the widercommunity will apply in the same manner to Commonwealth employees.

Senator CONROY—I was thinking more of when you will be putting legislation throughmaking those changes. Will they be incorporated in this bill, is a separate bill coming or isit part of a different bill?

Mr Millar —The expectation is that there will be legislation introduced shortly in connectionwith the legislation for the wider choice arrangements.

Senator CONROY—As far as you are aware, it is not part of a choice of fund package ofbills?

Mr Millar —It will be a separate package.Senator CONROY—Has the department done any modelling on the impact of such a

measure on the viability of the PSS?Mr Millar —Not specifically. The PSS is an ongoing, viable scheme. It is still a large

scheme and will have many members for many years ahead, so there is no expected impacton the viability of the scheme. That has been confirmed with the Australian GovernmentActuary.

Senator CONROY—So the actuary has done some calculations?Mr Millar —The actuary has given some broad consideration to the issue and has considered

that the scheme will remain viable; that there is no need for any specific review to be doneat this point.

Senator CONROY—Is the actuary’s advice available to the committee?Mr Millar —I do not know that we have specific written advice to that effect. The advice

we received was certainly oral. I can check our records to see what advice we have.



Senator CONROY—Actuaries usually do not mind writing things down.Mr Millar —No.Senator CONROY—They are fairly precise about these things.Mr Millar —We may have some advice on the file. I would have to take that on notice, if

I could.Senator CONROY—Thank you. Given that the actuary’s 1996 report showed that the

general trend in unfunded liabilities for the Commonwealth super scheme is declining, whydo you think the scheme is being closed, given that the unfunded liabilities are reducing?

Mr Millar —The unfunded liabilities reduced slightly, mainly due to changes in actuarialassumptions and, specifically, the assumed change in the earning mode of the fund. Thegovernment announced the closure of the PSS in view of the lack of flexibility of definedbenefit schemes such as the PSS and lack of portability in the current environment of moreflexible workplace arrangements.

Senator CONROY—So the actuary’s calculation of the annual employer costs as apercentage of GDP falling from 0.5 per cent to 0.3 per cent over the next 45 years is, in yourview and the actuary’s view, due to those changes only, in terms of the actuarial assumptions?

Mr Millar —Not entirely; that decline was forecast in the previous actuarial report back in1993 and the decline continues to occur.

Senator CONROY—Is it possible to get the details of the change in the actuarialassumptions?

Mr Millar —Yes. They are in the actuary’s report that was tabled in the parliament.Senator CONROY—Will the closure of the PSS scheme cost the government revenue

through lost income tax revenue and double-dipping as people line up for social securitybenefits after spending their lump sum payouts? I understand that previously you could onlytake an indexed pension, but now there will be a situation where you are entitled to make achoice.

Mr Millar —We have done no specific modelling on those sorts of issues. As has beenpointed out to me just now, you can take a lump sum under the PSS scheme as well.

Senator CONROY—Do you know what percentage of people currently take lump sumsout of the PSS scheme?

Mr Millar —Not offhand. My colleagues from ComSuper might be able to help me outthere.

Ms Goode—Quite a high proportion of those retiring from that scheme do take a lump sum.I can verify this for you, but I think it is getting up towards 90 per cent. Could I take that onnotice to check it precisely?

Senator CONROY—Thank you. Will the 13 per cent notional level of funding bemaintained for all new and existing employees?

Mr Millar —The level of funding that is available to budget-funded agencies depends onthe mix of Commonwealth Superannuation Scheme members, Public Sector SuperannuationScheme members and members of schemes such as AGEST as at 1 July this year. The fundingfor CSS members is 21.9 per cent of salaries; for PSS members, 13.1 per cent of salaries. Sothe funding of agencies will continue on the basis of those funding rates, depending on themix of CSS and PSS members as at 1 July this year.



Senator CONROY—So there will be no reduction at all for anybody?

Mr Millar —Those rates are set; there is no plan to change those arrangements at all.

Senator CONROY—How will those contributions be made? Are they going to come fromconsolidated revenue, agency budgets or another source?

Mr Millar —The budget funded agencies have those funds included in their running costsbase, and that has been the case for quite some years. The contributions they make in respectof the CSS and PSS come back to consolidated revenue.

Senator CONROY—Will employees have to negotiate with their employer to maintain theircurrent levels of superannuation contributions?

Mr Millar —Under the choice arrangements, it will be open to employers and employeesto negotiate the level of superannuation contributions. That is certainly the case for newemployees from 1 July next year and it will be open to them to negotiate those arrangements,subject to the superannuation guarantee minimum levels of contributions. For employees inthe CSS and the PSS, after 1 July 2000 they have a choice of either staying in their currentscheme or moving to new superannuation arrangements at which time they can negotiatecontribution levels.

Senator CONROY—But nobody without agreement can be negotiated down from the 13per cent or the 21 per cent?

Mr Millar —People who are in the CSS and the PSS at the moment can stay in thoseschemes. There is no plan to change that at all. Those people can stay in those schemes andtherefore they are not disadvantaged in any way. If they wish to move out of those schemes,then they can negotiate employer contributions with their employer at 13 per cent, 21.9 percent or some other percentage, subject to a minimum of the SG rate of nine per cent by theyear 2002.

Senator CONROY—If some employees choose to take a lower level than the 13 per centbut above the SGC level and take the difference in cash or by some other mechanism, willthat result in a lower retirement income for them?

Mr Millar —Prima facie it would, but then again the idea of these arrangements is to giveemployees the flexibility to choose the rate that suits their particular individual circumstances,including the circumstances that might apply at varying stages over their lifespan. So, whilstan employee might decide to negotiate to have a lower level of contributions at one periodin their life, they might decide or plan then to have a higher level of contributions at someother stage in their life. They will have the flexibility under these arrangements to do that ifthey wish.

Senator CONROY—But what if they negotiated some sort of salary package that includeda car, for instance, instead of three per cent super or some creative arrangement like that?

Mr Millar —That will depend on the arrangements that the employer decides upon and thescope for flexibility that each individual agency decides to implement.

Senator CONROY—So it is possible, then, for individuals—unless they match it in someother way or it is higher at some other stage in their life—to have a lower retirement income?

Mr Millar —They can determine which way they want their retirement income to go. Theycan negotiate to have higher levels of contributions if they wish to increase their retirementincomes, as well. So there is flexibility there for them to negotiate whatever suits theirindividual circumstances.



Senator CONROY—I am concerned about this, because you would understand thegovernment’s view has to be to try to convince people to save for their retirement. That is ameasure which, again, opens up a choice now when previously you were guaranteed you weregoing to get this much. But now it is possible that, when you retire, you will have a lowerposition if you have not made alternative arrangements.

Mr Millar —Lower or higher, depending on—

Senator CONROY—It is sort of like the savings rebate where you have got a guaranteed$4 billion going into superannuation over here and now it is $2 billion possibly going intosuperannuation. It can only work in terms of the national savings rate if all the money is putback into savings at some other time or some other measure is taken at the same time. Do youfollow?

Mr Millar —Yes. The arrangements give a lot more flexibility to people, to employees—thatis the intention of it. So some employees who come in late in their lives, for example, willbe able to negotiate much higher levels of employer contributions in order to boost theirretirement incomes than they would have been able to do under the current arrangements.There is flexibility.

Senator CONROY—Do you have a couple of examples?

Mr Millar —We have not got any specific examples.

Senator CONROY—General?

Mr Millar —For example, an employee might be able to negotiate a somewhat higheremployer contribution rate for superannuation and a somewhat lower salary to compensatebecause that particular individual was seeking to maximise their superannuation benefit whenthey retire. That is the flexibility that will be available.

Senator CONROY—Sure, thanks. The Prime Minister, in his letter to all Commonwealthpublic servants of 28 February 1996, stated:I give you my rock-solid guarantee that the Coalition will not cut and destroy public sector superannuationschemes or the entitlements of existing and prospective Commonwealth Government employees.

It stressed the word ‘prospective’. Do you think that this initiative, particularly the part whichdenies new public sector employees a chance to join the PSS, breaks the Prime Minister’s rocksolid guarantee? Senator Minchin might want to jump in there.

CHAIR —Minister, I think this one is for you, really, rather than a public servant.

Senator CONROY—I can read you that quote again.

Senator Minchin—I am not saying it does not, but that is a political assertion which I donot think is substantiated.

Senator CONROY—I was just reading the Prime Minister’s letter.

Senator Minchin—These arrangements are really about a lot more flexibility and choice,consistent with maintaining our pre-election commitment.

Senator CONROY—I just remind you that you were studying some other documents whenI was reading the quote.

Senator Minchin—Sorry.

Senator CONROY—That is okay. This is from the Prime Minister’s letter dated 28February 1996 to all Commonwealth public servants:



I give you my rock-solid guarantee that the Coalition will not cut and destroy public sector superannuationschemes or the entitlements of existing and prospective Commonwealth Government employees.

That is from the Prime Minister’s letter, so it is not a political assertion; it is the PrimeMinister’s letter.

Senator Minchin—It is an assertion that that commitment has not been met.Senator CONROY—And?Senator Minchin—All I can do is remind you what the responsible minister, Mr Fahey,

said on 23 September 1997:The provision of choice will not reduce the remuneration package available to current or future employeesas the Government will continue to fund agencies at the existing cost levels of the current schemes.

Senator CONROY—So you are guaranteeing that the existing levels of the PSS schemewill be available to all new prospective public servants?

Senator Minchin—I can only repeat to you what the Minister for Finance and Administra-tion said in his press release of 23 September ‘Choice and Flexibility for Public ServantsSuperannuation’, and the commitments made in that press release.

Senator CONROY—So you believe that means that all future and prospective publicservants will be entitled to the same level of funding as the current PSS or the CSS?

Senator Minchin—I can only repeat the commitment made by the minister that it will notreduce the remuneration package available to future employees because we ‘will continue tofund agencies at the existing cost levels of the current schemes’.

Senator CONROY—Mr Millar indicated the CSS had a rate of about 21 per cent.Mr Millar —It is 21.9 per cent of salaries.Senator CONROY—When was that closed off?Mr Millar —That is the rate in the Australian Government Actuary’s report.Senator CONROY—When was the CSS scheme closed off?Mr Millar —The CSS scheme was closed off back in 1990.Senator CONROY—And the PSS immediately came into play then?Mr Millar —Correct.Senator CONROY—Right, and it is currently at 13.1 per cent?Mr Millar —It is 31.1 per cent of salary.Senator CONROY—So, to meet that commitment, 13.1 per cent needs to be, unless

otherwise negotiated, included for all prospective employees?Mr Millar —The arrangement is that agencies are funded in respect of their current

employees to the tune of 21.9 per cent of salaries for the CSS members and 13.1 per cent ofsalaries for the PSS members. That is the level of funding that they have available to themfor superannuation and, in broad terms, that continues.

Senator CONROY—I just want to make sure that I do not misunderstand what you aresaying. You are saying that that is available to the individual agencies. Could you draw aninference from that that they do not necessarily have to provide an equivalent 13 per cent orequivalent—that they could negotiate something lower?

Mr Millar —They could negotiate something higher or lower. The funding that is availableto them is in their running costs, and their running costs are available to negotiate remuneration



packages for their employees under workplace agreements, and that could result in higher orlower levels of employer contributions.

Senator CONROY—Could an agency offer the straight SGC? Even though the governmenthas provided funding for 13 per cent, could an agency offer nine per cent as part of an AWA,individual agreement or any other collective bargain like that?

Mr Millar —The minimum is the SG. That is the minimum amount that could be offered.

Senator CONROY—Minister, I want to explore this further. The press release suggests thatthe funding will be made available to the agencies. Is that the wording?

Senator Minchin—Yes, I am advised that is correct.

Senator CONROY—Is that a commitment from you that all the agencies will deliver 13per cent, or an equivalent package depending on salary, car or any of the flexibilities we talkedabout? Or is it saying that an agency can, if it chooses to, reduce its super to the minimum,say, nine per cent SGC?

Senator Minchin—I will ask Mr Early to respond to that, Senator Conroy.

Mr Early —The industrial relations arrangements that are in place now enable agencies tonegotiate Australian workplace agreements or certified agreements with their people, as youwell know. In the context of negotiating those agreements, they can obviously negotiatewhatever the department and, I think, a valid majority of the employees agree.

Making a judgment as to which way funding is going to go is difficult. There are obviouslyconstraints in the sense that these need to be the process of agreement between the employerconcerned and the individual people, or the people at large, as part of a certified agreement.

Senator CONROY—So I would not be able to bowl up, apply for a job as a new publicservant with one of the agencies and be offered a contract with just the minimum SGC? Eventhough the agency had been funded by the government for the 13 per cent, it could not pocketthe difference on me?

Mr Early —I am not an expert on industrial relations, obviously. The agencies have thecapacity to offer Australian workplace agreements to individual employees. There arerequirements under the act that, if they do that, they need to offer Australian workplaceagreements to all employees in similar circumstances. So they cannot pick off randomindividuals in the way that you are perhaps pointing at.

Subject to those sorts of constraints, it really is much more now, as Mr Millar has beensaying, a matter of flexibility and choice for public servants rather than being forced into ascheme which is deemed to be best for all of them.

Senator CONROY—Senator Minchin, I am really looking for a commitment from you thatno-one is going to be getting less as a prospective new person coming along, and no employeeis going to end up with less, unless otherwise agreed, than the salary packaging arrange-ments—maybe 10 per cent—and some alternative arrangements. I am just looking to makesure that the 13 per cent, in whatever form, is passed on to the individual.

Senator Minchin—Again, I can only draw your attention to what Minister Fahey said inannouncing this. He said:Agencies and employees will be able to negotiate the ratio of cash to super contributions paid to anotherfund or RSA, subject to the safety net level of the Superannuation Guarantee rate.

That is a clear commitment by the government to have that safety net level in place.



Senator CONROY—I am not damning that part; I am not sure if I am making myself clear.You are providing 13 per cent to the agency and allowing the agency to determine the packagein terms of the negotiation. I am looking for some sort of statement from you as to whetheror not, even though you have committed the 13 per cent to the agency, the 13 per cent orequivalent package will definitely be going to a prospective employee.

Senator Minchin—As I am advised, the agencies have no capacity whatsoever tounilaterally reduce those packages. I am confident to be able to give that sort of guarantee.

Senator CONROY—In the same letter, Senator, the Prime Minister included the relevantsection of the coalition’s superannuation policy. It states:A coalition government will guarantee all accrued superannuation entitlements and retain separatearrangements for public sector superannuation.

Do you think this initiative breaks the guarantee to retain separate arrangements for publicsector superannuation?

Mr Millar —The Australian Government Employees Superannuation Trust, which is thescheme that applies to casual, temporary and other Commonwealth sector employees, is acontinuing, ongoing scheme that will be available to public sector employees.

Senator Minchin—Therefore, I think that I can say with confidence that the PrimeMinister’s obligation has been met.

Senator CONROY—Has a decision been made which will prevent access to any lump sumredundancy benefits after 1 July 1999?

Mr Millar —The government recently announced changes to superannuation redundancypayments to clarify the previous arrangements. Those new arrangements allow for employeesmade redundant to have access to superannuation lump sums, if they wish, up until 1 July1999. From 1 July 1999, new preservation arrangements come into play, as announced by thegovernment recently. From that date also, the requirement is that superannuation lump sumspayable to Commonwealth sector employees will also be subject to full preservationarrangements, so that from 1 July 1999 the arrangement is that people who are made redundantfrom that time will be required to preserve their entitlements in their current scheme. Somepeople will be able to roll those entitlements over into another scheme. But those people willalso have to preserve those entitlements until retirement from the work force, therebypreserving the integrity of the retirement income system.

Senator CONROY—There are some current sunset provisions, though, for PSS and CSSabout access to those lump sum redundancy benefits: is that right? They can take them in cashuntil 30 June 2000?

Mr Millar —Under the current arrangements, under the current legislation, there is aprovision that as at 1 July 2000 all benefits would be preserved. That arrangement was putin place quite some years ago when it was understood that full preservation arrangementswould be in place well by then. The circumstances with respect to preservation have obviouslychanged in recent years.

Senator CONROY—Do you think these changes will affect public servants differently fromprivate sector workers?

Mr Millar —I am not really able to comment in any detail on what is available to privatesector workers. The arrangements tend to be often somewhat different and circumstances areoften somewhat different.



Senator Minchin—But I think that the intent is to seek to give public servants the sort ofchoice that is available to the rest of the community.

Senator CONROY—By taking away their access to their redundancy—to cash it in? Youare increasing their choice by stopping them doing something—taking away an option?

Senator Minchin—You are giving them greater options in relation to their ownsuperannuation, which is the situation in the private sector—and I thought that was somethingthat the Labor Party was seeking to achieve.

Senator CONROY—You are taking away access to a lump sum redundancy. But we willnot waste the committee’s time.[2.55 p.m.]

Program 7—Ministerial and parliamentary servicesSenator McGAURAN—Is it common across all the services—the Public Service—for

officers who take redundancy packages to be allowed to purchase equipment as they leave?Mr Mackay —I think there have been some cases of it but I would not have thought it was

a widespread practice.Senator McGAURAN—Is it a policy in DAS to allow officers who take packages to

purchase assets as they leave?Mr Early —It is not a policy in the Department of Finance and Administration, Senator.Senator McGAURAN—Was it a policy under the former structure?Senator Minchin—Under DAS?Senator McGAURAN—Under DAS.Mr Mackay —Under DAS there were some individual cases where people asked to purchase

mobile phones and laptop computers. There were two or three cases of that approved, on thebasis that the equipment was clearly surplus and that it was independently valued.

Senator McGAURAN—What were those cases, and who were those cases?CHAIR —You cannot ask about names.Senator McGAURAN—In that case, can you find out how many cases there were?Mr Mackay —It would be five or fewer.Senator McGAURAN—In toto? Since when?Mr Mackay —In recent memory. They would be the only cases—certainly this calendar year,

for example.Senator McGAURAN—Did you say three cases?Mr Mackay —No, I said five or fewer.Senator McGAURAN—In the last 12 months?Mr Mackay —Yes.Senator McGAURAN—More extensively than what you said before, what are the items

of equipment that were involved—the full list?Mr Mackay —I cannot think of any situation other than a laptop computer or a mobile

phone.Senator McGAURAN—Colour photocopier? Would that be thrown in?



Mr Mackay —No, there were none of those.Senator McGAURAN—Was there a request?Mr Mackay —Yes, I believe there was a request. I am not sure about colour photocopiers.

I would not be sure, but there were requests for some other items beyond that, and thoserequests were rejected.

Senator McGAURAN—In confirming that you believe that there were five, will you takeon notice that I want to be sure. Or are you telling me that you are sure?

Mr Mackay —I am telling you that I am sure it was five or fewer.Senator McGAURAN—In those cases can you give me—on notice if necessary—a proper

list of what was—Mr Mackay —Precisely what was purchased? Yes I could.Senator McGAURAN—And the valuations of them: I am trying to get an idea of how the

valuation is undertaken, what the values are, and the difference between those and thereplacement costs. In all those five cases, what was their value and what was the replacementcost?

Mr Mackay —I could find that out for you. From my understanding, they were valued byeither the Australian Valuation Office or Purchasing Australia, who as a matter of coursewould have gone out and checked the appropriate value. In the case of mobile phones, I doubtthat they would be very valuable at all.

Senator McGAURAN—Yes, correct. Were such packages by constituents at DASpurchasing within the DAS purchasing and sale guidelines or policy?

Mr Mackay —I am not sure whether or not that is correct. In more recent times we havehad a look at the rules for the disposal of assets. I think a strict interpretation would be thatthey were outside the rules.

Senator McGAURAN—Who was the officer in DAS—or what position did that officer havein DAS—in charge of this policy, in charge of the purchasing and sale guidelines, for theequipment?

Mr Mackay —I think in this case we are talking about a purchasing and sales instructionthat applies to all public servants.

Senator McGAURAN—All public servants?Mr Mackay —Yes. In the former DAS, I suppose general managers right across the board

would have had a responsibility as would the deputy secretaries and the secretary.Senator McGAURAN—They would implement and oversee the policy, be it, as you have

just said, outside the guidelines?Mr Mackay —Generally, I think the understanding was that, under the new purchasing

arrangements put in place in recent years, value for money was the key criterion. I think thethought was that, by the time you put items of this sort—in this case, a mobile phone—throughan auction process, the administration of putting it through that auction process as well as thecommissions paid would mean that it would have been much cheaper to put it in the bin. Inthe case of laptop computers, it would not be too far different. Their resale value, as you know,is very low.

Senator McGAURAN—I will leave it at that.Senator ROBERT RAY—Who is heading up Ministerial and Parliamentary Services?



Senator Minchin—Mr Peel is.Senator ROBERT RAY—Is that a permanent appointment?Mr Peel—No, it is not a permanent appointment. I finish up today.Senator ROBERT RAY—That was a career mistake. It should have been yesterday.Senator Minchin—He wanted to be here for estimates.Senator ROBERT RAY—Yes, I am sure he delayed it for that reason! Has it been

announced or decided who will replace Mr Peel?Mr Early —Mr Oliver Winder will take that position up.Senator ROBERT RAY—His previous thing was to give advice on preparations of budget

estimates?Mr Early —Mr Winder has had a long career in the Public Service, including the

Department of Finance.Senator ROBERT RAY—A distinguished career, in fact, from what I know.Mr Early —Yes.Senator ROBERT RAY—So he will take over as of tomorrow?Mr Early —Effectively so, yes.Senator ROBERT RAY—How many employees are there at the moment in MAPS?Mr Peel—Excluding Comcar?Senator ROBERT RAY—Yes, I am sorry. We will leave Comcar and its administration

aside.Mr Peel—Approximately 130.Senator ROBERT RAY—How many of those are decentralised, if you like, outside

Canberra?Mr Peel—About 30.Senator ROBERT RAY—That would be about the only Finance people in this department

that would be outside Canberra, wouldn’t it?Mr Peel—I think there a few of the old DAS people outside of Canberra, but not terribly

many.Mr Early —There are still quite a few, but I think the predominance of those are in supply

services, which, as you are aware, was to be outsourced prior to the formation of the newdepartment.

Senator ROBERT RAY—Do we know how many staff have left this division in the lasteight weeks?

Mr Peel—Very few, if any.Senator ROBERT RAY—Mr Semmens has left for other duties.Mr Peel—Mr Semmens is on other duties. Mr Early can answer in relation to Mr Semmens.Senator ROBERT RAY—I was not asking; I was just saying that he has left. I am not

asking anything further on that. But not many have left. So how is morale?Mr Peel—Morale is not as high as it could be. I think the events of recent times have

affected morale across the department not less so in Ministerial and Parliamentary Services.



There are a number of inquiries being undertaken at the present time and they obviously havean impact.

Senator FAULKNER—Before Senator Ray goes on: Mr Early, you have kindly tabled DrBoxall’s notice to staff on the outcomes of the Kennedy inquiry. You would recall when youappeared before the committee a few days ago.

Mr Early —Yes, I do, Senator.Senator FAULKNER—That was appreciated by us. In the last paragraph of that particular

note of 11 December, Dr Boxall says, ‘I have already taken steps to strengthen the resourcelevels in MAPS and will ensure that this is kept under close scrutiny in the future.’ Perhapssomeone—Mr Early or Mr Peel—could outline what the steps are to strengthen the resourcelevels. That might be helpful.

Mr Early —The particular steps which had already been taken at that point were to moveone ex-Finance SES officer into Ministerial and Parliamentary Services and to announce thatanother would be going at the completion of a current project.

Senator FAULKNER—Does that effectively mean that there will be two extra SES officersin MAPS?

Mr Early —No, the effect of that was one extra. There had been one person acting in a jobtemporarily. So effectively we moved two people in where there was one job previously.

Senator FAULKNER—So a net gain of one SES officer?Mr Early —Correct.Senator FAULKNER—There were no other steps that Dr Boxall was planning there to

increase the resource levels?Mr Early —You asked me to what Dr Boxall was referring in that particular paragraph, and

Dr Boxall was referring to those SES movements in that particular paragraph.Senator FAULKNER—I am aware of the other points that are raised in the note. In that

paragraph Dr Boxall flags that he is going to ensure that resource levels are kept under closescrutiny in the future. At the executive level, Mr Early, apart from making that commitment,which I am sure is probably a positive one and which I assume would be well receivedamongst MAPS staff, are you able to put any more flesh on the bones of what that mightmean; how that might be done?

Mr Early —Not at the moment, not properly. We have a new general manager taking upduty tomorrow. That general manager is well aware of the very clear desire from the executivethat MAPS have the strength and the resources that it needs to do its job well. He is alreadystarting to think about what the options are, but we are not at a point where we could reallyproperly announce those. He has some particular things in mind but he has not talked to theindividuals concerned.

Senator FAULKNER—This is not so much at that level of MAPS itself; this is really morea commitment, as I read it, from Dr Boxall himself to keep the matter under close scrutiny,working through whoever heads up MAPS.

Mr Early —Yes, indeed it is. We talked about the philosophy of the structure of theDepartment of Finance and Administration last time. You will recall that that philosophy wasto have a relatively small executive which operates substantially through the general managersof the operating groups of the department. That is exactly what I am referring to in thisparticular instance.



Senator ROBERT RAY—Could we, with the minister’s possible assistance, run throughthe Baxter report and the Coopers & Lybrand report to see what sort of progress has beenmade. I do understand you are midstream in changing general managers; I also understandthat this particular section has been a bit deluged by FOI requests and other things—Iunderstand that as background. One of the recommendations was to establish a singlecentralised remuneration allowance and entitlements system to be administered by DAS, nowyou, and implemented as soon as possible. How are you going on that?

Senator Minchin—I will ask Mr Peel to respond.

Mr Peel—We have effectively taken over the payment of travelling allowances on behalfof the Department of the Senate. We still have not got that function from the House ofRepresentatives.

Senator ROBERT RAY—Sorry, you have not?

Mr Peel—No.

Senator ROBERT RAY—That surprised me because they did not have to go through thepain of an appropriations and staffing committee, like I did, and two debates in the chamber;they can just do it by way of one signature. What is the hold-up, do you know, Minister?

Senator Minchin—All I can advise you is that it is a matter for the Speaker ultimately. Ithas been drawn to his attention. The request for the transfer has been made. We expect thatto occur—

Senator ROBERT RAY—You can understand that some of us did hard yards on this andtook a few lumps. I am most surprised.

Senator Minchin—As I say, ultimately it is a matter for the Speaker to make that happen.The government has indicated to the Speaker the government’s desire to have that transfer takeplace as soon as possible.

Senator ROBERT RAY—When mention is made here of remuneration, that is notpossible, is it?

Mr Peel—No, we are only talking about travel allowance transfers.

Senator ROBERT RAY—Yes, that one has gone over. The second recommendation madewas a reconciliation of travel expenditure by crosschecking of transport entitlement use againsttravelling allowances claimed. Would you like to tell us how you are going on that?

Mr Peel—The travelling allowances that we are currently paying are paid after we haveundertaken those checks. In the past, we had certifications that senators, ministers andparliamentary secretaries and so on had travelled and we went on their certification. We arenow actually checking against travel records to make sure that that travel was undertakenbefore we make the payment.

Senator ROBERT RAY—Minister, on this particular subject, and I know this could besubject to alteration again when government formally assesses the Remuneration Tribunalreport and we will come to that later, are you satisfied that there are not just too many staffresources being devoted here? Don’t think I am arguing for not checking, but I will give youan example of one senator who stayed the weekend in Canberra and did not go home, did notclaim Friday and Saturday nights, and that therefore triggered quite an examination becausethey thought he may have been gone home earlier. I am just wondering how many staff hoursit is taking or if there is some other way to get a system in place here. Could I ask you this:why not ask senators and members—those who drive here—to make out the same acquittal



document as their staff do with their boarding passes and sign it off? It might cost our staffa bit more time to prepare it—

Senator Minchin—You have to remember to keep your boarding passes.Senator ROBERT RAY—Even staff lose their boarding passes, so then you take it off the

ticket and then you might actually trigger a check. But it seems to me it might save a lot instaff hours—I am not sure.

Senator Minchin—The principle of doing that preliminary check is going to keep a lot ofpeople out of trouble. I think the principle is right but, as the system develops, if there arebetter ways of doing it, it makes sense.

Senator ROBERT RAY—If you can find one person who cheats on their travel allowancein the next 20 years, we have found a real mug.

Senator Minchin—That is right. I would be happy if Mr Peel wants to respond to thisquestion of how much time has been involved—whether we have been able to make anassessment of that or not. This is relatively new, so we may not have been able to assess itat this point. Do you have a comment?

Mr Peel—We have not made an assessment but the records are readily available to us. Ido not think it is a tremendous amount of extra time that we are spending. As you alludedto earlier, the Prime Minister has asked the Remuneration Tribunal to have a look at thetravelling allowance system. It may well be that there will be further changes down the trackto address the sorts of issues that you have raised.

Senator ROBERT RAY—I take it that you have not seen the Remuneration Tribunal reportyet.

Mr Peel—I have seen a copy of it.Senator ROBERT RAY—That is all right. I just wondered from the way you qualified your

remarks.Senator Minchin—But I take the tenor of your point. It is a good point—to monitor the

staff time required to put those checks in place. But I do think the principle of that checkingis very sensible.

Senator ROBERT RAY—We absolutely agree. The third point was the development ofagreed benchmarks as a basis for compliance monitoring and regular reporting to the Ministerfor Administrative Services by the secretary. Is that in place?

Mr Peel—No, not as yet.Senator ROBERT RAY—Any anticipated time when you will address that issue?Mr Peel—We want to address all these issues rather quickly. As you mentioned earlier, we

have been involved in other matters of late which have distracted resources. Mr Winder willwant to get on with these over the next three months or so.

Senator ROBERT RAY—Isn’t one of the real problems with MAPS historically—and Iam not limiting it to this government—that you administer entitlements, interpret entitlementsand have to give policy advice to a minister and that this actual division has not beenstructured to be able to deliver on all its requirements so far?

Mr Peel—It would be true to say that the resources you might devote to having a look atimproving the system and improving the processes in the past have been diverted to day-to-dayissues such as phone calls from senators and members, things that were raised in estimatescommittees and so on. In the future we are looking towards a structure that gives us a bit of



extra capacity so that we can have a group of staff to look at those issues who are notdistracted by the day-to-day activities but can, nonetheless, draw on the experience of thepeople who are involved in day-to-day activities to help improve the way things are done.

Senator Minchin—Senator Ray, I think the real point there is the interpretation problem,and with what has happened recently that is more significant and there are a lot more inquiriesas to what various entitlements actually mean. People are obviously a lot more careful andthe Remuneration Tribunal has been asked to give as much clarity to these entitlements as itpossibly can, given that many of them derive from the tribunal.

Senator ROBERT RAY—I was going to raise that later, but we might as well deal withit now. Would it be fair to characterise the Remuneration Tribunal as being a broad brushinstrument in the past?

Senator Minchin—In the past the description of the entitlements has been lacking theprecision which I think all members of parliament would prefer so that it is clear whethersomething is in an entitlement or not. Certainly it is my experience that there is not thatsufficient clarity, and the Remuneration Tribunal has been asked in relation to a number ofspecific entitlements to provide us with a lot more clarity which will make the job of MAPSand the government, or the minister, a hell of a lot easier.

Senator ROBERT RAY—Do you think they ever will? This is not a judgment on you oranyone else because I hold virtually the same job as you do in one sense, but is it not nowthe responsibility of the MAPS section and you to get on top of this and issue proceduralrules—one of which we will probably dispute later, I might add—that will never really comein fine detail from the Remuneration Tribunal? Isn’t that the problem?

Senator Minchin—It is that difficult issue as to what sort of freedom the government shouldtake upon itself to interpret ‘parliamentary’, for example. The Remuneration Tribunal, giventhat it made the decision that something is provided for the purposes of parliamentary business,has been asked to clarify what it meant by that. A point may arise where, if it feels it is unableto do it, or its response to that request is insufficient, it may require the government to interpretit.

But we have to work with and within the bounds set by the Remuneration Tribunal in thepublic interest to maintain the independence of the body that sets the rules. It cannot be, orcannot be seen to be, the case that the government is interpreting them in any way it likes justfor the benefit of politicians, as you would well understand. It is a delicate matter.

Senator ROBERT RAY—I will make another suggestion to you in that case. I agree withprecisely what you said and the position you are in, but I cannot see the RemunerationTribunal making the procedural rules. I can even see a prospect of your looking at the broadbrush approach from the Remuneration Tribunal—you would do the procedural rules and thensend them back to the Remuneration Tribunal for ratification, something along those lines.That is the first half.

The second half is the extent to where all this guidance is put for members, senators andministers. I am told it is in a CD-ROM, but that really depends on whether you know howto turn the computer on, I guess.

Senator Minchin—As you know, MAPS does produce quite elaborate folders telling youwhat the entitlements are. It does a very good job of that.

Senator ROBERT RAY—When was the last one of those issued, though?Mr Peel—March 1996.



Senator ROBERT RAY—Anyway, that is some food for thought.Senator Minchin—I appreciate the suggestion.Senator ROBERT RAY—Coopers and Lybrand recommended six-month reporting to

parliament. Before I get to some more detailed questions, what is going to be involved in thatsix months? What sorts of items will be reported?

Mr Peel—It is six-month reporting of travel and transport expenditure by all senators andmembers. So it is going to involve air fares, travelling allowance, car transport—things of thatnature.

Senator ROBERT RAY—So it is transport related?Mr Peel—Transport and travelling allowance.Senator ROBERT RAY—Are you going to do an imputed cost if someone travels by VIP

flight?Mr Peel—That is an issue that we are looking at at the moment. Yes, we will need to work

out some sort of formula.Senator ROBERT RAY—For instance, are you going to publish the mileage claim of those

who drive here and back?Mr Peel—No, I think the reporting is really in monetary terms rather than in mileage terms.Senator ROBERT RAY—If Senator Faulkner flies up from Sydney, his air fares are there

and, if another senator drives up from Sydney, his petrol claim is there—provided it is nottheir electorate car, I hasten to add. What sort of detail are we going into?

Mr Peel—We would record that detail, Senator.Senator ROBERT RAY—But are you going to record it in your published figures that you

report? That is what I am asking.Mr Peel—The published figures will reflect the expenditure on transport and travel by

individual senators and members.Senator ROBERT RAY—What about timelags? We have problems already with timelags

with travel allowance. People do not always claim it within the financial year and the nextfinancial year, no matter how hard we try with the parliamentary departments, they publishas an aggregate. If you are $6,000 behind in the previous financial year and you are paid on2 July, suddenly you get $6,000 added to the next year’s, and of course you are right up thetop of the thing. That is just an example of timelags with all this sort of stuff. Secondly, youmay have a problem with people deliberately not putting in some of their claims to lower thelevel.

Senator Minchin—It may well be that the Remuneration Tribunal in its report on TA dealswith the question of reporting in time and time limits on claiming TA. That may well dealwith a large part of the problem you quite properly raise.

Senator ROBERT RAY—It may well. The only difficulty with that is reporting every sixmonths. Given what I would assume any reasonable tribunal would recommend in terms ofa couple of months, that may not be so easy over six months. I wonder how you will approachit. I am not critical.

Mr Peel—We have problems with lags. For example, we have not always got bills fromairlines in time to know that a senator or member has made an expenditure on airfare. Thefirst tabling we do will be in February. That will cover the period to the end of December.



Hopefully, with that two-month gap, because of the sitting of parliament, we will be able topick up any lags. It is an issue that we will need to address. I think it is fair to say that wehave not yet worked out exactly how we will deal with that in the future.

Senator ROBERT RAY—You will not be tabling in February, I hope.Mr Peel—It might be March. It has changed.Senator Minchin—Table it at the Constitutional Convention.Mr Peel—It is March. I forgot about the change.Senator ROBERT RAY—How long will the process take? Will you be checking with

senators, members and ministers to get them to verify or challenge anything in them if thereis something wrong?

Mr Peel—We would anticipate that we would do that.Senator ROBERT RAY—It is quite a tight timetable, is it not?Mr Peel—Yes, it is.Senator ROBERT RAY—Is it your intention, Minister, to have regular reporting dates

every six months? You realise that there have been problems with delays with both Labor andLiberal governments in reporting recently?

Senator Minchin—Certainly it is the government’s intention to report every six months.Senator ROBERT RAY—Another issue is the regular auditing of all claims against

entitlements. Is that just for the travel allowance or broader allowances?Mr Peel—In the context of the process that we are talking about, we are talking about travel

and related matters.Senator ROBERT RAY—The next one talks about restructuring the division so that there

are not inconsistencies in advice. I think we have already covered that in questioning. Anotherrecommendation is placing a clearer or greater responsibility on senators and members to useentitlements in an accountable manner. What is involved there?

Mr Peel—That relates to the fact that we will be tabling expenditure on a regular basis. Itplaces a degree of pressure, if you like, on senators and members to use their entitlements ina proper way.

Senator ROBERT RAY—How accurate are the monthly reports?Mr Peel—They are as accurate as we can make them. There are obviously errors from time

to time. We have had difficulties in the past, as I mentioned before, with things such as airlinecharges not coming to us until after a monthly report is completed. It is fair to say that senatorsand members should check them thoroughly against their own records. For various reasons,we cannot guarantee that they are 100 per cent accurate. From the available information wehave, they are as accurate as we can make them.

Senator ROBERT RAY—Can I suggest—I know that you are always open to suggestions—that this is one area you might refer to the customer forum. I know that it is an ever-growingbody, but there are problems in the way this whole thing operates. It is so hard to track downerrors. I was shown last year as having spent $20,000 on postage when I spent $3,000. It wasonly in the way they formatted the report that that occurred. I am talking about the longerterm; let us not worry about this year. Your inquiries always say that it is about clientsatisfaction. Here you have some forum to deal with the clients. The one thing can I tell youis that they are pretty expert in these areas.



CHAIR —Some of them are.

Senator ROBERT RAY—Most are. Most have some working knowledge of it and mayeven be able to assist in the process.

Mr Peel—There is a customer forum that deals with Jetset and Comcar.

Senator ROBERT RAY—It is growing. First it was Jetset and now it is Comcar.

Mr Peel—We have been discussing internally putting in place arrangements, for example,to give the staff of senators and members some greater training on entitlements and those sortsof issues. That sort of thing would be of assistance in addition to whatever forums we mightset up for senators and members themselves.

Senator ROBERT RAY—I want to raise a broader question. One would assume that it willtake another six to eight months, even with all your efforts, to get a system going that youwill be happy with. Has any thought ever been given to making MAPS a semi-autonomousbody?

Senator Minchin—That issue was raised last week. I am not aware of the history of this.You may yourself, in your time as minister in your period of government, have consideredit. I am not aware of it. I am sure this was raised last week. In the period I have been here,I think having MAPS within the Department of Finance should be tried and tested. I amconfident that it will prove to be the right place for it. I am happy to listen to any propositionyou want to put. The government acted quite properly and sensibly in locating the unit withinthe Department of Finance. I am confident that that will prove to be the right location. I amhappy to have a discussion with you at any time about any view you have as to where itshould be or its status.

Senator ROBERT RAY—I am not sure that you are wrong. You are probably right. Oneof the sensitive areas is dealing with members’, senators’ and ministerial entitlements. Someare friends and some are more distant friends in the opposition. Therefore, an enormousresponsibility falls on any minister who holds your position to not misuse it. As we believehas happened on a couple of occasions, information has been transmitted to a minister’s officeand then put into the public domain. It may have been requested for only that reason. I amsure that if that has happened in the last year or so, it has happened before then.

Senator Minchin—We always worried about it in our 13 years in the wilderness.

Senator ROBERT RAY—I never did it once in the time I held that position in charge ofMAPS. It was a much quieter time. If it is not a semi-autonomous institution, I guess we haveto take your word and character that you would not indulge in that sort of behaviour.

Senator Minchin—I would like to believe you have the confidence that will be the case.But I appreciate the tenor of your remarks. If it was semi-autonomous, it would certainlyremove any possibility or suggestion that political interference could occur. What the cost ofthat would be, I am not sure. I would certainly like to take your proposition on notice andthink about it myself.

CHAIR —With regard to training and with regard to entitlements, committee staff in theparliament need additional information too.

Mr Peel—Yes, certainly.

Senator ROBERT RAY—Can I ask you about page 85 of the annual report? It notes therethat this division conducted a seminar on privacy and security of information for all divisionstaff. When was that held? How much did it cost? What was really the purpose of it?



Mr Smail —I have to take the question of how much it cost on notice. It was held, as Irecall, in October last year. It was conducted by the Protective Security Coordination Centrefor us. It was two full days. On one day about half of the Canberra based staff attended andon the second day the other half attended. It was about the responsibilities of public servantsunder the Privacy Act and the Crimes Act and various pieces of legislation that cover us. Italso gave us some general information about how to preserve documents and how to behave,how not to be suborned by people who may wish to eavesdrop or use various techniques tooverhear people or make friends to get documents and all that sort of thing. We could providethe cost.

Senator ROBERT RAY—Just a final question before I get on to more recent history ofreform of parliamentary entitlements. Minister, I doubt that you have but have you gone backand checked on the Auditor-General’s report No. 34 of 1990-91 that was done into thisdivision?

Senator Minchin—I regret to say that I have not, but I thank you for drawing it to myattention.

Senator ROBERT RAY—My understanding is that virtually every reform the Auditor-General recommended bar one has been implemented, in case anyone thinks this area has neverbeen looked at. The one area is the one you focus on, Minister—this problem of administrat-ing, certifying and giving advice at the one time.

Just on this general view of reform of parliamentary entitlements, I did ask Senator Hill atthe estimates on PM&C—I think he was referring to this division—about the abolition of DASand whether it was done because of the ministerial unpleasantness a few weeks ago. SenatorHill said:The Prime Minister blames his colleagues for the ministerial problems. But there certainly has been aview that some of these matters could have been administered more effectively than they have been. Wehave had that debate really going on all year.

Did Minister Jull write to a variety of people in about October last year seeking their viewson whether parliamentary entitlements should be reviewed?

Mr Peel—Yes, he did.

Senator ROBERT RAY—How wide did that letter go?

Mr Peel—It was not whether entitlements should be reviewed; it was whether we shouldproduce guidelines on interpretations of things like ‘parliamentary electorate’.

Senator ROBERT RAY—So it was similar to Mr Walker’s letter of the previous year.

Mr Peel—It was.

Senator ROBERT RAY—Do you know how wide it went? I am not trying to pry here toomuch. A copy would have gone to the Prime Minister?

Mr Peel—It did not go to the Prime Minister personally. It went to Mr Morris in the PrimeMinister’s office.

Senator ROBERT RAY—To Mr Reith?

Mr Peel—Yes. I think it went to the Deputy Prime Minister and to Senator Hill.

Senator ROBERT RAY—Did Mr Morris ever respond?

Mr Peel—No.



Senator ROBERT RAY—No response at that stage. I understand a Mr Sam Skrzypek, whowas here in another guise and not a member of MAPS, actually wrote a paper on some sortof reform of parliamentary entitlements or maybe on definitions. Is that right?

Mr Peel—I think he might be now referring to the chain of events which were outlined inthe article by Mr Laurie Oakes in theBulletin on possible reform of entitlements. In relationto those matters, I do not think it is appropriate for me to comment because that relates to achain of events which may have been providing advice in the nature of policy advice togovernment.

Senator ROBERT RAY—Mr Skrzypek’s paper was not written for advice for government,was it? It was an internal DAS paper.

Mr Peel—I do not think I should comment on it.

Senator FAULKNER—Perhaps a better way of dealing with it is: who tasked Mr Skrzypek?I think that is a reasonable question. In other words, was it departmentally tasked orministerially tasked?

Mr Peel—I am not sure I should comment because if the papers were prepared it goes toissues related to providing advice to ministers and government in the nature of policy.

Senator FAULKNER—I am deliberately framing my question at this point. I do not acceptthat you are compromised in any way. If you feel compromised I think the process questionought not be problematical. I think even the minister would acknowledge that. If he wereministerially tasked, so be it. We would at least know what we are talking about. This is aprocess question. This does not go on advice to government. Let me go back a step. MrSkrzypek—and I think Mr Skrzypek was before the estimates committee at our last hearingsin relation to other program areas in DoFA—is not in the MAPS group.

Mr Peel—No, he is not.

Senator FAULKNER—I cannot precisely recall where he is, but I know he is not in MAPS.I think it is reasonable in this circumstance just to ask the simple question—and I think,Minister, you would agree—of who tasked Mr Skrzypek. I cannot see anything problematicalabout that. It might help us understand what we are speaking about.

Mr Peel—All I could say is that the department, from time to time, looks at particular issuesin preparation for providing advice to ministers on any changes that they may think might beappropriate. Any work that Mr Skrzypek may have done would have been in that sort of vein.

Senator FAULKNER—Is that a way of saying that he was departmentally tasked?

Senator Minchin—I think you have to accept Mr Peel’s answer at face value.

Senator ROBERT RAY—I am not going to accept it, Minister. I do often when I thinkit is going into absolute content of advice to government, but these are process matters notsubstance matters. If a paper is commissioned or required on parliamentary entitlements andit is done by someone outside the MAPS division Senator Faulkner is entitled to know whoasked him to do it. I am going to ask you for a copy of the paper. I am sure you are goingto refuse. I would not imagine why you would because history has gone by.

Senator FAULKNER—I heard what Mr Peel said. I was trying to frame my questiongenerously. I am not trying to be unfair to Mr Peel, but it was a convoluted answer. It is afairly simple process question. I am surprised that you are concerned. I would be verysurprised if the minister were concerned about the tasking of a paper. Even if it was



ministerially directed that is not a problem if the estimates committee is apprised of that. Ithink you might understand that.

Mr Peel—Mr Skrzypek was asked by the department and not by the minister to prepare thepaper.

Senator FAULKNER—I appreciate that. Would it be possible to say who in thedepartment? I assume it was the secretary, Mr Mellors.

Mr Peel—Yes.Senator ROBERT RAY—Is the preparation of a chronology of events by the department

regarded as advice to government?Senator Minchin—That is a hypothetical question: is the preparation of a chronology of

events regarded as advice to government?Senator ROBERT RAY—When the department prepares a chronology of past events, is

that regarded as advice to government?Senator Minchin—As Mr Early says, it all depends, but prima facie I would have thought

it constitutes advice to government on the chronology of events.Senator FAULKNER—I did want to follow through one aspect of the issue of Mr

Skrzypek’s paper. It was a departmental paper. How did the department respond to that paper?Who looked at it? Where did it go?

Mr Peel—The paper was prepared at the request of the secretary, as I mentioned, for thedepartmental executive.

Senator FAULKNER—Was it discussed more widely than the departmental executive?Mr Peel—Not to my knowledge.Senator FAULKNER—Was it discussed at a workshop that was held within the then

Department of Administrative Services?Mr Peel—Not that I can recall.Senator ROBERT RAY—But some time in November or December the then secretary

asked for a paper to be prepared on parliamentary entitlements?Mr Peel—Yes.Senator ROBERT RAY—We cannot have a copy of that paper, Minister?Senator Minchin—I would have to take that on notice.Senator ROBERT RAY—Sure. Mr Peel, did you prepare a chronology tracking from 18

December 1996 various stages in the recommendations for review of parliamentaryentitlements?

Senator Minchin—I would have thought that that is a question on advice. It is not reallyappropriate.

Senator ROBERT RAY—I am still going to ask the questions, Minister. In this chronologythat you prepared, Mr Peel, you mention 18 December 1996 as a crucial date. There was aminute to the then secretary of DAS proposing a draft terms of reference for an inquiry intoremuneration entitlements and facilities for members and senators. Do you have no commenton that?

Senator Minchin—What is the question?Senator ROBERT RAY—I am asking whether that occurred.



Senator Minchin—I would have thought that goes to advice.Senator ROBERT RAY—Just so you understand, what you have here, Minister, is that

at some stage in April we had the Prime Minister saying that only your government had evertackled the parliament entitlement area. He slags us. Fair enough. Sweet cop. What the recordshows is that your government, when put to the test, deliberately deleted this area out of acabinet submission and was happy to bury the whole thing until controversy came up.

Senator Minchin—That is a political assertion that we buried the whole thing and hopedit would go away.

Senator ROBERT RAY—It is a political assertion that you are welcome to disprove, butwhat you are going to do is insist on hiding behind the old advice-to-government thing whilstwe have statements not only by the Prime Minister but by former minister Jull that they wereon-the-job, et cetera, when in fact they were not.

Senator Minchin—That is not true. The government has undertaken all these inquiries andset in train reviews of these entitlements.

Senator ROBERT RAY—No, we will go through—Senator Minchin—I know you are upset by the assertion that you did nothing in

government and we have, but the record speaks for itself.Senator ROBERT RAY—No, it does not, and we will pursue that.Senator Minchin—I am not interested in point scoring either way on this issue. I think we

are all—Senator ROBERT RAY—You have done the point scoring, Minister.Senator Minchin—My view is that we all have responsibility to ensure this is an open,

honest and accountable system, and the minimum of point scoring is what will place theparliament in the best light for the Australian people.

Senator ROBERT RAY—But you are not willing to address the—Senator Minchin—There have been problems on both sides in relation to this issue and

I think a bipartisan spirit of cleaning it up and getting a transparent, open, honest andaccountable system is in all our interests.

Senator ROBERT RAY—Yes, we agree with all that but it is the road to it where doublestandards and point scoring on the process issues—not the substance issues—have beenremarkable. The fact is that you have a minute on 18 December to Mr Mellors asking for thisarea to be cleaned up. You have a further minute on 2 January 1997. You have an improvedminute on 3 January 1997. You have a meeting on 10 January 1997 to confirm this. You havea further draft cabinet submission on 4 February 1997. But when the crucial cabinet submissioncomes up for discussion on 5 February 1997, on the instructions of Mr Sutherland in Mr Jull’spresence, all reference to a review of these parliamentary entitlements was deleted, and thereis a final note in DAS on this subject.

Senator Minchin—I remind you that in March, the previous Minister for AdministrativeServices did announce the Baxter review of parliamentary entitlements. The record stands foritself. We did initiate this review of entitlements by Baxter publicly back in March.

Senator ROBERT RAY—Okay, we will come to that. Mr Baxter was entitled—

Senator Minchin—But you just said we buried the whole thing hoping it would go away,until it blew up. Your assertion suggests that nothing happened until September.



Senator ROBERT RAY—No, not at all.Senator Minchin—That is the impression you have left.Senator ROBERT RAY—Minister, all of this was in place—the review, the recommenda-

tions—and Mr Jull’s senior adviser was sent out to test the waters. He came back and said,and this is on a file note, ‘Don’t rock the boat.’ It is taken out. One month later exactly, MrJull announces that Baxter is extended to cover parliamentary entitlements. Nothing happensin that month. One month later, with half an hour’s notice to this department—you should atleast be able to confirm that—and half an hour’s notice to Mr Baxter, that is half an hourbefore question time when suddenly the panic is on, all this gets resurrected. So do not tellme that the government was determined to reform this area. It dumped it so it did not haveto rock the boat on 5 February 1997.

Senator Minchin—Whatever conspiracy theories you wish to assert—Senator ROBERT RAY—No.Senator Minchin—The fact is we announced publicly the review of these entitlements by

Baxter in March.Senator ROBERT RAY—Having dumped it in February. Having tested the political waters

and not wanting to rock the boat, you dumped it. It is only when the Colston, Woods and othermatters come up, half an hour before question time with half an hour’s notice to thisdepartment. Check with your officials before you talk about conspiracy theories. Take themoutside and check with them. We will have a five minute break. At least you will not makethose assertions, because your own documents document all this.

Senator FAULKNER—Can I just go back to the original question Senator Ray asked aboutthe minute of 18 December. You indicated that you felt this was advice to government andwere not able to answer the question. We have a real problem here. This was actually a minuteto the secretary of the department. This was a minute to the then secretary, Mr Mellors, which,as I understand it, proposed terms of reference for an inquiry into remuneration entitlementsand facilities for senators and members. Minister, what is the problem with the officer at thetable confirming that? How possibly does your definition of advice to government apply? Thisis a minute.

Senator Minchin—I think Mr Peel has already answered your question on that.Senator FAULKNER—No, I believe—Senator Minchin—You want confirmation that it exists?Senator FAULKNER—I believe you might have been talking about another issue.Senator Minchin—Yes.Senator FAULKNER—If it is now confirmed that such a minute exists, I am pleased

because previously-Senator Minchin—That was done some time ago and you asked for a copy.Senator FAULKNER—Senator Ray asked for a copy.Senator Minchin—Whatever; and I said I would take your question on notice. So you are

just going back over old ground. That is my only point.Senator FAULKNER—I am making the point that many of these minutes or departmental

processes do not fall into the category of advice to government. They are actually departmentalprocesses. So if you use the defence of advice to government, I think you are drawing an



extremely long bow that it is unusual for a minister at the table at an estimates committee todraw in these circumstances.

Senator Minchin—Where do you draw the line? A lot of activity that goes on withindepartments is a matter of, ultimately, the preparation of advice to government. A lot of thesedepartmental papers, et cetera, are all about the preparation of advice to government.

Senator FAULKNER—Some are, some aren’t.Senator ROBERT RAY—Maybe government should not be so misleading in their public

statements.Senator Minchin—Ultimately, the departments are there to advise governments and you

could argue quite logically that just about everything they do is about advice to government.Senator FAULKNER—On that basis, we should never direct any question to any

department about any of its internal operations. Oh, come now, Senator!Senator Minchin—I think a good barrister could argue that case.Senator FAULKNER—We do not have a good barrister here obviously.Senator Minchin—Anyway, I have taken that question and request on notice.Senator ROBERT RAY—These are questions you can answer, I think, Mr Peel. When the

minister announced in the House of Representatives that KPMG and Baxter had been retainedto provide advice on administration of parliamentary entitlements—you recall those words—there were no terms of reference then at that stage, were there?

Mr Peel—No.Senator ROBERT RAY—The terms of reference in fact were concluded a week later?Mr Peel—That is correct.Senator ROBERT RAY—When did the contract with KPMG get signed for that extension?Mr Peel—I do not have that information in front of me, Senator.Senator FAULKNER—Can we go back a step. The minister make an announcement in

the House, a statement was made on 5 March, the terms of reference were finalised on 12March and the contract signed some time in April.

Mr Peel—I do not have that information here. I am sorry.Senator FAULKNER—You might take that on notice.Mr Peel—Yes, I will take it on notice.Senator FAULKNER—Was a history of these circumstances provided to the Department

of the Prime Minister and Cabinet in the period during which the abolition of the Departmentof Administrative Services was being considered or, to put it another way, the formation ofthe Department of Finance and Administration was being considered?

Mr Peel—A history of the Baxter report?Senator FAULKNER—I am interested in whether an outline of these matters which have

been canvassed in questioning by Senator Robert Ray had been made available to the Secretaryto the Department of the Prime Minister and Cabinet or to the Department of the PrimeMinister and Cabinet around the time that the formation of the Department of Finance andAdministration was being considered—in other words, early October this year.

Mr Peel—Yes, Mr Mellors wrote to the Department of the Prime Minister and Cabinet inOctober and provided an outline of those matters.



Senator ROBERT RAY—But that was entitled ‘Cabinet-in-confidence’, was it not?Mr Peel—Yes, Senator.Senator FAULKNER—You would not be able to provide a copy of that?Mr Peel—No.Senator ROBERT RAY—I am interested in the document that Mr Peel did either on 13

or 14 October. Does that fall under the ambit of advice sought by government?Mr Peel—We have said that, yes. It is in the nature of advice and I do not think I can

comment on it.Senator ROBERT RAY—Even though it is just a chronology of events? Do you have a

copy of that with you here? I am not going to ask you to table it.Senator Minchin—That is an unfair question.Senator ROBERT RAY—I was hoping he could pass it over to you, Senator. It might

quieten down some of your more aggressive comments about this being a conspiracy theory.I recommend you read the chronology, especially 5 February 1997 where it says, ‘Further draftcabinet submission reference to review of entitlements deleted.’

Senator Minchin—The government’s decision as to how it would handle the question ofentitlements was made clear in the announcement in March of the Baxter review. Whateveryou wish to assert went on before that, the government’s decision as to what course of actionit proposed to take was announced in March.

CHAIR —The secretary advises me, with respect to the point you have been getting atconcerning this particular document, that in the guidelines for public servants appearing beforecommittees any documents that are attached to advice to government are covered by the adviceto government.

Senator ROBERT RAY—Okay. I am still pursuing the issue because what we have on thepublic record are claims by the Prime Minister that previous governments did nothing aboutthis and this government was determined to do something about it.

Senator Minchin—Which we have.Senator ROBERT RAY—You only did it under pressure is the point I am making.Senator Minchin—That is just your assertion.Senator ROBERT RAY—All right, we will go through it again.Senator Minchin—The Prime Minister’s statement is right: he did something about it. You

can quibble and make your political points about the background to that and what elsehappened, but governments receive and reject advice of various kinds. We took the action wethought was right and that was the announcement of this Baxter review.

Senator ROBERT RAY—We are going to the nature of your rejection because you havea background paper, you have about three minutes on this, you have a meeting which includedsomeone from the Prime Minister’s department—Ann Hazell—on 10 January, you developtwo or three drafts of a cabinet submission, a senior ministerial adviser goes out to test thewaters in the rest of government and it gets knocked off. So do not come in here and tell usthat you always intended to do something about it. You only did something about it in a panichalf an hour before question time. I think I am at least entitled to ask this, because it is notadvice to government: when was the Department of Administrative Services informed by theminister that Mr Baxter would do this review?



Mr Peel—I think it was on 5 March, Senator.

Senator ROBERT RAY—Yes, and I am right when I say it was half an hour beforequestion time. You probably cannot remember precisely, but it was in that order, was it not?

Mr Peel—I do not know, Senator. I was not involved,

Senator ROBERT RAY—Who was here?

Mr Peel—I think Mr Simmons was involved at the time.

Senator ROBERT RAY—No-one else?

Mr Peel—Not to my knowledge.

Senator MARGETTS—I want to find out whether there is a formula used in the calculationof parliamentary sitting fees.

Mr Peel—Parliamentary sitting fees? Could you clarify that?

Senator MARGETTS—We were talking about parliamentary entitlements. One wouldassume that there might be a formula that is used or recommended in calculation of that whichincludes knowledge of cost of meals, accommodation, incidentals and perhaps transport. Isthere a formula that is used? This might be affected by the directions of ministers in what canand cannot be used in entitlements. Is there any way I can get a copy of the breakdown ofthe formula that is used in the calculation of parliamentary sitting fees.

Senator Minchin—Do you mean travel allowance?

Senator MARGETTS—No, I am talking about sitting fees.

Senator Minchin—We do not have sitting fees. We have travel allowance.

Senator MARGETTS—The $145—

Senator Minchin—That is called travel allowance—$145 a day in Canberra.

Senator MARGETTS—It is called a sitting fee, as far as I was aware.

Senator ROBERT RAY—It is about to change its name again. That is why there isconfusion.

Senator Minchin—It is known as travel allowance, and it is a figure determined by theRemuneration Tribunal.

Senator MARGETTS—Yes. The Remuneration Tribunal is quoted by you in letters topeople, Minister, so I wondered what the basis of that calculation was.

Senator Minchin—That is entirely a matter for the Remuneration Tribunal to make adetermination as to what it believes is an appropriate payment to be made to members ofparliament for travelling allowance, either in Canberra or in other capital cities.

Senator MARGETTS—Mightn’t they be influenced by decisions of the ministry in relationto how that operates and what kinds of expenses may or may not be incurred by parliamenta-rians when they are in parliament, as a result of directions by ministers? Would you not passon to the Remuneration Tribunal, for instance, whether there are any decisions that might affectthe expenses of parliamentarians while they are in parliament?

Senator Minchin—Anyone is entitled to make a submission to the Remuneration Tribunalas to what they believe is the appropriate allowance, whether it be in Canberra or in anothercity. Submissions of that kind are constantly made, whether it be by government, oppositionor individual members.



Senator MARGETTS—Although you might quote Remuneration Tribunal considerations,you do not get any breakdown of expectations of parliamentarians’ expenses whilst they arein parliament?

Senator Minchin—The Remuneration Tribunal sets the allowance. In its determinations itmay state the basis on which it augments changes and sets the allowance, but it is entirely amatter for the tribunal to make that determination based on the submissions it receives andits consideration of what is appropriate.

Senator MARGETTS—So how would one find out how that is based?Senator Minchin—By asking the Remuneration Tribunal.Senator MARGETTS—So you might quote from the Remuneration Tribunal, but I would

have to go direct to them to find out how they base their calculations?Senator Minchin—It is not a figure set by the government.Senator MARGETTS—No, this I understand. But you use Remuneration Tribunal findings

to give directions to senators.Senator Minchin—Sure. We are required to.Senator MARGETTS—I thought there might be some communication between you and

the Remuneration Tribunal.Senator Minchin—We are required to abide by Remuneration Tribunal determinations as

to entitlements.Senator MARGETTS—I am trying to establish: is it a two-way process? If there were

elements of your directions to senators and members that might affect that travellingallowance—or sitting fee, as I call it; that specific 6A sitting fee—would you not communicatewith the Remuneration Tribunal and advise them that there might be—

Senator Minchin—It is open to the government to make a recommendation to the tribunalthat an allowance level be changed one way or the other, based on whatever evidence orproposition the government or any other member of parliament wishes to put to the tribunal.

Senator MARGETTS—If, for instance, I were to find out that certain expenses were notincluded in that sitting fee, might it be considered that the Remuneration Tribunal was notexpecting that members and senators were expected to incur those expenses?

Senator Minchin—They set an allowance that they determine shall be paid to members ofparliament commensurate with what the tribunal believes is an appropriate amount given therequirement to be in Canberra for parliament or to be interstate on committee or otherparliamentary business for which an entitlement is paid. They presumably take into accountthe cost of hotel accommodation and meals in setting that figure, based on the cost of livingin the city in which they are making the determination.

Senator MARGETTS—Including the cost of taxis?Senator Minchin—As you know, the Remuneration Tribunal has determined that members

of parliament are entitled to transport, that is, the use of Comcar or the equivalent when onparliamentary business.

Senator MARGETTS—So I could therefore expect that the calculation of parliamentarians’sitting fees—as you call it, TA—would include a calculation for going to the chemist; goingto get basic provisions by taxi, if there were no other source available; and going for a meal.The expectation of taxi fares would be included in that sitting fee?



Senator Minchin—In setting the TA?Senator MARGETTS—Fine, I will be happy to go off and see if that has been included.Senator Minchin—You would have to ask the tribunal specifically if sitting fees or TA take

that into account.Senator MARGETTS—I will.Senator Minchin—The Remuneration Tribunal is mindful that it provides a transport

entitlement for parliamentary business but, as Mr Peel is saying, that is separate from the TA.Senator MARGETTS—Sure. I guess you are here because you have to attend parliament;

if you have to be here over the weekend, you cannot not eat, not go to get provisions, not goto the chemist. You cannot not do those things unless you actually live on fresh air for twodays.

Senator Minchin—Some would say that the TA is paid to accommodate that fact, or othersmight suggest that—

Senator MARGETTS—That is fine; that is all I wanted to find out. I will certainly go offand find out whether it has—

Senator Minchin—I think you should write to the tribunal and say, ‘Do you take accountof that when you are setting the allowance and, if you don’t, I would like you to do so.’ Thatis entirely your prerogative.

Senator MARGETTS—It is not just a matter of whether I would like them to do so. Youwould think that any findings of the Remuneration Tribunal would be consistent and, if therewas an expectation, that actually would be consistent with their expectations of what expenseswere met.

CHAIR —We will have a 15-minute break.Sitting suspended from 4.05 p.m. to 4.20 p.m.

ACTING CHAIR (Senator Payne)—I call the committee to order. We are still on program7, Ministerial and parliamentary services.

Senator ROBERT RAY—We were talking about Mr Baxter doing a review, which wasannounced on 5 March. Am I right in saying that he was already doing a general review intoDAS?

Mr Peel—That is correct, Senator.Senator ROBERT RAY—Did the additional terms of reference also involve any additional

remuneration to do this part of the review, or was that just absorbed into it?Mr Peel—Yes, Senator.Senator ROBERT RAY—There was additional remuneration?Mr Peel—Yes.Senator ROBERT RAY—How much?Mr Peel—I do not know. I will have to take that on notice.Senator ROBERT RAY—Thank you. Could you also take on notice—you may have

already—the date on which the additional terms of reference and the resultant contractamendment were finalised? I believe it was some time in April.

Mr Peel—Certainly.



Senator FAULKNER—I would like to ask the minister a few questions about therefurbishment of the Government Members Secretariat downstairs. I flagged this issue duringthe Department of the Prime Minister and Cabinet estimates, and the Department of the PrimeMinister and Cabinet were desperately keen for me to—

Senator ROBERT RAY—I think it was the Senate.Senator FAULKNER—It may have been; it may have been Joint House, in fact. I think

it was. It is the same principle. They were just very keen for me to ask you, Senator Minchin,so let me oblige. Can you tell me what is happening down there?

Senator Minchin—I gather the fit-out work has been completed.Senator FAULKNER—Okay. Well, what has been done?Mr Peel—Senator, perhaps I can be of help. This issue really comes under program 4. I

do have some limited information, though, that I can pass on to you. The office was originallydesigned for the Ministerial Media Group, and they had a relatively small number of staff butlarge spaces for meetings. The work that was undertaken involved reconfiguring the layoutto provide additional office accommodation and converting conference rooms into discreteoffices.

Senator FAULKNER—And that’s all?Mr Peel—I think the front entrance was also altered, but that was more a requirement of

the parliament than the office itself.Senator FAULKNER—What did this cost, Mr Peel?Mr Peel—The total cost was $39,960, Senator.Senator FAULKNER—Thank you. And who carried out this work?Mr Peel—Peter May David Flannery Pty Ltd were the architects recommended by the Joint

House Department. It was supervised by the capital and engineering works area of the JointHouse Department.

Senator FAULKNER—What about facilities inside the Government Members Secretariat?In other words, what about some of the hardware, et cetera? Have there been anyimprovements undertaken concurrently with the refurbishment?

Mr Peel—Are you talking about computers and that sort of thing, Senator?Senator FAULKNER—Yes.Mr Peel—That really is an issue that comes under program 4. Ministerial and parliamentary

services is really only concerned with staffing issues in terms of the Government MembersSecretariat. Program 4 provides the home department service for the secretariat. I just do nothave those details, as I said.

Senator FAULKNER—We usually asked them in this program—with the previousincumbent. I think we had sort of established that it was easier to do it all at once. You usedto be able to give us a great deal of detail.

Senator Minchin—The advice that I have in terms of that expenditure is that it did notinvolve any computer equipment.

Senator FAULKNER—We could let it ride for a while and come back to some of theseissues if it would be more appropriate for some other officer to join Mr Peel—

Senator Minchin—Your question was whether the $39,000 covered—



Senator FAULKNER—No, my question was whether, above and beyond the $39,000, inthe refit and refurbishment there had also been improvements in terms of the facilities downthere—the computers, the hardware—

Senator Minchin—At the same time.Senator FAULKNER—Yes.Senator Minchin—Not that I am aware of, but we will get that information for you.Senator FAULKNER—I was suggesting that if only some of these questions are relevant

to Mr Peel we could let this slide for a while perhaps and come back to it if we could bejoined by an officer who might be able to assist us.

Senator Minchin—Yes, we will do that.Senator ROBERT RAY—On the little group downstairs, I think you answered some

questions on notice coming out of the supplementary hearing on 19 August. You answeredtwo questions from Senator Faulkner: one on the amount of paper used downstairs and oneon the number of photocopies.

Mr Peel—I did answer those, Senator, but at the time I was in a different program.Senator ROBERT RAY—When I say ‘you’ I mean the department, not you. I will try to

use ‘Mr Peel’.Mr Peel—It actually was me.Senator ROBERT RAY—Yes. That is good. Is it the practice of people other than the

Government Members Secretariat to do large photocopying runs?Senator Minchin—Do you mean like Labor staffers or—Senator ROBERT RAY—I am just asking you. You have to go back to previous evidence

at this committee, before you get a little too bold there, Minister. I just caution you on that.I am asking whether people bring photocopying to be done to this unit downstairs rather thanthe photocopying they do from their own resources.

Mr Peel—I would not know that, Senator, because we are not involved in the actual internaloperations of the Government Members Secretariat.

Senator ROBERT RAY—But these people in fact are attached to the Minister forAdministrative Services, which, I assume, is passed on to you, Minister?

Senator Minchin—I assume so.Senator ROBERT RAY—Do you assume so or do you know so?Senator Minchin—Sorry, I know so.Senator ROBERT RAY—These extra 10 staff are your staffers, in effect?Senator Minchin—They’re government members’ staff but, for administrative purposes,

they were allocated to the Minister for Administrative Services, as you well know, in termsof their staff placement. And that has continued since my taking over responsibility forministerial and parliamentary services. But they are, of course, as you well know, out of thetotal government staff allocation and are there to help government members.

Senator ROBERT RAY—Yes, we know all that. We are just trying to find out who isresponsible for them, and it is you. What I am asking you is whether in fact the facilities areused down there for people—presumably members and senators or whoever—who bring inmaterial to be photocopied that is not in the normal, direct course of their activities.



Senator Minchin—All members’ staff have their own photocopying arrangements. The GMSis there to provide training and support for government members, as you know. I am notdirectly aware that members are getting photocopying done there. Are you asserting that thatis the case?

Senator ROBERT RAY—No, I was just surprised that they have made a lot morephotocopies than the paper they have ordered. Even though the dates are not exact, anyextrapolation will show that they are doing a lot more photocopying than paper ordered in.When you consider some of that paper would be for computer printing and fax machines aswell, the gap starts to stretch out. I am wondering whether it is being used as a little printshop.

Senator Minchin—They are there to support 130 coalition members of parliament and thereare only 10 of them.

Senator FAULKNER—Only 10 of them?Senator ROBERT RAY—Have you looked at the seniority level of their classification?Senator Minchin—They are there as part of the government’s staff allocation to support

130 government members.Senator ROBERT RAY—To support 130?Senator Minchin—There are 130 in the coalition.Senator ROBERT RAY—Yes, but there are 41 on the Executive Council. You can cut

them off, if you like.Senator Minchin—All right, but there is the total coalition for them to support. There are

not that many staff when you look across the total breadth of the coalition. You have beenasking questions about this since we came into government. We can bat the political ballaround in terms of what you did in government and what we are doing. We are quite happyto defend what we are doing compared with what you did in government.

Senator ROBERT RAY—Yes, and it is your turn at bat, so I am asking—Senator Minchin—What we did is nothing compared with your government. We are not

embarrassed by having the Government Members Secretariat supporting government members.Senator ROBERT RAY—Minister, it would be impossible to embarrass you. I realise that.

I am asking you as the responsible minister because your predecessor and your representativeat this table have laid down to us, not in very precise terms, general guidelines of what thisgroup will be up to. For instance, it does not do any media monitoring.

Senator Minchin—That is right.Senator ROBERT RAY—I accept that. You have set up another unit to do that. Leaving

that aside, I am asking you if it is doing photocopying outside its normal operations as definedand put down to this committee by ministerial representatives.

Senator Minchin—Obviously, as the Government Members Secretariat it does photocopying.Part of its job is to help members communicate the government’s positions. But the extentto which it goes beyond what is normal is an impossible question to answer. All members—Labor, Liberal, National, Democrat and Green—have photocopying paper entitlements. Staffof the government, like staff of the opposition, have photocopying entitlements.

Senator ROBERT RAY—Going back to the responsibility for paying staff under MOP(S),was any calculation ever done—just generally, across the board, without trying to isolate two



people in the Prime Minister’s office—as to the difference in payout between people resigningand people being terminated?

Mr Peel—There is a formula for termination which is: less than one year, a two-week salaryseverance benefit; one year but less than two years, six weeks salary severance benefit; twoyears but less than three years, eight weeks salary severance benefit; and so on.

Senator ROBERT RAY—So there is a far more generous payout if you are terminated thanif you resign. Is that correct?

Mr Peel—You would not get that additional benefit if you resigned.

Senator ROBERT RAY—So for someone with five to 10 years service it would be a fairlysubstantial amount of money—in five figures?

Mr Peel—Depending on their salary; five years would be 12 weeks pay.

Senator ROBERT RAY—Senator Minchin, you mentioned government staffing and yourallocation. Can you confirm the figures given to us in PM&C what government staffing isnow?

Mr Peel—I have some figures on government staffing that I could provide to you. I thinkPM&C quoted a figure of 311 and that is the figure I have here as at 31 October.

Senator ROBERT RAY—So since the previous time we saw these figures—I cannot quotethe date, I am sorry; I will have to look it up—they have gone up by 15. Am I correct in that?It was 296, I think, the last time.

Mr Peel—That is correct.

Senator ROBERT RAY—Could we have details—and you may have to take this onnotice—of where the extra staff have gone. It might be a little difficult because of variousreshuffles, et cetera. We do know that there are two extra ministers, for instance. Could wehave some detail either now or by way of notice as to where the extra 15 staff have gone?

Mr Peel—Yes, I could have a go at providing that to you now.

Senator ROBERT RAY—Good, that will save resources.

Mr Peel—There are five additional senior adviser positions.

Senator ROBERT RAY—Out of the 15?

Mr Peel—That is right, Senator.

Senator FAULKNER—That is SES level?


Senator FAULKNER—I assume two of those would be in the two new ministers’ offices?


Senator FAULKNER—What about the other three?

Mr Peel—There were three adviser positions upgraded as well.

Senator ROBERT RAY—When you say ‘upgraded’, that does not really imply additionalpositions; just an upgrade.

Mr Peel—Not additional positions, but there is an additional number of people.

Senator ROBERT RAY—So the adviser positions were filled behind them. Is that whatyou are saying?



Mr Peel—No, they were not in those cases. There was not a commensurate number ofadditional adviser positions. In fact, there have been no additions to the adviser positions.

Senator ROBERT RAY—In the totality of staffing we have an extra five senior advisers,but the reality is out of the 15 it is really two extra people and three existing?

Mr Peel—Correct.Senator FAULKNER—But you are saying beyond that there are three fewer advisers, aren’t

you?Mr Peel—That is correct.Senator ROBERT RAY—Where did those three senior advisers go to? On whose staff did

they get the upgrade?Mr Peel—Senator Hill, the Prime Minister and the Treasurer.Senator ROBERT RAY—Could you tell us how many staff Senator Hill is allocated, less

electorate staff?Mr Peel—I would have to take that on notice.Senator ROBERT RAY—I think we know the PM’s and the Treasurer’s. We interrupted

you when you got to senior adviser level.Mr Peel—Two media advisers for new ministers.Senator ROBERT RAY—These are Canberra-based ones; this is not baby aNiMaLS?Mr Peel—For new ministers, yes.Senator Minchin—Press secretaries to ministers.Senator ROBERT RAY—Press secretaries not monitors; thank you.Mr Peel—Two assistant adviser positions, one for Mr Cadman and one for Dr Wooldridge,

and six personal secretary positions—two each for the new ministers, making four—Senator ROBERT RAY—Two?Mr Peel—Yes, one for Mr Cadman and one for Mr Ruddock.Senator FAULKNER—Would Mr Cadman’s responsibilities—?Senator Minchin—He is a parliamentary secretary.Senator FAULKNER—He went from being—?Senator Minchin—Chief whip.Senator FAULKNER—From being Chief Whip to a newly created parliamentary secretary.Senator Minchin—No, I think Mr Thomson and I were elevated from being parliamentary

secretaries to ministers, and Mr Cadman filled one of those parliamentary secretary positionsand—

Senator ROBERT RAY—Is that right? I thought it may have been at the time Mr Prosserleft; I could be wrong.

Senator Minchin—My chronology might be wrong.Mr Peel—My notes here indicate that position was provided to Mr Cadman in July, so that

might correspond.Senator Minchin—Kathy Sullivan became a parliamentary secretary to replace Thomson

and—



Senator ROBERT RAY—You might get a chart done for us of all these changes over thelast year.

Senator Minchin—They were announced, but I do not have them in my head. They wereall in a press statement by the Prime Minister at the time.

Senator ROBERT RAY—That very long one—yes, I remember it.Senator FAULKNER—I think you have to find three more, haven’t you, Mr Peel?Mr Peel—No, I think that adds up to 15.Senator FAULKNER—But three of the five additional SES level positions are upgrades

and the overall staffing establishment has gone up by 15?Mr Peel—I think what we need to do is delete those three upgrades, if you are looking at

the additional number of positions, and take that down to 12. Three of the senior advisers wereupgrades, those previous positions did not—

Senator Minchin—They were not in addition.Senator FAULKNER—But is the total establishment 311 persons?.Senator ROBERT RAY—Just tell us how many assistant advisers again, that might help

us—is it two or four?Mr Peel—An additional two.Senator ROBERT RAY—So two press and two assistant advisers, that is four; three

advisers is seven; two media is nine; and senior advisers is 11 at this stage. Do part-timeconsultants come into this figure?

Mr Peel—No, Senator.Senator ROBERT RAY—They do not?Mr Peel—There are no additions that I have here for consultants.Senator FAULKNER—Can I just go back a step: is the figure of 311 the total

establishment figure, regardless of the changes that might have occurred?Mr Peel—The number of positions as at 31 October are 311.Senator FAULKNER—Does that include unfilled positions?Mr Peel—Some of those positions would be unfilled, but I do not have the number of

unfilled positions in front of me.Senator ROBERT RAY—I really think you had better take a question on notice here. It

is getting a bit confused. I think it would be much easier if you just answered the question:could you show us by way of the break-up of the 311 exactly where they are all there. Youhave done that in the past, so I know you can do it.

Mr Peel—We can certainly do that.Senator ROBERT RAY—It might be easier to do it that way and not be confused by these

upgrades of senior advisers, which can be a bit distorting in the argument.Mr Peel—Okay.Senator ROBERT RAY—When you mention the upgrade of the three senior advisers, let

us say since 1 January this year, have many government staff positions been upgraded in thattime?

Mr Peel—I do not have any figures in front of me on that—



Senator ROBERT RAY—No, that is not the question.Mr Peel—But there have been a number of upgrades.Senator ROBERT RAY—Can we get someone who has been more intimately involved

at the table on this—Mr Gavin or someone like that?Mr Gavin —First of all, the consultant is included.Senator ROBERT RAY—In the 311—that is good, we thought he might have been. This

is the newly appointed one?Mr Gavin —No, there are two part-time consultants that, combined, work fewer than 52

weeks a year and therefore it is counted as one position.Senator FAULKNER—But I think what you are confirming, Mr Gavin, is that the figure

of 311 includes all consultants, including part-time consultants, as an aggregate of the totalstaffing establishment. This is an important figure for the opposition, obviously, because thereare consequences in terms of opposition staffing, as I am sure everyone appreciates. That iswhy I want to be clear on it.

Mr Gavin —Yes, of course. The notion of establishment is used in the Public Service senseso that, if there are unfilled positions, it would still count.

Senator FAULKNER—I am sorry, I was not using that word in a technical sense; I wasusing it as a total staffing figure. That is why I asked Mr Peel the question about any possiblevacancies that might be there. I think we are not talking at cross purposes.

Mr Gavin —No, I am just confirming your understanding.Senator FAULKNER—I think we are on song, as they say; 311 is the figure on which,

as of today, for example, the opposition would base its own staffing entitlements accordingto the formula.

Mr Gavin —I understand.Senator ROBERT RAY—Now to get back to my question, which was basically for the

period from about 1 January this year, on how many occasions and how many times havegovernment staff members in that 311, or the lesser figure of 296, received an upgrade of theirposition?

Mr Gavin —Senator, to be very confident, I would like to take that on notice but, accordingto the documents in front of me, there are three.

Senator ROBERT RAY—I presume those are the three senior advisers.Mr Gavin —Yes. Just to clarify how the numbers work, while there were three advisers

upgraded to senior adviser, in fact in different offices there were another three advisers created.That is how you get to the 15.

Senator FAULKNER—There were three advisers?Mr Gavin —Yes.Senator ROBERT RAY—They were backfilled?Mr Gavin —No.Senator ROBERT RAY—Not necessarily in the same office?Mr Gavin —That is right.Senator ROBERT RAY—That makes sense. With the consultants, you just add the two

up and you get one establishment?



Mr Gavin —Yes.

Senator ROBERT RAY—We have established there have been three upgrades that weknow of, and obviously there may be the odd one or two others. What about salary increasesfor government staffers? Have they occurred at all since 1 January?

Mr Gavin —My memory is that there have been of the order of three of four who havemoved within the band.

Senator FAULKNER—Let us be clear here. There is obviously different terminology here.Senator Ray has asked a question about upgrades and a question about salary increases. I thinkyou have given a similar answer, Mr Gavin. I am not saying it is not correct, but do youperceive a difference there? I interpret those as two different questions.

Mr Gavin —So did I.

Senator FAULKNER—So there has not been an across-the-board salary increase for thetotal staffing establishment?

Mr Gavin —That is right: there has not.

Senator ROBERT RAY—We will now look at the opposition staffing level. When youestablish the government level of staff, the opposition is entitled to 21 per cent of thatestablishment; is that correct?

Mr Peel—Yes, that is correct.

Senator ROBERT RAY—Does anyone here know, or have knowledge of, the originalformula?

Mr Gavin —My understanding is that it was the formula that applied at the change ofgovernment in 1983.

Senator ROBERT RAY—My understanding of that formula was that it was a two-tieredthing in fact—21 per cent of staff and 21 per cent of salary. Does that have resonance withanyone at the table?

Mr Peel—The information I have, Senator, is simply 21 per cent of staff.

Senator ROBERT RAY—With the change of government in 1996, if there was 21 per centstaff, are you aware of what percentage of that came as a percentage in terms of salaryposition?

Mr Peel—No, I am not. I would have to check that for you.

Senator ROBERT RAY—It was a fraction down on 21. It was 20.6.

Mr Peel—I am not aware of that, Senator.

Senator ROBERT RAY—You are not aware that at the moment it might be 17 per cent?

Mr Peel—No, I am not.

Senator ROBERT RAY—Are you aware of that, Minister?

Senator Minchin—I am not. I can have that verified. You are saying that the ratio ofopposition salaries to government salaries has slipped?

Senator ROBERT RAY—Fairly dramatically. It looks like it has, but I am not assertingit. I find it hard to ask you a question because I do not like asking questions that require thegovernment to create documents. I like to get the documents that are there. No-one has everraised this as a possible trend?



Mr Peel—Not with me in my short time there. The only focus that I have had is on the staffnumbers comparison rather than the salaries comparison.

Senator ROBERT RAY—How is that sitting at the moment?Mr Peel—I think the current ratio is 20.25 per cent.Senator FAULKNER—So what is the opposition’s staffing establishment?Mr Peel—The figure I have is that the current establishment is 63 for the opposition.Senator FAULKNER—If it were at 21 per cent, it would be what?Mr Peel—It would be 65.31.Senator FAULKNER—Do we round the 0.31 up or down, Mr Peel. I think I know the

answer to this question.Senator Minchin—Anything below 0.49 normally goes down.Senator ROBERT RAY—No, Minister, 61.95 was rounded down.Senator Minchin—Really?Senator ROBERT RAY—Yes.Senator FAULKNER—But now that you have established a new benchmark—Senator Minchin—I am a generous man.Senator FAULKNER—What you are putting, Minister, without perhaps understanding the

significance of your comment, is not illogical.Senator ROBERT RAY—You have to draw the line somewhere and that is a fair one.Senator FAULKNER—That is reasonable.Senator ROBERT RAY—We miss out this time.Senator Minchin—There is another review, as I gather. The Leader of the Opposition has

been advised that there is an annual review of that. The next one is in March, and it will beadjusted, if necessary, at the time of that review to make sure it stays at 21.

Senator ROBERT RAY—So you are belting up your numbers by 15 now, but we wait tillMarch.

Senator Minchin—I presume we are just following the practice.Senator ROBERT RAY—But you did not often have it belted up by 15 in one set. That

rule is basically there for the one, two, three incremental government staff, not a 15-personsurge, nor does it take into account five people going to senior adviser level, does it?

Senator Minchin—There is a mechanism for an annual review of the ratio.Senator FAULKNER—But when you attract only one opposition staffer to five government

staffers, this obviously has—Senator Minchin—I think we just indicated that, if it were brought back to 21, it would

be two extra staff.Senator FAULKNER—Mr Peel has told us that it is 65.31, and I think what you have said

is reasonable—that is, if it is 65.49 or below, it ought to be rounded down and, if it is 65.51or above, it ought to be rounded up. So this should be rounded down.

Senator Minchin—I am not indicating policy. I am indicating what normally happens inmathematics.

Senator FAULKNER—I think it is now policy if it has been uttered by the minister.



Senator Minchin—I do not make that determination. I was talking in general terms aboutmathematics.

Senator ROBERT RAY—Yes, you do. You do make it.Senator Minchin—I will do it on advice. Let us look at the review and I will discuss it.

The Prime Minister will make the appropriate decisions at the time of that review.Senator ROBERT RAY—I see. Senator Hill seemed to take the view, in PM&C evidence—

I suppose we could find it for you—that this should be addressed earlier than the annualreview in March.

Senator Minchin—Senator Hill indicated that?Senator FAULKNER—He did in the PM&C estimates. I thought you might have read that

evidence.Senator Minchin—I am sorry, but I have not.Senator ROBERT RAY—You do not intend to do anything about this until March?Senator Minchin—As I understand it, that is the current position that has been indicated

to the Leader of the Opposition by the Prime Minister.Senator ROBERT RAY—You will have to take this on notice. I would like a list of all

311 employees by name, classification and salary range, please.Senator Minchin—I will take it on notice.Senator ROBERT RAY—When you do your review in March, I take it that there will be

some cognisance of the fact that, if you put on five senior advisers, the opposition is entitledto one more. You do acknowledge, do you not, that you had 20 more opposition staff thanwe have? You do understand that, do you not?

Senator Minchin—Is that a function of our having fewer government staff than you had?Senator ROBERT RAY—It is a function of your reducing the staff at one level and

shoving the DLOs up at another. That is what it is a function of. We have your ministerscoming into the chamber complaining about the quality of our amendments to legislation, yetyou cut our staff numbers by 20. You do not touch the Democrats, the Greens or theIndependents. You cut ours by 20. You have staff upgrades and reclassifications. We haveto wait until March for a review of those things. You then complain about the quality of ouramendments. I cannot see why, having had a surge of 15, you cannot review that situationright now. If you want to play hard-ball politics, I understand.

Senator Minchin—There is a review in March. I note that you would like to have thatreview occur earlier. My advice is that the Prime Minister has written to the Leader of theOpposition about the matter. I take note of what you are saying.

Senator ROBERT RAY—I return to the question of paying out Mr Morris and MsMcKenna. Does the department ever question the situation where MOP(S) staff issue aresignation and are then sacked? Do you ever question the payout in those circumstances?

Mr Peel—If we had some doubt, we would, yes.Senator ROBERT RAY—Were you aware that Ms McKenna and Mr Morris submitted

resignations on 25 September but were terminated by the Prime Minister on 26 September1997?

Mr Peel—Those documents were tabled in the parliament.Senator ROBERT RAY—I asked whether you are aware. You are aware of that?



Mr Peel—Yes, we are aware.Senator ROBERT RAY—In effect, they had submitted resignations but, by the very act

of the Prime Minister sacking them, they had enhanced payouts.Senator Minchin—The Prime Minister terminated their employment.Senator ROBERT RAY—That is right. But they had already offered their resignation.Senator Minchin—It is a matter for the Prime Minister to terminate them.Senator ROBERT RAY—Maybe you should have kicked in the $30,000 or whatever it

is to make up the difference. If a public servant resigns, they get their normal payout. If theyare sacked, they get an enhanced payout. These people resigned and then they were sacked.

Senator Minchin—I do not know that they resigned, but they were certainly terminated.Senator ROBERT RAY—They issued letters. The letters were tabled in parliament.Senator FAULKNER—I have them here in front of me. Let me quote from Mr Morris’s.

He says, ‘Nevertheless, I feel I should resign. I regret that more than anyone can imagine.’In fact, it was the saddest thing he had had to do in almost two decades in politics.

Senator Minchin—To my understanding, there were offers.Senator ROBERT RAY—Why were they not accepted so that the taxpayer would be saved

that money?Senator Minchin—The Prime Minister, as with any employer, has the prerogative of

terminating the positions of certain staff.Senator ROBERT RAY—Has this happened in any other cases? Have any other prime

ministerial staff been terminated since 11 March 1996? I am not challenging the right of thePrime Minister to terminate staff, by the way.

Senator Minchin—My understanding is that the Prime Minister indicated initially that theywould need to be terminated.

Senator FAULKNER—No. Take Ms McKenna as a case study. On 25 September 1997,she said, ‘I hereby tender my resignation from your staff.’ Mr Howard, on 26 September, said,‘I hereby confirm my decision to terminate your employment forthwith.’ Can you explain that?

Senator Minchin—The Prime Minister thought the appropriate course of action in thecircumstances was to terminate their employment.

Senator ROBERT RAY—Which is his business. It is not a decision that we can directlyquestion here. We are asking, in terms of the administration of the MOP(S) Act, whether theofficers are entitled to take into account before they make the enhanced payout whether theperson has been sacked genuinely or post their resignation. That is my question.

Mr Peel—I thought we answered that earlier. We would take it into account.Senator ROBERT RAY—You would take that into account, but you did not in this case?Mr Peel—In this case, we took some advice as to whether they had resigned or been

terminated. The advice we got was that they were terminated.Senator FAULKNER—Where did you take that advice from, Mr Peel?Mr Peel—We sought legal advice.Senator FAULKNER—Because you were concerned about this issue?Mr Peel—We were concerned only from a technical point of view that we make the right

payment.



Senator FAULKNER—I bet you were! Who did you seek the legal advice from?Mr Peel—From the Chief General Counsel.Senator ROBERT RAY—Mr Burmester?Mr Peel—Correct.Senator ROBERT RAY—Returning to my other question which got lost in the polemic

and rhetoric before, have any other prime ministerial staff been sacked since 11 March? Haveyou had to pay out on the basis of termination rather than resignation under the MOP(S) Act?

Mr Peel—Not to my knowledge.Mr Gavin —I do not think so, but we will take it on notice.Senator ROBERT RAY—Has the department done any costing on the increase of the

ministry? I had the great privilege of going back and rereading the 1987 debate on theMinisters of State Act where the coalition furiously opposed the structure of 30 ministers. Inotice now that you are using that same Ministers of State Act to pay the 30 ministers. I alsonoticed Mr Peter McGauran’s comments at the time that drew attention to the massive costsinvolved in this, including travel allowance. I am wondering whether you did any calculationof the totality of the cost of expanding the ministry by two and retaining or going to 11parliamentary secretaries?

Mr Peel—No, not that I am aware of.Senator ROBERT RAY—What sorts of costs would be involved?Mr Peel—We would have to take that on notice and do a calculation.Senator ROBERT RAY—You pay the additional salaries of ministers, don’t you?Mr Peel—We do.Senator ROBERT RAY—And their increased entitlements to travel allowance. There has

been an increase in staff of about 10 for the two new ministers.Mr Peel—That is correct.Senator ROBERT RAY—And there would be ministerial offices in the various states, home

state possibly—a big move on smaller government to go to 30 ministers!Senator Minchin—The government restored the position to that which we inherited.Senator ROBERT RAY—Having made a big song and dance at the time of 11 March of

how you were going to smaller government.Senator Minchin—It is a much smaller government.Senator ROBERT RAY—In terms of ministers, you made the point then—not you but your

government.Senator Minchin—The whole government has significantly reduced expenditure compared

to the position we inherited and that position remains.Senator ROBERT RAY—At the time you announced the new ministry you said that

smaller was better. It is just the Prime Minister paying people off that has kicked that out to30, isn’t it?

Senator Minchin—The size of government is more appropriately measured by totalexpenditure. You can make your cheap debating point that when we came in we reduced itfrom 30 to 28 and now it is back to 30—fact.



Senator FAULKNER—You are making a saving on the two opposition staffers that weare entitled to under the formula. I suppose that is on the other side of the ledger.

Senator Minchin—At your request.Senator FAULKNER—That is a saving for government.Senator Minchin—I have noted your request that you bring that forward.Senator FAULKNER—What about Senator Hill’s comment? I refer you to the Finance and

Public Administration Legislation CommitteeHansardpage 233. The weight of the evidenceand argument appeared to impress him. He said, ‘Why don’t I have a go at checking theprogress?’ I said, ‘Yes, we would appreciate that. That would be good.’ Senator Hill was farmore reasonable about this than you have been today, I must say, Senator Minchin.

Senator Minchin—I have noted your request.Senator ROBERT RAY—It is obviously why you did not support him in Boothby.Senator FAULKNER—That is a saving for you—the two opposition staffers who are

entitled to it and the fact that the opposition staffing establishment is structured differentlyfrom the government’s, so there are fewer senior positions on a proportional basis.

Senator Minchin—If there were more opposition staffers it would cost more than iscurrently the case. Of course that is true.

Senator FAULKNER—If you paid them at the appropriate level—that is another saving.Senator Minchin—What do you mean by ‘appropriate level’?Senator FAULKNER—On a proportional basis. In other words, the salaries amount to 21

per cent of the salary budget of government staffers, which is the principle.Senator Minchin—I am not aware that is an agreed formula. Was any undertaking given

to you that opposition staff would have the same ratio of salaries?Senator FAULKNER—My understanding—correct me if I am wrong—is that there has

been an acceptance for a long time that that is the case. No-one is going to argue—I am notanyway—that this has to be absolutely precise, obviously. The opposition figure was 65.31off the top my head. No-one is arguing we should go to 66 in that circumstance. Like you,we do think if it were over 65.5 it would be reasonable to round it up. No-one is going toprecisely match the 21 per cent. You could do an awful lot better than you are doing. Youcould get pretty close, I think. But that is a saving again for the government.

Senator ROBERT RAY—And the fact that you have suddenly got five more senior advisersin government.

Senator Minchin—I have noted your request that the review be brought forward. SenatorHill said that he would check progress on that. I am happy to fit into that response.

Senator FAULKNER—Has Senator Hill raised it with you?Senator Minchin—No, he did not raise with it me. As I understand it, at the end of the day,

it is a matter between the Prime Minister and the Leader of the Opposition.Senator ROBERT RAY—That is a big advance on where we were half an hour ago, so

we might move on.Senator Minchin—That would be good. We seem to be going around in circles.

Senator ROBERT RAY—Has the question of supplementation of the staff travel budgetfor the extra week sitting been transmitted to administrative services and been approved?



Mr Peel—We have not seen anything as yet.Senator ROBERT RAY—Why should I be surprised?Senator Minchin—We received a request, I believe, from you.Senator FAULKNER—We received a guarantee from you.Senator Minchin—We received a request from you and, as I understand it, you have been

advised that—Senator FAULKNER—We have been advised that it has been agreed to.Senator Minchin—I am confirming that it has been agreed to.Senator FAULKNER—Yes but, unfortunately, the officers at the table know nothing about

it. That worries us.Senator ROBERT RAY—This always happens.Senator Minchin—My understanding is that it has been agreed to in principle, but we are

wanting to ensure the absolute commitment on your part to the extra sitting.Senator FAULKNER—Come off it! The thing has gone through the parliament, as you

know. You are well aware of the fact that you have agreement around the Senate chamber.Certainly the opposition has made it absolutely clear we are happy to have the extra week ofsitting. We want the government to bring the Wik bill on. I would hope you, as the responsibleminister, would want that to occur and we are expecting it to occur at 12.30 p.m. Monday.

Senator Minchin—That is entirely in your hands as to the debate of other bills.Senator ROBERT RAY—Is it? But your Prime Minister demands we bring this on. He

accuses us of not bringing it on.Senator FAULKNER—You determine the legislative program. You know that.Senator Minchin—We have told you that once all the other bills are out of the way we can

start on native title. So the sooner we finish with the other the sooner we get to native title.You asked for the supplementation of the travel budget and that has been agreed to. If all thei’s have not been dotted and all the t’s not crossed then—

Senator ROBERT RAY—Minister, we are not having a go at you.Senator Minchin—I do not understand why you are raising this.Senator ROBERT RAY—The reason is that every time there have been extended sitting

weeks—and you have been given a lot of extra weeks and a lot of extra time since you havecome into government—

Senator Minchin—We need it because of the length of time it takes to debate bills.Senator ROBERT RAY—You have been given it.Senator Minchin—Sure.Senator ROBERT RAY—Usually that puts extra pressure on people who have to have staff

here. Your managers inevitably agree to lift the requirement to cover that. But it never seemsto get across to the poor officials at the table who on one occasion had to ring me to find outwhich weeks were supplemented and which were not. All I am asking you to do is set a newprecedent. You do not have any form on this. When this is agreed to, transmit it to thedepartment and then we can forget about it. That is all we are saying.

Senator Minchin—Sure.



Senator FAULKNER—It does have an impact on senators, staff and personal arrangementsthat people make.

Senator Minchin—You simply want departmental confirmation. I would be happy toprogress that.

Senator ROBERT RAY—Just so the communication goes across in future.Senator FAULKNER—We want the joint to work smoothly.Senator ROBERT RAY—Have we an updated list of the six additional media advisers who

are allocated out mostly to junior ministers? Have you got a list of which ministers and whothe media advisers are? You will find that there will be one in each state and home based;that is your hint.

Mr Peel—There is a media adviser in Melbourne.Senator ROBERT RAY—Who is that?Mr Peel—Carmel Christensen.Senator ROBERT RAY—I will come back to that one.Mr Peel—In Adelaide there is Christian Kerr.Senator ROBERT RAY—The first one is attached to Mr Reith’s staff?Mr Peel—Yes.Senator ROBERT RAY—Is that person occupying the Treasury Place somewhere?Mr Peel—Yes, in a ministerial office in Melbourne.Senator ROBERT RAY—The second one was in Adelaide, but in whose office?Mr Peel—In Senator Vanstone’s ministerial office in Adelaide.Senator ROBERT RAY—She is a junior minister.Mr Peel—Sydney is vacant.Senator ROBERT RAY—And that position was attached to Mr Ruddock?Mr Peel—Yes.Senator ROBERT RAY—Is it still in his establishment?Mr Peel—Yes. In Brisbane attached to Senator Parer is Peter Kaye.Senator FAULKNER—We know all about him, thanks to Senator Parer, I might say.Mr Peel—He is in the ministerial office in Brisbane. In Perth there is Stuart Joynt who

is attached to the Attorney-General’s office and is in the ministerial annexe.Senator ROBERT RAY—So a cabinet minister has that adviser.Mr Peel—In Launceston there is Simon Elderidge who is attached to Warwick Smith’s

ministerial office.Senator FAULKNER—He would have a lot of monitoring to do there just on Mr Smith’s

activities alone.Mr Peel—That is at 31 October.

Senator ROBERT RAY—When Mr Kennett launched his jihad on Mr Ian Hanke allegingthat he was monitoring everything Mr Kennett said and rushing it up to Canberra he wasbasically out of touch. Mr Hanke has been out of that job for some time. He has moved upto the senior media adviser’s job, has he not?



Senator Minchin—Are you asking where Mr Hanke works?Senator ROBERT RAY—It was about two weeks ago that the Premier of Victoria launched

a jihad against Mr Ian Hanke. He sent him a cheerio, alleged that he was part of federalgovernment media monitoring and alleged he took down every word he said and rushed itstraight through to ministers in Canberra. Is it not a fact that Mr Ian Hanke has left that joband gone on to another one with Mr Reith? It is not his job any more to do that?

Senator Minchin—Whatever his previous job was, as I understand it he now works for MrReith in Canberra.

Senator ROBERT RAY—As a normal press secretary.Senator Minchin—As a media adviser.Senator ROBERT RAY—Not as a monitorer. So Mr Kennett has it wrong, has he not?Senator Minchin—I am not going to comment on what Mr Kennett says every day of the

week.Senator ROBERT RAY—Even though you know what he says every day of the week.Senator Minchin—I do not know what he says every day of the week. All I know is that

he supports the Native Title Bill, for which I am very grateful. I did hear him say that.Senator FAULKNER—You have found one aspect of federal government policy that he

endorses. You got his support on something. That must be a real relief. I bet you weresearching for a long time.

Senator Minchin—He also strongly supports the proposition that we reform the tax system.Incredibly the Labor Party does not.

Senator FAULKNER—You found two.Senator Minchin—I could keep going if you want to be here all afternoon.Senator ROBERT RAY—He has probably suggested you give your spouse a government

credit card as well.Senator Minchin—We do not have government credit cards.Senator ROBERT RAY—You have a bit more principle, haven’t you.Mr Peel—Could I make a correction. I have just been advised that yesterday the media

adviser that was formally attached to Senator Vanstone’s office is now attached to MrDowner’s office, but I do not have the name of that person.

Senator Minchin—So three out of six are cabinet. You were making some reference tojunior ministers.

Senator ROBERT RAY—But it does not help with what they are doing. Senator Parer putthat on the record.

Senator Minchin—You have asked questions at previous estimates about that. Given thehistory of your government, we have no embarrassment about the operation of those people.

Senator ROBERT RAY—We announced what we were doing. You hid yours. There wasno announcement at all. There are six extra media officers dotted across each of the six stateshidden away in the figures. When your government was first asked we got weasel words. Itwas only when Senator Parer came down and fessed up that we actually got the story. We donot mind you monitoring media. We could not care less, but do not be sneaky and hide it. Youget caught every time.



Senator FAULKNER—Can I ask about these particular media liaison officers? Is that theircorrect title? What should I call them?

Mr Peel—Media advisers.Senator FAULKNER—Has any extra equipment, since we last addressed this issue, been

supplied for these six?Mr Peel—Any equipment provided to them would be by their home department, so we do

not have that information. You would have to address it to each individual minister.Senator FAULKNER—You are certainly not aware of extra support supplied by MAPS

to these six?Mr Peel—No.Senator ROBERT RAY—Can I go to the annual report just briefly. On page 84, the third

dot point reads:Examining options for Internet provision in electorate offices and related possible enhancement to thecommunications network managed by the division.

I would be misleading if I told you I was excited about all this, but some of my colleaguesare.

Mr Peel—I understand that.Senator ROBERT RAY—Can you give us a progress report?Mr Smail —The provision of Internet access for electorate offices has not been funded by

the government yet. As you are probably aware, there is the provision of Internet browsingwithin the parliament, but that has not been extended to electorate offices. Internet e-mail willbe extended to electorate offices but not browsing.

Senator ROBERT RAY—Can’t you do it in reverse?Mr Smail —We had a consultant look at the whole prospect of the Internet browsing

provision in electorate offices earlier in the year and it was his suggestion that there could besavings made if we examined the totality of communications costs to electorate offices andthere might be enough savings to provide Internet. We have had a second consultant, a moretechnical consultant, look at that and their report is due within the next few days. When wehave got that, we will be able to put a proposal to government about whether it can beprovided or not. It is a complex matter of technology as well.

Mr Peel—Just to add to that, we are actually trialling the Internet access in a number ofelectorate offices at the moment.

Senator ROBERT RAY—Which ones?Mr Peel—Mr Dargavel, Ms Kelly, Senator Lundy, Mr Nairn, Senator Payne and Mr Price.Senator ROBERT RAY—All close in this circle, so they can be supervised. That is not

a bad idea actually.Senator Minchin—Very bipartisan.

[5.17 p.m.]

Program 4—Corporate ServicesSenator FAULKNER—I notice Mr Ash back at the table. I assume he has kindly come

back to assist us with those questions in relation to the Government Members Secretariat. Quiteproperly, Mr Peel indicated some of the issues fell more within program 4 than program 6.



Senator Minchin—You wanted that information about whether additional equipment—

Senator FAULKNER—I just ask you, Minister, whether it would suit you if we revisitedthat now. I assume Mr Ash has come back just for that. What we are trying to establish is thedetails in relation to the refurbishment of the Government Members Secretariat. We have heardwhat the costs of refurbishment borne by MAPS have been. I would be interested in hearingfrom you, Mr Ash, information in relation to that. The figure Mr Peel provided was $39,600-odd—

Mr Peel—It was $39,960.

Senator FAULKNER—Nearly $40,000 for that. Thank you again. Mr Ash, were there othercosts borne by your division in relation to what went on downstairs? In other words, someof the issues were further equipment, be it hardware, software and the like. We just were notclear on that.

Mr Ash —As of today, I am not aware of any other equipment that has been purchased butI can confirm that. An advice that I was provided for last Thursday, as this is an area that wastransferred into my area only a week or so ago, is that there may be some minor costs relatingto rearranging of existing work stations in the area immediately adjacent to where the fit-outworks were undertaken. Those minor works had not been completed as of last Thursday. Itwas just effectively moving desks around a bit to fit in the area immediately adjacent.

Senator FAULKNER—Is that done by the same contractor who did the refurbishment?

Mr Ash —I do not know. I would have to confirm that.

Senator FAULKNER—Do you know what the parameters of that are, Mr Peel?

Mr Peel—The parameters?

Senator FAULKNER—I am just trying to establish whether the work that you contractedfor also involved the work that Mr Ash is speaking about in relation to the rejigging ofworkstations.

Mr Peel—Perhaps I should clarify first that MAPS has not paid for any of the work. Allof the work is paid for under program 4. I mentioned earlier that I had some information aboutit but, as it was not our responsibility, I did not have a complete picture. My understandingis that the total cost of the fit-out is $39,960 and I think Mr Ash is suggesting there may besome further minor adjustments to workstations over and above that figure.

Mr Ash —That is correct.

Senator FAULKNER—But there is no new equipment involved here?

Mr Ash —Not that I am aware of.

Senator FAULKNER—Does it go to cabling, et cetera? Would that be a matter—if therewas new cabling, for example—that you would have to deal with? You would have to do itin association with Joint House, one would assume.

Mr Ash —That would have been included with that $39,960. If there was any more withthat minor movement of desks, I would be very surprised. I can confirm that.

Senator FAULKNER—What we are talking to, in terms of this refurbishment, is limitedto that work. Perhaps there is a small amount on top of nearly $40,000. Would you be ableto give us some detail about that? You can take it on notice.

Mr Ash —I will take it on notice.



Senator FAULKNER—Perhaps you could break down the $39,900 into some broadcategories of what was involved in that work. We probably did not need to drag you over forthat, Mr Ash. I appreciate you coming back. Can you confirm the staffing level is still thesame, Mr Peel?

Mr Peel—Yes. There are 10 positions; one is currently vacant, so there are nine staff.Senator ROBERT RAY—One in Sydney and one in Adelaide?Mr Peel—Yes, one in Adelaide and one in Sydney.

[5.23 p.m.]

Program 7—Ministerial and parliamentary servicesSenator ROBERT RAY—On a different subject, Senator Minchin, you sent a letter out

on 5 November 1997 to all senators and members about the use of short-term self-drive carsin Canberra in which, very sensibly, you say that these are the guidelines for future use. Therewas often discussion in this committee as to precisely the definition, so I commend you forsending out the guidelines. One aspect of it does not sit well with my reading of theRemuneration Tribunal and it goes this way: if you are entitled to a self-drive car it can onlybe in substitution for a Commonwealth car.

Senator Minchin—That is right.Senator ROBERT RAY—The Remuneration Tribunal says you are entitled to a

Commonwealth car under these conditions if you are in a city on parliamentary business,which has always been taken to mean if you are on a committee in Brisbane you are entitledto be driven in a car while you are there—not in your home city. This seems to take thedefinition a lot further. It says that the only time you are entitled in that city is when you meetsome sort of description, not properly defined, of ‘parliamentary business’. That means that,for instance, if someone in Canberra wanted to slip out to mass, they could not do it. Hereinlies the definitional problem, which I think is a different interpretation from what was theintention of the Remuneration Tribunal. We have encouraged you to make procedural rules,and this is almost equivalent to one. I hesitate to dispute procedural rules, but I worry aboutthe consequences of interpretation.

Senator Minchin—I appreciate that. Senator Margetts was asking questions along similarlines. The drift of her questioning was whether the Remuneration Tribunal, in setting the TA,was taking account of the cost of transport that could not be directly related to parliamentarybusiness, was therefore not within the Comcar entitlement and whether the TA was meant toallow for the cost of taxis or whatever for non-parliamentary business transport. That was areasonable inquiry and I suggested she might address that to the Remuneration Tribunal. Youknow the reason that that note of 5 November went out is that there have been cases of clearabuse of the weekend situation.

I share with you the concern about exactly what parliamentary business means. I do not thinkany of us would want to see any member of parliament who is legitimately using transportwithin Canberra being caught. We have asked the Remuneration Tribunal to clarify what theymean by ‘parliamentary business’. With a without prejudice comment, if it was the case thatthey came back with what they believed to be the interpretation of parliamentary businesswhich, there was a view, was completely unrealistic, it would then be open to government,opposition and members of parliament to put to the Remuneration Tribunal, as you weresuggesting before, a proposition that transport entitlement have procedural rules attached toit which reflected reality.



Senator ROBERT RAY—My problem here is not a definition of parliamentary business.I agree that ‘parliamentary’, ‘party’ and ‘ministerial’ all have to be properly defined. It is thepotential misinterpretation of the Remuneration Tribunal that says you are entitled to a carif you are in a city on parliamentary business; that is, if you are in a city on parliamentarybusiness rather than on parliamentary business in a city. That distinction, if you extend it toall the rest of traditional use, totally changes the definition and, I think, is a misinterpretationof the Remuneration Tribunal. It is possible, however, for you to say that this does not haveto flow on to all other transport, and you have made these procedural rules in this case. Asyou say, there has been abuse of it and you want to clamp down on it and we endorse that.I do not think we will resolve it here but I flag it as an issue, not just for me. A lot of concernhas come to me.

Senator Minchin—Sure. I appreciate that and that is why we have sought clarification fromthe tribunal. We will take appropriate action when we get that advice.

Senator ROBERT RAY—Only one colleague has asked this question; John will be ableto guess who. You eventually remit the money to pay for fares for official delegations thatgo overseas. It is DAS that pays for those. Traditionally, that has been calculated on the basisof a Qantas first-class fare, let us say to Zurich or Frankfurt. There has always been anopportunity for members of parliament to downgrade and take their spouse with them. It wassuggested to me that what may well happen now, especially now Jetset has got the contractfor both, is that, instead of going for the Qantas fare, they will shop around and maybe takea Philippine airlines fare and that will be used as the basis for the formula in the future. Cananyone assist me with whether that is going to happen?

Mr Smail —My understanding is that when Jetset is asked for the quote they give thearound-the-world published fare of Qantas. Is that what you meant?

Senator ROBERT RAY—No, it is not; that is for members’ study entitlement. Move offthat and on to delegations. That is all correct weight; that is no problem. It is when you maybe appointed by the parliament, with the concurrence of your party, to go to Frankfurt for aconference. It has always been done on the basis of Qantas to Frankfurt as the fare entitlement;then, if you wish to commute it to take a spouse or go business class or any other thing, youcan.

Mr Smail —Even if you do not fly Qantas?

Senator ROBERT RAY—Yes. But what I am asking is whether that figure will becalculated not on the Qantas fare in future but on the cheapest fare, which means you haveto go to Manila and stay a day and meet all these other conditions or whether it will justremain at the Qantas fare there and back.

Mr Smail —We have had a couple of conversations—and will have another conversationI think tomorrow—with the Parliamentary Relations Office to try to sort out a way in whichthis will operate.

Senator ROBERT RAY—So it is under way?

Mr Smail —It is under way.

Senator ROBERT RAY—Okay, fine. Minister, can I ask how much the government isgoing to be bound by the recommendations—it is only a report to government—of the Remtribunal on travel allowance, and how much scope they would have, either by themselves orin cooperation with the opposition and other parties, to come to a solution to some of theproblems in terms of substantiation or a Canberra allowance, et cetera?



Senator Minchin—My understanding of the process—I am not sure what yourunderstanding is—is that, as you know, the report has been received and has been copied in-confidence to the Leader of the Opposition. The government is currently considering it; therewill be a process of consultation and, ultimately, a government submission to the tribunal anda final determination by the tribunal.

Senator ROBERT RAY—So the next step is a government submission to the tribunal?

Senator Minchin—That is right. They give their advice on what they recommend, thegovernment considers that, consults and then a submission is made to the tribunal for thetribunal to make a final determination.

Senator FAULKNER—We are at the stage of that submission being developed bygovernment?

Senator Minchin—That is right.

Senator FAULKNER—The second last stage?

Senator Minchin—There will be a process of consultation, and then a submission madeto the tribunal by the government.

Senator ROBERT RAY—I read about it in the papers the other day, although it may notbe an accurate version of the reaction of certain government backbenchers when it was flaggedwith them. So that process of consultation is under way in government?

Senator Minchin—That is correct.

Senator ROBERT RAY—And you think you might even go a further step and consult withthe opposition?

Senator Minchin—I understand that will take place, yes.

Senator ROBERT RAY—That is a good idea.

Senator Minchin—I believe it should.

Senator FAULKNER—What is the time line?

Senator Minchin—I think we are trying to complete this by mid-December.

Senator FAULKNER—It is true, isn’t it, that the Remuneration Tribunal effectively cannotmake determinations on a range of other matters that are before it until this issue, whichobviously is a very important one, is determined? Would that be a correct understanding?

Senator Minchin—Yes. They are anxious for the matter to be completed, as is thegovernment. Consultation is appropriate, but we are operating as quickly as we can. Myunderstanding is that the desire is to have this settled by Christmas because there is that otherreview they want to get on with.

Senator FAULKNER—One assumes the other review could well have been effectivelycarried out; it is just that the determinations cannot be made by the Remuneration Tribunaluntil they have made determinations on this issue.

Senator Minchin—That is correct. We share with you the interest in having the mattersettled as quickly as we can, but we want to consult both internally ourselves and with you.

Senator ROBERT RAY—Our priorities are two months ahead of yours, though, and wedo not want to get stranded.

Senator Minchin—I see, of course. As I have said, we want it completed by Christmas.



Senator ROBERT RAY—Are you going to put to the tribunal this perennial problem—which I think even you got stung with a bit—where we have a convention of not claimingtravel allowance post policy speech, but it is only a convention; it is nothing to do with theRemuneration Tribunal. Are we going to regularise that?

Senator Minchin—I think Mr Jull did.Mr Peel—Yes, Senator. That issue was put to the Remuneration Tribunal by the former

minister, and it is one of the issues on its plate to deal with.Senator ROBERT RAY—But it is going to be resolved?Mr Peel—Yes.Senator ROBERT RAY—That is a good idea.Senator Minchin—Before the next election.Senator FAULKNER—In the second set of determinations.Senator Minchin—Not in this one.Senator FAULKNER—So mid-December is your best guess in relation to timing?Senator Minchin—Yes.Senator FAULKNER—So we are clear: there are not two submissions from government.

You have correctly said the opposition has been provided with a copy of the RemunerationTribunal report that has gone to the Prime Minister; you provided that in-confidence. That istrue. There will be a government response to that and then the Remuneration Tribunal willmake determinations?

Senator Minchin—That is correct.Senator FAULKNER—So there are effectively only two stages to go?Senator Minchin—That is correct.Senator FAULKNER—A further submission from government—or a response is perhaps

a better way of putting it—and then determinations brought down by the tribunal?Senator Minchin—That is right.Senator FAULKNER—Obviously the timing issues in part will be governed by the capacity

of your own operation—the government itself—to be able to get its response or finalsubmission before the tribunal.

Senator Minchin—Yes, that is advanced, as I say. We understand that there is acommitment to consult with the opposition prior to the government submission being made,but we are certainly well advanced in terms of the government’s own thinking on the matter.

Senator ROBERT RAY—I want to ask a question on a different subject. It may have tobe taken on notice. How many FOI requests—I know I cannot ask the nature of them, becausethat remains private—has MAPS had since 1 January this year?

Mr Peel—I would have to take that on notice.Senator ROBERT RAY—Yes, okay. In terms of chartering, has there been a clear

distinction made within the department between ministerial charter and electorate charter whenministers have an electorate that gives them a charter entitlement to cars and light aircraft, yetthey also have a ministerial entitlement? Has there been a clear distinction made in billing orhas it been blurred?

Mr Peel—Mr Gavin might be able to answer that.



Mr Gavin —It has been blurred over a number of years.Senator ROBERT RAY—I think so. Are some steps going to be taken to make sure that

if someone is on electorate business it is taken off their charter allowance and if they are onministerial business it is billed to DAS or their department or whatever?

Mr Gavin —We have indicated to some ministers that as long as they tell us we can recordit that way.

Senator ROBERT RAY—What I am really asking you is: can we be confident in futurethat this will be disentangled?

Mr Peel—I think the idea is as long as we are advised of the nature of the travel. If it wasfor ministerial travel, then we would be able to disaggregate that from the electorate. But itrelies on us being advised—

Senator ROBERT RAY—Yes, but it must affect the monthly reports—Mr Peel—Yes.Senator ROBERT RAY—and it must also affect that previous annual report you put in

to parliament. We do not really, at that level, need to see their electorate travel, only theirministerial travel.

Mr Peel—It does rely on the particular minister letting us know.Senator ROBERT RAY—I do not know that that is good enough.Mr Gavin —When I joined the area—which is only a couple of years ago, but it was during

the previous government, of course—it was put forward that ministers were ministers 24 hoursa day and that therefore it was rather sensible to have this kind of blurring, as you call it.

Senator ROBERT RAY—I am not sure that that is even fair to the ministers. They couldappear to have a very high ministerial charter bill when they sometimes have very largeelectorates and it is electorate travel—that is all. I have no sensitivity that the previousgovernment may have erred in some administrative or ruling area. Life moves on. We improve,we hope. I do not know if you follow that, Minister. I am just trying to see whether we canget a distinction between electorate based charter use and ministerial when they happen to bein big electorates. It does not all run in favour of ministers. Sometimes at the moment thereporting runs against ministers’ interests. We will leave that go for a moment.

Senator Minchin—Okay.Senator FAULKNER—In relation to the Rem Tribunal, just so I am clear: did the former

Department of Administrative Services or the Department of Finance or the new DoFA—Iam just not sure of the time lines here—make submissions to the tribunal on the matters thatwere referred to the tribunal by the Prime Minister?

Mr Peel—Yes, we did—as DoFA, not as DAS.Senator FAULKNER—So there was the one submission as—Mr Peel—We actually went twice to speak to and to submit to the Remuneration Tribunal.Senator FAULKNER—I would expect you would, but that was done as—Mr Peel—As a departmental submission based on our experience with the system.Senator FAULKNER—I see. Could I try to establish what Mr Cousins’s role is and what

involvement you have with Mr Cousins, if any, in terms of this new function that he isperforming in the Prime Minister’s office which goes to improving the media performances



of the ministry? I must say he deserves a George Cross for taking this one on, I think. Whatcan you tell me about that, Mr Peel, if anything?

Mr Peel—Not very much, except that Mr Cousins has been engaged as a consultant by thePrime Minister to advise and assist in relation to communication strategies.

Senator FAULKNER—I see. Is this consultancy included in the staffing establishment of300?

Mr Peel—Yes, it is the portion of the one that we referred to before.Senator ROBERT RAY—Has there ever been a figure released on payment of the

consultant—how much is being paid?Mr Peel—No. We do have to table information in relation to consultants, but it does not

include the actual amount of money that they are paid.Senator ROBERT RAY—So we do not know. It is not listed in here in the program

statements?Mr Peel—Not as an individual amount, no.Senator ROBERT RAY—I will be crass—I will ask how much.Mr Peel—Can I take it on notice?Senator ROBERT RAY—Yes, I think you’d better—Mr Peel—I think I would need to think about it.Senator ROBERT RAY—then you can see whether you can release it or not.Mr Peel—Yes, that is right.Senator FAULKNER—Did it go out to tender, this consultancy?Mr Peel—I am not aware.Senator Minchin—You would have to ask Prime Minister and Cabinet—Senator ROBERT RAY—No, you paid under the MOP(S) Act.Senator FAULKNER—You are fronting up with the dough, I think, Senator Minchin.Senator Minchin—Yes, but the Prime Minister made the engagement. So, in terms of how

the engagement was made, it is appropriate that you pursue that matter with PM&C.Senator FAULKNER—So you do not have a view on that issue?Senator Minchin—I did not make the appointment. That was a prime ministerial

appointment. This division pays the salary.Senator FAULKNER—You were not involved in interviewing Mr Cousins?Senator Minchin—Not at all.Senator ROBERT RAY—I am sure it was an outrageous beat-up in the media that one

of Mr Cousins’s jobs was to require you ministers to send him tapes of your mediaperformance for evaluation. He has never done that to you, surely?

Senator Minchin—That is not my understanding of his role, nor have I been asked toprovide videotapes of any of my media performances.

Senator ROBERT RAY—It seemed to be a very well-sourced story.Senator Minchin—My understanding of the role is, as has been described by Mr Peel, that

it is to advise the Prime Minister on communication strategies.



Senator ROBERT RAY—It seems to me that the story was put out by someone whoseterritory was infringed on here. That seemed to be the source of it.

Senator Minchin—I do not believe everything I read in the papers, and I am sure you don’teither.

Senator ROBERT RAY—No, not at all—not even when it comes from a journalist whois regarded as the Prime Minister’s mouthpiece; not at all!

Senator FAULKNER—I read in theAgenewspaper—I don’t know if we are talking aboutthe same article, but I suspect we might be.

Senator ROBERT RAY—I could not possibly comment.Senator FAULKNER—The article said, ‘the media trainers for the politicians have tried

to ram home the lessons to their apprentices, but the decision by the Prime Minister’s officethis week to require all ministers to submit audio and visual tapes of their media performancesto a new consultant for a critique shows that a lot more work needs to be done’. Can youconfirm that that is not true?

Senator Minchin—I have received no request, nor do I know of any other minister havingreceived such a request.

Senator FAULKNER—I was interested in who would be paying for the audio and visualtapes, of course.

Senator Minchin—As I have said, I am not aware of any such request being made to anyminister, and certainly not to me.

Senator ROBERT RAY—This is a really badly sourced beat-up then, isn’t it?Senator Minchin—It sounds like it.Senator ROBERT RAY—It is disgraceful journalism, isn’t it, Minister?Senator Minchin—I am not going to provide a running commentary on Australian

journalism at this estimates hearing.Senator ROBERT RAY—I thought you might have one dip, because this is so outrageous.Senator Minchin—You will have to tell me who wrote it before I say anything.Senator FAULKNER—Niki Savva wrote the piece that I am quoting from. It is called, ‘The

touchy feely cardboard cutouts.’ Ms Savva said, ‘The directive has created some angst ingovernment ranks for several reasons.’ Knowing how close you are to most of the angst ingovernment ranks, Senator Minchin, I thought you would be able to confirm that.

Senator Minchin—I know of no basis on which that story could be regarded as an accuratereflection of reality.

Senator FAULKNER—And also given your interest in advertising campaigns—given theperceived failure of the advertising campaigns he ran for the Liberals in the 1990 and 1993elections, the angst is that he got the job. We hope he is just as successful as he was on thoseoccasions.

Senator ROBERT RAY—I think we have made the point.Senator FAULKNER—Yes. Is Mr Michael Schildberger doing any work that you are aware

of?

Senator Minchin—Not that I am aware of.Senator ROBERT RAY—No. He runs his own consultancy.



Senator Minchin—Are you asking whether he has been engaged by the government?Senator FAULKNER—Yes.Senator Minchin—Not that I am aware of.Senator FAULKNER—I was just checking, as this was mentioned in the article, too. I read

a lot of things in theAgeand like to check them out.Senator ROBERT RAY—Can you recall the last time you answered a question on either

refurbishment or moving into new electorate offices? You gave us a fairly good list, I think.MAPS gave us a pretty good list of which members and senators had moved—I am talkingabout electorate offices—or had had their offices upgraded. Can you recall that?

Mr Gavin —Yes.Senator ROBERT RAY—Do you have an approximate date so that it will help with my

next question.Mr Gavin —I think it was about a year ago.Senator ROBERT RAY—Could you find that date, rule a line under it and provide us with

a list of who has moved since, what the cost was, what the rent is and who has had their officerefurbished. That is not an urgent one. I do not think it involves too many resources, probablynot as many as the last one. Do you want to take that on notice?

Mr Gavin —Yes.Senator FAULKNER—There were some useful answers on notice provided to Senator

Bishop in terms of guidance and parameters for the establishment of new electorate officeaccommodation and the like. Where is ex-Senator Short’s office located?

Mr Peel—We can find out.Senator FAULKNER—I thought someone might know.Mr Gavin —His former office, or do you mean his overseas office?Senator FAULKNER—No. His former senatorial electorate office.Senator ROBERT RAY—I think it was Brunswick.CHAIR —Brunswick.Senator FAULKNER—Do you know the status of the lease on that office?Mr Peel—We would have to check and take it on notice.Senator FAULKNER—I would appreciate that. Are you aware of any deficiencies in terms

of that particular office?Mr Gavin —There are deficiencies, and we are looking for alternative premises for his

successor.Senator FAULKNER—Senator Synon is currently in ex-Senator Short’s former electorate

office?Mr Gavin —As I understand it, Senator, yes. It is fairly small and there are possibly some

occupational health and safety problems with it because it is a terraced house with a fairlynarrow stair.

Senator FAULKNER—I see. Are you considering renovation or restoration there?Mr Gavin —I understand we are looking at the possibility of a move.Senator FAULKNER—What marginal Labor seat would Senator Synon be going to?



Senator Minchin—Which one are you most likely to lose?Senator FAULKNER—None, the way we are going. Where is she off to?Senator ROBERT RAY—Higgins, probably.Mr Gavin —I do not recall, Senator.Senator FAULKNER—Let me help you. Jagajaga, I think, is the answer to the question.

We are fairly confident.Senator Minchin—Labor senators’ offices are normally strategically located.Senator ROBERT RAY—So they should be—both sides. You actually could serve the

people for once.Senator FAULKNER—It is the consistent application of the guidelines which is the issue

here, Senator Minchin. I think that is an important issue for us all.Senator Minchin—I agree.Senator FAULKNER—So what stage is that process up to?Mr Smail —We will have to take that on notice, Senator.Senator FAULKNER—I see—the usual issues of lease costs and appropriate accommoda-

tion. I assume relocation costs and the like are not matters that would ordinarily concern youin terms of establishing new—

Mr Peel—Those sorts of things would normally be taken into account, Senator, in anyassessment as to whether someone should move offices.

Senator FAULKNER—I see.Mr Peel—And then advice is provided to the minister to make a decision.Senator FAULKNER—I’m sorry?Mr Peel—Then we would provide advice to the minister, who would make the final decision

as to whether there should be a relocation.Senator FAULKNER—Are there any cases of senators’ wishes not being accepted in this

regard over the past 18 months?Mr Peel—There would have been cases over the last number of years. Whether there are

any over the last 18 months I would have to check. Certainly, there are cases where weexamine a range of options and settle on options that were not necessarily the first one putforward by the member or senator.

Senator FAULKNER—Minister, you accept the general principle, do you—I gather fromwhat you were saying earlier—that if a senator determines it is appropriate to locate an officein whatever location he or she may determine and that new office accommodation fitsguidelines, then that is something about which you would not get involved? Is that what youwere saying?

Senator Minchin—The final decision would be based on the advice of the department, andthat advice of course takes account of all the matters that have been referred to, as to whetherit is appropriate for the move to be made.

Senator FAULKNER—But partisan political issues would not come into play, as far asany decision you were going to make was concerned, would it?

Senator Minchin—No, it would not.Senator FAULKNER—I am terribly relieved to hear that.



Senator Minchin—I think it would be very silly to play politics with that sort of matter.Senator ROBERT RAY—It is not good business.Senator Minchin—No, exactly.Senator ROBERT RAY—It is not principle; you would get caught.Senator Minchin—Yes. It is one of those areas that would be far too obvious, so it would

obviously be stupid to act in that way.Senator MACKAY —I have questions on Jetset. Does that require a change of personnel?Mr Peel—Mr Smail is across that, Senator.Senator MACKAY —How many people are currently employed by Jetset, do you know?Mr Smail —In the Parliament House office?Senator MACKAY —Yes.Mr Smail —Twelve.Senator MACKAY —Is there any direct line financial arrangement between Jetset and the

government?Mr Smail —No, Senator.Senator MACKAY —So those 12 staff that are currently employed in Parliament House

are paid by Jetset?Mr Smail —They are.Senator MACKAY —In previous Senate estimates I think the minister provided an estimated

cost saving of $1.5 million as a result of moving to the Jetset contract. Can you just give usa bit of an outline of how we are going with regard to that saving?

Mr Smail —Yes, the $1.5 million estimate was based on the assessment of Jetset’s tender.Like all the tenders it was measured against the 1995-96 expenditure on travel—domestic andinternational—of $23 million. Jetset’s offer in its tender was the best, giving us savings of $1.5million, which is approximately 6.5 per cent.

Senator MACKAY —How were those prospective savings derived?Mr Smail —In two ways. One is that they are required to get discounted, cheaper, better

fares for us. Secondly, by the process in which they operate, the commissions that they earnas a travel agent are in fact remitted to the Commonwealth, and from that the operatingexpenses of the office here, an administrative fee and their management fee are paid. And theCommonwealth keeps the remainder of those commissions.

Senator MACKAY —How much do they remit to the Commonwealth, and how much isremitted back?

Mr Smail —That will depend upon the turnover. But so far, for the first two months, theturnover has been $850,000. We have not actually had any remittance from them, because thatis not due until the end of the first full quarter, which is the end of December.

Senator MACKAY —In terms of the terms of the contract, what is the percentage ofremittance expected to be?

Mr Smail —It is expected to be 6.5 per cent of turnover.

Senator MACKAY —You indicated that they would be shopping around, as it were, fordiscounted cheaper fares. Has that occurred?



Mr Smail —We understand that in many cases they have been able to get better fares up-front—where senators or members or staff members have booked plenty of time in advance,for example. They also get discounts overall on the spend that they have with the airlines. Sothey negotiate particular percentage discounts, for example, with the two major airlines.

Senator MACKAY —I want to pursue the question of these discounted cheaper fares. Interms of personal experience, we have booked quite far in advance and have not noticed adiminution in the cost of the airfares. Could you provide us with instances and the dollaramount—you can take this on notice—where there have in fact been discounted faresnegotiated.

Mr Smail —These are the kinds of fares which are normally available if booked inadvance—the apex type fares, et cetera.

Senator MACKAY —I appreciate that. If they are normal discounted cheaper fares, of whichin fact a number of us were availing ourselves prior to Jetset taking up the contract, whereis the saving in that?

Mr Smail —The saving is further down the chain. With regard to the actual amount paidfor the ticket in the end by Jetset through the settlement process it has with the airlines, anumber of other discounts are taken off, commissions are earned and there are a variety ofdifferent ways in which they get further savings for the Commonwealth.

Senator MACKAY —Can you explain how?Mr Smail —This is all covered in the contract and a lot of it is commercial-in-confidence,

so I might have to be a little vague here and there. The principle is that, as they are a verylarge buyer of tickets from both the major Australian airlines, they get further discounts thanyou or I could get, even on apex tickets, for example.

Senator MACKAY —And how is that realised? Is that additional discount down the line,as you describe it, reflected in what the Commonwealth pays, or does that go to Jetset?

Mr Smail —No, we pay only the Jetset amount.Senator MACKAY —So Jetset is currently shopping around for cheaper fares and that is

what the Commonwealth pays.Mr Smail —Both ends—first with the apex and subsequently with the discounted rate they

get because they are Jetset.Senator MACKAY —I would be interested in taking stage 2 on notice as well, if you

wouldn’t mind, in terms of the more global or aggregate savings that you referred to.Mr Smail —We could give you some information, but we may not be able to give you the

specific percentages that they have negotiated with airlines because that is commercial-in-confidence between them and the airline.

Senator MACKAY —What you could provide, though, is the standard fare and the fareactually paid.

Mr Smail —We could give you some models, if you wish. On specific tickets?Senator MACKAY —Yes.Mr Smail —Certainly.Senator MACKAY —I am not asking for specific senators’ or members’ names. What I am

asking for is sector comparisons—the fare, say, for Canberra-Perth, the standard fare Canberra-Perth, and actual paid fare over the period of the Jetset contract, for everybody.



Mr Peel—We will see what we can provide to you, but I stress, as Mr Smail said earlier,that some of this may be commercial-in-confidence between Jetset and the airlines, so we willhave to be very careful how we provide that to you.

Senator MACKAY —I am curious: why would a direct line comparison of what theCommonwealth actually paid and what the standard fare is be commercial-in-confidence? Thatis what I asked.

Mr Peel—That wouldn’t be, but I understood you were trying to get the other end as well.Senator MACKAY —What do you mean by that?Mr Peel—I thought you were asking about the actual discounts that Jetset gets with the

airlines over and above the difference in the fare rate.Senator MACKAY —That is why I asked Mr Smail the question, because what I understand

the Commonwealth actually pays is what Jetset negotiates.Mr Smail —I believe we will be able to give you that in aggregate. There are components

within it. They have different names. There is a top-up commission, a something commissionand a rebate or something. Those are specifically negotiated with the airlines and areconfidential, but I believe we will be able to provide the aggregate. We will have to discussit with Jetset to get these figures, anyway.

Senator MACKAY —All these various components, though, contribute to the bottom line,don’t they? So I am really after what the bottom line is after all those components are takeninto account, given that I have got an assurance that what the Commonwealth actually paysis the bottom line. So I am not really interested in the rest of it—and a direct line comparisonto full business, economy or whatever is paid. Further in relation to Jetset and the projected$1.5 million savings, I appreciate that Jetset has not been going for that long. What are thesavings to date?

Mr Smail —On the turnover of $850,000 so far for the first two months, at the 6.5 per centrate, that would be a saving of $182,000 or $91,000 a month.

Senator MACKAY —Has that been realised?Mr Smail —We have not yet got the exact reconciliation from them because it is not

required until the end of the first full quarter, which is the end of December.Senator MACKAY —Is it possible to put that on notice for the end of December to get that

next year? I can put it on notice through the normal Senate process, if you like.Mr Smail —We will take that on notice.Senator MACKAY —Can you advise me what it was costing the government with regard

to the previous travel arrangements?Mr Smail —In 1995-96, $23 million was spent. We have not yet got the full figure for 1996-

97.Senator MACKAY —You have not got the figure for 1996-97; will you take that on notice

for me?Mr Smail —Yes.Senator MACKAY —In terms of the contract with Jetset, with regard to the $1.5 million

savings component, what proportion of that was savings realised through the negotiation ofdiscount airfares and the like and the other components that you alluded to earlier? Whatproportion related to staff, for example?



Mr Smail —I am not quite sure I understand the question. It is all from the negotiateddiscounts of Jetset. You mean savings in staff elsewhere?

Senator MACKAY —Yes. The previous Commonwealth service to the service now—a directline comparison.

Mr Smail —As you would be aware, senators, members and staff made their own bookingsdirect with the airlines. We have estimated that we possibly have saved about half a personin the administration of the bill paying, et cetera, in the office.

Senator MACKAY —If Jetset essentially negotiate airfares, the bottom line airfare whichthe Commonwealth then pays, are they absorbing the wages of the additional 12 staffthemselves?

Mr Smail —They are paying those wages out of the commissions they earn as travel agentsbefore they remit the remainder to the Commonwealth as a saving.

Senator MACKAY —So the bottom line that we were talking about before includes a—

Mr Smail —There has been a component for paying the staff taken out already.

Senator MACKAY —What is that?

Mr Smail —It is the cost of the salaries of the staff and the running of the operation inParliament House.

Senator MACKAY —What do you mean ‘has been taken out already’?

Mr Smail —The commissions are accumulated by Jetset. From that the running of the officeis taken out, which includes the staff. Out of it also comes an administration fee and out ofit will come their management fee. The remaining commissions are retained by theCommonwealth.

Senator MACKAY —What proportion of the commission is for running of the office, staff,administration and so on? I am trying to get at what savings there are with regard to theadministration side, given that, by and large, we used to make our own bookings.

Mr Smail —It is not a percentage. There is a budget which has been incorporated into thecontract, but which is commercial-in-confidence. In effect, it is not a charge to theCommonwealth. That amount of money, the staff and the running of the office, is not a chargeto the Commonwealth budget. It is being paid out of the commissions earned.

Senator MACKAY —It is commercial-in-confidence, but it is not commercial-in-confidenceto the extent that what I am attempting to do is find out what, if any, the savings are to theCommonwealth with regard to the administration side. You are saying it is about half a staffperson.

Mr Smail —Half a staff person so far.

Senator MACKAY —In relation to the commission, you are not able, because ofcommercial-in-confidence, to provide me with details of the percentage of the commission?

Mr Smail —Not the way in which the commissions are made up, no.

Senator Minchin—You mean the proportion of the commission which goes to managementfees and administration costs?

Senator MACKAY —Yes.

Mr Smail —It is commercial-in-confidence.



Senator MACKAY —Why is that commercial-in-confidence, Minister? I do not quite followwhy that is commercial-in-confidence. I am not actually asking for the commission in toto;I am asking for the percentage of the commission.

Senator Minchin—You are.Senator MACKAY —No, I am not.Senator Minchin—I am not the expert on what is and what is not commercial-in-confidence.

I must defer to the relevant official.Senator MACKAY —I know that you are not the expert, but you are the determinant in

terms of what the government regards as commercial-in-confidence. I am not asking for—Senator Minchin—No, there is a contractual agreement between the Commonwealth and

Jetset which determines what is commercial-in-confidence. What I am saying is that theresponsibility for that contractual arrangement lies with the official.

Senator MACKAY —I appreciate that. We have had this argument, as you are probablyaware, about what is the definition of commercial-in-confidence at about every estimatescommittee hearing in this place for the last umpteen months. That is why I quite carefullyworded my question to the effect that I am not interested in the commission in toto. What Iam interested in is what percentage of that commission goes to the savings with regard toadministration of staff and so on.

Mr Smail —We could take that on notice and confer with Jetset as to whether they wouldallow some way in which we could make this known.

Senator MACKAY —I will be open about it. Essentially, what I am trying to determine isthe savings proportion—the $1.5 million projected savings and what is actually happening withregard to whether the contractual arrangement with Jetset is in fact saving money. That is whatI am after.

Mr Smail —Because it is being paid out of the commissions which we would not havepreviously got—

Senator MACKAY —But you remit a proportion of the commission.Mr Smail —Yes.Senator MACKAY —The administration side is taken out prior, but then you remit a

proportion of the commission back.Mr Smail —Only as their management fee and there is the administration fee to Jetset, and

the remainder we keep.Senator MACKAY —That is my point.Senator Minchin—But the estimated $1.5 million savings are net of those fees.Senator MACKAY —Yes, but the savings are projected savings.Senator Minchin—It is too early to tell.Senator MACKAY —I appreciate it is too early to tell. That is why I prospectively put a

question on notice for the end of the year. This is a fairly complex situation, but I think youwould probably appreciate where I am coming from with regard to this and the level ofconcern there has been. Do Jetset pay rent?

Mr Smail —They do.Senator MACKAY —They pay rent for that room they have got?



Mr Smail —Yes.Senator MACKAY —How much rent do they pay?Mr Smail —I am not sure.Mr Peel—They pay rent to the Joint House Department. You would need to direct that

question to them.CHAIR —That question was asked previously and the answer is in theHansardrecord.Senator MACKAY —Thank you. I appreciate your assistance there. You indicated that there

has been a reduction of approximately half a staff person as a result of the direct Common-wealth liability from the Jetset contract. Is that half a staff person—and I understand how thesethings operate; I know what you mean by half a staff person—aggregated House ofRepresentatives-Senate or is that half a staff person in the Senate or how is that?

Mr Smail —A total, aggregated.Senator MACKAY —Aggregated. So it is half a staff person for House of Representatives

and Senate. What staffing reductions have there been as a result of the Jetset contract?Mr Smail —Staffing reductions?Senator MACKAY —You said you are saving half a staff person in terms of the aggregate

between Senate and House of Representatives. What do you mean by saving?Mr Smail —Half a person has been dedicated to other work in the office and has been able

to be freed for other work.Senator MACKAY —So are we talking about two people here—one Reps, one Senate—

whose workload has been reduced?Mr Smail —No, these are in our department.Senator MACKAY —Within the department, okay.Mr Smail —Yes, within the department.Senator MACKAY —What about the situation with, for example, the Senate Transport

Office where they previously undertook work with regard to bookings and they are no longerdoing that?

Mr Smail —I understand that there has been some reduction, but I do not know what thathas been, Senator. That is a question for the Senate or the House of Representatives.

Senator MACKAY —That is under a different program. With regard to Jetset and the 12-oddstaff you say are located in Parliament House: do you know how many are rostered on at anygiven time?

Mr Smail —No, Senator, but the contract says that there shall be at least two from 9 to 5on business days and whenever either House is sitting, but it is my understanding that theyare well beyond those numbers.

Senator MACKAY —Nine to five and when the House is sitting. So what was thecontractual obligation outside of 9 to 5?

Mr Smail —That there would be a phone or fax contact. What I understand is actuallyhappening is that they are rostering people 24 hours a day in the Parliament House offices.

Senator MACKAY —Okay, given how we actually travel and how we actually reorganiseourselves, I appreciate that that would be required. So there is essentially a pool of 12 people,I take it?



Mr Smail —Yes.Senator MACKAY —So these presumably are not 12 full-time people employed?Mr Smail —They are full-time employees, but I do not believe all 12 are always there.Senator MACKAY —So there are not 12 permanently located in Parliament House. Do you

know how many people there are in Parliament House, say, during 9 to 5.Mr Smail —No, I would have to take that on notice, Senator.Senator MACKAY —Okay, if you would take that on notice, I would appreciate knowing,

basically, how much time for each person, how many people there are, how long they arethere, and when they are there. We have absolutely ruled out the possibility that theCommonwealth is providing any other than the commission assistance that you referred to,any assistance with regard to the employment of those staff? We have ruled that outcompletely?

Mr Smail —Yes.Senator MACKAY —Okay. With regard to the consumer forum at which a number of quite

welcome changes were made on Jetset, the minister sent a letter out to all of us which saidthat travellers can now change their flight, night-time or day, and all transfers and other relatedmatters without reference to Jetset so long as the destination is not changed. Why was thisrequirement necessary? Was there a shortfall in the adequacy of staffing of Jetset that madethis necessary?

Mr Smail —There were a number of issues: one was that often, as you are no doubt wellaware, the change must be made very quickly at the last moment if, for example, you arriveat an airport and want to take an earlier or slightly later flight. There is the problem of findinga phone if your mobile is not working—those sorts of questions arose.

It was difficult to find the time sometimes to ring Jetset to make the change. Basically, itwas a matter of the flexibility of being able to make the change at the last minute. Also, asa result of people ringing in to make changes with Jetset, there were more calls being madeto Jetset than had been anticipated so there was some increasing delay on getting through toJetset.

Senator MACKAY —So did that mean that, given that they had a pool of 12 staff toallocate, if you like, there was a cost impost to Jetset in terms of transferring additional staffto deal with us ringing up with half an hour’s notice changing flights?

Mr Smail —I do not think so, Senator. It was a matter of flexibility and convenience forthe traveller. They were concerned, as were representatives of the customer forum, at the delayin getting through and particularly the flexibility of being able to do it quickly on the run.

Mr Peel—I think that the previous arrangement was that if you wanted to do that sort ofthing you had to get in touch with Jetset; you could not just do it at the airport with Ansett.

Senator MACKAY —I remember it well.Mr Smail —And Qantas.Mr Peel—And the change that is being made is simply that you can now do that directly

with Ansett and Qantas and you do not have to ring Jetset to make those alterations.Senator Minchin—Weren’t 30 per cent of the calls of that kind originally, of people

wanting—Mr Smail —Yes, about 30 per cent were people changing bookings.



Senator Minchin—So that has now been eliminated.Mr Smail —Yes.Senator MACKAY —Have there been any consequential contractual changes as a result of

that? If 30 per cent of the phone calls were to do with flight changes, what consequentialcontractual changes were made as a result of the diminution in workload?

Mr Smail —None, Senator and—Senator MACKAY —Can you explain why?Mr Smail —We have not had our first quarterly formal meeting with Jetset to look at where

the budget for the office has gone—whether telephone costs have blown out or staff is under.We get that at the same quarterly that we are talking about. It will be in January after the endof the first quarter. We may revise their budget or we may not allow them more money fortheir budget.

Senator MACKAY —There may be a revision downwards as a result. Given that that wasapproximately 30 per cent of calls and in terms of personal experience with my office it wasa substantial amount of time involved, one would assume that there would be some potentialsavings there to the government as a result of that diminution in workload?

Mr Smail —I believe one of the results has been that this has freed at least one of the peopleto be rostered from 8.00 p.m. to 8.00 a.m. in the office here for all the time, every day.

Senator MACKAY —For all the time every day. So this would be to cater for MPs or MPs’officers ringing up to book flights in that period?

Mr Smail —Yes.Senator MACKAY —So previously there was not someone rostered on?Mr Smail —There was someone working in the Jetset office in Sydney to which calls were

in fact transferred.Senator MACKAY —I understand. So calls were diverted. That actually explains a lot. I

was not aware of that. You indicate that you will be raising these points with Jetset at thequarterly meeting which will occur at the end of the year?

Mr Smail —We certainly will.Senator MACKAY —Essentially, are you monitoring—or how are you going to negotiate

or renegotiate, if you feel it is required—the Jetset contract? What empirical data will it bebased on? How are you monitoring this?

Mr Smail —The contract requires Jetset to notify the Commonwealth of major complaintlevels. They have to keep logs of complaints and advise those to us in the quarterly report,but in addition we have had constant contact with them as a result of representations we havereceived and they are in contact with us on occasions when they have received representations.

Senator MACKAY —At wits end, yes. The minister also indicated that waiting times wouldbe monitored. Thank you for answering that. And if there is no significant improvement, othermeasures will be considered. Again, this significant improvement would be based on whatempirical data? Is it simply complaints?

Mr Smail —Yes.Senator MACKAY —So you will be monitoring it based on complaints?Mr Smail —We are also doing some random dipstick telephone calling of our own to see

how long it takes to get through to Jetset.



Senator MACKAY —So you are monitoring in terms of a spot-check type situation. Whatwould constitute a significant improvement? How are you going to determine what ‘significant’means? Would it be the sort of dramatic drop in complaints?

Mr Smail —Yes.Senator MACKAY —So you are assuming that politicians are so voluble that if there were

any difficulties they would be on the phone? The minister indicated that other measures willbe considered. What does the minister mean by that?

Mr Smail —In relation to what, Senator?Senator MACKAY —This is again quoting from Minister Minchin’s letter—that ‘waiting

times will be monitored and if there is no significant improvement, other measures will beconsidered.’

Mr Smail —Other measures would be, for example—Senator MACKAY —It says: ‘will be considered’.Mr Smail —These are the kinds of issues that will be raised at the quarterly meeting and

discussed with Jetset, particularly in relation to the staffing level in the office, rostering andthose sorts of issues.

Senator MACKAY —I see. So ‘other measures’ would not be dramatic; they would be atthe periphery rather than anything dramatic.

Mr Peel—There are provisions in the contract, as I understand it, ultimately to imposefinancial penalties on Jetset if their service standards consistently fall below acceptable levels.

Mr Smail —And acceptable level is defined in the contract as industry best practice.Senator MACKAY —Industry best practice. What is meant by financial penalties in reality?

I know what financial penalties are but what are they in this circumstance?Mr Smail —It is withholding of part of the management fee.Senator MACKAY —The remitted—Mr Smail —Their profit.Senator MACKAY —Their profit, right. I guess I cannot ask what those penalties are?Mr Smail —They are—Senator Minchin—The issue has not arisen. I do not think we should be suggesting that

there is anything wrong with their performance.Senator MACKAY —No, I am just saying that you have referred to provision for financial

penalty. I am just wondering what the financial penalty is.Senator Minchin—My memo referred to other measures to ensure that, as has been

indicated, if you need extra staff or whatever, the phone service meets adequate standards. MrPeel was just indicating a last resort sort of situation if those measures referred to in my memoare not successful. But I don’t think we should go too far down that track, that is all.

Senator MACKAY —No, I am asking, if a last ditch effort were unsuccessful, what thefinancial penalty would be.

Mr Peel—I think Mr Smail has explained that that would be a reduction in their profit level.Senator MACKAY —I appreciate that. I am asking the specific question.Mr Smail —There are five specific benchmarks in the contract, each of which allows the

Commonwealth to hold back a percentage of the fee.



Senator MACKAY —What are the benchmarks?Mr Smail —They are: if the contractor’s service falls below standard—Senator MACKAY —Industry standards.Mr Smail —On two or more occasions in a quarter and is not resolved quickly in that time;

it fails to resolve within a specific period, which I believe is 10 business days, specific materialcomplaints; and if it fails to meet some of the reporting requirements—reporting data backto DoFA.

Senator MACKAY —Okay, so the reporting requirements are still quarterly, are they?Mr Smail —They are weekly and quarterly. There are weekly reports of tickets sold and

refunds that have been collected where tickets have not been used, et cetera. It is a fairlymechanical concept.

Senator MACKAY —That is the information that you took on notice earlier, essentially?Mr Smail —For the quarterly summary.Senator MACKAY —In terms of the line comparisons. The 1800 number that has been

instituted: who is paying for the 1800 number? Is that Jetset?Mr Smail —Jetset.Senator MACKAY —Do we know how much that is costing Jetset?Mr Smail —I do not know, Senator, but we could get that for you.Senator MACKAY —I imagine it would be a substantial impost. I would appreciate that.

I have got about one minute. I will just see if there is something I desperately want to ask.I think I have finished.

CHAIR —Nothing further you want to put on notice?Senator MACKAY —Not really. I think Mr Smail has got the flavour of what I am after

in terms of the savings issue. We will see you at the next round of estimates, I guess.CHAIR —Thanks, Senator.

Sitting suspended from 6.30 p.m. to 8.11 p.m.CHAIR —We have one little bit left of program 7 on Comcar, I understand.Senator FAULKNER—In the Department of the Prime Minister and Cabinet estimates we

canvassed the issue of the Prime Minister’s driver who threatened to resign. Were you apprisedof that at all? It even got a bit of a run in the media.

Senator Minchin—I was never advised that there was any talk of resignation. I know therewas a question about the appropriate matters of dealing with overtime and other things, andI understand they have been satisfactorily resolved. Can we confirm that?

Senator FAULKNER—When Senator Hill was reminded about the cabinet meeting thatwas delayed for about an hour while some of these issues were sorted out, I think it was agood memory jogger for him.

Senator Minchin—I am not a member of cabinet so I have no knowledge of any suchcircumstance.

Senator ROBERT RAY—You were not a minister at that time.

Senator Minchin—I was not involved at that time as a minister. Could we just resolve thequestion of the driver?



Mr Gouldson—The current situation is that all drivers, including the Prime Minister’sdriver, are still employed under the current award and conditions. We are negotiating a newcertified agreement with the TWU and driver representatives, which includes a flexibleworking hours arrangement, and contained within that is a remuneration package. To date, thediscussions and negotiations with driver representatives and the union have been very positiveand constructive with substantial agreement reached on most of the issues and the remunerationcontained in that. We still have a little way to go, but we are progressing quite well.

Senator FAULKNER—So was the Prime Minister’s driver offered in the first place $38,000per annum plus allowances?

Mr Gouldson—There has been no offer made to the Prime Minister’s driver whatsoeverat this stage. Do you mean under the new arrangement?

Senator FAULKNER—Mr Gouldson, were you aware of the evidence that was given atthe Department of the Prime Minister and Cabinet estimates?

Mr Gouldson—Yes.Senator FAULKNER—I am referring to those issues that were raised at that time by

Senator Ray.Mr Gouldson—There have been—certainly with me—no direct discussions with the Prime

Minister’s driver whatsoever on the level of remuneration or any other issue.Senator ROBERT RAY—In these negotiations, has there been a set fee plus allowances

in lieu of overtime? Is that part of the agenda?Mr Gouldson—That is correct.Senator ROBERT RAY—And is the figure of $38,000 not related to the Prime Minister’s

driver but others who have some resonance with him?Mr Gouldson—There is a figure in there for official dedicated drivers, which includes the

Prime Minister’s driver, which is $38,000.Senator ROBERT RAY—Plus allowances?Mr Gouldson—Plus allowances in recognition of overtime and penalties.Senator ROBERT RAY—I do not want to pre-empt your negotiations here. I just need to

understand what the general nature of the allowances is.Mr Gouldson—That is correct. It is a $38,000 base with allowances on top of that.Senator ROBERT RAY—Sorry, I am just asking what constitutes allowances.Mr Gouldson—The allowances taken into account are overtime and penalties, meals

allowance.Senator ROBERT RAY—That is rolled into one?Mr Gouldson—Rolled into one.Senator ROBERT RAY—That is a proposal?Mr Gouldson—Rolled into one and then made as an annual allowance.Mr Peel—Like a ministerial staff allowance.Senator ROBERT RAY—Fully taxable. I think I follow. If you were to work less hours

than overtime you get to keep the money, but if you have to work more hours, like a lot ofministerial staff do, they are well on the hop. That is the way it works. I am not sayingwhether you are right or wrong.



Mr Peel—That is the principle, yes.Senator ROBERT RAY—The negotiations with the drivers have only been dealt with by

your branch, not by ministers or the Prime Minister direct?Mr Gouldson—That is correct.Senator ROBERT RAY—So you assert to me that if there was a problem with the Prime

Minister’s driver he did not make an offer to him? It has not come to your attention?Mr Gouldson—There has been no offer in regard to the Prime Minister’s driver whatsoever.

All discussions have been with myself to the TWU and a small group of driver representatives.Senator ROBERT RAY—Let us consider the evidence here. Are you saying to your

knowledge there has been no offer made by either a minister or a Prime Minister to adedicated driver?

Mr Gouldson—That is correct.Senator ROBERT RAY—To your knowledge?Mr Gouldson—That is correct.Senator ROBERT RAY—Therefore this will be resolved by way of the normal

negotiations?Mr Gouldson—That is correct.Senator ROBERT RAY—There will not be intervention by the Prime Minister or ministers

to negotiate wages with their own drivers?Mr Gouldson—No, absolutely not. The matter has been left entirely to the Comcar

management.Senator ROBERT RAY—Dr Wooldridge did not make an offer to his own driver of

$48,000 a year plus allowances?Mr Gouldson—I might be able to explain: some ministers have explored the option of

employing a driver.Senator ROBERT RAY—Billed to their home department?Mr Gouldson—Yes, that is right. That is where there may have been some negotiations.Senator ROBERT RAY—Is that allowable at the moment?Mr Gouldson—Yes. Without subsidisation from Comcar, they may employ a dedicated

driver in their home state and the cost is borne by the department.Senator FAULKNER—By the home department?Mr Gouldson—Yes.Senator FAULKNER—So when the minister says ‘no cost’ he means no cost to his own

budget, but he is quite happy to—Mr Gouldson—No cost to Comcar.Senator FAULKNER—No cost to Comcar, precisely, but it gets flicked to the home

department. Can you tell me how many ministers are considering that and who they are?Senator Minchin—I would have thought it is only appropriate as and when it happens, as

I understand it.Senator FAULKNER—First of all, how many has it happened with, and who are they?Senator Minchin—Fair question.



Mr Gouldson—There are none, at this point in time, of the ministers that have taken adriver onto staff.

Senator FAULKNER—How many are negotiating such arrangements, Mr Gouldson?Senator ROBERT RAY—This is an allowable question because it affects the current

negotiations. How many people are negotiating?Senator Minchin—I would have thought the only relevant information is: as and when such

an arrangement is entered into.Senator FAULKNER—You have got to understand, Minister, it is reasonable for us. You

might have thought it was the only relevant information, but you never know, we might bequite eccentric on this side of the table—

Senator Minchin—I would never think that.Senator FAULKNER—and think there are just a few other things beyond what you think

are relevant that we happen to think are relevant. There you have it: perhaps a difference ofview about relevance but certainly, I do not think, something that is improperly asked at theestimates committee hearing.

Mr Gouldson—There are a couple of ministers who I know are investigating the possibilityof doing it.

Senator FAULKNER—Thank you for that. Who would those couple be, Mr Gouldson?Mr Gouldson—Minister Ruddock. And these are all at various levels of inquiry.Senator FAULKNER—I appreciate that. At different stages of the process. It may not even

be concluded.Mr Gouldson—Minister Wooldridge and Minister Bishop. I cannot recall any more at the

moment.Senator ROBERT RAY—Has the Prime Minister been involved?Mr Gouldson—No.Senator FAULKNER—Perhaps you would take on notice whether there are any others,

Mr Gouldson. I thought there might be another name that you would want to throw in.Senator ROBERT RAY—Would the fact that arrangements are being made for dedicated

drivers for ministers in the home department and the level that they are set at impact back onyour negotiations for an overall level?

Mr Gouldson—Not in terms of remuneration for the drivers, no.Senator ROBERT RAY—Why not? If the drivers are told, ‘Dr Wooldridge has offered

a dedicated driver at $48,000 per year, but our offer on the table to you is $38,000’, surelythey will use the benchmark that has been established somewhere else.

Mr Gouldson—It would be fair to say that usage by various ministers varies enormously.The approach under the certificated agreement for Comcar is one of, if you like, averagingout the overtime and penalties across the board. It would vary between what we wouldprobably put on the table versus what a minister who is an extremely high user would perhapsrequire. It would vary from case to case.

Senator ROBERT RAY—What are your views on dedicated drivers? Dedicated driversdo not mean available exclusively to ministers. They may be dedicated to use by the ministerwhen they need it and then go back in the pool. Is that correct?



Senator Minchin—The government’s decision was to remove dedicated drivers forministers, unlike the previous situation.

Senator ROBERT RAY—I am trying to get a definition of ‘dedicated’. Sometimes peoplein your government misunderstood what dedicated was.

Senator Minchin—But there was a misinterpretation that they worked only for that minister.

Senator ROBERT RAY—They do not, do they, generally? There may have been examples.I do not know.

Senator Minchin—They primarily worked for the minister. But if they were not workingfor the minister, they worked for others. That is how I understand the situation.

Senator ROBERT RAY—What do you mean by primarily?

Senator Minchin—I understand that the situation under your government was that adedicated driver primarily worked for the minister.

Senator ROBERT RAY—No.

Senator FAULKNER—No. They were primarily in the pool.

Senator Minchin—But you always had that driver.

Senator ROBERT RAY—No.

Senator Minchin—We terminated that arrangement. Ministers were just like everybody else.There was this provision that has been explained to you, at no cost to Comcar. If a departmentarrangement was made, somebody could be employed in a department to do a variety offunctions, including being the home base driver.

Senator ROBERT RAY—I will go back in time, because this may help you in thesecircumstances. When people read that you are going to dedicated drivers—

Senator Minchin—We are not going to dedicated drivers.

Senator ROBERT RAY—Hold on. The use of the term ‘dedicated drivers’ was sometimesdistorted.

Senator Minchin—Yes. I accept that.

Senator ROBERT RAY—I know when comparative staff figures were made that it wasargued I had a full-time driver. If you look at my Comcar bills going back over the six yearsthat I was the Minister for Defence, you will realise that that person would have starved ifhe was dedicated to me. Dedicated drivers in that sense meant that you were allocated a No.1 driver or a No. 2 driver. On some other occasion you would get another driver. Thedifference here with these arrangements for dedicated drivers is whether it really is a dedicateddriver. That person does not, when they finish with the minister, go back into any pool.

Senator Minchin—Comcar will have no dedicated drivers and has no dedicated drivers.However, the arrangement that is available but has not been entered into by anybody is thatsomeone working in a department would have, among a number of other functions, the jobof driving the minister in their home state.

Senator ROBERT RAY—Would that person remain a member of Comcar on secondment?

Senator Minchin—No.

Senator ROBERT RAY—They would just leave entirely?

Senator Minchin—That is right.



Senator ROBERT RAY—It could be possible that that driver is entirely dedicated to onlythe minister. They will not go back into a pool.

Senator Minchin—The arrangement would be that they would have a full-time job.Obviously, they would perform other functions. One of the functions would be being availableto drive the minister, as required.

Senator ROBERT RAY—If the minister is in Canberra 22 weeks of the year, what doesthat dedicated driver do?

Senator Minchin—It would be a matter for the home department to ensure that that personhad a full-time job.

Senator ROBERT RAY—Driving around departmental officials?

Senator Minchin—Whatever the department thought appropriate as to that person’s skillsand experience. They would be employed full-time. When the minister was in town and neededa driver, they would be used. It is all hypothetical, because it has not been entered into byanyone.

Senator FAULKNER—It is not really that hypothetical, because Mr Ruddock, DrWooldridge and Mrs Bishop are in the process of examining it and possibly completingnegotiations.

Senator Minchin—As I understand it, it is a matter of investigating the possibilities. Butnothing has been entered into.

Mr Peel—I might point out, in case you are not aware, that this concept of a dedicateddriver attached to departments was originally raised by the previous government.

Senator ROBERT RAY—And rejected by the previous government.

Senator Minchin—You had them on staff, didn’t you? You had them on your personal staffat one stage.

Senator ROBERT RAY—Of course we did not.

Senator Minchin—What is the difference?

Senator ROBERT RAY—We never had them on personal staff.

Senator Minchin—As I understand it, your government entered an arrangement where theycould be on your personal staff.

Senator ROBERT RAY—I never had them on my personal staff.

Senator Minchin—You had that option.

Senator ROBERT RAY—Who exercised it?

Senator Minchin—Mr Walker exercised it. I cannot remember all the travesties of yourgovernment.

Senator ROBERT RAY—Mr Peel interjected that this was an option before the previousgovernment. We have had millions of options. For heaven’s sake, we will get judged by whatwe accepted, and we may be judged badly. But at least do it on that, not on everything werejected in the past.

Senator Minchin—You may have rejected that, but you did have the option, which wasexercised by the Prime Minister, of having them on your personal staff. We removed dedicateddrivers in relation to Comcar. But there is the option, which has not been exercised by anyone,



of the home department employing someone full time who would have a range of functions,including driving the minister when the minister is at home.

Senator FAULKNER—It is a way of really having your cake and eating it too, is it not?Senator Minchin—I would not have thought so.Senator FAULKNER—I would have. It is a real transparency issue. Unless this had been

exposed by the opposition, no-one would have known that Dr Wooldridge was in the businessof undergoing these negotiations. We might not have been able, unless there was so muchconcern in the community whereby people informed us that this was happening, to have knownthis. There is a real transparency issue here, isn’t there?

Senator Minchin—We are being quite transparent.Senator FAULKNER—Now.Senator ROBERT RAY—Now that you have been sprung.Senator Minchin—It is not a matter of being sprung. We are being transparent.Senator FAULKNER—You have been caught red-handed.Senator Minchin—There is nothing secret about it. No-one has taken up this option.Senator FAULKNER—You say that it is a terrific option as there is no cost to Comcar.

It is the same cost to the taxpayer.Senator Minchin—When are you representing Comcar?Senator FAULKNER—But it is the same cost to the taxpayer or more.Senator Minchin—You want to go and ask this question of other departments.Senator FAULKNER—We might have to.Senator Minchin—But it has not been taken up.Senator ROBERT RAY—So we will reopen the estimates, will we?Senator Minchin—No. Because no-one has taken up the option.Senator ROBERT RAY—We will move an amendment in the Committee of the Whole

and we will debate it there.Senator Minchin—No-one has taken up the option. The person would be full-time in the

department but they would have, as one of their many functions, this function of driving theminister in their home state. It seems quite logical.

Senator ROBERT RAY—Why would you get rid of dedicated drivers out of Comcar whenmost of them went back in the pool and worked and then transfer the cost to anotherdepartment? Mr Early, I am sure, does not want to intervene on the economics of this froma Finance perspective, so I will not embarrass him. However, he would regard that as verystrange.

Senator Minchin—I would have thought it is probably a lot cheaper. You know how muchComcar costs.

Senator ROBERT RAY—How is it cheaper? Are they going to get a car for nothing? Theywill have to lease a car, won’t they?

Senator Minchin—The person will have a full-time job with other functions.Senator ROBERT RAY—What other functions?Senator Minchin—That will be a matter for the department to determine.



Senator ROBERT RAY—Are they going to open letters or answer the phones in betweentimes?

Senator Minchin—Perhaps. There will be a range of functions which I am sure they canperform when they are not driving the minister.

Senator FAULKNER—There is not just the salary package for the driver. There will bethe cost of the car and maintenance, et cetera. What would you estimate, Mr Gouldson, thatthis might cost the average department? We are talking about a considerable amount of moneyhere. There is no cost to Comcar, as Senator Minchin assures us, but there is a significant costto the taxpayer, which he does not mention.

Mr Gouldson—The arrangement is that there is no supplementation of the cost of the driveror the vehicle with the departments. It is hard to guess what the total cost would be. It woulddepend on what salary was negotiated with the driver plus the vehicle costs, which, dependingon what sort of vehicle they had, could be in the order of $7,000 to $10,000.

Senator FAULKNER—And the rest.Senator ROBERT RAY—Amortised per year.Mr Gouldson—Dedicated driver services was an expensive service in Comcar.Senator ROBERT RAY—But not for departments? Do not comment on that.Senator Minchin—It is utterly hypothetical. It has not been entered into.Senator ROBERT RAY—But why do you make the philosophical decision to do it? You

make your political capital. Like a lot of things we have exposed today, you make it look likeyou are the new reformed government. You say that you will not expand the ministry or doall these things. However, you have been in power for 20 months and then you go fordedicated drivers. They are far more dedicated than any arrangement that has existed in thepast.

Senator Minchin—I am advised that the precedent was set by your government in that MrWalker’s driver was employed by the department.

Senator ROBERT RAY—DAS. Big deal. They ran Comcar.Senator Minchin—You are attacking this whole process, yet one of your own ministers

had a driver employed under exactly this arrangement.Senator ROBERT RAY—You have come into office and said that you are getting rid of

dedicated drivers.Senator Minchin—Out of Comcar, yes.Senator ROBERT RAY—Is that the semantics?Senator Minchin—There are no dedicated drivers in Comcar. No minister, apart from

obviously the leadership group, has a dedicated driver. But there is this option, which no-onehas exercised. It was an option exercised by Mr Walker in your government.

Senator ROBERT RAY—You come in and get the brownie points. You say, ‘No dedicateddrivers’ as we had, then you reverse that ruling. I am wondering what the rationale is forreversing it. You said that it is at no cost to Comcar. I understand that. There are costssomewhere else. Why the change?

Senator Minchin—It is an extremely expensive service to provide out of Comcar.Senator ROBERT RAY—Is that the reason? Ministers are worried about the expense of

the service and are looking for dedicated drivers. Is that the rationale?



Senator Minchin—As I say, the ministry generally is happy with the arrangements that havebeen settled in the absence of dedicated drivers in Comcar.

Senator ROBERT RAY—As a rule.Senator Minchin—No minister has taken up this particular option.Senator ROBERT RAY—So they are happy, or some are happy and some are unhappy?Senator Minchin—None of them has taken up this other option.Senator ROBERT RAY—How long has the other option been on the table?Mr Gouldson—It has been on the table since the budget announcement in May this year.Senator Minchin—Six months.Senator ROBERT RAY—No-one has taken it up yet.Senator Minchin—No.Senator ROBERT RAY—Have people asked for a pool of two to three drivers out of

Comcar to drive the minister?Senator Minchin—Whatever you might speculate about what might be sought, the fact is

that there will be no change to the existing arrangements.Senator FAULKNER—Will this be available to both cabinet ministers and non-cabinet

ministers?Senator Minchin—For those with a department it is an option.Senator FAULKNER—What about a parliamentary secretary?Senator Minchin—No.Senator FAULKNER—Are you going to rule that one out?Senator Minchin—Absolutely.Senator FAULKNER—That is something. You said that those apart from the leadership

group would not have dedicated drivers. I think that is perfectly reasonable. I know that MrHoward talked about having a dedicated driver, and so he should have one; there is noargument about that. All I would be interested in knowing is who is defined as the leadershipgroup so that I understand that.

Mr Peel—The Prime Minister, the Deputy Prime Minister, the Deputy Leader of the LiberalParty, the Deputy Leader of the National Party and the Leader of the Opposition.

Senator ROBERT RAY—Not the leaders in the Senate?Mr Peel—Only the ones I have read out.Senator ROBERT RAY—We have tried previously to find out the pecking order of the

government. We are extremely disappointed at how low the Senate rates in the establishment.We used to rate two and three. So they are in the tail end and they do not get a dedicateddriver?

Mr Peel—No. Only the ones I have mentioned.Senator ROBERT RAY—I have no objection to that.Senator Minchin—It is a function of leader and deputy of the party.Senator ROBERT RAY—I would have thought it was a function of seniority and security.Senator Minchin—The Deputy Leader of the Liberal Party is senior to the Leader of the

Government in the Senate.



Senator FAULKNER—So is the Deputy Leader of the National Party. But if it is on thebasis of seniority, leader and deputy leader of the party, why is the Deputy Leader of theOpposition not there? That is an illogicality, is it not?

Senator ROBERT RAY—Let us not rock the boat on that one. We are not here as his shopsteward.

Senator Minchin—Is that what you are requesting? Are you putting in a formal request?Senator FAULKNER—Both you and Senator Ray looked aside and wondered how the hell

to deal with that one. You have to find a new principle.Senator Minchin—These are the governing parties. They are ministers. We accord the same

status to the Leader of the Opposition.Senator FAULKNER—That is completely understandable.Senator Minchin—And the Treasurer and the Minister for Primary Industries and Energy.Senator FAULKNER—It is completely understandable with that qualification.Senator ROBERT RAY—You brought in a variety of Comcar reforms. There has been

a long list of them over the years. You changed the hours of operation of Comcar. They wereadjusted for the parliamentary timetable, et cetera. Has there been any request or considerationgiven to vary those hours for ministers and office holders?

Senator Minchin—Obviously, it is prudent to assess the impact from time to time of thechanges as they occur. I can assure you that there will be no changes to the existingarrangements.

Senator ROBERT RAY—Ministers are not finding it inconvenient, especially if they havefunctions out of hours?

Senator Minchin—There are alternative arrangements available for them.Senator ROBERT RAY—Hire cars? Taxis?Senator Minchin—Sure.Senator FAULKNER—We have an up-to-date list of the number of Comcar drivers. This

is a perennial that comes back nearly every estimates.Mr Peel—The number of Comcar drivers as of today?Senator ROBERT RAY—Full-time and part-time.Mr Peel—There are 102 Comcar drivers as of today.Senator ROBERT RAY—Has any request been put forward for Comcar and the Olympics

in 2000? How many drivers would be desired?Mr Gouldson—No. Not at this point in time.Senator ROBERT RAY—Comcar drivers have not been down to Sydney for training for

the Olympics?Mr Gouldson—No.Senator ROBERT RAY—No-one has said that such drivers would have to be at level 6?Mr Gouldson—No.Senator FAULKNER—There are 102 Comcar drivers as of today. How many of them are

full-time and how many are part- time?Mr Peel—They are all full-time permanent drivers.



Senator FAULKNER—What about in the other category?Mr Gouldson—Other employment categories?Senator FAULKNER—The part-time drivers.Mr Gouldson—We have 113 casual drivers nationally.Senator FAULKNER—Could you take on notice a breakdown of the numbers by state or

territory. I want to know specifically how many full-time drivers there are in Canberra.Mr Gouldson—The number of full-time drivers in Canberra at the moment is 33.Senator ROBERT RAY—Of that 102 or 113, what is your projected figure for 1 January

next year?Mr Gouldson—By 1 January next year, for full-time permanent drivers, it will be 76

nationally.Senator ROBERT RAY—And the casuals?Mr Gouldson—We think the casuals will be much the same.Senator FAULKNER—Of the 33 in Canberra, what sort of a reduction has that represented

over, for example, the last six to 12 months?Mr Gouldson—Probably from 41 down to 33.Senator ROBERT RAY—After parliament gets up, it is going down to what?Mr Gouldson—The figure will go to 22.Senator ROBERT RAY—Down by 11; is that right?Mr Gouldson—That is correct. It will be down to 22.Senator FAULKNER—Is there any regional breakdown of that 33, or is that the lowest

geographic or regional breakdown you make by territory?Mr Gouldson—In Canberra?Senator FAULKNER—Yes.Mr Gouldson—That is the lowest.Senator FAULKNER—I assumed that it was.Senator ROBERT RAY—So you will have 22 permanent drivers in Canberra. How many

casuals do you think you will have?Mr Gouldson—There will be approximately 70.Senator ROBERT RAY—And there are approximately 70 currently?Mr Gouldson—Yes; that is correct. The numbers vary, of course, with the nature of the

employment. It is around that number.Senator FAULKNER—There is also a significant pool of hire cars that you are drawing

on pretty regularly, isn’t there?Mr Gouldson—That is correct.Senator FAULKNER—Is that a limited pool?Mr Gouldson—It is limited in Canberra. I think there are around 16 or 18 hire cars

available in Canberra that we could use, excluding stretch limousines.Senator FAULKNER—No stretch limousines are now used anywhere. Is that right?Mr Gouldson—That is correct.



Senator FAULKNER—I am pleased to see that.

Senator ROBERT RAY—You were kind enough, back in 1984, to make the first stretchedlimousine available to Senator Richardson and me, just as the press gallery were going on theirdaily run. I have waited 13 years to thank you for that.

Senator FAULKNER—Now ex-Senator Richardson drives in one every day. Is there aprocess? Let us take Canberra, for example. How do you determine which hire cars or hirecar companies are acceptable in terms of service? How do you make the professionalassessment that it is appropriate to use hire cars as far as the Comcar service is available? Ido not want a long answer to this, just a general answer.

Mr Gouldson—We do have a common use contract that we developed in collaboration withthe then Purchasing Australia whereby we identified hire car contractors. We have very strictguidelines in terms of standards that are comparable to Comcar standards. That is how we haveidentified them. We continue to monitor their quality of service against those standards, andthe contract has in it provision for penalties for poor performance, et cetera.

Senator FAULKNER—What about the training issue? That is an important matter, Iassume. Is that something you check on?

Mr Gouldson—Training does vary from hire car company to hire car company. Some hirecar providers are aiming for high level training. For example, some are doing preliminary workon antiterrorist training; others do defensive driving training techniques. We have had somepreliminary discussions with the industry. We have clearly indicated that we are happy to assistthe hire car industry in coming up with uniform driver training standards and, if need be, helpwith the design of training programs, et cetera.

Senator FAULKNER—I appreciate that; that is helpful information. I suppose the importof my question is whether, in effect, you are authorising a hire car company, a hire car vehicleor a hire car driver to undertake responsibilities for Comcars. That is the point of my question,if you could just explain that to me.

Mr Gouldson—The contract is with the hire car company to provide a level of service and,as I indicated, there are certain requirements to be met in terms of the standards of thevehicles, dress codes, licensing requirements, police checks, character checks and those sortsof issues. We do random checks where, if I am going interstate, I will deliberately use a hirecar company that I want to monitor myself, or I will call in on a particular hire car companywhile I am interstate just to see how their operations are going.

Senator ROBERT RAY—Is it part of your regulations to put a speed governor up to 40kilometres and no further on hire cars?

Senator Minchin—You picked a slow one, did you?

Mr Gouldson—No. I would be interested to know who it is, though.

Senator Minchin—Do you have complaints?

Senator ROBERT RAY—I do not want to pursue these sorts of issues generally here. Ido not have to because I am on the client forum, so I will do it there. The one thing we couldnot resolve at the last client forum meeting was: what is going to be the philosophy as regardsComcar? Is it a business? Is it a service? Or is it a too-expensive service?

Senator Minchin—I think it is a service that is provided for members of parliament, butits costs must be kept in check. It is an extremely expensive service. We have done what webelieve is appropriate, since we have been in government, to reduce those costs to a reasonable



level. I would hope that we can hold the line at the level of service we have. I think Comcarplays a great service in assisting the private hire car industry to understand the need for highquality service. Part of the consequence of this will be high quality private car service whichwill supplement the service provided directly by Comcar.

Senator FAULKNER—It is a bit hard with the quality control once you are dealing withtaxis, I suppose, though, is it not?

Senator Minchin—Obviously the taxi industry is different from the private hire car industry.Senator FAULKNER—That is what I am saying. It is getting a bit difficult.Senator Minchin—Our arrangements are just with hire car companies.Mr Gouldson—They are contracted as hire care providers or some term themselves

‘executive taxi services’, but they are basically hire car operators, not the run of the mill taxiservices.

Senator FAULKNER—I refer you to Mr Jull’s letter to senators and members of 4 July1997 headed ‘Comcar revised arrangements’. Do you know the circular I mean?

Mr Gouldson—Yes, Senator.Senator FAULKNER—I was interested to know when the government made these decisions

and what the process was that led to this circular going out.Mr Gouldson—This is one to the ministers?Senator FAULKNER—Sadly, I would not know about the one to ministers; I only know

about the one to senators and members. Did they get a special deal, did they?Senator Minchin—They were told they were not getting a special deal.Senator FAULKNER—We only have your word for that, Minister.Mr Gouldson—This is just simply an advice about the details of the government’s decision.Senator FAULKNER—It covered the national reservation service, the parliamentary shuttle

service, tightening requirements to be met by contractors and Comcar locations at majorairports. It is dated 4 July 1997 to senators and members entitled ‘Comcar revisedarrangements’ under Mr Jull’s signature.

Mr Gouldson—That was the minister’s advice about the details of the implementation ofthe 1997 budget decisions which went to the hours of operation; the provision of shuttleservices, as it says there, continues; the provision of hire cars; the arrangements put in placeregarding contracts for the hire car industry; and also changes in the reservations allocationsarea.

Senator FAULKNER—I see. That is what I was trying to establish—whether this is as aresult of budget decisions made in this year’s budget or whether it had been as a result ofdecisions made in relation to administrative arrangements subsequent to the budget. Thisflowed out of budget decisions this year, did it?

Mr Gouldson—That is correct, Senator.Senator FAULKNER—I see. That is fair enough. Thank you.

[8.50 p.m.]

Program 12—Australian Electoral CommissionCHAIR —Welcome Mr Gray and officers.Senator FAULKNER—Welcome. I am sorry we are doing this at this hour of night.



CHAIR —Aren’t we all.

Senator FAULKNER—As they say, that is politics. Mr Gray, I want to ask you about theAdvance to the Minister for Finance. I noticed that on page 11 of the advance there is a figureof nearly $800,000 in relation to the conduct of election of delegates to the ConstitutionalConvention. Could you give me some detail as to what that is all about?

Mr Dacey—With regard to the Constitutional Convention, we sought the total of $841,000in advance from the Minister for Finance and expended approximately $788,000. The mainreason for seeking that advance was that, at the time we thought we were getting ready toproceed with the Constitutional Convention election, we had no legal basis as appropriationfor funds so we had to go to the AMF to seek those funds to get things under way for theproposed Constitutional Convention.

Senator FAULKNER—I understand that, but what time frame are we talking about? Iassume this is prior to the legislation passing.

Mr Dacey—This is prior to the first round of the legislation, yes, that is right. It was earlyin the first half of this year.

Senator FAULKNER—One of the issues that the minister at the table would well rememberwas canvassed—it seemed like at very great length in the committee stage debate in theSenate—was the relative cost between a postal ballot and an attendance ballot. That got quitesome considerable parliamentary focus and beyond the parliament as well. How are yourcostings shaping up at this stage? I understand where we are in the process. I appreciate thatadvice that you might provide to me would be preliminary, but I have no doubt, given theefficiency of the operation you run there, Mr Gray, that you might at least be able to give usan indication as to what sort of progress you are making.

Mr Gray —Senator, at this particular point in the process we anticipate to come within theestimate that we identified—that being in the order of $35 million. As to the amount below$35 million, if indeed we do come below that, it is difficult to judge at this point. But I thinkwe can say with some degree of confidence that, on our current analysis, we would be withinthat $35 million.

Senator FAULKNER—I see. That is—

Senator Minchin—Good news really.

Senator FAULKNER—That is good to hear. You had previously provided us with youradditional costings for a postal ballot versus an attendance ballot. I think the last figure I hadavailable to me was quite significantly footnoted in xix. Do you know the document I amreferring to? I cannot identify it any better than saying it is table 1, cost of elections, as at 6May 1997.

Mr Gray —Was this the one attached to the report of the Senate Legal and ConstitutionalReferences Committee?

Mr Dacey—This is a comparative report between an attendance and a postal ballot.

Senator FAULKNER—Was that your document?

Mr Dacey—It would have been. I do not have a copy of that with me now.

Senator FAULKNER—I see. The figures came in at $49,059,100 for the attendance ballotand $35.598 million for the postal ballot.

Mr Dacey—I recall there was a difference of about $15 million. That is correct.



Senator FAULKNER—It goes through a whole range of categories: advertising elections,statistical results, elector leaflets and so forth. I do not want to go into that in any detail, butat this point do you have an update of estimates in those self same categories that you mightbe able to provide on notice to the committee?

Mr Dacey—We certainly have a later estimate than that for the postal ballot for theConstitutional Convention election.

Senator FAULKNER—Could you provide us, on notice, with the most recent estimate—Mr Dacey—The bottom line is very similar to that bottom line.Senator FAULKNER—I heard what Mr Gray said and I also appreciate your reinforcing

comment about the bottom line. I suppose it is the elements that go to make up the bottomline. I assume there is some change there.

Mr Dacey—Not a great deal since then.Senator FAULKNER—Okay. What you have and are able to provide to the committee

would be useful.Mr Dacey—That would still be based on the estimates, rather than actual expenditure to

date.Senator Minchin—Are you seeking those estimates within those categories of the final

expenditure?Senator FAULKNER—Yes, obviously at this stage in the process I would not be expecting

anything more of you.Senator Minchin—You could be asking for expenditure to date, but you are not. You are

seeking today’s estimates of the final figure.Senator FAULKNER—I am not, no. I may as well indicate to you that at some point we

would obviously like to look at what the final costs of the exercise were. I suspect that willnot be limited to this parliamentary committee or just to us. I would not expect that of younow. Not even I would be that unreasonable.

Senator Minchin—Thank you.Senator ROBERT RAY—You posted out nine million envelopes for the Constitutional

Convention ballot. Is that right?Mr Dacey—It was 11.9 million.Senator ROBERT RAY—Have you done a calculation of how many people have been able

to get the sticky label to work? Is it beyond five yet?Mr Dacey—It is much better than that.Senator ROBERT RAY—Is it?Mr Dacey—We have had very few instances of any problems with any of the mail.Senator ROBERT RAY—You can identify my vote as the one with the sticky tape across

it. I want to ask a couple of questions. My first is in relation to spot audits of politicalparties—which I think is a good thing. How do you determine which units within a statebranch of a political party you spot audit?

Mr Kerslake —Our compliance investigators go out into the field. When they conduct auditsin head office they look at the information that has come into that head office from variousparty units. At that stage they make a determination whether there are particular ones on which



they want to focus. If there are no particular problems, it may be that they choose somerandomly in order to complete the exercise.

Senator ROBERT RAY—The spot audits can be on the basis that the units have a dubiouslook about them when the head office audit is done?

Mr Kerslake —They may not necessarily be dubious. It may be the level of transactionsor whatever. They might prefer to go to one rather than another. That does not necessarilymean they have formed a tentative view that those units are dubious.

Senator ROBERT RAY—Is there any consultation with a party agent on which units youspot audit?

Mr Kerslake —Party agents are consulted before people go out into the field. They are giventhe opportunity to notify party units within a reasonable time that this visit is going to takeplace. It is not a question of the party agent necessarily having a say in which ones we aregoing to audit. By that I mean that, if we saw one that we particularly wanted to have a lookat for particular reasons, we would not want to be diverted from that point.

Senator Minchin—It is a process of notification rather than consultation.Mr Kerslake —Yes. It is a process of making sure people have sufficient advanced notice

that they do not suddenly find somebody arriving on their doorstep and wonder what hashappened.

Senator ROBERT RAY—How is the investigation going into the anomaly with DrWooldridge and the $10,000 donation to the Liberal Party where the address of the donor wasin fact Dr Wooldridge’s mailing address paid for by administrative services?

Mr Kerslake —That matter is still being looked into. I am not aware that that has beenfinalised.

Senator ROBERT RAY—I do not want to pre-empt any inquiry on that. Does that coverone donation or several donations?

Mr Kerslake —I would have to check to get all the details on how many were involved.Senator ROBERT RAY—Have you found much difference between donations notified by

parties and donors notifying? Are there discrepancies between the two?Mr Kerslake —Between donor returns and party returns, is that what you are saying?Senator ROBERT RAY—Yes. Have you found the party returns are far more exhaustive

and some donors just do not comply either out of ignorance or ineptness.Mr Kerslake —Obviously there have been occasions when we have found that donations

have been listed on, for example, a party return and not by an individual donor. By and large,that has not been revealed as deliberate evasion but more ignorance. The legislation is so setup that the party returns are received in advance of the due date for the donors’ returns. Thatin fact enables the commission to write out to a lot of apparent donors and notify them inadvance of their obligations and that certainly helps to ensure that we get the vast majorityof donor returns in.

Senator ROBERT RAY—Is the date for the parties notifying donors and the donorsnotifying you of their donations the same?

Mr Kerslake —For parties notifying donors?Senator ROBERT RAY—Yes.Mr Kerslake —If parties are putting in their annual return to the commission.



Senator ROBERT RAY—Yes.Mr Kerslake —No, they put in their annual returns four weeks before the donors’ returns

are due in. It is that four-week period that enables us to go out to the donors.Senator ROBERT RAY—I thought that must have been the case.Senator FAULKNER—In terms of your advertisements for the constitutional convention,

can you just very briefly outline to me what advertisements the AEC has been involved indeveloping?

Mr Hallett —Basically we ran a three-phase campaign. There were some advertisementsannouncing that the election had started. The first major phase was the enrolment phase. Thatwas on TV, press and radio. More recently we have had the explanation phase that has beenbasically in the press. There will be a reminder phase that will start on 30 November that willbe on radio and press. It will remind Australians that if they wish to participate, the closingdate for the ballot is 9 December.

Senator FAULKNER—What involvement did OGIA have in this advertising campaign?Mr Hallett —OGIA supervised the appointment of the creative agency which is Box Emery

and Partners in Melbourne. A representative of OGIA has been present at all meetings withthe advertising agency and have also provided informal advice over the last six to eightmonths.

Senator ROBERT RAY—How many pitched for this particular contract?Mr Hallett —This agency was actually appointed in 1994.Senator ROBERT RAY—So it is an extension of a contract.Mr Hallett —It is an extension. We have been granted permission by OGIA.Senator ROBERT RAY—Senator Minchin did not get a chance to sign this one.Senator Minchin—You guys did it, not me mate.Senator ROBERT RAY—We know what you have done.Senator FAULKNER—In any of the advertisements that were developed, did you think,

at any stage, of using a minister who might have ministerial responsibility for the AustralianElectoral Commission?

Mr Hallett —No. Our role is to—Senator Minchin—I do not take any offence.Mr Hallett —Our role was to draw attention to the fact that the election was on, to explain

to electors how to participate and to remind them of their enrolment responsibilities, and thatis what we have done.

Senator ROBERT RAY—But you did not get any reinforcement by approaching any seniorfigures to feature in these advertisements?

Mr Hallett —Do you mean getting celebrity endorsement?Senator ROBERT RAY—Celebrity or ministerial. I know there is a big difference but—Mr Hallett —No, we did not.Senator FAULKNER—Did Mr Jull keep an eye on the advertising campaign?Mr Hallett —No, he did not. In fact, we have run the planning and the implementation of

this advertising campaign as we would for a normal election campaign. We have not reportedto the ministerial committee on advertising, although they have been briefed and provided with



information. But as part of our independent function, we have been very careful to keep theadvertising and all the public information separate to anything that might be perceived as beingpartisan.

Senator Minchin—I fully endorse, support and congratulate the—Senator FAULKNER—Are there any advertisements that were developed that you have

had to can or dump?Mr Hallett —No. The agency presented a number of concepts for approval, but once the

campaign was decided upon, we have gone ahead with the campaign as planned.Senator FAULKNER—So you did not get to the point of developing some advertisements

and deciding that they were not appropriate in either print or electronic form?Mr Hallett —No. But I do stress that various concepts were presented very early in the

planning phase, as happens in any campaign.Senator FAULKNER—Sure. That is understood. Can I ask about the issue of the funding

of the hotlines. My understanding was—and I might be wrong here, Minister, so correct meif I am wrong—that there was originally no funding for an information or language informationhotline. That is my recollection. Am I correct?

Senator Minchin—No, that is not right, but I will get the officers to fill you in.Mr Hallett —As with every election, we provide a national inquiry line. When we prepared

estimates, when we were costing the election earlier this year we put in a cost both for ournormal inquiry line and also to provide interpreting services, as we do with every election.

Senator FAULKNER—Have you had to enhance the hotline or language informationservices at all or is it going according to plan?

Mr Hallett —We believe that the service is enhanced compared to the previous electionbecause each election we look at how we had done it beforehand and look at ways to makeit better. For example, this time we are providing the 15 language specific lines that we didnot provide previously. We used to just have one number. We have also put on more operators.For the first time at this election we have had an overflow call centre here in Canberra becausewe believed it was a different sort of election. It was new for most Australians and thereforewe expected an increase in inquiries and we wanted to make sure that we could handle thosecalls, particularly since we were advertising our inquiry number in the press.

Senator FAULKNER—I appreciate it has been improved, if you tell me it has improvedsince the last election, but you have not enhanced it from your original planning for theconvention election?

Mr Hallett —No.Senator FAULKNER—What is the volume of calls like for the various hotlines?Mr Hallett —With our 13 number, which is our main national inquiry number, I have figures

up to 18 November. Nationally, since the election was announced, we have taken just over150,000 calls.

Senator FAULKNER—How would that compare to a traditional attendance ballot? I wouldbe interested to hear how the comparisons go.

Mr Hallett —The only figure I have with me tonight is that, at the 1996 election, we tooka bit over 300,000 calls.

Senator FAULKNER—In total?



Mr Hallett —Yes. But we should remember that that was a four-week campaign whereasthere is a longer election period for this election.

Senator FAULKNER—What about the language information? You have got the 13 numberand then you have got the specific language information lines, as I understand it.

Mr Hallett —That is correct. As Mr Gray says, there are 15 lines that are language specificplus a 16th line where they will try to find an interpreter if one is available.

Senator FAULKNER—I see. Can you give me some sort of aggregated figure?Mr Hallett —Again to the 18th, which is the latest figures I have, there have been 7,013

calls.Senator FAULKNER—Tell me what you had in the last election in dealing with

information for non-English speakers?Mr Hallett —At the 1996 election and at the 1993 election we used the TIS service,

translating interpreting service, of the Department of Immigration and Multicultural Affairs.That was one number where people had to find the specific interpreter plus at the TIS end theydid not know whether they might have a social security inquiry, a Medicare inquiry or anelectoral inquiry. That is one reason why we have tried to enhance this service. They nowknow not only that it is language specific but that it is an inquiry about the election.

Senator FAULKNER—It is language specific and election specific?Mr Hallett —That is right. These numbers are specific to this event.Senator FAULKNER—One assumes with the TIS line you still were able to have a

reasonable stab at the numbers of inquiries you were getting. Is that right?Mr Hallett —It is probable. I would have to take that on notice because I do not have them

with me tonight.Senator FAULKNER—I would appreciate that. If you have the detail of how those calls

change through the various stages of the previous elections that would be useful. You couldmake the point to me that maybe the comparisons are not particularly valid because of thefundamentally different nature of the process that is going on. I do not know the answer tothat question. I suspect no-one at the table at this point does. Would that be right, Mr Gray?

Mr Gray —It is the case that, at the end of this event, we will have a range of statisticswhich we will want to analyse or at least draw our own conclusions from. We will allowothers to draw conclusions from the statistics which we will produce at the end of this event.

Senator FAULKNER—In relation to your 13 number, did you have any projection in mindabout the number of calls you might receive?

Mr Gray —We certainly believe that, because of the nature of the event, we would haveto have what we would see as an expanded service, a service that would at least be capableof taking a fairly high number of calls. That has proved to be the case. There are a highnumber of calls during various elements and parts of the process.

The number of calls is dropping off at this point in the process—it has dropped from around12,000 calls a day to about 6,000 calls a day. Often the peaks and the troughs seem to haveno clear reason, yet at other times people seek to relate them to talkback radio or some otherevent in the media that generated inquiries of one kind or another. Alternatively, the inquiriesbegan to reflect the staggered posting out and receiving by people of information.

The answer to your question as to whether or not we predicted and effectively planned fora large number of calls is yes, we did. We sought to do that. I think we can say with



confidence that, perhaps unlike the last general election, we did not have the long queuingand, if there was queuing, we did not have people dropping off that queue. We were able tocater for all calls that were made. That is something of an advance on our experience fromthe previous elections.

Senator FAULKNER—I assume, particularly on the 13 number, you would be logging thenature of the queries you are getting?

Mr Hallett —Not really. We do know that there are inquiries about a range of subjects suchas voting tickets, how to vote, how the vote is counted and so on. Again because it was sucha new sort of election, we have not really kept any records of the nature of the inquiries wehave got in any scientific way.

Senator FAULKNER—So if I asked you what the three or four most common categoriesof inquiry were, you really would not be able to let me know at this stage?

Mr Hallett —Not at this stage. I could tell you anecdotally, but we have not been keepingscientific records.

Senator FAULKNER—Is that a bit of a weakness, Mr Gray, in terms of making anassessment of how the process has gone?

Mr Gray —It may be seen as information which would have been better supported byspecific statistics to the extent that we could have provided them. I think that we are able toidentify, for example, some of the main areas of inquiry as a consequence of talking with thesupervisors of the various centres that we have established around Australia. I think we willbe able to identify with some degree of accuracy those areas which were most commonly thesubject of inquiry.

Senator FAULKNER—What are the hours of service for your telephonic service? Whatis the situation there?

Mr Hallett —Basically, 8.00 a.m. to 8.00 p.m. We have also been running it at weekendsfrom 8.00 a.m. to 5.00 p.m. However, more recently, as the number of calls has dropped away,we have been closing the service earlier. I think last night we closed at 6.00 o’clock here inCanberra because we were not getting the calls, but there is a facility to take voice messagesand we return the calls the next day.

Equally, 10 days or so ago, in the middle of the mail-out when the calls were going beyond8 o’clock, we kept the service open to handle inquiries. So it has been flexible, but basically8.00 a.m. to 8.00 p.m weekdays and 9.00 a.m. to 5.00 p.m. on weekends.

Senator FAULKNER—Are you logging the times of calls so you can tell us where the peaktimes are during the day and so forth? Is there any pattern?

Mr Gray —As I said, there really is not any pattern, there really are not any predictablepeaks, in respect of one day to the other.

Senator FAULKNER—Sorry, you are talking on a daily basis. You were talking from dayto day.

Mr Gray —Yes, I was.

Senator FAULKNER—I meant within the day in terms of more in the morning, lunch timeor evening.

Mr Hallett —One thing we have noticed is that there has been a large number of calls atabout 6.00 o’clock. People have obviously got home, opened their mail and found their ballot



papers. We have certainly found that, between 6.00 p.m. and 7.00 p.m. local time, the callcentre has been very busy and then it has dropped off after about 7 o’clock.

Senator FAULKNER—In relation to overseas voting, I cannot remember the figures now,but I vaguely recall—you probably remember this better than I do, Senator Minchin—that therewas an acceptance at some point that you need about $1½ million to distribute the ballotpapers to Australians overseas. Is my recollection right there?

Mr Dacey—I have not got the exact figure with me, but I think it was in the order of$200,000—but I can confirm that. That is basically to cater for the supply of the material toour overseas missions.

Senator Minchin—We agreed to an amendment suggested by the Senate committee thatwould ensure that the procedure more closely reflected what happened at a normal federalelection and there was a cost impact from that.

Mr Dacey—That is right.Senator FAULKNER—Have you got those final additional costs now for the overseas

distribution?Mr Dacey—Yes, we have.Senator FAULKNER—Could you let me know what they are?Mr Dacey—Yes.Senator FAULKNER—You do not have them here tonight?Mr Dacey—Sorry, I do not have them here. I will take it on notice.Senator FAULKNER—I see. What about the procedures in terms of issuing that material

to the overseas missions?Mr Dacey—It is basically exactly the same as the procedures we employ for federal

elections where we use the staff within our embassies or consulates or high commissionsoverseas and very similar procedures. Electors can either come in and have a vote in personat those missions or they can contact the mission and have the vote mailed out to them. Theyeither mail it back to the post overseas or mail it directly back to Australia.

Senator FAULKNER—So really you are saying to me there is fundamentally no difference?Mr Dacey—No difference at all.Senator FAULKNER—Okay. There is another thing I could ask in relation to the 13

number and the language information lines that you have established. Were your assessmentsof staff that needed to be involved for those lines pretty close to the mark, do you know?

Mr Hallett —We have been flexible about that. Most of our capital city offices have enteredinto an arrangement with a recruiting company which provides telephone operators. It has beenclear right from the start that the AEC’s needs would be flexible, so if we needed more staffthey could be provided. If we needed less staff, we would not have people sitting around withnothing to do. Certainly, my understanding is that that has worked very well.

Senator FAULKNER—That is helpful. Thanks for that. TheRepublic—yes or no?document—I do not know how best to describe it. Is that what it is called? What do you callit officially?

Senator Minchin—It is not the responsibility of the Electoral Commission.Senator FAULKNER—I understand that this is produced by the Department of Prime

Minister and Cabinet.



Senator Minchin—That is right.Senator FAULKNER—I appreciate that, but what do you call the document, Minister?Senator Minchin—Information material, information document, information insert—

whatever you like.Senator FAULKNER—I have just called itRepublic—yes or no?, because that is what it

is headed.Senator Minchin—That is what we call it inside the government.Senator FAULKNER—I appreciate this has been produced by the Department of Prime

Minister and Cabinet because it says so at the bottom of the final page.Senator Minchin—We thought we should authorise it.Senator FAULKNER—You have got an authorisation and you might even have a printer’s

imprint, I think. Yes, you do have a printer’s imprint—I tell a lie. Were they all printed inTasmania?

Senator Minchin—I think they were. The department handled that entirely and they gotthe best arrangement they could.

Senator FAULKNER—I am sure. I do not want to ask you questions that go to PM&Cresponsibility for this, but I do want to ask about the issue of whether this particular documentwas to be included in the mail-out, which is something that I understood commitments weregiven about. I just wondered, Mr Gray, if that had been the understanding of the AEC: thatthis particular document was in fact to be part of the mail-out?

Senator Minchin—Can I just say that obviously in planning—Senator FAULKNER—Or through you, Minister.Senator Minchin—Mr Gray might want to add to it, but obviously in planning this whole

exercise there was consideration given to the question of whether information material couldbe mailed direct to voters. Obviously, there was a package of material in any event that wasbeing sent—that is one of the virtues of it—with information about candidates and candidates’statements. There was consideration as to whether the information about the issues involvedin moving to a republic could be distributed in that way, but the costs were very prohibitive;it would been monumentally prohibitive. So, in the consideration of that option, it wasdiscarded on cost grounds, and we went with the option of newspaper inserts which was amuch cheaper way to distribute information nevertheless across a very wide spectrum ofAustralia.

Senator FAULKNER—The mail-out is the responsibility of the AEC, so a decision as towhether or not this particular document was included in the mail-out, I assume, is somethingthe AEC would have been consulted about?

Senator Minchin—Advice was sought on discussions we had as to the cost implicationsfor the mail-out, which was being sent out in any event, of adding additional material to it.

Senator FAULKNER—Who actually then made the formal decision that this would notgo in the mail-out?

Senator Minchin—The government.Senator FAULKNER—So it was a political decision?Senator Minchin—It was a government decision that the responsible course of action was

not to incur the additional cost of adding to the budget for the election by the amount that



would have been incurred by adding into the material that information about the issuesinvolved in the convention.

Senator FAULKNER—Mr Gray, as I said, I had a look at this closely and saw theinvolvement of the Department of the Prime Minister and Cabinet. Do I assume that, in termsof the content of this document, the AEC had no involvement?

Mr Gray —Yes, you can assume that. We did not, as I understand it, take any responsibilityfor the content of the insert or whatever.

Senator FAULKNER—That was my assumption, but I just wanted to be clear on thatbecause I think these are important issues. Did the AEC have any involvement in the timingof its distribution? Let me rephrase my question: did you have any input or involvement inthe content of this?

Mr Gray —None whatsoever.Senator Minchin—No, the only question of timing was that the government needed to know

the timetable for the mail-out in order to ensure that the insertion was at an appropriate timebecause, obviously, we wanted it to coincide in general terms with the mail-out. That is thelevel of the consultation.

Senator FAULKNER—You did have that level of consultation, Mr Gray?Mr Gray —We informed the government as to the period during which we would be mailing

out the material for which we were responsible. The timing of that particular documentbecoming public was a matter for the government.

Senator FAULKNER—But they had the benefit, at least, of advice from the AEC aboutthe—

Mr Gray —As to our schedules.Senator FAULKNER—Yes, about your schedules; that was what I was trying to get to.

When you say ‘the government’, Senator Minchin, in terms of timing, distribution, content,et cetera, was that completely a matter bureaucratically handled or departmentally handled bythe Department of the Prime Minister and Cabinet?

Senator Minchin—Obviously, I signed off on the final timing. Advice was put to me asto a sensible insertion program based on the advice from the commission as to when the mail-out was occurring.

Senator FAULKNER—Okay.Senator Minchin—So I take responsibility, therefore, for—Senator FAULKNER—I appreciate that. It is quite a simple matter. Just so I am clear—and

this is not directly a question to the AEC, but you might care to answer—I just wonderedwhere that advice was generated. Which department—

Senator Minchin—From PM&C. We have a convention secretariat within PM&C.Senator FAULKNER—That is what I assumed. I just wanted to check that.Senator Minchin—Sure. They gave me advice.Senator FAULKNER—I see. As I said, I thought there was some early understanding that

this might have gone out in the—Senator Minchin—I think what you are getting at is that, for some reason, there was an

impression created, certainly within the ARM, that the material which we had flagged to themwe were hoping to distribute relating to the issues involved, might be distributed with the



postal ballot, because that was an option. That option was, as I say, removed or rejectedbecause of the significant cost implications.

Senator FAULKNER—How was that impression created?

Senator Minchin—As you would understand, I was very keen to ensure that the two majorprotagonists in this debate—the ARM and the ACM—were properly consulted about the wholeprocess.

Senator FAULKNER—So you created the impression?

Senator Minchin—Perhaps they misunderstood. All I did was, in my discussions with bothorganisations, talk about the government’s desire to ensure that balanced, informative, objectivematerial went out, because obviously they had a right to know what the government had inmind. I would have indicated at some stage that there were a variety of options as to themechanism for distributing them.

At no stage did I indicate that the government made a decision to distribute it by mail, eitherwith or at the same time as the ballot paper material. I merely indicated to them that that wasan option. If they understood me to mean that that option had been chosen, then I regretcreating that impression. At no stage did I ever actually indicate that the government madethat decision. I merely indicated to them the options we had before us.

Senator FAULKNER—Mr Dacey, in terms of any of the projected costs that you wereanswering some questions about earlier, was this particular document, or the precursors of thisparticular document, ever costed in terms of the mail-out and the like in any of the earlycostings?

Mr Dacey—No, not at all. It was entirely our package, which excluded that document.

Senator Minchin—PM&C provided me with advice on what the costs were of the variousoptions for distribution of that.

Senator FAULKNER—So when we talk about the costs of this particular electoral event,we ought to also take into account whatever the cost of this was and a range of other materialand activity that is being generated in PM&C. There is a bit of a hidden cost there, is therenot?

Senator Minchin—It was never hidden. We made it quite clear from the outset that therewas a separate cost involved in actually staging the convention, a cost to be borne whetheryou had an attendance ballot for the election of delegates or a postal ballot. There was alwaysa set costing for the convention itself.

Senator FAULKNER—Yes, but this is not a staging cost, is it?

Senator Minchin—The cost of that was assessed as a cost of the convention itself becauseit was a cost incurred in staging the convention.

Senator FAULKNER—Do you know what the cost was, just out of interest, of printingand distributing this?

Senator Minchin—No, I cannot remember.

Senator FAULKNER—I know it is not technically a matter for the AEC.

Senator Minchin—It is a PM&C costing.

Senator FAULKNER—I appreciate that. I know this is not a matter for the AEC, butperhaps you could take that on notice as a question that might—



Senator Minchin—Sure. I have indicated publicly what the cost was. I just have not gotit in my head at the moment.

Senator FAULKNER—My question to Mr Dacey is the one that I am most interested in:you never planned, Mr Dacey, at any stage that this type of material—theA republic—yes orno? type of document—would be included in the AEC mail-out?

Mr Dacey—That is correct. It was not taken into account in any of the early estimates thatwe did.

Senator FAULKNER—I want to ask about the issue of what I call the preference book,for want of a better description—the candidate information in the mail-out. Do you believe,Minister, that you have been able to conform with or honour the commitments that were madein relation to the assurances from the government about the appropriate amount of informationabout candidates who are contesting the convention ballots?

Senator Minchin—The act provided for the opportunity for candidates to submit a setnumber of words of their choosing, governed by some provisions in the act as to what wouldultimately be included, that would be provided to voters. We have complied with the act inso doing.

Senator FAULKNER—If you ring the AEC 13 hotline and you ask for some information,what are the instructions to the people on the end of hotline, Mr Gray? If I ring up and I askfor candidate information, what am I told?

Mr Gray —Basically that the information about candidates is in that particular handout andthey should refer to that. To the extent that they require additional information aboutcandidates or groups and so on, we are limited in what we are able to provide them. Ours isto ensure that we have complied with the act. The act has been complied with in relation tothat particular document. It is not unlike a general election, in the sense that if people wantmore information about candidates then it is for candidates to provide that information. It isnot for the AEC to do that.

Senator Minchin—I know you do not like the postal ballot per se, but one of its virtuesis that you are able to distribute that sort of information to every voter in Australia.

Senator FAULKNER—Would you be surprised if I rang the hotline and I was offered thephone number of the relevant groups? Would that be standard practice? You did not mentionthat, Mr Gray, but I am surprised you did not.

Mr Hallett —I do not know about the particular instance you are referring to, but myunderstanding of how everyone has been trained is as Mr Gray says. Our job is to providethe information that is in the booklet you have just referred to. We provide voting ticketinformation, as we are required to under the act. I would have to take on notice the particularinstance you are referring to and we can look into it.

Senator FAULKNER—Let me just assure you that in a number of instances, if the hotlineis rung for information, you are actually offered the phone number of the groups. I am notsaying that there is anything necessarily wrong with that, I might say, but it just was notincluded in the information you have provided.

Mr Gray —No, it is not included in the information. If someone has gone that step forwardto try to provide a service, I am not overly concerned about that. The training, if you like, ofthe people on a part-time or casual basis manning the phones have had their attention drawnto the fact that there is a limited amount of information we are able to give and it is limited



to what is in the document. To the extent that someone has provided you with numbers sothat they might achieve or gain more information, then so be it. It is not an instruction.

Senator FAULKNER—This is the problem. What if I ring the hotline and I would like toknow what the voting ticket is for above the line voting for candidate or group X? That is notin the booklet, is it?

Mr Gray —No, it is not. Nor was it supposed to be.Senator Minchin—That is not sent to voters in a federal election.Senator FAULKNER—Nothing is sent to voters in that sense. This is a postal vote. If you

go to a polling booth, as you are well aware, Minister, to cast your vote, you will find adisplay of all registered group voting tickets unless there has been an amendment to theAustralian Electoral Act since the last election that I am not aware of. I am right, aren’t I?

Mr Gray —Yes, that is correct.Mr Dacey—If members of the public do request a voting ticket, whilst it is available—and

it is on display at AEC offices if that is not convenient—we have been faxing or postingvoting tickets to those members so requesting.

Senator FAULKNER—Thank you for that, Mr Dacey. That is certainly my understandingbecause I have tried that one out, too. It is all on the one call. You can rest assured it is only150,000 minus one, so do not worry too much. What you are told is that the preference bookis too big to mail out and you can go to your local divisional office and have a look at it. Itjust seems illogical to me that if you are providing this sort of voter information service notto be able to give it over the phone. If you want to vote above the line—

Mr Hallett —There are different levels of service. Certainly my experience with the inquiryservice here in Canberra is that if an elector has rung and said, ‘I wish to vote for candidateor group X. What is their ticket?’ if it has been reasonable, we have offered to read it overthe phone to them. In some cases that is quite practical. In other cases, for example, in NewSouth Wales, where a group may have registered up to 160 or more preferences, it is not.

Senator FAULKNER—Mr Hallett, you probably touched on an important issue. At the endof the day I suspect you probably quite properly draw a distinction between a comparativelysmall number of candidates and less complex task in the Australian Capital Territory comparedto my own state of New South Wales, which obviously has a very significant number ofcandidates and far greater than the number of nominations in the ACT. Nevertheless, if youwant that level of information, you are not able to get it by ringing the hot line. You areactually told, ‘Zip down to your local divisional returning office.’

Senator Minchin—It is mailed or faxed if you register the request.Mr Hallett —We are trying to meet the request—Senator FAULKNER—But it is the issue of registering a request. If you ask for the

information and you do not register a request, because you do not know to register a request,you do not get it. All you are told is, ‘Zip down to the DRO.’ Isn’t that right?

Senator Minchin—No, you can ask for it over the phone, ask for it to be sent to you.Senator FAULKNER—But if you do not know that you can ask for it to be sent to you,

you have a problem, do you not?Senator Minchin—Doesn’t the information service tell people that that can be sent to them?Mr Hallett —Yes. When people ring and ask us we offer them a range of options. If it is

obviously practical to read it over the phone, we do that. If it is only a page or two, we offer



to fax it. Where people have expressed, for example, in New South Wales, to have the wholebook, we have offered to post it to them. We have also said to them that they can go in andexamine it, but obviously that is not always possible in country areas and so on. So we aretrying, wherever possible, to meet people’s requirement to get this information.

Senator FAULKNER—I am not saying you are deliberating misleading the committee—butI just do not think your evidence is correct. I do not think that electors in this situation arebeing offered these options. How thick is this booklet in New South Wales? I assume it ispretty thick, isn’t it?

Mr Hallett —Yes, it is. I do not know the number of pages.Senator FAULKNER—It is a pretty substantial sort of document. My understanding is—

and I am very confident in what I am saying to you—that that offer is certainly not beingmade on all occasions. I do not know if it is being made in the vast majority of cases. Howdo I know? I am quite confident in what I am saying to you is the case.

Mr Hallett —I am drawing on my experience here in Canberra.Senator FAULKNER—I think there is a difference. This is the whole point I am making

to you. I think there is a difference in relation to the ACT. I want to be assured that this isnot driven by the costs involved in New South Wales in relation to the postage costs of whatis a pretty substantial sort of booklet. I hope there is no cost imperative here, and I want tobe assured about that. Can you assure me about that?

Mr Dacey—I can assure you it certainly was not a cost imperative when we developedestimates. As far as I am aware, and Mr Hallett can confirm, certainly our procedures are thatit is offered. As to an individual that may not have offered, I cannot answer that. If you haveit on good authority that it happened—

Senator FAULKNER—You are saying that it ought to be offered and instructions to yourtelephone operators is that it ought to be offered in all states and territories in Australia?

Mr Dacey—Mr Hallett and I have discussed the number of print copies we needed to make.We said that if people request them they should be made available. On the other hand, ifpeople ring up and want that information it should be offered to them.

Mr Hallett —In fact, in New South Wales, my understanding is that they have soughtadditional funding to re-print the New South Wales booklet because of demand. I certainlyrecommended to Mr Dacey’s branch that that be done because it is important this informationbe provided.

Senator FAULKNER—I am pleased to hear that, if that is the case. What was your originalprint run?

Mr Hallett —It was done in our New South Wales office. I would have to take that onnotice.

Mr Dacey—I am not sure either. Certainly we provided funds for an additional print to caterfor requests of copies.

Senator FAULKNER—So you had a bit of a contingency fund going for that, did you?Mr Dacey—We could meet it within the estimates.Senator FAULKNER—But has that experience been repeated in other states where you

found—Mr Dacey—It has been.



Senator FAULKNER—So there is quite significant demand for the preference booklet,effectively?

Mr Dacey—I could not give you numbers but, certainly, I am surprised at the demand insome of the states, yes.

Senator FAULKNER—What sort of advertising has the AEC done about the availability,or have you done any advertising about the availability of the preference information at all?

Mr Hallett —We have done no formal advertising about that, but we have certainly drawnpeople’s attention to it in our publications and our public relations materials.

Senator FAULKNER—What sort of market testing, as I call it, have you done? I mightbe using the wrong terminology, so correct me if I am wrong. I used to do a bit of this indeveloping ‘how to votes’ in another life when I was in the honoured profession of politicalapparatchik. I am interested to understand what level of testing you have done on prospectiveballot paper designs.

Mr Hallett —We did concept testing of the advertising, particularly the advertising that hasjust been running which explains how people vote, but I am not aware that we did any testingof the ballot paper itself.

Senator FAULKNER—I appreciate that help, Mr Hallett, but it is a different issue I amgoing to—the actual ballot paper itself. Was any testing done about that? I am calling it markettesting, but you know what I mean by this, don’t you, conceptually? In other words, you mockup a few ballot papers and you try them out on people to see how easy it is for people to worktheir way around it.

Senator Minchin—Senator Bolkus was part of the market testing, as I recall, through theSenate committee.

Senator FAULKNER—I have raised this issue myself—Mr Dacey—Do you mean professional market testing?Senator FAULKNER—I mean how did you test—or did you test? I assumed you had, but

let me take it back a step. Did you market test or test the ballot paper design for its voterfriendliness, et cetera?

Mr Dacey—No.Senator FAULKNER—So that was not done at all?Mr Dacey—No.Senator FAULKNER—That was just a design generated within the AEC and you hoped

for the best?Mr Gray —That is a design based on the requirements of the legislation which prescribed

what needed to be on that ballot paper.Senator FAULKNER—Yes, that is true, but I in fact had asked officers at the table from

the AEC prior—because I have been interested in the design of this particular ballot paper forsome time because I think it is a fairly difficult document—

Senator Minchin—The basic building block was a Senate ballot paper. It was a Senate-styleelection, so the Senate ballot paper was a starting point and—

Senator FAULKNER—Is the font the same size as a Senate ballot paper, Mr Gray?Mr Dacey—The font is the same size. In fact, in some states, the font would be a larger

size.



Senator FAULKNER—But in terms of the method of voting below the line, that was nottested either, I assume.

Mr Gray —No, because that was a given. That was something that was canvassed quitewidely during the course of inquiries, which you would be familiar with. The arguments forand against and the pros and cons of all of that were well canvassed during the course of theparliamentary debates, but the legislation finally determined the way in which the ballot paperhad to look. There were not really many options in terms of the design, having prescribed howthe groups and ungrouped would be formulated and how the below-the-line boxes would bealso formulated. There really were not very many options once the prescription was there, andit was our task to follow it in a way that could be read. I believe that that is precisely whatwe have done, and done in accordance with the prescribed requirements of the act.

Senator FAULKNER—I am not suggesting for a moment that is not the case, Mr Gray.In fact, from what I have seen, it conforms with the legislation. There is no suggestion on mypart that it is not the case. I suppose a more general issue is whether you think it is a goodidea if you develop a new type of ballot paper with a new voting system. By the way, SenatorMinchin, I think it is nothing like a Senate ballot paper, but that is just—

Senator Minchin—I said that was the basic building block. But, as I said publicly in—

Senator FAULKNER—A building block it might be. But it is a monstrosity of a buildingblock.

Senator Minchin—Senator Faulkner, as I said to the Senate committee publicly, we hadto design a ballot paper that met with quite unique conditions. This is not a parliamentaryelection. You are not dealing with traditional political parties. You are dealing with a wholerange of groups and individuals. Because there was no precedent, we simply had no idea howmany groups or individuals would nominate. We had to design the thing to accommodate worstcase scenarios. We might have had 2,000 people.

Senator FAULKNER—Yes, but you did not try it out on anyone as to whether it was easyfor voters to work their way around it.

Mr Hallett —Senator, it might assist if I can just go back to the concept testing I was talkingabout because, as well as looking at the advertisements and whether people understood those,one of the activities that the market research company did was to make up a number of dummyballot packs, including a mock ballot paper. One of the things that the company did with theproposed advertisement was hand these people the materials and say, ‘Do it.’

On the basis of the company’s findings, their degree of difficulty and what they were ableto do, we made significant adjustments to the wording of the advertisement. But they wererequired to open the thing, to complete the ballot paper, to vote either above the line or belowthe line, to look at the guide, to complete the declaration envelope, to put it all back togetheragain, as if they were to post it. That activity was conducted in May at a stage when thelegislation had not been passed. But we were fairly advanced in our planning.

Senator Minchin—One of the main criteria was to be as user friendly as possible. But wehad to design the ballot paper and finalise that prior to knowing how many candidates orgroups would nominate. In New South Wales it might have been 1,000—we were not to know.There were those sorts of constraints and criteria that had to be met. But, certainly, userfriendliness was a critical criteria.

Senator FAULKNER—The issue is, I suppose, in these unique circumstances that youdescribe—a new method of voting—whether it is not appropriate to actually concept-test the



design of the ballot paper itself. Let’s face it, Senator Minchin, if the Liberal Party produceda new ‘How to vote’ for the South Australian Senate election, I bet you anything you like—you just check it with a few people down there who planned to vote Liberal—that they couldeasily work their way around it, wouldn’t you?

Senator Minchin—Perhaps. All I can say is that a lot of thought—and I mean that—wentinto the design of this ballot paper, with a premium placed on it being user friendly, but onethat had to be designed in advance of knowing how many candidates we would have. But wedid put a lot of effort into making it user friendly.

Senator FAULKNER—I just wanted to understand the mailing house procedures, if I could.Did you give a magnetic tape to the mailing house? Is that how it worked in terms of—

Mr Dacey—That is correct, Senator.Senator FAULKNER—What guarantee was there that 100 per cent of addresses given to

the mailing house actually got a letter sent out?Mr Dacey—Senator, we had extensive quality control procedures in place. They included,

of course, the number of records on a tape matching the number of items that were producedin the mailing houses. Our staff at all times, or representatives of the AEC, were there to doconstant spot-checks in the mailing houses—and during the printing process, and during thedispatch process.

Senator FAULKNER—What weaknesses did the quality control identify?Mr Dacey—Not a great deal. There was the odd problem picked up where an incorrect label

may have been put on or the ink was starting to run low at the end of the batch of labels, andthose issues were all, as far as we were aware, picked up by our quality control procedures.

Senator FAULKNER—How many labels got crunched through the machinery? Did labelsget crunched through the machinery?

Mr Dacey—I imagine they did. I do not have full reports on it yet.Senator FAULKNER—What do you do in that circumstance?Mr Dacey—They would have to reprint.Senator FAULKNER—Did they reprint?Mr Dacey—As far as I am aware. I do not know of any instances where that, in fact, did

not occur.Senator FAULKNER—How was the mailing house selected for this particular job? It was

a big job.Mr Dacey—Through an open tender process.Senator FAULKNER—Did one mailing house do nationwide?Mr Dacey—One mailing house was selected basically for the east coast and another mailing

house for the west coast, South Australia and the Northern Territory.Senator FAULKNER—There was an open tender?Mr Dacey—There certainly was, yes.Senator FAULKNER—I suppose you would do integrity checks on the mailing house. One

would assume that would be fundamental to ensure—

Mr Dacey—Yes. We used the services of Purchasing Australia as well in the conduct ofsome of those checks.



Senator FAULKNER—Would you describe them as thorough and rigorous?

Mr Dacey—Yes.

Senator FAULKNER—Are you planning to report on these after the—

Mr Dacey—Yes we will, on the whole process.

Senator FAULKNER—I know of a case of a ballot paper being sent to an old address andto a new address of an elector—one elector receiving two ballot papers.

Mr Dacey—The procedures do cater for that. If a ballot paper was sent to an old addressand someone had changed address and had not received it, or it was not redirected from theold address, we have procedures in place where that elector can request a reissue to a newaddress.

Senator FAULKNER—Yes, but I am asking about the quality control issue of how, forthe same individual, a ballot can go to an old address and also to a new address?

Mr Dacey—Because that elector may well have requested a ballot paper to go to the newaddress, so that we have, in fact, sent two.

Senator FAULKNER—Do you mean made a formal request in the context of this election?

Mr Dacey—Phoned our inquiry number, our 13 number, and said, ‘I haven’t got my ballotpaper,’ or ‘I’ve moved address.’ We would subsequently send one to a new address.

Senator FAULKNER—Yes, but that was not the case. This is a person who was previouslyenrolled in one electorate and received a ballot paper for that address and also received—letme assure you, this person is very politically aware and astute.

Senator Minchin—Not so aware that they would deliberately enrol twice.

Senator FAULKNER—No. This person is not a rorter—there is no suggestion of that—anddid not rort. This person received two ballot papers, I think virtually on the same day, oneat an old address and one at a new address. That is why I raised the issue of quality control.There is no scam here.

Senator Minchin—It goes to matters of the roll itself.

Mr Dacey—That is right. It is not a quality control issue for the print or mailing house. Itis a quality control issue for the roll.

Senator Minchin—Regardless of this election or the convention.

Senator FAULKNER—Are you aware of any other instances like this?

Mr Dacey—I can honestly say that is the first instance which has been brought to myattention.

Senator Minchin—These are the sorts of issues the Liberal Party has talked about in thepast about the integrity of the electoral roll.

Mr Dacey—In the case that you are suggesting, it is quite apparent that it may well be aduplicate on the roll. Someone has re-enrolled or changed enrolment for a new address andhas not been taken off at the old address.

Senator FAULKNER—Your own procedures for checking duplicate enrolments are prettythorough, are they not?

Mr Dacey—We have de-duplication procedures, yes, but something may have slippedthrough. As the minister has said, there could be a difference in the spelling of a name and,



if it is not an exact match, they may not have been taken off at the old address. Those sortsof things are usually picked up in our de-duplication process.

Senator FAULKNER—At the end of the day, what was the postage paid for the mail-out?Mr Dacey—The service level agreement contract with Australia Post for the mail-out is

45.5c per item. For the return mail the rate is a variable rate between 39c and 42c. I retractthat: it was 35.5c per item for the mail-out.

Senator FAULKNER—I was going to say you were really dudded if it was 45.5c.Mr Gray —I was about to say I would like to take that on notice.Senator FAULKNER—You could see the press release coming.Mr Dacey—The return rate will be a variable rate depending on the number of electors who

choose to return their ballot, but it will be somewhere between 39c and 42c.Senator FAULKNER—Was the 35.5c mail-out rate a precise cost which you were aware

of reasonably early in the process?Mr Dacey—Not reasonably early. We did not know until nominations closed, until we knew

the size of the ballot paper and the size of the information booklet. Had we gone to a muchlarger size and a much bigger booklet, of course, it would have been a significant increase.

Senator FAULKNER—I see. I remember this being canvassed earlier. What did you baseyour costings on originally?

Mr Dacey—From memory, it was about a $1.50 all up for in/out, or out/in, plus printing,per article.

Senator FAULKNER—Did you have a breakdown of your original costings for the out?Mr Dacey—It was just under 40c.Senator FAULKNER—So you might have saved a bit of money there?Mr Dacey—Yes, because we kept it to a small sized article.Senator FAULKNER—Yes and the in, so to speak, is dependent on numbers?Mr Dacey—That is right. Certain discounts apply if we achieve a certain number.Senator FAULKNER—I see. What is your estimate on returns?Mr Dacey—I do not have one, Senator. As of today, we have about 27 per cent. Over the

last two or three days, I think we have been up two and three per cent most days.Mr Hallett —At close of business today, we have 3,343,121 items back, which is 27.88 per

cent when you look at it as the percentage of the enrolment.Mr Dacey—That has been steadily increasing on a daily rate.Mr Hallett —We are providing those figures on a daily basis to anyone who wants them.Senator FAULKNER—I appreciate that. The last figures I saw were of a few days ago and

appeared to show some quite significant state and territory variations. Is that still the case?Mr Hallett —Yes, the ACT at the moment is 34 per cent, compared with Queensland which

is 23 per cent. So there is some variation at the moment, yes.Senator Minchin—That is influenced by the mail-out.Mr Hallett —That is right.Senator FAULKNER—Do you mean the mail-out timing?



Mr Hallett —Yes. There were still electors at the end of last week receiving materials,because that was part of the official mail-out.

Senator FAULKNER—There are those returns and, of course, there are the other returns,the ones that are returned undelivered—return to sender.

Mr Dacey—Normally we would expect the official return to sender from Australia Postwithin a few days of mail-out—it does not sit around for too long. It is running at somethingless than two per cent at the moment.

Senator FAULKNER—What was your estimate there?Mr Dacey—We did not really have one, but experience has shown with local government

elections, particularly in Tasmania and Victoria, that it runs between two and four per cent;that is, the official Australia Post return to sender mail. That is not where an elector choosesto return it to sender because they may not wish to vote; it is annotated by Australia Post thatthey have left the address.Senator FAULKNER—Yes. I appreciate the difference. What is the scrutiny process now?Have there been any further advances there?

Mr Dacey—The scrutiny is done in two parts: the preliminary scrutiny, which is readingof the bar code and marks the elector back to the roll; and then there is the further scrutinyafter the close of the poll on 9 December, when the envelopes are opened and the ballot paperis extracted. The above-the-line scrutiny will take part in the divisional offices and the below-the-line scrutiny will be done, as is a Senate scrutiny, at a central location in each capital city.

Senator FAULKNER—Just so I am clear: before the close of the poll, what stage of theprocess are you going to—roll checking and that sort of thing?

Mr Dacey—Just the check back to the roll of the outer envelope—basically, that the electoris entitled to vote then that vote is then admitted to further scrutiny.

Senator FAULKNER—Is that being effectively done progressively?Mr Dacey—That is correct.Senator FAULKNER—Is it being done in the—Mr Dacey—In the divisional offices. The mail is going back to each divisional office.Senator FAULKNER—Yes.Mr Dacey—All candidates and groups have been advised that that scrutiny is occurring.

There is an opportunity for scrutineers to be present if they so desire.Senator FAULKNER—Do you mean during the process that is taking place at the moment?Mr Dacey—Yes.Senator FAULKNER—I imagine you would not have huge numbers of scrutineers.Mr Dacey—I have heard of one.Senator FAULKNER—There is one very keen person.Mr Dacey—There is nothing to see except envelopes at this stage.Senator FAULKNER—Yes. That person has little faith, I suspect. In terms of advertising

to promote the election and encourage people to vote and so forth, what is happening in termsof ethnic communities and ethnic media?

Mr Hallett —We believe we have met our obligations there. The Office of GovernmentInformation and Advertising requires that we spend 7.5 per cent of our press and radio budget



in community newspapers and on ethnic community radio stations. They do not have a figurefor television.

We have gone into 18 languages in the press; we have gone into 20 languages in radio,including nine Aboriginal languages. We have also gone into 12 languages on television. Wehave also provided a range of public relations materials to be translated—editorial news—toa much broader spectrum of radio, press and TV.

Senator FAULKNER—In terms of Aboriginal communities, are any special arrangementsbeing made there?

Mr Hallett —In addition to advertising, we did run a special education program in certainremote areas on the basis that those areas did not have access to mainstream media, whereteams of people went out and provided information about the election, about the voting system,about enrolments and so forth.

Senator FAULKNER—In relation to nursing homes, will there be a capacity to see if thereare differential returns and statistics in relation to people enrolled in nursing homes? Is thatgoing to be achievable?

Mr Dacey—The difficulty is that quite often the nursing home residents are not enrolledfor the nursing home. They are still enrolled for their home address.

Senator FAULKNER—Yes, I appreciate that but some, of course, are enrolled.

Mr Dacey—We are looking at the issue of what statistics we might be able to produce atthe moment. That is something we can take on board to look at.

Senator FAULKNER—I would not mind you taking that on board and seeing if there isanything that is possible. That would be interesting. Are you going to recycle these ballotpapers?

Mr Dacey—We recycle all our paper.

Mr Gray —We do recycle paper. I saw a little ‘first byte’ today suggesting that we oughtto be interested in recycling and I can assure people we are.

Senator FAULKNER—I wish I had time to read the ‘first byte’.

Mr Gray —We read it all.

Senator FAULKNER—I must say, Mr Gray, thanks to you, that in time I will be able toread the ‘first byte’ because no doubt it will be in the clips that come through, which I doappreciate. Believe it or not, eventually I get to them—after a time lag, I have to say. I stackthem up and read them, so I will get to see that one at some stage.

What are the procedures for a voter who makes a mistake claiming a new ballot paper?

Mr Dacey—If a voter has made a mistake and spoilt a ballot paper they can ring our inquiryservice once again and request a replacement or a reissue.

Senator FAULKNER—And what are your checks in regard to that?

Mr Dacey—If someone rings up and asks for reissue, obviously, we ask who they are, andwe also ask them to give an identifier, such as date of birth, to prove as best we can that itis that person, and a postal address if they have one, and that ballot material is then sent tothem at that address.

Senator FAULKNER—Have you got any idea of the number of calls you have receivedfrom people who actually have not got a ballot paper?



Mr Dacey—I can give you the number of people that have asked for a reissue. That doesnot mean, necessarily, that they have not got one; it may mean it has been spoilt. As of thismorning, we had approximately 72,000, which is 0.6 per cent.

Senator FAULKNER—Is that about what you had expected at this stage?Mr Dacey—We expected less than one per cent, given local government type experiences.Senator FAULKNER—One assumes the proportionality will not change?Mr Dacey—I would not expect so.Senator FAULKNER—It would be hard to see much of a change. Is there any advertising

going to the issue of people who have not received a ballot paper and what they might be ableto do?

Mr Hallett —This week we have been running press advertisements, both in English andin other languages, which say to people, ‘If you have not got your ballot paper, phone 132326,because the mail-out is now complete.’

Senator FAULKNER—What proportion of your advertising budget is going on thatparticular issue?

Senator Minchin—While that is being looked up, Senator Faulkner, you asked somequestions about the ‘A republic—yes or no’ costings. The total cost for printing distributionand insertion in newspapers—remembering we did 6.75 million—was $1.2 million. Theestimate provided to us for printing and distribution by mail was $6 million, and the totalconvention cost, including the $1.2 million, is $3.9 million.

Mr Hallett —Senator, I will have to take the previous question on notice, because the adsthat are running this week are part of the explanation phase, which included the ‘how to vote’ads last week. I can break that figure up at a later date.

Senator FAULKNER—I would appreciate that. You might be able to break your advertisingbudget into the various elements.

Mr Hallett —We can do that.Senator FAULKNER—Again, I think we will have an opportunity after the event to have

a look at that more closely. Without going to a lot of trouble, if you can do that, I wouldappreciate it. Do you have plans to actually step up the advertising campaign towards the endof the voting period?

Mr Hallett —Yes. The last phase will commence on 30 November which, as we explainedearlier, will remind electors that if they wish to vote the closing date is 9 December. I wouldnot necessarily use the word ‘step up’; it is just the last phase of the campaign.

Senator FAULKNER—In the 1996 federal election some return envelopes for postal voteswere destroyed in the mail, I recall, Mr Gray. Wasn’t that the case?

Mr Gray —Yes, there was an occasion, and I think it was in a Queensland postal centrewhere there were difficulties with envelopes in a sorting machine. Those difficulties werereported upon during the report on the 1996 election.

Senator FAULKNER—The point of my question was: how many have been destroyed sofar in this process that we know of?

Mr Gray —I do not think anybody has reported that.Mr Dacey—I have not heard of any. It is also a different system. We liaised a lot more

closely with Australia Post, but the envelopes in question in Queensland had what we call a



privacy flap. These return envelopes are straight envelopes, a double enveloping system, sothere is no potential for the Australia Post machinery to chew them up—all going well.

Senator FAULKNER—In terms of your ‘return to sender’ mail, I would be interested inunderstanding whether you are going to use that as a basis for any roll cleansing or the like?

Mr Dacey—Yes, Senator, we plan to undertake a few roll cleansing activities. Obviously,with ‘return to sender’ mail, we have policies in place for official ‘return to sender’ mail, andthat can be a trigger to commence objection action. However, if mail is being returned froma postal address—and we can identify that it is a postal address by a particular code on theenvelope—we will then send that to a residential address where that residential address isdifferent, so we will reissue that. We have also provided a facility in the declaration on theenvelope for electors to provide us with any change of address information as well. We willbe using all that information as a source of roll cleansing data.

Senator FAULKNER—How have you dealt with silent enrolment for this?Mr Dacey—They have been handled through our division returning officers, as any mail

to silents would normally be, but they were not included in the mailing house mail-out.Senator FAULKNER—What about the quality control in terms of inserting the material

in the envelopes at the mailing house? Can you assure me that the contents of the envelopeswas uniform?

Mr Dacey—In terms of our quality control? I have heard of two instances where a ballotpaper has been missing. It is always possible. I am not saying there are not more, but in 12million if we only hear of two I think we are doing pretty well. But, yes, we had the samequality control procedures in place for that whole process.

Senator FAULKNER—I am quite interested in this issue, but I think it is best we look atit after the election. There will be a whole range of issues. I am in no doubt that you are allgoing to be very interested in it in a professional sense at the AEC and I think many of usin the parliament will be interested in it too. I am more interested tonight in using theopportunity of the estimates to get a bit of an understanding at this stage in the electoral event.I want to have a bit of an understanding about some of the issues that have received a bit ofpublicity. I am not going to detain you much longer, Mr Chairman, which might disappointyou.

I did read in one of the newspapers an article that went to the most asked questions. I donot know how the newspaper was able to establish what the most asked questions are. I couldnot at the estimates committee, and that worried me a bit. Could you explain that?

Mr Gray— No, I do not think I can explain that.Senator Minchin—Does that journalist say the information was supplied by the AEC?Senator FAULKNER—No, but it gives the 13 information line number—which is a good

thing—in the article. I am not critical of the journalist at all, by the way. It seemed like apretty—

Senator Minchin—I just wondered if they had got the information about the most askedquestions from the AEC, according to the article.

Senator FAULKNER—It says that eight out of 10 calls to the Constitutional Conventionhotline are from people wanting to know if they have to vote. Is that right?

Mr Gray— I would certainly say that one of the most common questions is whether it isvoluntary or compulsory.



Senator FAULKNER—Yes, and I think the point of this article was that the actualvoluntary nature of the vote, which is obviously a matter which is of very significant politicalcontention, was omitted in the guide that was sent to voters.

Mr Gray— That is right—it was.

Senator FAULKNER—Was that deliberate?

Mr Gray— No, that was not deliberate. I know that it is difficult to appreciate, but whenthe document was being prepared and put together there was great concentration on what wasin the guide, particularly the statements being made by each of the candidates, and so on.Three words were missing, I think, and I would put it to oversight. I regret that. But in all ourother advertising and other public relations material we have emphasised the fact that it isvoluntary. The fact that it was not in the guide is a straight oversight—nothing deliberate,nothing malicious, nothing intended—and I wish it were there.

Senator FAULKNER—I was not suggesting it was malicious or anything else, but I wasnot absolutely clear until you made that explanation whether it was a mistake or not.

Mr Gray— In hindsight, I wished it was there, because then it may not have been one ofthe most common questions asked on the 13 line. As I said, in our advertisements in respectof the—

Senator FAULKNER—I understand that at some level an error was made—so be it. Atleast you fessed up.

Senator Minchin—It was not a devious scheme by me to maximise the turnout.

Mr Gray— No, it had nothing to do with anybody else. It is within the AEC and we takefull responsibility.

Senator FAULKNER—I hear what you say. Senator Minchin, do you take fullresponsibility for the articles in the newspapers which describe the thing as a completeshemozzle?

Senator Minchin—That is the wonderful thing about democracy: everybody can have theiropinion and express it. I certainly completely disagree with it and I congratulate the AEC fororganising a very good, effective professional—

Senator FAULKNER—It was not the AEC that they were being critical of, Minister; itwas in fact—

Senator Minchin—What the parliament for the legislation it passed?

Senator FAULKNER—No, to be honest it was really you, particularly on the issue of thecoordination of this document with the ballot papers. You would recall some of the presscomment on that?

Senator Minchin—Yes. We did give a lot of thought as to the best timing. We did not havecomplete freedom because it was a matter of availability of newspapers. On advice from thedepartment, we did make a deliberate decision to insert that on the weekend after thecommencement of the mail-out based on on-balance advice, which I accepted, that to go outthe week before was to run the risk that the thing was thrown out before people received theballot papers. So I accepted the advice that the ideal time was to insert it as soon after themail-out commenced as we could, subject to availability in various newspapers.

Senator FAULKNER—We are just finishing off on newspaper articles now. They arealways a good source of material. The coordination of this with the ballot paper is obviously



quite a significant issue. I think there has been a lot of public criticism about that aspect. Thisis something that the AEC obviously—

Senator Minchin—It has nothing to do with them.Senator FAULKNER—Absolutely nothing to do with them. I suspect that most public

criticism of it has gone to the nature, timing of distribution and coordination of distributionwith ballot papers of this document.

Senator Minchin—I think that criticism is fundamentally unsound and misplaced. We madea deliberate decision on the timing. I think it was a very sensible one given that, when it wasinserted, the response rate was probably 10 per cent and 80 to 90 per cent of people still hadto return their ballot papers. I think the timing was, on reflection and with hindsight, verysensible. I am glad we did not put it out on the weekend before the mail-out commenced. Ithink the timing was very sensible.

Senator FAULKNER—Have you received any legal advice on whether the exclusion ofminor groups from this newspaper lift-out breached two relevant sections of the ConstitutionalConvention (Election) Act?

Senator Minchin—That is not a matter that has been drawn to my attention.Senator FAULKNER—You are not aware of legal advice being sought?Senator Minchin—No, I have certainly not sought any.Senator FAULKNER—That was something again that I read in a newspaper article.Mr Gray —No, there was a complaint from one group of candidates who drew my attention

to what they saw to be some inequity. I think they were suggesting that there had been somebreach. That has been dealt with in the same way as any other complaint would be. It has beenpassed for legal advice and that advice is yet to be received.

Senator FAULKNER—But would that be something dealt with by the AEC or thedepartment?

Mr Gray —Only so far as it was alleged to be a breach in some way of the ConstitutionalConvention (Election) Act.

Senator FAULKNER—A final question about disqualifications. I read an article in theAustraliannewspaper of Friday the 14th talking about a two per cent disqualification rate. Ido not think we have canvassed the issue of the disqualification rate before.

Senator Minchin—That ballot paper is rejected because there was not the requisiteinformation on it.

Senator FAULKNER—The article said that 16,000 votes were disqualified because theydid not have a verification signature or a date of birth and that 36,000 votes were under acloud, et cetera. Are these accurate figures? Can you give me any advice on this?

Mr Dacey—I cannot claim that they are accurate. They may have been released by one ofour officers at some stage, but it is still early days to say what the rejection rate might be.

Senator FAULKNER —Is ‘rejection rate’ the technical terms as opposed to‘disqualification’?

Mr Dacey—‘Rejected at preliminary scrutiny’ is the proper term, as any declaration votein a federal election would be.

Senator FAULKNER—Stumps. Thank you very much for your time this evening. Iappreciate it.



CHAIR —It is likely we will resume with programs 10 and 11, subject to the approval ofthe Senate, on next Monday evening at 8 p.m. The committee stands adjourned.

Committee adjourned at 10.25 p.m.


senate · 1998-01-21 · mr anthony cowley chair—i declare open this public hearing of the...

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