Environment and Communications Legislation Committee_2013_02!12!1702

COMMONWEALTH OF AUSTRALIA

Proof Committee Hansard

SENATE

ENVIRONMENT AND COMMUNICATIONS LEGISLATION

COMMITTEE

Estimates

(Public)

TUESDAY, 12 FEBRUARY 2013

CANBERRA

BY AUTHORITY OF THE SENATE

[PROOF COPY]

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SENATE

ENVIRONMENT AND COMMUNICATIONS LEGISLATION COMMITTEE

Tuesday, 12 February 2013

Members in attendance: Senators Abetz, Bilyk, Birmingham, Boyce, Bushby, Cameron, Heffernan, Joyce,

Ian Macdonald, McKenzie, Milne, Nash, Ronaldson, Ruston, Siewert, Singh, Waters, Whish-Wilson, Williams,

Xenophon.

Tuesday, 12 February 2013 Senate Page 1


SUSTAINABILITY, ENVIRONMENT, WATER, POPULATION AND COMMUNITIES

PORTFOLIO

In Attendance

Senator Farrell, Parliamentary Secretary for Sustainability and Urban Water

Department of Sustainability, Environment, Water, Population and Communities

Executive

Dr Paul Grimes, Secretary

Mr Malcolm Thompson, Deputy Secretary

Dr Kimberley Dripps, Deputy Secretary

Mr David Parker AM, Deputy Secretary

Mr Rob Sturgiss, Assistant Secretary, Land Accounts and Analysis Branch

Biodiversity and Conservation Division

Mr Sean Sullivan, First Assistant Secretary

Mr Greg Terrill, Assistant Secretary, Program Support Branch

Ms Claire Howlett, Assistant Secretary, Biodiversity Policy Branch

Dr Fiona Fraser, Acting Assistant Secretary, Indigenous Policy Branch

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

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

Environment Assessment and Compliance Division

Mr Dean Knudson, First Assistant Secretary

Mr Michael Ward, Acting Assistant Secretary, North, West and Offshore Assessment Branch

Ms Adrienne Lea, Assistant Secretary, Queensland and South Australia Assessment Branch

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

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

Ms Carolyn Cameron, Assistant Secretary, Strategic Approaches Branch

Ms Mary Colreavy, Assistant Secretary, Great Barrier Reef Taskforce

Heritage and Wildlife Division

Ms Alex Rankin, First Assistant Secretary

Mr Paul Murphy, Assistant Secretary, Heritage North Branch

Mr Nigel Routh, Assistant Secretary, Heritage South Branch

Ms Deb Callister, Assistant Secretary, Wildlife Branch

Regulatory Reform Taskforce

Mr Mark Flanigan, First Assistant Secretary

Ms Kelly Pearce, Assistant Secretary

Environment Quality Division

Dr Diana Wright, First Assistant Secretary

Mr Andrew McNee, Assistant Secretary, Environment Protection Branch

Mr Matthew Dadswell, Assistant Secretary, Environment Standards Branch

Mr Bruce Edwards, Assistant Secretary, Waste Policy Branch

Sustainability Policy and Analysis Division

Mrs Mary Wiley-Smith, Acting First Assistant Secretary

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

Marine Division

Mr Stephen Oxley, First Assistant Secretary

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

Page 2 Senate Tuesday, 12 February 2013


Mr Charlton Clark, Assistant Secretary, Commonwealth Marine Reserves Branch

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

Parks Australia Division

Mr Peter Cochrane, Director of National Parks

Policy and Communications Division

Mr David Williams, Assistant Secretary, Governance and Legal Branch

Mr Theo Hooy, Assistant Secretary, Review of the National Environment Protection Council

Ms Chris Schweizer, Assistant Secretary, International Branch

Mr Matthew Whitfort, Acting Assistant Secretary, Strategic Advice Branch

Ms Ruth Dewsbury, Acting Assistant Secretary, Communications and Ministerial Services Branch

Corporate Strategies Division

Ms Dianne Carlos, Chief Operating Officer

Ms Lily Viertmann, Chief Financial Officer, Financial Services Branch

Water Efficiency Division

Ms Mary Harwood, First Assistant Secretary

Mr Colin Mues, Assistant Secretary, Water Recovery Branch

Mr Richard McLoughlin, Assistant Secretary, Irrigation Efficiency Northern Branch

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

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

Water Reform Division

Mr Tony Slatyer, First Assistant Secretary

Mr Tim Fisher, Assistant Secretary, Murray-Darling Basin Reform Branch

Ms Tanja Cvijanovic, Assistant Secretary, Water Policy Branch

Mr Greg Manning, Assistant Secretary, Aquatic Systems Policy Branch

Mr Aidan Dalgliesh, Assistant Secretary, National Water Market System Branch

Commonwealth Environmental Water Office

Mr David Papps, Commonwealth Environmental Water Holder

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

Dr Simon Banks, Assistant Secretary, Environmental Water Delivery Branch

Office of Water Science

Ms Suzy Nethercott-Watson, Acting First Assistant Secretary

Bureau of Meteorology

Dr Rob Vertessy, Director of Meteorology

Dr Neville Smith, Deputy Director, Research and Systems

Dr Ray Canterford, Deputy Director, Services

Ms Vicki Middleton, Deputy Director, Corporate

Dr Dasarath Jayasuriya, Acting Deputy Director, Climate and Water

Great Barrier Reef Marine Park Authority

Dr Russell Reichelt, Chair and Chief Executive

Mr Andrew Skeat, General Manager, Marine Park Management

Mr Bruce Elliot, General Manager, Corporate Services

Ms Margaret Johnson, General Manager, Communication and Policy Coordination

Murray-Darling Basin Authority

Dr Rhondda Dickson, Chief Executive

Dr Fraser MacLeod, Executive Director, Information and Compliance Division



Mr Russell James, Executive Director, Policy and Planning Division

Mr Frank Nicholas, Executive Director, Corporate Services Division

Ms Jody Swirepik, Executive Director, Environmental Management Division

Mr Tony Morse, Acting Executive Director, River Management Division

Dr Tony McLeod, General Manager, Water Resource Planning

Mr David Galeano, General Manager, Policy and Planning

Ms Katrina Maguire, General Manager, Engagement

National Water Commission

Mr James Cameron, Chief Executive Officer

Sydney Harbour Federation Trust

Mr Geoff Bailey, Executive Director

Committee met at 9:03

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

Communications Legislation Committee. The committee will resume its examination of the Sustainability,

Environment, Water, Population and Communities portfolio. Under standing order 26, the committee must take

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

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

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

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

The extract read as follows—

Public interest immunity claims

That the Senate—

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

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

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

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

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

(1) If:

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

a Commonwealth department or agency; and

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

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

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

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

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

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

minister.

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

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

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

document.

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

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

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

committee as in camera evidence.

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

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

the matter to the Senate.

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

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

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

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

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



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

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

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

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

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

Department of Sustainability, Environment, Water, Population and Communities

[09:04]

CHAIR: I welcome Senator the Hon. Don Farrell, Parliamentary Secretary for Sustainability and Urban

Water, representing the Minister for Sustainability, Environment, Water, Population and Communities and

portfolio outcomes. We now turn to outcome 2 and call officers from the department in relation to program 2.1,

Management of hazardous waste substances and pollutants.

Senator BIRMINGHAM: Good morning, everyone. Can I start off by just getting some clarity from the

additional estimates papers in this area. There are some adjustments around voluntary productive stewardship that

relate to a return of revenue to the Consolidated Revenue Fund, as outlined on page 18 of the additional estimates

statement. Are you able to enlighten me as to what those funds are and why this action has been undertaken,

please?

Dr Wright: The figures you are referring to are to provide for cost recovery for the voluntary program. The

program provides for those that wish to seek accreditation to be charged a fee for assessment, and the way that

that is being achieved is through an appropriation. That is the way that any fees that are charged are returned to

the department.

Senator BIRMINGHAM: Any fees that are charged are returned to—

Dr Wright: To the program to fund the accreditation process. So we are no longer able to take any revenue

directly; it has to be appropriated back to the department. That is the new process from the Department of Finance

and Deregulation.

Senator BIRMINGHAM: Okay, so it has to do a loop.

Dr Wright: Yes, so there is a bit of a time delay in receiving the money.

Senator BIRMINGHAM: Okay, so you return it to them and they return it to you.

Dr Wright: That is correct.

Senator BIRMINGHAM: Excellent. That is called government. I will not dwell on the bureaucracy behind

that but will simply move on to the application of this department's role in the carbon tax and, in particular, the

equivalent charges on refrigerants. We ascertained last time that the department, I gather, expects to collect

approximately $190 million in the first year. Is that correct?

Dr Wright: That is the revenue forecast developed by the Treasury portfolio.

Senator BIRMINGHAM: How much has the department collected thus far?

Dr Wright: In relation to the equivalent carbon price specifically, $51.1 million.

Senator BIRMINGHAM: As at?

Dr Wright: As at 31 January. We are still in the period for the second quarter. Revenue is collected on a

quarterly basis, so we have concluded the first quarter and we are part of the way through the second quarter.

Mr Thompson: Part of the way through the second quarter collection.

Dr Wright: So it is not the full quarter.

Senator BIRMINGHAM: The quarters, I assume, operate on normal quarters of the financial year.

Mr Thompson: Correct.

Dr Wright: Yes.

Senator BIRMINGHAM: How much did you collect in the first quarter? Let us perhaps do it this way.

Dr Wright: In the first quarter, $25.5 million.

Senator BIRMINGHAM: And that has all been collected?

Dr Wright: It is $25.7 million in the second so far. Entities have 60 days after the close of the quarter for all

of the processing to occur for payment. That is why we are not concluded in the second quarter as yet.

Senator BIRMINGHAM: So it is your expectation—60 days having long since passed for the first quarter—

that all first quarter receipts—



Dr Wright: That has concluded.

Senator BIRMINGHAM: Okay. And for the second quarter there are a few days left in which entities—

Dr Wright: Until 1 March.

Senator BIRMINGHAM: All the way through to 1 March, entities could remit. Do you have any ability to

assess whether most have now or not?

Mr Dadswell: No, entities have until 1 March to pay their second quarter invoices. I do not have any figures

available as to how many have paid to date. They naturally leave their payments until the latest possible date in

most cases.

Senator BIRMINGHAM: In terms of the invoicing process, does the department invoice them knowing how

much has been imported during that quarter, or is it a case of their simply having to remit against what they know

that they have imported?

Dr Wright: It is a formal reporting process and the invoicing is against the amount that has been imported.

Senator BIRMINGHAM: The department should be aware, then, as to how many invoices are outstanding or

the value of invoices that are outstanding?

Mr Dadswell: I think you would expect the $25.7 million to be the amount for the second quarter. It would

only be if some entities have not reported yet, as they should have, but come in late. But that tends to be at the

smaller end of the scale. I think it is fair to say it will be close. We will have to wait until the end of the financial

year for the complete figures for each quarter, but at this stage $25.7 million is a reasonable estimate for the

second quarter.

Senator BIRMINGHAM: In that case, $51.1 million for the first two quarters of the year—with the

possibility of some minor additions or adjustments—is obviously a long way short of half of the $190 million

annual forecast. Is there a particular reason in terms of timing of importation of gases or the like that might

explain why the forecast is so much higher than the revenue received?

Dr Wright: At the present time, it is difficult to assess the number of factors that are at play. We know, for

example, that a number of companies have already changed over to low-global-warming-potential gases. For

example the major supermarkets have all switched over. There is that sort of factor at play. There is most likely

increased maintenance of equipment. I think at the last Senate estimates I advised that leakage rates from

equipment can be anywhere from between 40 per cent per annum, so if there is improved maintenance then

clearly the need for gas goes down. The carbon price equivalent is likely to encourage recycling, so that is another

factor at play where you would not see gas being imported because recycled gas was being used. And there may

have been some additional imports before the carbon price kicked in on 1 July. So it is not possible to say at the

present time what is driving these figures and whether there will be a spike towards the end of the year. If imports

are lower, it could be an early indication that the government's intention of encouraging transition to lower-

global-warming-potential gases is already working.

Senator BIRMINGHAM: Did the department previously collect reporting information from gas importers?

Dr Wright: Yes.

Senator BIRMINGHAM: So you have some historical appreciation of the pattern of importation and it is

relatively even throughout the year?

Mr Dadswell: Yes, we do have a history of what the gas imports for ozone-depleting substances and synthetic

greenhouse gases have been historically. They do generally follow a regular pattern throughout the course of the

year.

Senator BIRMINGHAM: If indeed Dr Wright is correct and perhaps there has been some movement as a

result of this cost being applied in terms of the patterns of behaviour around the use of these gases, and this is the

new average, then it is likely there will be about a $90 million shortfall in revenue if the next two quarters reflect

the first two quarters of revenue.

Mr Thompson: Dr Wright indicated a range of factors which could be at play here. Changes in importation

and all of the things that she mentioned have an impact on the import rates, but there are other movements in

importation which may explain this. It is difficult for us to draw a trend line from two quarters or even from this

individual year about what might be the new normal. As we said at the outset, the revenue projections are ones

that were developed by the Treasury based on historical averages, and we are still waiting to see them.

Senator BIRMINGHAM: In the preparation of the additional estimates statements or the preparation of

MYEFO, was any consideration given to revising down the estimated revenue from these measures?



Mr Thompson: My understanding—this is probably more a question for the Treasury—is that it is not typical

to revise these sorts of revenue estimates in the MYEFO context. We did not provide advice on that matter. I do

not know whether it was considered by Treasury.

Senator BIRMINGHAM: Is this revenue that the department receives banked by the department for support

of internal departmental activities, or is it then on-forwarded by the department into consolidated revenue so that

you are acting as the tax collector in this regard?

Dr Wright: It goes straight to consolidated revenue.

Mr Thompson: The department has a separate appropriation for its departmental activities in administering

the scheme.

Senator BIRMINGHAM: In terms of getting an appreciation for the volume of gases involved, Dr Wright,

are you able to give me an understanding of what volume these figures of $25.5 million and $25.7 million equate

to and how much less that is compared with what had been expected?

Dr Wright: The imports of synthetic greenhouse gases in the first quarter of this financial year were 679

tonnes and 702 tonnes in the second quarter—that is metric tonnes.

Senator BIRMINGHAM: Was there an estimate of what had been expected on a quarterly basis, or was that

$190 million forecast simply over an annual basis?

Dr Wright: That was an annual basis.

Senator BIRMINGHAM: How many tonnes would that equate to?

Dr Wright: I do not have that figure with me. We would have to double-check with our colleagues in

Treasury.

Senator BIRMINGHAM: Thanks, Dr Wright. There is one other area I would like to discuss, and that relates

to your responsibilities around product stewardship. Are you able to give us a quick update of the recognition of

different product stewardship schemes by the department and by the government, and how many have been

approved in the different scopes of schemes—from voluntary to mandatory—that exist?

Dr Wright: There are three categories of product stewardship that can occur under the legislation. The first is

mandatory and there are none under that at present. The second is co-regulatory and I think, as you would be

aware, the television and computer scheme regulations were made in, I think, November 2011, and this financial

year is the first target year for that scheme. Currently there are three product stewardship arrangements accredited

under that scheme, and as at 11 February 118 access points had been rolled out. In terms of the voluntary

accreditation, the regulations were only made in November. The department is currently in the process of putting

out the guidelines so that any entities that wish to put forward for accreditation can do so. We have not had any

applications as yet, but we are just ready to start.

We are not certain as to which entities may apply. We have an expectation that the tyre industry will seek

accreditation. They are currently in the process of getting approval through the ACCC to run a scheme, and once

that has occurred they have a draft approval. Then we have an expectation that they would apply. It is likely that

the existing scheme for recycling commercial fluorescent lights will also apply—that is FluoroCycle. After that, it

really depends. There are a number of existing schemes that possibly may apply: drumMUSTER is longstanding

and MobileMuster is equally longstanding. There is quite a lot of interest, I understand, from the battery sector

and also paint, but we have no knowledge. We have not been formally approached by those industries as yet.

Senator BIRMINGHAM: My final question, very quickly: is the government giving any consideration, in

either the mandatory or the co-regulatory space, to pursuing any other recognitions at present?

Dr Wright: A notice was issued, I think, 18 months ago to say that governments were looking at packaging.

Under the legislation, you have to give advance notice to industry if government is considering regulation under

the product stewardship legislation, regardless of whether that is mandatory or voluntary. As you would be aware,

there is a current COAG process under the Standing Council on Environment and Water to assess whether

additional product stewardship should be applied to packaging. That process is still happening.

Senator BIRMINGHAM: Thanks, Dr Wright.

Senator SINGH: I would like to ask some questions in regard to hazardous substances and the Rotterdam

convention. I understand that SEWPaC is the lead agency for Rotterdam on prior informed consent and that the

conference of the parties will be held in April this year. Firstly, I presume the department will be sending

delegates to the conference of the parties meeting. What will be the principal issues covered at that conference?

Can you outline Australia's position on the listing of chrysotile asbestos under that convention and the negotiation

processes that are being undertaken with other states parties to that convention?



Mr McNee: We will certainly be attending the Rotterdam convention this year. This year will be quite

significant because this will be the first time that the three chemical conventions—the Basel convention, the

Stockholm convention and the Rotterdam convention—will be meeting in the same place at the same time to try

and build synergies across the chemical suite of conventions. Specifically in Rotterdam, we will obviously be

looking at new proposals for chemicals that should be listed and also reviewing those activities that have been

undertaken in terms of the convention—compliance and other activities. Of particular interest to Australia will be

the consideration of chrysotile asbestos. That has come before the convention conference of the parties three

separate times. Each time, a significant majority of parties to the convention have indicated a desire to see

chrysotile asbestos listed, therefore triggering the requirements for prior informed consent. At the last conference

of the parties, in 2011, Australia was very active in working with other countries, particularly those from the EU,

in really giving a particular focus to that issue. Even so, a small number of countries continue to oppose that

listing. We were instrumental in generating a declaration that at least set out the very clear reasons why chrysotile

asbestos should be listed.

Senator SINGH: That was led by Canada—that small number of countries opposing it.

Mr McNee: That is right.

Senator SINGH: It is a consensus process.

Mr McNee: Particularly with this part of the convention, the listing of new chemical substances, the

requirement is that it is a consensus listing so that there is no capacity, for example, to move to a vote where

clearly the majority sat with those who would like to see it listed. Since that, Minister Burke wrote to Canada last

year urging them to reconsider. Subsequently the situation has changed in Canada, and Canada has now indicated

that it would be likely to support a listing. Unfortunately, that does not appear to immediately change the game in

the sense that a number of countries are still active in the production and export—particular Ukraine—and,

importantly, Russia has now become a party to the convention and has indicated that it too would oppose a listing.

At this stage it will certainly come up at the convention and we will be active in terms of making sure that this is a

significant issue, but at this stage it is unclear what the success of that might be.

Senator SINGH: The new Office of Asbestos Safety: they will be working with SEWPaC on the preparations

for COP 6?

Mr McNee: Yes. The Office of Asbestos Safety has recently been established on the back of the Asbestos

Management Review. There were recommendations in there for that body in terms of coordination of activities

and, particularly, acting as a focal point for international activities in relation to asbestos. We will be working

closely with them in the preparation for the whole-of-government brief.

Senator SINGH: Is the department aware of the UNEP global chemical report that was released last

September? It had a number of general recommendations and specific recommendations within it. What are the

recommendations that Australia is considering adopting in that report? You might want to take that on notice—

there are a few recommendations in there.

Mr McNee: We are certainly aware of the report. It was a very useful report.

CHAIR: Senator, I am going to have to wind you up, I am afraid.

Mr McNee: We will take that on notice, Senator.

Senator SINGH: Thank you.

CHAIR: Senator Whish-Wilson, you have got a couple of minutes.

Senator WHISH-WILSON: Thanks, Chair, I am going to talk like a machine gun. I have just got a couple of

quick questions—

CHAIR: Or you could put them on notice.

Senator WHISH-WILSON: I will put some on notice, thank you, Chair. The National Television and

Computer Recycling Scheme: perhaps on notice could you give us an update on the number of televisions and

computers that have been collected on a state-by-state basis, what sorts of recycling rates that translates to and

how that relates to your target of 2010 from 17 per cent to 30 per cent?

Senator Farrell: I think there would be a weight rather than an actual number.

Senator WHISH-WILSON: A weight, okay, and how it might translate to your targets.

Mr McNee: We will take that on notice.

Senator WHISH-WILSON: Are there any plans to expand to other e-wastes such as mobile phones and other

home appliances?



Dr Wright: There are no immediate plans, but the issue has been raised with the department by a number of

stakeholders. It is something where one would need to go through a regulation impact assessment process, and we

will assess that further. The scheme is only 12 months old now and we are in the first target year, so we would not

wish to do that prematurely, but one would need to do an economic assessment on costs and benefits of adding

other product classes. Clearly, with converging technology, it is an increasing issue.

Senator WHISH-WILSON: Would the infrastructure be part of that issue, in terms of having the

infrastructure rolled out around the country to cope with the collection of that sort of waste?

Mr Thompson: Certainly a common infrastructure, if we were to piggyback on the TVs and computers

scheme, would be one of the factors that would be taken into account in any cost-benefit analysis.

Senator WHISH-WILSON: Are there any jurisdictions with free collection points in the states at the

moment?

Mr Thompson: For mobiles?

Senator WHISH-WILSON: Yes, or for televisions and computers, I suppose.

Dr Wright: The scheme is free at the point of drop-off. Currently there are 118 access points, as of 11

February. That has almost doubled since 19 November. The scheme is still in rollout and the requirements under

the legislation for Australia-wide access need to be in place for all arrangements by the end of this calendar year.

Senator WHISH-WILSON: Can I just confirm if there are any in Tasmania, my home state, yet?

Dr Wright: Tasmania has not had any access points, but we understand that quite a number are about to be

opened.

Senator WHISH-WILSON: Fantastic.

Dr Wright: It is within the control of the arrangements as to how they stage this around the country.

Senator WHISH-WILSON: Is there any evidence of importers passing on the costs of these schemes?

Obviously they are syphoning in money to pay for these schemes. Has anything been put in place to monitor that?

Dr Wright: It is a highly competitive sector with very low margins, Senator, and nothing has been raised with

us to date.

Senator WHISH-WILSON: Fantastic. I will put my other questions on notice.

CHAIR: That concludes the time for that area. I now call witnesses from the Sydney Harbour Federation

Trust.

Sydney Harbour Federation Trust

[9:31]

CHAIR: Mr Bailey, do you wish to make an opening statement?

Mr Bailey: No, Senator.

CHAIR: We will go to questions. Senator Birmingham.

Senator BIRMINGHAM: Welcome, Mr Bailey. In terms of visitor numbers to the trust and the different

parks and activities, what level of data do you collect for those visitor numbers and, in particular, to what extent is

it broken down between intrastate, interstate and overseas visitors?

Mr Bailey: The data we collect is variable; it is dependent on the site and the ease with which we can collect

it. Overall, approximately 600,000 people visited trust sites in the last 12 months. Of those, roughly half went to

Cockatoo Island and the rest were distributed over the other sites. On the extent to which we break them down

into local, interstate and international visitors, we have very limited data on that so far. We have done some

survey work on Cockatoo Island for particular events, but we do not have good data across the board at this stage.

At North Head, we have only just completed the installation of much more accurate measuring devices.

Cockatoo Island has a laser counter on both wharves, so it is very simple to count people in and out. At the other

sites, because they are parklands with lots of access points, both pedestrian and vehicular, it becomes quite

difficult to count them. The system we have at North Head is a video camera set-up that is able to convert images

to numbers. As I said, we have only just installed that, so we are not sure what the counts are that are coming

back. The numbers I have given you already are, in large part, extrapolations from particular counts that might be

done for a week or two.

Senator BIRMINGHAM: In terms of any of the more detailed surveys you have done, are you able to give

any estimate as to what your trends have been for international visitation over the last few years?



Mr Bailey: International visitation I think is still very low. The vast majority of visitors to our parklands are

Sydneysiders and there is a sort of doughnut effect: the closer people live to the sites, the more likely they are to

be visitors. For Cockatoo Island, for example, the dominant number of people who come are from the Sydney

inner-western suburbs. International visitors would be—and I am guessing—a very small proportion of the total

number.

Senator BIRMINGHAM: Does the trust undertake any particular activities to try to boost or address those

issues around international visitation numbers?

Mr Bailey: To date we have done minimal work along those lines but we intend to increase that effort.

Primarily, I guess our brief is to open these sites to access for Australians and we have focused on that. But

international visitation is certainly something that we would like to encourage as well.

Senator BIRMINGHAM: With regards to your accommodation facilities, how many different

accommodation facilities does the trust operate?

Mr Bailey: I guess it depends on how you count. We have some historic houses that we have restored and

they are furnished to a very high standard. Then we have camping. You can bring your own tent to whatever

standard you like. Very few people do that. Most people choose to rent one of the tents that we have pre-

erected—a basic sleeping mat on the ground. Then there is what we call 'glamping', which is a higher standard

with a bed and fresh linen and so forth, but you are still in a tent.

Senator BIRMINGHAM: I will look forward to Hansard making sure they get 'glamping' correct. What are

your occupancy rates across your different accommodation options?

Mr Bailey: Again, variable. The houses are around 50 to 60 per cent. The glamping tents are very high—and I

can take that question on notice to give you the exact figures—with a higher occupancy rate than the normal

camping. The occupancy rates for bring-your-own are the lowest of all, around 20 per cent. It is obviously very

seasonal. In wintertime it drops right back, while in summertime particularly during the period we are just

finishing, it is very full.

Senator BIRMINGHAM: Glamping has got me somewhat fascinated, but nonetheless, maybe next summer!

The rate of 50 to 60 per cent for the furnished houses at that level of accommodation seems a little below

comparable accommodation options perhaps in such a prime location. Has the trust looked at how that compares

and what might be done to be able to boost those occupancy rates?

Mr Bailey: We have and, indeed, we are looking at it right at the moment. We are certainly looking at how we

can boost that occupancy rate. Almost all of the accommodation is on Cockatoo Island and, whilst it is a prime

location, it is also on an island and if you want easy access to the city then you are limited by the ferry timetable.

We certainly think we can increase that occupancy rate. We have had increasing interest from the corporate sector

for away days. They like the idea that their employees are trapped on an island and cannot skive off during the

middle of the day, so that is a growing part of the market. Yes, we are certainly looking to increase the occupancy

rate. Having said that, it is a profitable business.

Senator BIRMINGHAM: The last questions from me concern the implementation on the MOUs with

Defence around clean-up issues and so on. Are all of the milestone targets and objectives under that MOU being

delivered upon and met?

Mr Bailey: I presume you are referring to HMAS Platypus and the MOU with Defence on the clean-up of that.

The answer is, yes, we are meeting our targets. We are due to complete that project by the end of this year. A very

large amount of preliminary work has had to go into getting the site ready to undertake that decontamination and

the treatment trials, the sample trials, are due to commence perhaps today or tomorrow—certainly any day now.

We have completed the odour control structure, which is a 3,800 square metre 'tent' over the whole site. We

have also completed the associated emission control systems and water treatment plant that go with that. All of

those have been commissioned. The sampling will be taking place at the moment, and then within the next few

weeks we hope to get underway with the main clean-up. We would expect that to be complete by May and the

subsequent works, such as water treatment facilities and so forth that need to be installed permanently on the site,

in place also. Then the whole decommissioning of the site brings us to the end of the year. So the dirty part of the

work is about to start any minute now.

Senator BIRMINGHAM: What is the proximity of both activities on site and the transport routes for those

operating at the site to local residents?

Mr Bailey: Very close. The site is surrounded by medium- to high-density residential development, so we

have had to go to considerable lengths to minimise and ameliorate any of those impacts—hence the enormous tent



structure that has been built over the site to contain all of the odours, which is a sort of negative pressure tent. A

great proportion of the rehabilitated material will be retained on site. The most toxic will be removed, but it will

be removed by barge, so the local roads will not be used for that. There is obviously limited use of the roads, but

it is really for the passage of vehicles to bring equipment and vehicles in. So there is not a line of trucks coming

off the site; all of that will be taken off by a barge.

Senator BIRMINGHAM: Mr Bailey, to give us an estimate of the scale of what you are undertaking here:

how much material do you expect to be treated and kept on site versus how much to be completely removed?

Mr Bailey: The volumes to be removed and retained I have not got in front of me—I think I had it last time I

was here, but I cannot bring it to mind. In total, there are about 30,000 tonnes of contaminated waste that we

treated. The great majority of that I know will stay on site, but I can come back to you with the precise figures to

be removed.

Senator BIRMINGHAM: Is there a need to bring infill back into the site?

Mr Bailey: No, there is no need to bring infill into the site. Part of the task will be to distribute the

rehabilitated fill on the site as part of the landscape works—the parklands.

Senator BIRMINGHAM: Thanks, Mr Bailey. That is all from me.

CHAIR: I have a couple of questions. I have received correspondence from a constituent in relation to the

cancellation of some festivals at Cockatoo Island. The complaint that is being made to me is that, if you start a

festival, you have to plan not for one festival but for at least a follow-up to get the festival locked into the psyche

of the public. What is the situation in terms of the festival—I think it is Outpost?

Mr Bailey: Outpost.

CHAIR: Can you take us through the issues there, please.

Mr Bailey: Senator, the festival that you are referring to is called the Outpost festival. It is a festival of street

art. There are many genres in street art, of which graffiti is only one, and it is an art form—or a group of art

forms—of growing interest. In 2011 the trust, in its planning for the future of Cockatoo Island—we have very

successfully held contemporary art festivals called the biennale, and they happen, in accordance with their name,

every second year—were looking to, in the alternate years, have another cultural art festival at a similar time. We

chose to focus on street art because we thought that that was not an art form that was being represented well in the

more conventional galleries et cetera.

The Outpost festival in 2011 proved to be very successful. We had 85,000 people come to visit it, and I think

the trust regarded it as a great success. Because of that—and I guess along the lines of your question—we thought

that it was something we would like to continue. So we commenced planning for a second one to be held this

year. That planning got to an advanced stage, but I guess the trust has encountered a tighter financial situation in

this last 12 months. We have had to incur some rent reductions and have had pushback from some of our tenants,

so our revenue streams have not been as strong as they had been. Coupled with that, the cost of putting on the

festival began to exceed our budget significantly, and we were confronted with some hard decisions. Deferral,

reduction in scope—all of those things were considered by the board just prior to Christmas. In the end, the

decision was taken by the trust to cancel the event because we could not afford to put it on as we had planned. I

think there is no doubt the organisation still has a commitment to it, but it cannot afford to put it on this year.

CHAIR: Given that it was such a success, was there any effort made to try to get private sponsorship or do a

public/private partnership?

Mr Bailey: Absolutely. The cost of putting it on is around $1 million. We had attracted approximately

$400,000 in sponsorship, of which a third of that was cash. The rest was in kind. Unfortunately, however, that

was not enough to get us there. We had hoped to get even greater levels of sponsorship than we were able to

achieve.

CHAIR: There have been a number. There is the Outpost festival. There was the Cockatoo Island Film

Festival. There was the World's Funniest Island comedy festival and the Cockatoo Island music and culture

festival. So there have been a few festivals there.

Mr Bailey: There have been many more than that. The first event we held in 2005, before the island was fully

open to the public, was a music and arts festival which was very successful. About 20,000 people came. We have

subsequently had three biennale contemporary art festivals. The most recent attracted over 200,000 visitors. We

have had major Red Bull stunt motorcross events on the island. We have had a whole range of events of a very

wide variety. Most of them have been very successful; a few have not. The film festival you mentioned did not

succeed. It was run by a private group, as was the comedy festival. There was one held, and for the second one



they were not able to sell enough tickets, so they canned that. Not everything we do or are involved in can

succeed, but the majority of them have.

CHAIR: The constituent indicates to me in the correspondence that he believes that you have real

achievements in rehabilitating sites around the harbour but is highly critical that on the cultural front, basically

saying the trust is badly led. Then he goes to another important question. He said Cockatoo Island is a World

Heritage site, one of a number of convict sites around Australia listed for their significance, and asks what the

trust is doing to promote the great historical heritage of the island. He has seen precious little: a couple of

publications, some signage, a token effort on the website, all of it implemented some years ago. Could you

explain to me if there is any validity in that critique?

Mr Bailey: I guess whether the trust is well led is for other people to judge. For the crucial point about the

cultural events: the trust, unlike just about every other agency I know, is completely self-funding. Our revenues

from our commercial activities are what fund our cultural events, and we have to live within our means. We have

found on Cockatoo Island in particular that it is ideally suited for cultural events and we have had an awful lot of

them. The great majority of them are successful. If you are particularly interested in street art then obviously you

are going to be disappointed that the second one was not held. By the way, I do not know of any other street art

festival in the world, so it is a unique activity of this scale. I think the trust was bold in going there. When we first

announced the idea of street art most people just looked askance at us and said: 'That's just vandalism. Why would

you do that?' So I think we have taken some bold decisions.

As for the World Heritage site—

CHAIR: Before we go to that, let's stay with the street art. Did the trust marketing manager go to New York

and Berlin to investigate street art?

Mr Bailey: She went to New York and Berlin to investigate a range of things. Street art was one of them.

CHAIR: So it was not just street art.

Mr Bailey: No. In fact, in New York that was not relevant at all.

CHAIR: Could you provide us on notice with details of what that trip was about.

Mr Bailey: Sure.

CHAIR: So the historical heritage.

Mr Bailey: Regarding the promotion of World Heritage we have recently produced a whole suite of

publications. Your correspondent may not have seen them just yet; they have only just been published and

released. We have also upgraded our self-guided audio walking tour and have a range of promotional activities

and events on the island planned for the next year. Perhaps that is not enough, but it is within our means.

CHAIR: Thank you. That concludes the time allocated for the Sydney Harbour Federation Trust.

[09:50]

CHAIR: I now call officers from the department in relation to outcome 5, program 5.1, conservation of

Australia's heritage and environment. Senator Siewert.

Senator SIEWERT: I know I only have a short amount of time, so I want to ask two sets of questions about

Aboriginal heritage. First I want to follow up the number of section 9 applications that you have had over the last

10 years if that is possible, how many from Western Australia and how long the average processing time is.

Dr Dripps: You are referring to the Aboriginal and Torres Strait Islander heritage?

Senator SIEWERT: Yes.

Ms Rankin: We could take those details on notice since I only have details since 1984. I can give you those.

Senator SIEWERT: I am looking for most recent history of the use of the act.

Ms Rankin: We will have to take that on notice to give you the rest.

Senator SIEWERT: Could you do that for section 10 applications as well. I am particularly interested in the

processing time for them. I want to home in on the two Western Australian ones that have been most problematic

in the recent past: Yindjibarndi and James Price Point. Could you tell me where we are up to, when those

applications were first received and where we are up to in processing them. I think there are nine and 10 for both

of them.

Mr Routh: You are interested in the Fortescue Metals one with Yindjibarndi?

Senator SIEWERT: Yes, and James Price Point.



Mr Routh: The details of that one are reasonably complex because there have been applications lodged and

then amendments to those applications, then applications withdrawn at different times. We can give you detailed

documentation of the sequence of events. At the moment, there is a reporter currently working on the case. They

were appointed under the ATSIP act. That is an active work in progress the reporter is working on with the

respective parties, and obviously the department and the minister are awaiting the report. That is the basis for the

minister's consideration for a decision.

Senator SIEWERT: Okay. When do you expect that to be done?

Mr Routh: It is very difficult, as you can probably understand, to put a precise time frame on it, because it is a

matter of providing natural justice and an opportunity to comment on the material to all of the interested parties.

That has been ongoing for quite a period of time. Obviously we hope that that would occur this year; but, because

of the nature of the need to consult and provide opportunity for the relevant parties to provide feedback and

comment, that may be ongoing. We also recognise also that the applications, as they have been, can be varied

along the way by the applicants.

Senator SIEWERT: You are aware that there are suggestions that part of the site has been destroyed.

Mr Routh: We certainly monitor reports in the media, and other parties bring things to our attention, so we

are aware of claims about what has or has not occurred on the site.

Senator SIEWERT: When did you first receive the initial application?

Mr Routh: 18 November 2011. There were three applications received under, respectively, sections 9, 10 and

12; but, as I said, there have been withdrawals and variations of those applications. The applicants withdrew the

section 9 and 12 applications on 2 March 2012. The minister appointed the reporter to write the section 10 report

on 20 December 2011. The applicants amended their section 10 application on 2 March 2012. There were notices

placed, as required under the act, in the government gazette and in local newspapers on 30 May and into June in

the Pilbara newspapers in 2012. So it is an active, ongoing process.

Senator SIEWERT: Thank you. What applications do you have and when did you receive them for James

Price Point?

Mr Routh: The James Price Point process is again fairly complex. We received the application on 8 July

2011. The section 9 application was then revised and varied by the applicant on 22 May 2012. Then additional

documentation was provided by the applicant on 9 August 2012.

Senator SIEWERT: And is that also subject to a report?

Mr Routh: Yes. The minister appointed a reporter in January 2013.

Senator SIEWERT: Just this year.

Mr Routh: Yes. So that is a process that is also underway.

Senator SIEWERT: Why the delay?

Mr Routh: They are very complex processes. The department deals with priority applications and finding an

appropriate reporter is something that involves approaching people with relevant expertise and the minister

making a decision on which one to appoint.

Senator SIEWERT: So you are aware that the Western Australian department has given the go-ahead for the

application by the mining company.

Mr Routh: We are aware of what the Western Australian government has announced that they have approved,

yes. I think there have been some recent decisions on that as well.

Senator SIEWERT: Yes, there have.

Mr Routh: Yes, in December last year.

Senator SIEWERT: Yes, by the Western Australian department. How much of what the Western Australian

department has approved covers the area of the application—is it sections 9 and 10—for James Price Point?

Mr Routh: If you are asking about the geographic area and the overlap, we would have to have a look at that

and take that on notice.

Senator SIEWERT: Could you please. You said before that you have the documentation of the process for

both of them. Could you also please take on notice to supply those.

Mr Routh: Yes.

Senator SIEWERT: Thank you. Can I ask you about the Indigenous Heritage Program and funding for those

applications. When will they be announced?



Dr Dripps: As you are aware, we are not able to answer questions about when things might happen in the

future. We cannot know precisely when that might happen. We are expecting them to be announced in the not-

too-distant future.

Senator SIEWERT: Is there a time frame for applications I understand were closed on 12 June last year?

Mr Sullivan: As you said, the application process is closed. The assessment process is finalised. When the

announcement is made is a matter for the minister. We expect it will be in the near future.

Senator SIEWERT: So the assessment process has been finalised?

Mr Sullivan: Yes.

Senator SIEWERT: Thank you.

Senator McKENZIE: I had some questions around heritage conservation. I asked some questions a couple of

estimates ago about communities, not just places, being able to be covered under concepts of heritage values.

Could you let me know how many communities have been able to access funding through this area through the

department?

Dr Dripps: You are asking how many heritage grants have been—

Senator McKENZIE: Not for places but for communities.

Dr Dripps: I am not sure we have that information immediately at hand. We can take that on notice.

Senator McKENZIE: That would be fantastic.

Could you briefly comment on the importance of bushfire research to conservation within heritage funding? Do

you rely on bushfire funding or research being done to assist you in your work in this area?

Dr Dripps: No.

Senator McKENZIE: Thank you.

Senator BIRMINGHAM: Is it correct that $1 million in heritage grants got the chop in the MYEFO grants

review?

Dr Dripps: That is correct.

Senator BIRMINGHAM: What impact will that have on the number of grants—

CHAIR: Is 'chop' a new public service term?

Senator BIRMINGHAM: I think Dr Dripps understood what I meant!

CHAIR: I think she did!

Senator BIRMINGHAM: What impact will that have on the number of grants that are given out this year?

Mr Sullivan: As you said, the original appropriation for 2012-13 was $8.4 million, which was reduced to $7.4

million as part of the government's consideration of uncommitted grants as part of the general grants pools. Of

this $7.4 million, $2.8 million is contracted due to previous funding rounds. That means there is currently $4.6

million unallocated for this financial year. We expect guidelines for the allocation of that $4.6 million—the

remaining funding for 2012-13—to be released in the near future. The reduction in funding has no impact on

previously funded projects. As for what that will mean in terms of general numbers: it is impossible to give you a

quantitative answer given the range of programs and range of sizes of projects that that program supports.

Senator BIRMINGHAM: Is there a shortage of applications for heritage grants?

Mr Sullivan: I do not have the total figures for previous rounds and how many applications were received, but

there is not a general shortage. From recollection, I think in a previous funding round in 2011-12 around 550

applications were received, of which approximately half were funded.

Senator BIRMINGHAM: So approximately 270 applications from the previous round would not have been

funded, and that was with just on $8 million of grants in the previous round.

Mr Sullivan: I will have to clarify the exact number for you; but, as with a number of programs—in fact, the

majority of programs I have worked on—the applications will outweigh the number of projects that are inevitably

approved. That is the nature of competitive grants processes.

Senator BIRMINGHAM: Certainly, and obviously when there is $1 million less available in the pot for

those grants there will be fewer projects funded when the consideration is given. It would be dependent upon the

size and the volume of the grants given out, but there will be fewer projects funded.



Mr Sullivan: We anticipate that there is $1 million less in funding for this financial year. I cannot tell you that

there will be fewer projects, because there may be more smaller projects than last year, but there is a reduction of

$1 million.

Senator BIRMINGHAM: Can you just give me a very quick summary, in terms of these heritage grants, as

to the range of grants provided, the priority projects—the types of projects that they are provided for?

Mr Sullivan: I am happy to give you the total list of projects funded previously on notice, but the types of

projects that are funded under the heritage grants are protecting national historic sites, assisting with the recovery

from natural disasters, commemorating eminent Australians, sharing community heritage stories and celebrating

community heritage.

Senator BIRMINGHAM: Quickly, one other area in terms of heritage assessments undertaken: have the

heritage assessments for the Canberra Central National Area and Inner Hills in Canberra and surrounding areas

been completed?

Mr Routh: The national heritage listing assessment proposal for Canberra is being assessed by the Australian

Heritage Council, and has been assessed, and is still a work in progress in terms of the next steps.

Senator BIRMINGHAM: Is being assessed, has been assessed and is still a work in progress. Just to give me

a little bit of clarity as to where it is actually at in terms of the heritage assessment actually being undertaken and

finalised, the work of the department has been completed and presented to the council and they are yet to make a

determination as to whether it meets the requirements for such heritage listing? Where exactly is it at?

Dr Dripps: As Mr Routh indicated, there has been quite a lot of work undertaken on the assessment so far. It

is not yet finalised and it has not yet been presented to the minister.

Senator BIRMINGHAM: In the answer to question on notice No. 142, the current assessment deadline for

those two areas is set down as being 31 December last year. So that deadline has not been met?

Mr Routh: That is the deadline; you are correct.

Senator BIRMINGHAM: The list that I got in that answer indicates that many other deadlines have not been

met. Moree baths and swimming pool originally had an assessment deadline of 30 June 2010, which was revised

to 30 June 2011, which was revised to 30 June 2012, which was revised to 30 June 2013. Why are there these

perpetual delays, it seems, in meeting the assessment deadlines?

Dr Dripps: As we have advised in previous estimates hearings, we prioritise our work on assessments in order

to finalise assessments that are progressing well. That means that, in some cases, assessments that are not

progressing quite so well are deprioritised in a particular financial year for a range of reasons.

CHAIR: Who can help me with the Blue Mountains National Park and the World Heritage area? Dr Dripps?

Dr Dripps: Yes, we can help you with the heritage aspects of that in this section and with the EPBC approval

aspects of that in the following section.

CHAIR: Part of maintaining heritage is to try and maintain the pristine nature of the park, isn't it?

Dr Dripps: Yes, that is right.

CHAIR: How do you deal with feral animals in the park?

Dr Dripps: The arrangements for control of feral animals are undertaken by the local managers of the

properties. In the case of the Blue Mountains World Heritage Area, my assumption—and I will just check—is

that it is the New South Wales National Parks and Wildlife Service.

CHAIR: On behalf of the federal government? Is that the case or is it part of their own responsibilities?

Dr Dripps: Each of our World Heritage properties generally has different management arrangements in place.

For the Blue Mountains property, those management arrangements are as part of the New South Wales parks. For

Kakadu and Uluru they are managed by the Commonwealth Director of National Parks.

CHAIR: I am only interested in the Blue Mountains at this stage. Have there been any discussions between

the department and the appropriate New South Wales government department in relation to recreational shooting?

Dr Dripps: We will have to take that question on notice with regard to whether there has been any discussion

in the department between officers, but none that I am personally aware of.

CHAIR: Are you aware of the New South Wales government's decision, under pressure from the Shooters

Party, to open up parks to recreational shooting?

Dr Dripps: Yes, I am.



CHAIR: Have there ever been any discussions about recreational shooting in World Heritage areas to your

knowledge?

Dr Dripps: Not to my knowledge, but we will take the question on notice.

CHAIR: Would there be any issues related to recreational hunting in World Heritage areas?

Dr Dripps: I am just thinking about it. The basis of the World Heritage Convention is that the values of the

place are listed and that those values need to be protected in perpetuity, so it would depend on which values were

present and whether the intensity, frequency and impacts of the shooting activity were likely to have an

undesirable effect on the values of the property.

CHAIR: How would you make that assessment?

Dr Dripps: It would be important to go back to the Statement of Outstanding Universal Value of the property

and to consider which values the property was listed for, and then to understand the likely frequency and intensity

of the shooting activity within the park.

CHAIR: Does the Blue Mountains World Heritage Area abut any of the New South Wales reserves where

recreational hunting has been approved?

Dr Dripps: I will have to take that question on notice.

CHAIR: Good. Could you also provide an analysis for us of the effects that recreational hunting might have

on a World Heritage area, given that there is now pressure to have recreational hunting widespread in New South

Wales.

Dr Dripps: We will take that question on notice as well.

Senator McKENZIE: Just on that point, Dr Dripps, I have had cause to actually head overseas and see

hunting, if you like, as a management and pest control tool in a highly managed environment—in Scotland,

actually. I was just wondering if you have any comments, or could take it on notice, in terms of how hunting

could actually be used as an appropriate management tool in pest control in World Heritage areas.

CHAIR: Maybe you could provide Dr Dripps with the context of that 'highly managed area' and she may be

able to answer the question. I think there is a difference between a highly managed area and recreational hunters.

Senator McKENZIE: I am talking about highly managed hunting as one strategy in a suite of strategies used

to control pests.

Dr Dripps: We will take that question on notice as well.

Senator WATERS: I have some questions about Australia's recent state party report to the World Heritage

Committee on the Great Barrier Reef. The World Heritage Committee was very clear in their recommendations

about port developments along the Queensland coast. They said no new ports, no port expansions where those

expansions will impact on the overall universal value of the reef and that no approvals should be issued until the

strategic assessment was finished. The government's response in the state party report really only commits to that

first request about no new ports. Is that correct?

Dr Dripps: You have run through the question very quickly. I have the decision and the summary of the

government response in front of me. I am not sure I can precisely match the parts of your question to the relevant

parts of the government response as quickly as you have been able outline it. We will give it a go. The World

Heritage Committee decision reads that they welcome the initial positive results of the reef plan and associated

measures to address the major long-term—

Senator WATERS: I am sorry to interrupt you, but given the time and the Chair's willingness to keep to it, I

might just direct you if I have been confusing in my last question.

Dr Dripps: Certainly. Would you be able to direct me by the part number of the decision? Is that possible?

Senator WATERS: I can direct you to the page of the state party report. It is page 13 where it cites

UNESCO's recommendations. My questions are, firstly, whether or not the Australian government has failed to

commit to the two-pronged recommendation of no approvals until the strategic assessment is completed and,

secondly, about no port expansions where those expansions will impact the overall universal value of the reef. It

is clear from my reading of the state party report that that is what the government has done, but I am wanting to

give you the opportunity to correct me.

Dr Dripps: I am just not finding the right part of the recommendation.

Senator WATERS: It is clearly stated on page 13 of the state party report. I could leaf through and try to find

the recommendations myself, but we have less than three minutes to go and I have four other questions.



Dr Dripps: The reason I am not finding an answer or answering the question at the moment is I do not recall

that the decision said that we would not approve any projects until the strategic assessment was finished. I would

like to take the opportunity to find the right part of the recommendation and to actually refer correctly to the

response or I can take that part of the question on notice.

Senator WATERS: You could take it all on notice. It is clearly in error. I have read it many times and

closely.

Senator MILNE: I wanted to ask in this section about the decision of the minister on the Tarkine. The

Australian Heritage Council's assessment of the Tarkine recommended the natural heritage listing of the Tarkine

under certain criteria. Does the department assess such a recommendation separately and advise separately or did

the department do any assessment of the Tarkine's natural values in the context and, if so, can you tell us what

that was?

Dr Dripps: The department works very closely with the Australian Heritage Council throughout the period of

it undertaking its work in assessing a place, including as you suggest undertaking assessments of the values that

are likely to be present in a place to assist the Heritage Council with its deliberations. The department also

provides advice to the minister after he has received the Australian Heritage Council's recommendation report.

Senator MILNE: What was the department's advice to the minister after you received the Heritage Council's

report?

Dr Dripps: The advice that the minister received from the department has been posted on the website and we

can provide with a copy of that if you would like.

Senator MILNE: I would like to know what the department's advice is if you can just tell us here.

Ms Rankin: The department's advice was that it noted what the Australian Heritage Council had

recommended in terms of the natural values as well as cultural values of the Tarkine area. It noted that the

minister had received some representations from other sources, particularly the Tasmanian government, about

potential social and economic impacts of listing the Tarkine. It presented the minister with a number of options

about which areas he may choose to list or whether he wanted to list or not or extend his decision time frame.

Senator MILNE: So you are saying that the department did not support the Australian Heritage Council's

recommendation?

Ms Rankin: We did not either support or not support. We outlined the basis of the values that the Australian

Heritage Council had identified and it is a decision for the minister to make about whether he chose to list or not.

Dr Grimes: Chair, it may be appropriate for me to just make the point that we have limitations on what we

can cover in terms of policy matters in estimates. Where the government has released material from the

department, obviously that is a matter of the public record, but there are limitations on the amount that we can

discuss in terms of provision of policy advice. That is just a general comment; it is not a specific comment in

relation to this matter.

Senator MILNE: In the department's assessment of the Australian Heritage Council's recommendations in

terms of the Tarkine, did the department dispute any of the recommendations of the Australian Heritage Council?

Senator Conroy: That goes to advice to government. I think that is the point that is being made, and I do not

think that the officers are in a position to know. It is Senate estimates; we cannot comment on advice to

government. Asking if they disputed with another agency would form part of that advice.

[10:21]

CHAIR: That concludes program 5.1. We will now move to program 5.2,. Environmental regulation.

Senator IAN MACDONALD: What is the department's involvement in the flying fox problem that has been

evident in Charters Towers and, more recently, in Yungaburra on the Atherton Tableland? Is the department at all

involved? Are you aware of those issues, for example?

Dr Dripps: Yes, I am aware of those issues. I will just call the relevant officer up to the table so that we can

continue to take this line of questioning. The flying fox is listed under the EPBC Act, and there has been quite a

lot of work over the last 12 months to progress more streamlined arrangements for managing them.

Senator IAN MACDONALD: I appreciate that. Bear in mind that I have only got a couple of minutes. When

you say 'more streamlined arrangements', what does that mean in ordinary language?

Ms Callister: The minister has written to state governments that have grey-headed flying foxes and asked

them if they want to enter into a conservation agreement under the EPBC Act. What a conservation agreement

would do is that it would mean that approvals in relation to the grey-headed flying foxes would then be done by



the state involved, rather than the Commonwealth having a role. We are currently still negotiating that with the

states.

Senator IAN MACDONALD: Can I just stop you there. The Yungaburra issue was the spectacled flying fox,

which I understand is listed as 'vulnerable' under the Commonwealth act and 'of interest' under the state act. I

understand that the state might be interested in doing something, but because it has a vulnerable classification

under the EPBC Act it is very difficult to do anything at all. The species is clearly not vulnerable. Last Saturday I

saw what looked like 100,000 of them—perhaps that is an exaggeration. The CSIRO said a couple of years ago—

and I have indicated this in a letter that I sent to the minister last night so that you might be alerted—that there

were 35,000—that is two or three years ago. The locals tell me that there would be millions. What is the process

to un-vulnerablise any species?

Ms Callister: There is currently some funding being provided through the National Hendra Taskforce funds

and also through the National Environmental Research Program towards the national flying fox count. The first

count will get underway from 14 to 16 February, so that is about to kick off. Under that count, it will be looking at

trying to get to the issues that you were just talking about, so it will be looking at what are the actual numbers of

the two nationally listed species—that is grey headed flying foxes and spectacle flying foxes. It will also be trying

to replicate those counts over a number of years so we can get some sense of trends. In order to delist a species—

which I think is what you are looking at—we need to know what are the population numbers and what has been

the trend. We have to do that over a series of years in order to get that replicable information.

Senator IAN MACDONALD: I understand that. Is there a process where you can apply to delist the species?

Ms Callister: Yes, there is.

Senator IAN MACDONALD: Can anyone do that?

Ms Callister: Yes, there is.

Senator IAN MACDONALD: In the space of two years?

Ms Callister: Actually the nomination period happens each year and it is currently open at the moment so if

somebody wanted to put forward a nomination they could do that as part of that annual process and it would then

be considered through the threatened species scientific committee.

Senator IAN MACDONALD: This suburb in Yungaburra is relatively new, a nice area. The forest the flying

foxes have come into since Cyclone Larry—they were never there before—is one that one was planted with

Commonwealth government money in the 1990s so it is not even natural. There are millions of hectares of wet

tropics rainforest where the flying foxes could go. I would say there are about a hundred people whose health,

welfare and certainly property values have just plummeted. This is a real human health issue and you are saying

to me that the law requires a two-year assessment. These people will be slitting their wrists before that and the

kids will probably all have hendra virus if any of them are left there. People are going to start walking away from

their brand new homes. No-one will buy them. The noise at three o'clock on a Saturday afternoon, which they tell

you is the quiet period, was just deafening. Is there any way that any urgent action could be taken to assist the

health not of wildlife but of human beings?

Ms Callister: The local government can apply to get approval for actions to mitigate that?

Senator IAN MACDONALD: They have been told they can strategically lop some of the high branches.

That is what they have given permission to do.

Ms Callister: What we always suggest in these situations is that they work with their state government in the

first instance and also with ourselves to see what actions they can take. We are very sympathetic. We understand

the impacts that flying foxes can have on communities. We encourage them in the first instance to work with the

states because these species are also protected under the state government law. They need to look at what they can

do in terms of both the state government and the Commonwealth government.

Senator IAN MACDONALD: People took matters into their own hands out of sheer desperation and started

rattling cans. They were threatened by the police acting under the state environment department with fines of up

to $100,000 and years in jail for doing this. There are children and people there who are at their wit's end. So we

look after the health of the flying foxes and forget about people. The state government is working, but your listing

of vulnerableness has greater impacts on what can be done. I have written to the minister thanking him for what

you have done and asking if you could reply to my correspondence in due and indicate if there is something than

can be done before the next two years—I suggest without being overly dramatic—that will really obviate major

health risks, if not something more serious, for the people in that area.



Ms Callister: Certainly. As I said, the conservation agreements that we are currently negotiating with the

states would also include the spectacle flying fox.

Senator IAN MACDONALD: If there were an agreement, then the state could assess them even although

you still class as under.

Ms Callister: Correct.

Senator SIEWERT: Can I ask about the James Price Point assessment sand timelines on that?

Dr Dripps: Certainly.

Ms Cameron: The James Price Point assessment is literally under assessment. The state government lodged

their documentation with us in mid-December. We are reviewing that material in terms of the terms of reference

to ensure that it responds to what is required for the minister to consider it for endorsement.

Senator SIEWERT: What sort of timeline do you expect to have that completed by?

Ms Cameron: The original look at the material is coming to its conclusion. There is no statutory timeframe

for strategic assessments; it takes as long as it takes. In this case, it has been two years since their original public

comment and there are a number of other studies and other things that have come to us that have been done in that

interim time.

Senator SIEWERT: With all due respect, you did not answer my question. I appreciate the information you

gave me, but do you expect it to be before June, before May, before 9 March?

Dr Dripps: I think Ms Cameron has answered the question as well as she is able to at this time. As she has

indicated, our analysis of the documents provided by Western Australia is not yet complete, so we are not yet able

to advise the minister on whether their documents are acceptable for an assessment and whether they meet the

terms of reference. When we have completed that analysis, we will advise the minister in due course and the next

steps will be taken. They would either be progress towards approval or further work on the assessment

documents.

Senator SIEWERT: In terms of the additional studies that have become available, am I to understand that

they are outside of the documents that the state government has sent you as part of their process?

Ms Cameron: The state government has incorporated a range of documents that have been done in the

interim; and, as always, we receive documents from interested community groups as well.

Senator SIEWERT: So, you have got them. You have referenced the terms of reference, and one of those, as

I understand it, was addressing the issue of Aboriginal consent. Have you got documents associated with that? I

presume you are aware of the ongoing issues in the area around consent and the bungled acquisition program.

Ms Cameron: We are very aware that the supplementary report that was provided by the state includes a

chronology of consultations and consent processes undertaken with the traditional owners. The recent split of the

claim creates additional complexity in that space. I am sure that you are aware that that clause in the document

says 'whether' the traditional owners have given informed consent.

Senator SIEWERT: Yes.

Ms Cameron: It is up to us to give the minister advice on whether they have or not.

Senator SIEWERT: Do I take that to mean that you will be looking into that whole process?

Ms Cameron: Yes.

Senator SIEWERT: Is that supplementary document from after mid-December?

Ms Cameron: No. Under strategic assessment, there is a plan that is given for the minister's endorsement and

a supplementary report which takes into consideration the responses to public comment. But, because it was two

years, there is also some extra information that has gone into that.

Senator SIEWERT: Will you be going back to the community—I am thinking of the broader public but I am

also thinking specifically of the Aboriginal community—to further consult them on the documentation you have

received?

Ms Cameron: It is not our role. The state, as the proponent, is responsible for undertaking that process. They

did provide the traditional owners with what was then the penultimate plan in late November, and the traditional

owners were given an opportunity to provide comment either then or later on.

Senator SIEWERT: Are you aware that some of the traditional owners have now asked the UN to look at the

issue?

Ms Cameron: Yes, we are aware.



Senator SIEWERT: The state government has given itself permission to not carry out further environmental

assessment. They have carried out the strategic assessment process and decided that this is a derived project and

will not be carrying out any further environmental assessment. As I understand it, the Commonwealth still has the

capacity to carry that out if the minister decides that that is appropriate. Is that correct?

Ms Cameron: There are two stages in a strategic assessment: the endorsement of the plan and the approval of

actions. The adequacy of the impacts to which the agreement relates is what is not in assessed in the endorsement,

so the minister needs to be confident that he has an adequate assessment of the impacts to which the agreement

relates. He may seek further advice, if required.

Senator SIEWERT: The decision by the state to not carry out any further environmental assessment of

specific actions does not bind the Commonwealth in its decision-making?

Ms Cameron: That is correct.

Senator SIEWERT: I presume the trigger for that would then be once there are specific development

proposals.

Ms Cameron: At the time when there would be approval of actions would be when you would be fully being

seized of the environmental impacts at James Price Point at that time by that proponent.

Senator SIEWERT: Some time ago we had a discussion about the social impacts. You indicated that you

would be looking at the social impacts. How are you doing that? Are you looking at just the documentation that

the state government has provided, or are you undertaking your own?

Ms Cameron: We are relying primarily on the documentation of the state. We did seek peer review of their

methodology to ensure that their methodologies were adequate. We will be relying primarily on their assessment

in that area.

Senator SIEWERT: You mean by people with expertise in social impact assessment?

Ms Cameron: Yes.

Senator SIEWERT: And will that be made public?

Ms Cameron: At the time of the decision, all documents are available.

Senator SIEWERT: And in terms of peer review, I presume you have access to the papers that people like

Murdoch University put out that are the peer review of the marine science.

Ms Cameron: Yes, we have spoken to those experts ourselves.

Senator SIEWERT: And will you also be taking the community monitoring work that has been going on

with regard to whale numbers—as you are fully aware there is a lot dispute about that—into consideration during

your process?

Ms Cameron: We take all information into consideration. As you can imagine, we rely also on our line areas;

we have internal experts within the department as well.

Senator SIEWERT: I want to go back to the social impact issues. Does the peer review include claims

around job numbers, the impact of fly-in fly-out, the impact on the town? As you know, the town is divided over

this project.

Ms Cameron: There was a study about the quality of life in Broome as well as more social infrastructure

issues. Those will all be taken into consideration in providing the information to the minister about

socioeconomic considerations.

Senator SIEWERT: I want to go back to this issue around time lines. Is it expected that there will be an

announcement before the state election?

Dr Dripps: We have already given the best answer that we possibly can to that question, which is: we are still

assessing the report and have not yet advised the minister on the adequacy of the materials submitted by the

Western Australian government.

Senator SIEWERT: I want quickly to ask about an issue relating to the Bremer basin off the south coast of

Western Australia. I had a question on notice about that. Very quickly, I just want to ask for an update on whether

there has been any subsequent application and progress on the application for seismic work to be carried out

there, or any other exploration work.

Mr Knudson: It was the Bremer canyon that you were asking about?



Senator SIEWERT: The Bremer basin off the south coast of Western Australia. You did answer a question

on notice about it for me, and I am asking very quickly for an update of any progress—if there have been any

applications subsequent to that.

Mr Knudson: Unfortunately, I think we are going to have to take that question on notice.

Senator SIEWERT: Okay.

Senator McKENZIE: I want to go to table A14 on page 289 of your annual report. There seems to be a lot of

discussion at the moment around administrative delays. I want to ask whether there is any updates, which are still

late in terms of all the things listed in that table. You will probably have to take that question on notice. Is there

any sort of global reason why the administrative delay is having such a significant impact on such a wide area of

your work, except for the time limit for making permanent decisions around CITES, where we had 1,500 in total

but only one administrative delay. Can we have a broad comment on what might be playing into that and what

steps you are taking to address it?

Mr Knudson: In terms of the specific table in the annual report, you are correct, we will have to take that on

notice if you are looking for an update on each of those items. In general, I would highlight that in terms of

decisions outside of the decisions that you are referring to, we have a median of late decisions, being five days. So

when they are late, they are not that late. I just want to point that fact out. In terms of administrative efforts that

we are undertaking within the division to improve our efficiency, as any regulator would try and do we are doing

a fair amount on a continuous basis. One of the issues that we have tried to take a look at, obviously, given the

importance of the relationship with the states and territories, is that we have realigned internally so that our

organisation is set up along state jurisdictions so that there is a greater development of the relationship with the

individual jurisdictions and greater cohesion between us. That is still a relatively recent realignment within the

division, but it is one of the things that we have done.

In addition to that, one of the pieces of work that we want to try to take a look at over the next little while is

how to provide greater certainty to industry in general in terms of what is required to meet the provisions of the

act. That is a standard piece of work that you would expect a regulator to do, and that is one of the things that we

will be looking at with more rigour, shall we say, over the coming months.

Senator McKENZIE: Is there any update on the discussions with the states around more efficiencies in that

conversation, in that process around assessment, approvals and streamlining?

Dr Dripps: In terms of updates, you are obviously aware of the COAG decision in early December regarding

the progress of the approvals bilaterals and you are aware also that the Department of the Prime Minister and

Cabinet was leading that work. We are in touch with the states on a regular basis on the assessments that are

underway and we have made good progress over the past 12 months with a number of jurisdictions, in particular

Queensland, with regard to the co-management of things that are being managed in both systems. So we are

retaining very cooperative relationships with the states and look forward to continuing to work with them to

improve the operations of the assessment bilaterals.

Senator McKENZIE: Thank you.

Proceedings suspended from 10:43 to 11:01

CHAIR: We will kick off again—Senator Waters?

Senator WATERS: Hi again, folks. Just firstly, and harking back if I may: Dr Dripps, the recommendations

were recommendation 5 for the World Heritage Committee and recommendation 2 of the monitoring missions

report. If you could possibly get a response to me by the end of business today, that would be very much

appreciated. I will put to rest on those matters on notice.

Moving now to the Whitehaven Coal project, which the minister conditionally approved yesterday: has the

department advised the minister as to whether or not it is a breach of the act to issue an approval when all the

details have yet to be settled?

Mr Knudson: We advised the minister that we were in a position to make a recommendation for a decision.

Senator WATERS: And that recommendation was for approval?

Dr Dripps: That is correct.

Senator WATERS: Did you advise the minister at any point that it might be a better idea to get the details

about the impact on matters of national environmental significance before he issued his approval to the company?

Mr Knudson: This project was subject to a controlled action assessment that took a considerable amount of

time to complete. In coming to the recommended decision, there was an exhaustive list of conditions put in place



covering a whole range of potential impacts, all of which are related, obviously, to matters of national

environmental significance.

Obviously, that included a pretty substantial offsets package, a number of water management plans and a mine

rehabilitation plan, all of which were designed explicitly to deal with potential impacts on matters of national

environmental significance.

Senator WATERS: Thank you, I will come to the offsets package. But first of all, media reports on Saturday

said that Minister Burke said that he was seeking clarification about impacts on matters of NES. Presumably, he

spoke to the journalist on Friday, and suddenly on Monday those issues were apparently resolved. What were

those potential impacts on matters of NES that the minister was seeking clarification on on Friday, and how were

those matters clarified by the time the approval was given on Monday?

Mr Knudson: We as officials met with the company on Friday. We went through a few issues with them, one

of which was seeking clarification on the biodiversity corridor. When we had finished with the discussions with

the company, there was left a path forward to proceed with a recommended approval for the minister.

Senator WATERS: So that was the potential impact—

Dr Grimes: It may be worth observing that there had been a leak of material into the public domain.

Senator WATERS: I am aware of that.

Dr Grimes: The minister indicated that that had had a bearing on the way in which the matter had been

handled.

Senator WATERS: Thanks, Dr Grimes. I will come to that.

Dr Grimes: I think that is quite important, including in—

Senator WATERS: Thank you. I will come to that. Could I just continue. Pardon me, but I have a limited

time.

CHAIR: Senator Waters, you really must let the officers respond.

Senator WATERS: I do not think he was responding, with respect. He was taking it in a different direction.

Did you have anything further to add, Dr Grimes?

Dr Grimes: My intention was to assist you, Senator, in getting responses to your questions.

Senator WATERS: Thank you. I appreciate that.

CHAIR: Are you finished, Dr Grimes?

Dr Grimes: I think so for now. We can see how we can help the senator with further questions.

Senator WATERS: Thank you. My apologies if I interrupted you. Can I just clarify your last response: you

said that clarification was sought on biodiversity corridors. Was that the only clarification on potential impacts of

matters of NES that you sought? The minister used that phrase. I am seeking to understand what he meant.

Mr Knudson: I was using that as an illustrative example.

Senator WATERS: So what were the other clarifications that were needed?

Mr Knudson: The process that we continually go through with every proponent is to ensure that, before we

put a recommended decision up to the minister, there is a level of comfort across all aspects of the proposed

decision.

Senator WATERS: Yes, and my point is that the minister said himself that he did not have that requisite level

of comfort on Friday, but then he issued the approvals on Monday. So what clarification was sought and gained in

that time period?

Dr Grimes: I think it may also be appropriate to note that, in making the decision, the minister has indicated a

number of areas where, as conditions of the project, certain plans or other activities need to be undertaken to the

satisfaction of the minister as part of the explicit conditioning of this project. That is why my response to you

previously was quite relevant in terms of the release of information in the public domain that meant that the

minister felt that this was the most appropriate way of resolving the matters given the leak of information to the

public domain.

Senator WATERS: So do I take that to mean that the potential impacts on matters of NES that the minister

was seeking clarification on are not resolved but they now will be resolved with those future plans and programs

that the conditions impose? Is that what you mean to say?

Dr Grimes: The minister has put in place an initiative to ensure that he can be satisfied that there has been

appropriate conditioning under the EPBC Act, and in some cases that relies on further actions to be undertaken by



the company as part of the explicit conditioning for the project. Those must be undertaken to the satisfaction of

the minister.

Senator WATERS: So what happens if they are not undertaken to the minister's satisfaction? What happens

to the status of the approval then?

Dr Grimes: In that case the company would be in breach of our conditions under the EPBC Act.

Senator WATERS: Would the approval be revoked?

Dr Grimes: In that case we are getting very much into the territory of the hypothetical.

Mr Knudson: Various hypotheticals.

Dr Grimes: Obviously I would like to not get heavily into hypothetical actions, but it is quite clear as to the

minister's expectations of the conditions to apply.

Senator WATERS: So conditional approval has been given and we await further details, but who knows

whether the approval will be revoked if they are not met? It is a very odd process. I am alarmed that the

environment minister does not have the requisite certainty before he issues an approval for very large coalmines

in old-growth forest, but hey—I am not with the Labor Party.

Dr Grimes: Once again, there is market sensitive information in the public domain and the minister has

clearly set out the basis of approving the project.

Senator WATERS: Thanks, Dr Grimes. I will take the relevant officer to that point. The minister said

yesterday that the leaking of the information by the New South Wales government caused him to bring his

decision forward. How was the leaking of that information a relevant consideration under the act?

Dr Grimes: There is market-sensitive information that is provided in the public domain. The minister, in

putting strict conditions on the project, has made it quite clear that there are a number of aspects that need to be

completed to his satisfaction as part of the explicit conditioning of the project.

Senator WATERS: With respect, Dr Grime, that did not answer my question. How was the leaking a relevant

consideration under the act?

Dr Grimes: As I indicated, market sensitive information had been provided that it was appropriate for the

minister to make an earlier decision. In making that decision of course the minister would be very aware—and us

in advising the minister—of the requirements of the EPBC Act and that is precisely why there are conditions in

place where further activities need to be completed and brought back to the satisfaction of the minister. Now this

is not the only case where there is an EPBC approval and where as part of the conditioning of the project there are

plans for other actions that must be completed to the satisfaction of the minister as part of the approval under the

EPBC Act. So it is true this is an unusual situation with the specific circumstances—I mean the leaking of

information is unusual—and the fact that under the EPBC Act there are conditions that rely on subsequent actions

is not unprecedented. There are other cases where that has occurred.

Senator WATERS: Indeed, that practice has been going on for a long time. Can I take you now to the issue

of the offsets, because clearly there is a lot of concern and one of the community groups has commissioned a

scientific report that talks about the ecological characteristics of the proposed offset. They say actually it does not

even contain the very ecosystem that will be affected by the mines, ergo it is not a sufficient offset. Has the

department advised the minister around those issues?

Mr Knudson: In providing the recommended decision to the minister, we noted that there was a requirement

proposed, which the minister endorsed, that the proponent must register a legally binding conservation covenant

over the offset areas and that that needs to cover no less than 9,334 hectares of equivalent or better quality habitat

for the regent honeyeater, the swift parrot and the long-eared bat and an additional 5,532 hectares of equivalent or

better quality habitat for the white box, yellow box, Blakely's red gum grassy woodlands and derived native

grassland ecological community, noting that 5,000 hectares could be included in the 9,000. So we provided advice

with respect to what was required in terms of an offset. In addition to that we also recommended that the

proponent must verify through an independent review the quality, quantity and condition and class of that habitat

with respect to the offset and that the details of all that independently verified offset area must be submitted to the

minister for approval by 30 December this year and that the findings of the independent review must be published

on the proponent's website.

Senator WATERS: Sure, but has the department started investigating allegations that the proposed offset in

the EIS amounted to false and misleading information by the applicant, being the misdescription of that

ecosystem?



Dr Dripps: We are aware of community concerns about a range of matters around this project. I am not

certain that we have received a formal allegation of that nature and we would have to take that question on notice.

Senator WATERS: My understanding is that has been sent to the minister but my question is not if you have

received documents. It is: are you investigating whether or not the inclusion of that information amounts to false

or misleading information which, of course, would be in breach of the act?

Dr Dripps: We will have to take that question on notice.

Senator WATERS: I think you should be aware of whether you have commenced an investigation or not.

Dr Dripps: I am not aware. That is why I would like to take the question on notice.

Senator WATERS: Are any of the other officers aware as to whether an investigation has been commenced?

Mr Knudson: No. No investigation has commenced.

Senator WATERS: Thank you for clarifying it. Is there any intention to now commence such an investigation

or will you wait for the receipt of a formal allegation even though I think that has already happened?

Dr Dripps: We will check the records of whether we have received that as soon as we get back and take

further necessary steps.

Senator WATERS: Does the department do its own initiative investigations or what is the procedure for

when you would investigate a claim of false or misleading information? Could you do that of your own volition?

What is the usual process?

Mr Gaddes: We would normally assess all allegations of a breach of the EPBC Act. We would look at each

one and do a triage-based approach and look at whether or not there was anything that would make it a breach

under the act. In these circumstances we have not done that as yet. We are aware that there has been an allegation

of false and misleading information, but we have not yet looked at the substance of that allegation.

Senator WATERS: Are you intending to do so?

Mr Gaddes: As I said, we assess every allegation of noncompliance with the act, so we will look at his one.

Senator WATERS: Given that the allegations relate to the offset package, did the department advise the

minister on his options of not yet issuing the approval until those details were sorted out and those claims were

investigated?

Dr Dripps: Senator, I would just draw your attention back to the details that Mr Knudson has recited from the

conditions: the offset conditions have specified an outcome—an ecological outcome—that is required to be

delivered by the proponent as part of this project. When they submit their independently verified offset areas to

us, we will assess whether they are suitable and satisfactory and, if they are, they will receive that subsequent

approval.

Senator WATERS: I have one last question on this matter before I move to some other brief matters. The

media reports on Saturday said:

Mr Burke now says he was forced to postpone the decision after it emerged that a key condition of consent could not be

enforced under NSW law …

What was that unenforceable condition of consent and why was that relevant to whether the federal minister could

put federal conditions on a proposal?

Mr Knudson: The issue of concern was around what level of protection could be provided to the biodiversity

corridor. That is why, in terms of the condition that was approved, as Dr Dripps talked about, we try to take an

outcome-based focus. In this case, what we have said is that the proponent must submit a biodiversity corridor

plan to the minister within three months of the date of the approval and, in there, the plan must address the

following matters—and one of those matters is that there must be evidence that the biodiversity corridor will be

protected in perpetuity through a legal mechanism that would provide equivalent protection to a conservation

covenant.

Senator WATERS: Okay, so they were not sure whether you could get permanent protection so you have

said, 'It doesn't matter; we'll approve it anyway and we'll just try to work out in the next three months whether it

can be.' Is that an accurate summary of what you have just said?

Dr Dripps: I think, as Dr Grimes outlined earlier, it is quite usual in the process of considering projects to

have subsequent work that needs to be done to the satisfaction of the minister as part of the approval conditions

on the project.

Senator WATERS: I suggest the minister is too easily satisfied. However, we shall move on. For Gladstone,

when did the minister ask the department to do work to establish the Gladstone independent panel?



Dr Dripps: As you are aware, Senator, the requirement to have an independent panel assessing the health of

Gladstone Harbour derives from the World Heritage Committee decision of June of last year, and we have been

working since then to implement the responses to all of those recommendations.

Senator WATERS: And when did the minister specifically ask for the panel to be commissioned?

Dr Dripps: I do not recall the minister specifically asking. It was part of the work that was being done in

responding to the recommendations of the committee.

Senator WATERS: The minister did not direct that work? That seems highly unusual.

Dr Dripps: We quite often prepare work that we anticipate the minister would be likely to require. I could

check my records to see if I have a formal request from the minister and take that on notice.

Senator WATERS: Thank you. I am surprised that the minister did not specifically ask for something to be

done on Gladstone—that in itself is alarming, if that is what you are saying.

Dr Grimes: This is certainly a matter that the minister has taken a very close interest in. In terms of

specifically responding to your request, though, it is probably better that we take that on notice.

Senator WATERS: Thank you, I am keen to know the time frames.

Dr Grimes: But it is definitely the case that it is one that the minister has taken a very active interest in.

Senator WATERS: I would have hoped so. Thank you. I am keen to know precisely when that work was

commissioned. Secondly, on the resourcing for that panel, will it be funded? If so, will independent data be

collected?

Ms Colreavy: We do have a budget set aside to assist the panel with information and other work as it is

needed. There has already been quite a large amount of information, scientific data and work commenced by the

department since the strategic assessment process has got under way in anticipation of this. So, as Dr Dripps

indicated, the work of the department in responding to the World Heritage Committee decision commenced last

year. We put our shoulders to basically implementing all of those recommendations with a sequence time plan. A

number of pieces of work have been commissioned that will provide new data and information to the committee.

If they require additional data beyond that we do have a limited budget to assist and we will discuss with them

what those needs might be.

Senator WATERS: Can you take on notice to give me some more detail about the independent data

collection that has happened at the behest of the department and now may happen under the panel's direction?

Ms Colreavy: Certainly.

Senator WATERS: Thank you.

Senator BIRMINGHAM: If I can return quickly to cover some of the issues that Senator Waters was just

covering around the Maules Creek coalmine and the Boggabri coalmine extension. I want to get a bit of

sequencing to some of the information that has been provided. When did the department first provide

recommendations to the minister that outlined that conditional approval should be granted?

Dr Dripps: As you may be aware, the process for finalising an approval decisions under the EPBC Act is a

two-step process. There is a proposed decision made and then there is a final decision made. Sometimes there is

an extension of time between those two things. So the minister made the proposed decision on 21 December

2012.

Senator BIRMINGHAM: At that stage it was a proposed decision for conditional approval?

Dr Dripps: Yes, that is right.

Senator BIRMINGHAM: At that stage the deadline for final approval was still at that point in time set as the

end of last week or thereabouts?

Dr Dripps: Yes, 31 January. So under the act the proposed decision is provided to the proponent. We

generally engage with the proponents in discussion about how the outcomes or precise description of the

conditions can be implemented and how that will work. It is also provided to other relevant Commonwealth

ministers and to state ministers at the same time for feedback and comments.

Senator BIRMINGHAM: Following the release of that proposed decision and prior to the decision to extend

the time line, did the department provide final recommendations or paperwork to the minister to make the final

declaration of an 'approved with conditions' statement in relation to these two projects?



Dr Dripps: I am trying to find out whether we did submit a brief in that period. I would like to take the

question on notice because there is some uncertainty about whether we formally submitted a brief during that

period.

Senator BIRMINGHAM: So the department fully prepared something but whether it was submitted has a

level of uncertainty, Dr Dripps?

Dr Dripps: There is quite a lot of work involved in finalising these decisions. There were certainly very

advanced drafts of a likely final decision, but I do not believe that they were finalised. I would like to check that

detail please.

Senator BIRMINGHAM: When did the minister indicate that he wanted an extension of time for the

decision-making process?

Mr Tregurtha: During January, after we make a proposed decision and as we move through into the final-

decision making stages, there are a number of discussions had with both the proponent in relation to the decision

package in the minister's office. During the course of those discussions in February the minister had indicated that

he may require further time for an extension of a decision. Then the decision time line for the project was

extended to 7 February. Subsequent to that, the decision time line for the project was extended to 30 April. Both

of those extension notices are available on the department's website because they must be made public as soon as

they are made.

Senator BIRMINGHAM: I have the notices for the extension to 30 April before me. They were made on 6

February. When was the decision to extend until 7 February undertaken?

Mr Tregurtha: To get an exact date I would have to take that on notice. We can get someone to look that up.

Senator BIRMINGHAM: Why is it that essentially a one-week extension was initially felt suitable and then

somehow the one-week extension that was felt suitable at whatever point in January that it was granted suddenly

morphed into several extra months.

Mr Tregurtha: There are always a range of discussions that happen between a proposed and a final decision

to ensure that the final decision package is correct and is one that the minister is comfortable with in terms of his

responsibilities for protecting matters of national environmental significance, in many cases one that the company

can take forward so that it is a decision that is valid under law and enforceable. In terms of the nuances between

those two decisions, there were a number of issues that were discussed throughout that time. The extension to 7

February, from my recollection, was in relation to ensuring that decisions in relation to both the Boggabri

extension and Moore Creek were able to be made together so that the impact of both mines could be considered at

the same time, quite an important consideration in relation to these two projects. It was also in relation to

providing sufficient time for advice received during that consultation time to be fully processed. The decision to

extend the projects out for three months was to provide additional time, as we have heard this morning, for

consideration of the matters such as the biodiversity corridor and protection of matters of national environmental

significance.

Dr Grimes: It may also be appropriate to note that we indicated to the proponents that, if it was possible to

resolve the matters in a shorter period of time, that would not preclude a decision being taken well inside that

extension period.

Senator BIRMINGHAM: I am sure that was of some comfort to them at the time, though the capacity once

an extension period is granted is, of course, to go right up to the death knell of it in any event. Was the minister

consulted about the extension to 7 February?

Dr Dripps: We would have to check our records. It is usual practice to consult with the minister on such

decisions.

Senator BIRMINGHAM: If you could check your records and check what the response from the minister's

office was, that would be appreciated. Also, if you could inform me what further information was forthcoming

between the decision to extend to 7 February and the decision to extend to 30 April.

Dr Dripps: As Mr Knudson began to outline earlier, we did have meetings with the proponents on Friday, 7

February during which we discussed the general set of conditions and the possible areas of modification of those

conditions as they related to the biodiversity corridor and a number of other matters.

Senator BIRMINGHAM: Certainly; however, that meeting on Friday, 7 February was after the decision to

extend to 30 April had been taken.

Dr Dripps: I am sorry; I may not have heard the question correctly.



Senator BIRMINGHAM: My question was: what additional information was forthcoming subsequent to the

decision being made to extend to 7 February and prior to the decision being made to extend the deadline to 30

April? What additional or new information came to light that caused that decision to be taken, and when was that

information provided to the department?

Dr Dripps: I think we will have to take that question on notice. As we have indicated, we have not got the

precise date of the extension to 7 February at hand. I would like to be able to line up the documents and give you

a precise answer rather than an answer that turns out not to have all of the relevant information in it.

Senator BIRMINGHAM: Okay. Are you able to detail what changes to approvals documents have been

made compared to the final drafts that the department would have prepared for approvals prior to 7 February?

Dr Dripps: I would have to take that question on notice. We can certainly line up the proposed decision and

the final decision and identify the differences for you.

Senator BIRMINGHAM: Okay. What changes have been made to the documents in the last week?

Dr Dripps: I do not have the precise information on the changes made to the documents to hand, so I would

like to take that question on notice?

Senator BIRMINGHAM: Are there any key changes in terms of key conditions imposed that have been

made in the last week?

Dr Dripps: As we have covered already in the evidence today, there are areas where there is a requirement to

produce plans to the satisfaction of the minister—in particular relating to the biodiversity corridor and the manner

in which it is protected.

Senator BIRMINGHAM: And they are all new additions that have been made in the last week.

Dr Dripps: Yes.

Senator BIRMINGHAM: Thank you.

Mr Knudson: To clarify: the biodiversity corridor was in beforehand. There have been modifications to those

conditions. I wanted to make it clear that the concept was in there before and it has just been modified.

Senator BIRMINGHAM: So that we can be completely clear here: modified in what way in terms of the

additional conditions that need to be met?

Dr Dripps: Modified in terms of requiring that a plan of approaching the particular matter is submitted and is

approved to the satisfaction of the minister.

Senator BIRMINGHAM: Remind me—because I think you said it before and it would be in here—by what

date the plan has to be submitted.

Mr Knudson: The plan needs to be submitted for the approval of the minister within three months of the date

of the approval of the project. The date of the approval of the project was yesterday.

Senator BIRMINGHAM: So three months from yesterday that plan needs to be submitted. How long would

the minister have to consider that plan?

Dr Dripps: There is no statutory time limit to the minister's consideration of such plans.

Senator BIRMINGHAM: And the project is unable to proceed until the minister has approved it?

Dr Dripps: There are a range of different provisions in the act when conditions are not being met. It does

depend on the degree of lack of compliance with the act, but one would expect that we would work closely with

the proponent until their plan was satisfactory to the minister.

Senator BIRMINGHAM: So by 11 May you would expect to receive this plan. What rights does the

proponent have should the minister or department seem to be taken an inordinate period of time to consider the

plan?

Dr Dripps: They have the usual channels of complaint about government services.

Senator BIRMINGHAM: Okay.

Senator HEFFERNAN: Could you table the guidelines for the plan?

Dr Dripps: No, I am not able to table the guidelines for the plan.

Senator HEFFERNAN: Why not?

Dr Dripps: Because at present there are no guidelines to the plan.



Senator HEFFERNAN: Surely there are hurdles that have to be jumped that the minister would have in his

mind. Can we have the hurdles that have to be jumped in this period to 11 May? The bloke next to you is shaking

his head.

Dr Dripps: We can take that question on notice and see what advice we can give you. We regularly undertake

post-approval of claims of various kinds.

Senator HEFFERNAN: Would you confirm—

CHAIR: Your time is up, Senator—

Senator HEFFERNAN: Just one more question. Does it include the emission of heavy metals?

Dr Dripps: No. We are talking about a biodiversity code or plan for the Moore Creek coalmine.

Senator HEFFERNAN: Do you understand when I—

Mr Tregurtha: That would be—

Senator HEFFERNAN: You are going to find out, and it should be in the plan.

Senator BIRMINGHAM: Was there any requirement for the minister to assess the plan before, say, 12

August?

Dr Dripps: I would expect that if the plan was submitted on or before 11 May that that assessment would

have been undertaken before then.

Senator BIRMINGHAM: Did the minister, or has the minister, sought any advice regarding the impact of the

leaked documents?

Dr Dripps: Not from me.

Mr Knudson: No.

Senator BIRMINGHAM: Dr Grimes, are we aware if the minister has sought any legal advice or otherwise

in relation to the leaked documents?

Dr Grimes: There has not been a request of me, but I do not know whether the officers have had any requests

for advice on handling of documents under the EPBC Act. We may have been asked for advice in that area; again,

I am not sure. I am looking at the ministers concerned, who are all shaking their—

Dr Dripps: We will take the question on notice.

Dr Grimes: It is best to take it on notice.

Senator BIRMINGHAM: Dr Dripps gave the answer before that no, no advice had been sought to her

knowledge.

Dr Grimes: It is best for us to take that on notice, and we can give you a complete answer.

Senator BIRMINGHAM: Can I just quickly go to issues regarding the destruction of illegal entry vessels in

the waters off Christmas Island? Do there have to be any approvals under the EPBC Act for such destructions to

take place? Or under any other environmental approvals relevant to the department?

Dr Grimes: We just have the relevant officer coming to the table.

Ms Lea: Senator, I can advise you that we do administer sea dumping under the sea dumping act. Currently,

we are assessing an application for dumping of vessels that are required to be dumped in circumstances of

emergency or other force majeure provisions under the act. So they are formally applying for sea dumping to be

regulated and we provide a permit for when those circumstances occur.

Senator BIRMINGHAM: Is formal application made by Customs or the Department of Immigration and

Citizenship, or whoever?

Ms Lea: I believe it is by AMSA, but I would like to check who the actual proponent is because I do not have

the detail in front of me. That is to my understanding, but I would like to take that on notice to check it.

Senator BIRMINGHAM: And is this for waters off Christmas Island or elsewhere?

Ms Lea: It is for any waters, so that if they are required to do it in certain circumstances they have a permit to

allow them to do it.

Senator BIRMINGHAM: There has been no permit previously, though?

Ms Lea: No. There are provisions in the act for when they do need to do emergency dumping—when human

life is at risk or there are other extreme circumstances.



There are provisions around the regulation of dumping, so there are guidelines that they need to follow. Under

those force majeure provisions, if there are extreme weather events or so on they do have options available to

them. But the permit application is aimed at regulating that more substantially.

Senator BIRMINGHAM: Okay. Provisions exist under the act for emergency-type situations; are there any

provisions at present that would allow, essentially, a more regular process of destroying illegal entry vessels and

sinking them?

Ms Lea: That is my understanding of the purpose of the current sea-dumping application.

Senator BIRMINGHAM: But there are no existing provisions that would facilitate that, except in emergency

circumstances?

Ms Lea: Correct.

Senator BIRMINGHAM: Is it correct that such vessels have been sunk in the waters off Christmas Island?

Ms Lea: I would have to get that information about the number that have been sunk on notice. I know that

those statistics are kept and that details of each instance are kept, but I have not got them to hand today.

Senator BIRMINGHAM: Has this department looked into that or enquired about whether these sinkings are

meeting the emergency provisions of the act?

Ms Lea: I believe that the application to have the sea dumping permit issued to takes account of these

circumstances is in response to a recognition of this increasing need and the force majeure provisions.

Senator BIRMINGHAM: Is this a retrospective application to try to recognise and take account of those

sinkings that have taken place to date, however many dozens or hundreds there have been?

Ms Lea: No, it is a proactive response to a recognition that they have had to take these steps in a number of

circumstances.

Senator BIRMINGHAM: Is it possible that other agencies, in sinking these vessels, have been acting in

violation of the conditions of the act?

Ms Lea: I have not got information on that particular topic or whether or not they would have breached

different acts. Under our act, there is provision for emergency provisions.

Senator BIRMINGHAM: I appreciate that there are provisions for emergency provisions, but does the

towing-out of a vessel and sinking it in the waters off Christmas Island constitute an emergency provision?

Ms Lea: It depends on the circumstances of each case. They need to meet the requirements of the act, and it is

spelt out very clearly in the act what those circumstances are. It is our understanding that they have been meeting

the requirements of that act but they have sought to apply for a permit so that that is more clearly articulated for

future dumping acts.

Senator BIRMINGHAM: Is the government aware of claims that there has been a significant level of waste

and toxic waste deposited as a result of the sinking of these vessels?

Ms Lea: I am not aware of that, but I could take that question on notice to check if we have been notified of

any. We do not administer those aspects of the act. I have had questions on notice on that topic previously, so I

would like to check back on those and provide that on notice.

Senator BIRMINGHAM: Is this application being made and initiated purely by the proponent, or has the

Department of Sustainability and Environment said to those authorities undertaking the sinking of these vessels:

'We think there may be a problem here under the sea dumping provisions of the act, and you'd better get some

approvals for this.'?

Ms Lea: As far as I am aware, there is ongoing dialogue between agencies about issues that arise and the best

way of dealing with them. AMSA's response is a result of their recognition of the issue. I would like to check that

that is the case. There are probably a range of consultative mechanisms in place.

Senator BIRMINGHAM: Is the department aware of suggestions that sinking has occurred and deposited

waste in areas that are known to be spawning grounds for southern bluefin tuna? Would that be a consideration in

such approvals processes?

Ms Lea: If there were impacts on matters of national environmental significance, it would be an action that is

referrable under the EPBC Act. If it were an issue involving a breach of the Sea Dumping Act, the department

would be made aware of the circumstances of it. Your previous question asked if we were aware of that, and I

took it on notice to find out for you.



Senator BIRMINGHAM: Does the department actually have any idea as to how extensive these activities

have been to date? We know that there are record arrivals of boats to Christmas Island; does that mean there have

been record levels of sinking of such vessels off of Christmas Island?

Ms Lea: In response to your previous question, I undertook to get data on the number of those instances and

the number of vessels that had been sunk in those circumstances. I have agreed to take that on notice, but your

question directly relates back to that.

Senator HEFFERNAN: It would be a bloody boat harbour if they had not have sunk them!

Senator BIRMINGHAM: If it is not an emergency situation, are there any circumstances under which such

sinkings would be allowed?

Ms Lea: I would have to read the parts of the act to you, but it is my understanding that the circumstances

under which you can make emergency sinkings are: if human life is at risk, extreme weather events or

navigational hazards.

Senator BIRMINGHAM: Otherwise, would those undertaking the sinkings potentially be in breach of the

act?

Ms Lea: Potentially.

Senator BIRMINGHAM: Whose responsibility is it to investigate such potential breaches?

Ms Lea: We administer the Sea Dumping Act.

Dr Dripps: It is our responsibility to investigate potential breaches.

Senator BIRMINGHAM: What actions has this department undertaken to look into such potential breaches

in the waters off Christmas Island?

Dr Dripps: As Ms Lea has advised, she does not have the precise information on these matters at hand, and it

would be our strong preference to take those questions on notice. We do not have the answers here.

Senator BIRMINGHAM: Are you aware of any steps the department has undertaken to make such

investigations?

Dr Dripps: We are aware of the fact that the activity has now been referred for assessment under the Sea

Dumping Act which means that there will be a comprehensive analysis of potential impacts ultimately resulting—

one would imagine—in some kind of conditional approval.

Senator BIRMINGHAM: The arrival of illegal entry vessels is not exactly something that has gone

unreported in Australia. Surely, as the department responsible for these sea dumping provisions, at some stage

you would have thought to make enquiries about what is going on in this regard. This department has officials

that are based on Christmas Island as well. What steps, if any, has the department made?

Dr Dripps: As we have advised, we will take the question on notice and give you advice in terms of the steps

that have been taken by the department.

Dr Grimes: I think your point is reasonable, Senator Birmingham, and as Ms Lea has indicated, it is

something that we have been in discussion with the relevant authorities about. The reason why officers are taking

some matters on notice is to ensure that we get precise details for you. Each year, there are many allegations that

come to the department that require follow-up, and it is appropriate that we check our records to see if there are

specific details that we can provide for you. The general issue is something that we have been very aware of. It

has been a focus of officers and is one of the reasons why the work is being undertaken to provide ongoing

permitting or related arrangements for dumping of these vessels.

Senator BIRMINGHAM: I appreciate the desire for thoroughness, Dr Grimes. I am just concerned that it

seems as though until this application is made to allow for dumping in the future, there does not seem to be any

confidence that anybody has had any discussion or received any briefings about the sinking of these vessels in the

past. Can any of the officials indicate and provide some comfort that there has been some degree of a watching

eye being put over this, that they have read a briefing, that they have received information or that they have asked

questions of those who are sinking these vessels?

Dr Grimes: There has certainly been an ongoing dialogue between our department and relevant agencies. I

think this has been the matter of previous questions on notice though, from memory, not going into very specific

cases. The officers that are here have indicated that they are not able to provide you with those very specific

details at the moment. For that reason they have indicated that they will take it on notice. The questions you are

asking are reasonable questions for you to ask and for us to respond to.



Senator WATERS: As you said earlier, the offsets plan needs to be submitted within three months. You have

also noted that there is no statutory timetable for the minister to then tick off on that offsets plan. Can you please

clarify whether the proponents can start work once they have submitted that plan but before it has been ticked off

by the minister?

Dr Dripps: There are a number of subordinate plans that are required to be submitted to the minister with

regard to the Whitehaven case. The offsets plan needs to be submitted by 30 December 2013, and that needs to be

independently reviewed.

Senator WATERS: Did you say December? I though you said three months.

Dr Dripps: There are different plans. The offset plan is due by 30 December and the corridor plan is due

within three months of the date of the approval. The proponent is required to submit those plans and have them

approved by the minister in advance of the project progressing.

Senator WATERS: So work cannot start until the minister has approved those plans?

Dr Dripps: Work that is likely to impact on the matters that the conditions relate to is not able to start.

Senator WATERS: The advice from the Independent Expert Scientific Committee on Coal Seam Gas on the

Maules Creek project talked about the predicted water drawdown. I think they said it would be two metres in

alluvial soils and 10 metres in the hard rock aquifer, which is quite significant. My understanding is the conditions

require a monitoring of that drawdown, but they do not actually constrain it. Why is that?

Mr Knudson: As Dr Dripps has talked about, there are a number of plans. The one that I think is most

relevant to your question is the surface and groundwater management plan which, as you noted, refers to taking a

look at modelling of surface and groundwater. That plan must be submitted within six months of the date of

approval. In addition to that, I do recall that there is a requirement out of the New South Wales government—

which this decision by the minister reflects—which requires that prior to the commencement of construction, the

surface and groundwater management plan must be submitted. That needs to address a number of matters which

include the maximum amount of allowable drawdown in the alluvial aquifer, the drawdown in hard rock, trigger

levels pertaining to drawdown in the alluvial aquifer and the depth of the root zone of the natural vegetation et

cetera.

Dr Dripps: I would like to add to Mr Knudson's statement about the trigger levels pertaining to the

drawdown, because that condition specifically refers to the depth at which corrective actions will be required to

be undertaken by the company.

Senator WATERS: So there is already a constraint on drawdown limits?

Dr Dripps: Yes.

Senator WATERS: I am pleased to hear that. I will now move to the EPBC amendment bill. Where is the

drafting up to for that?

Dr Dripps: The department has been working on the EPBC amendment bill for some time and we have not

yet finished the drafting process.

Senator WATERS: Is there a timetable for when that will be completed?

Dr Grimes: The matter of the EPBC Act amendment bill is something that the department has been

undertaking work on. The act itself is a matter for the government's consideration.

Senator WATERS: That is true, but I am asking if the drafting itself has been finished by the department.

Dr Grimes: It has been a process that we have been undertaking.

Senator WATERS: I understand that, but is it finished yet?

Dr Grimes: It is a matter for consideration by the government.

Senator WATERS: Thank you for not answering that one! I will now move to the former Arrow CSG project

which I think has now been taken over by Shell—that is the fourth LNG plant in Gladstone Harbour. Can you

update me on where the assessment of that application is up to?

Mr Knudson: Sorry, Senator, the reason this is taking us a little bit of time is that there are a number of

projects by Arrow Energy, and we want to make sure that we give you comprehensive information. I will flag that

there is a pipeline by Arrow Energy currently under assessment for preliminary documentation. It was determined

to be a control action on 1 November. The current status of that is that the additional information to make the

preliminary documentation complete has been requested from the proponent.



The next project I would highlight for Arrow Energy is the Bowen Coal Seam Gas Project, which I suspect is

the one that you are referring to.

Senator WATERS: No, it was not, actually.

Mr Knudson: It is a proposal for up to 7,000 coal seam gas wells and related infrastructure. A draft

environmental impact statement was provided to the Queensland government as at 13 December last year. The

department has advice that the draft environmental impact statement needs some additional revisions prior to

being published. There is one more, which is the Surat coal seam gas project for an additional 7,500 CSG wells

and related infrastructure in the Surat Basin. That one was determined to be a control action in March 2010. We

are currently awaiting a supplementary environmental impact statement from the proponent.

Senator WATERS: And the LNG plan?

CHAIR: That is—

Senator WATERS: That was the question I asked and they have not answered it yet.

CHAIR: Okay, Senator. You have had more than a fair go. You can supply some of that on notice if you like.

I have a few questions I want to go to. Who is across the issues of the COAG approach on the referral of powers

under the EPBC Act?

Dr Dripps: We can take questions on that.

CHAIR: As I understand it, the Business Council and business groups are pushing for a more efficient

approach to making determinations; is that correct?

Dr Dripps: There have been calls like that over a period of time, yes.

CHAIR: There have been statements from the business group; I do not remember what it is called.

Dr Dripps: The Business Council of Australia?

CHAIR: No, not the Business Council. There is a group advising COAG, I think.

Dr Dripps: The Business Advisory Forum?

CHAIR: There are statements from the Business Advisory Forum and statements from COAG on this issue; is

that correct?

Dr Dripps: Yes.

CHAIR: There have been a huge number of job losses in the various states in the environment departments.

As to the austerity programs that have taken place in the states, if powers were to be referred back to the states has

the department made any assessment of whether the states could be in a position to properly assess and determine

projects?

Dr Dripps: As you may recall, the Department of the Prime Minister and Cabinet ran a process last year of

engaging with the states in detail around standards for approvals bilaterals under the EPBC Act and, over the

course of that work, discovered a number of particular challenges with the concept of approvals bilaterals, in

particular the fact that they would not be likely to apply to all of the planning legislation that existed in all of the

states. As you may be aware, each state has a range of different planning instruments and each of them needed to

be considered separately in order to contemplate an approvals bilateral. So, when we reached the COAG meeting

in December last year, the Prime Minister announced that those approvals bilaterals would not be progressed

with.

CHAIR: Was that because of concern about the states being able to efficiently process and determine

projects?

Dr Dripps: A range of factors were emerging from the negotiations, which, as I said, were led by the

Department of the Prime Minister and Cabinet. The issues that were emerging were around the willingness of

state governments to meet the standards embedded in the EPBC Act and also the difficulties related to the number

of different pieces of legislation that apply in each jurisdiction. I am not aware of specific analysis having been

done of the capability of the states. That may have been something that would have followed on from the

negotiations as they progressed towards their close.

CHAIR: On notice, can you provide the committee an outline of details of job losses in the various state

environmental departments?

I know you are going to say it is not your area, but surely if we, as a government, are proposing to refer powers to

the states then we should be confident the states have the capacity, the ability and the quality of personnel to

actually carry out that function. So I would see this as a statement of due diligence by your department to be able



to advise this committee and government as to whether the states have the quality of personnel and the number of

personnel to actually carry out the functions that are being proposed by the Business Council.

Dr Grimes: We could certainly take the matters on notice and see what we might be able to provide. I suspect

it may be quite limited as to what we can provide in terms of information around the states themselves. As Dr

Dripps has indicated, the government is not proposing to move to bilateral approval agreements with the states.

What COAG has committed to, however, is ongoing work between the Commonwealth and states to better

integrate our assessment processes to ensure that there are more streamlined assessments. But in the work that we

do we will be very conscious of the need to make sure that there are very thorough assessments undertaken to

meet matters of national environmental significance to ensure appropriate consideration. And necessarily that is a

different conversation with each of the state jurisdictions but it is something that we are very mindful of and are

aware of as to the need to ensure that those assessment processes are undertaken in a very rigorous way.

CHAIR: So it is a different conversation with each of the state jurisdictions. How do you carry out due

diligence to satisfy yourself that the states can actually carry out that function?

Dr Grimes: Ultimately, because there would be assessments bilateral rather than approvals bilateral, the final

decision making on each project would rest with the Commonwealth minister and so the Commonwealth minister

has an ongoing assurance arrangement for being assured of the assessment that is provided to the Commonwealth

minister. So that would be the fundamental assurance regime.

CHAIR: I am not sure how that works. Can you walk me through how that assurance is given?

Dr Grimes: The Commonwealth minister, in approving actions under the EPBC Act, needs to be certain that

an appropriate assessment has been undertaken with appropriate due diligence, so that would be an ongoing

quality assurance mechanism for life. If the state had not been able to prepare assessment materials to the

satisfaction of the Commonwealth minister, then the Commonwealth minister would be requiring further

assessments to be undertaken. Of course, the intention of the COAG process is to try to minimise the need for that

and in fact have very streamlined processes and wherever possible assessments being undertaken at a state level.

CHAIR: So basically if the powers go back to the states, even on assessment, then there is a duplication

because your department would have to make a further assessment of the assessment to ensure that has been done

to the satisfaction of the minister?

Dr Grimes: So in effect we try to minimise the amount of duplication. There is no doubt there is duplication

in the system at the moment. There are ways in which we can —

CHAIR: No, Dr Grimes, I am asking a specific question and that is: if the assessment process goes back to the

states and a state says, 'Here's our assessment,' do you then have to carry out a quality control assessment of what

the state is telling you? Don't you?

Dr Grimes: I am happy to hand over to Dr Dripps in a moment to give you a more complete answer.

Effectively, if we identified that there was a deficiency in an assessment process then we may have to undertake

further work but clearly, given our intention in working with the states, we will be looking at ways in which the

states get the assessment to the appropriate standard right from the outset. I do not know whether Dr Dripps wants

to add anything to my answer.

Dr Dripps: I was just going to suggest, Chair, that we could take on notice providing you with the detail for a

number of different jurisdictions of how we currently undertake that quality assurance process. So, as Dr Grimes

has indicated, we endeavour not to duplicate what has been done by the states but we do have a very close

engagement with them while the work is being undertaken and we do look at key documents at various stages in

the process—for example, determining in a joint manner the terms of reference for an environmental impact

assessment or the adequacy of documents for publication. So we are happy to take that on notice.

CHAIR: Sure. I am just concerned that it is on the public record that 340 jobs have gone in Queensland in the

environmental department, with similar numbers, I think, in New South Wales. Now these are significant cuts to

environmental departments in both these states by the coalition governments. Wouldn't that set some alarm bells

ringing in your department as to whether or not there is a capacity for these coalition governments to carry out a

proper assessment process?

Dr Grimes: Clearly, something that we need to continue monitoring is the quality of the information that we

are being provided with by state governments, but I am not in a position to provide you with further advice right

at the moment.

CHAIR: Thanks very much. That concludes the time for program 5.2. We will now move to Outcome 4:

Adaptation to climate change, wise water use, secure water supplies and improved health of rivers, waterways and



freshwater ecosystems by supporting research, and reforming the management and use of water resources. If you

have not got set up after that lot, there is no chance!

Senator RUSTON: I am interested in the Huon Valley Regional Water Scheme. I think that is funded under

the Water for the Future initiative. Is that correct?

Ms Harwood: Yes, that is correct. The Australian government has committed $12 million to the Huon Valley

Regional Water Scheme in Tasmania. The total project cost is $34.6 million, with Southern Water providing

$22.6 million towards the project. The project is complete. It is just in the final stage of the final report on the

project and it was opened on 7 November last year. The project has upgraded and expanded the water supply

infrastructure in the Huon Valley to ensure a reliable and sustainable water supply for the region. The scheme will

also ensure that water quality in these areas consistently meets the Australian Drinking Water Guidelines by using

the Huon River as the primary water source and decommissioning five smaller rivulet supplies. Almost one

billion litres of water will flow back to creeks and rivulets in stressed catchment areas.

Senator RUSTON: Can you just tell me, Ms Harwood, how much water will flow back?

Ms Harwood: About one billion litres will flow back into creeks and rivulets in stressed catchment areas. This

will provide environmental benefits, including restoration of water quality and catchment health, which will

promote greater biodiversity in those waterways.

Senator BILYK: Can you tell me what areas of southern Tasmania are included in the water scheme?

Ms Harwood: I can tell you the works and where they are. The key infrastructure works included construction

of a new water treatment plant at Glen Huon, a clear water storage tank, raw water pumps, associated town pump

stations and reservoirs, and the laying of over 42 kilometres of pipe, including an underwater pipeline through the

Egg Island canal—that is in the Huon River—near Franklin. The main works locations are in Huonville, Glen

Huon, Franklin, Geeveston and Cygnet.

Senator BILYK: Presumably all of those areas benefit from the water scheme?

Ms Harwood: Yes.

Senator BILYK: Are you able to take on notice whether there are any other surrounding areas that also

benefit?

Ms Harwood: Yes, I can.

Senator BILYK: Do we know how many people there are who would benefit from it?

Ms Harwood: I might have to take that on notice in terms of the population down in the Huon Valley—the

area there. I can do that.

Senator BILYK: You told me that about one billion litres are returned to the environment. That is obviously

good for the catchment but also for the biodiversity in the waterways. Are you able to tell me how much the daily

and total supply of water is to the area?

Ms Harwood: I would have to take that on notice in terms of the volume of urban water use in the Huon

Valley, if that is what you are asking.

Senator BILYK: What I want to know is, daily, how much supply there is now for drinking water, because I

actually come from very near the Huon Valley and have a lot to do with things down there. I know that for quite

awhile the water was not of the standard that it should have been. So I am pleased to hear you say that it has now

reached the Australian water guidelines. Is that correct?

Ms Harwood: The Australian Drinking Water Guidelines.

Senator BILYK: I am interested in knowing how much there is for people to use and the broad coverage area

that it involves. So if you could take both of those on notice, that would be great.

Ms Harwood: Yes.

Senator BILYK: I think you actually answered some of the other questions I had on it in your other answers.

Did you say the total cost was $34 million?

Ms Harwood: $34.6 million is the total project cost, of which the Australian government's contribution

commitment was $12 million.

Senator BILYK: Do we know if local government put in any of that money?

Ms Harwood: The remainder is provided by Southern Water.

Senator BILYK: Great. I am not sure if you are the right people to talk to me about the Nyrstar project in

Hobart, through the stormwater grants program?



Ms Harwood: Yes.

Senator BILYK: How is all that going?

Ms Harwood: That project is receiving funding under round 3 of the Stormwater Harvesting Grants program.

The project is progressing. The project design is scheduled for completion in May this year, and construction is

scheduled to commence in July this year, with work' completion by September 2014.

Senator BILYK: I think it was last estimates that some of the direction had to be changed—or something had

to be changed—and the plan had to be changed. Do you know anything about that? I think it was mentioned last

estimates.

Ms Harwood: I am not aware of that being an issue for this project, but I could take that on notice. The

project is proceeding under our stormwater 3 grant and its design will be ready in a couple of months.

Senator BILYK: Do we know where we are at the moment?

Ms Harwood: Yes, we are in the project design phase.

Senator BILYK: Still in the design phase. What is the time line for the project to be up and running?

Ms Harwood: It is expected to be completed by September next year.

Senator BILYK: Once again, can you tell me what the benefits of that will be to the community?

Ms Harwood: The project is expected to save up to 869 megalitres per year of potable water through the

supply of treated stormwater. This volume equates to around 30 per cent of the current potable water usage at the

smelter.

Senator BILYK: It is for the Nyrstar smelter. I have been out to the site and, as I understand it, the water

comes down and they are building underground tanks for the collection or whatever they do to it.

Ms Harwood: Yes, and then to treat that water. It will also benefit the Derwent River by reducing stormwater

run-off from the site.

Senator BILYK: Tasmanians commonly know it as the zinc works—it did have a name change a few years

ago—but there have been issues about what actually goes into the river from there so that is obviously of benefit

to the whole river system. Thanks very much; I appreciate that.

Senator RUSTON: Could you advise us of what has so far been the overall reduction in funding to the

MDBA as a result of state government funding having been reduced and what you are expecting that reduction of

funding to be in the forthcoming year?

Dr Dickson: I can talk to that and the decisions so far. Just to give you a bit of background, the total funding

before the budget cuts—that is, New South Wales—last year was $110 million. That was the total funding for the

joint programs. New South Wales reduced their contribution for 2012-13 by $20 million and they are going to

reduce that further for next year. That has been announced for 2013-14. Overall, New South Wales, for this

coming financial year, it is a 73 per cent reduction.

As a result of New South Wales reductions, the ministerial council last year—I think it was late in June—

agreed on reductions to a number of the programs as a result of that. The council agreed to phase out the Native

Fish Strategy. It will be concluding this year. There is just some finalising work to be done. There is also the

Sustainable Rivers Audit program. It finished its final report and it was released last year. It is winding up as well.

As well is that they ceased any more funding for the South Eastern Australian Climate Initiative, which was doing

further work on climate change. That was the impact on this financial year from New South Wales.

Senator RUSTON: Have any other states indicated they are likely to follow suit?

Dr Dickson: South Australia advised just before Christmas that they are going to halve their contribution to

$14 million. It is roughly a 50 per cent reduction. As yet, Victoria has not signalled what they intend to do, nor

has Queensland or the ACT.

Senator RUSTON: Can I draw your attention to a press release dated 20 December by your chairman. He

said:

I am very concerned that this level of funding will be insufficient to cover even basic river operations, such as water

delivery to irrigators, and insufficient to adequately maintain $2.5 billion worth of river assets, such as dams, weirs and locks,

including Hume and Dartmouth dams and the South Australian barrages. It will also mean there will be no funding for any

natural resource programs in the Basin.

Could you reconcile $20 million from New South Wales and $14 million from South Australia to a comment like

that?



Dr Dickson: The way the contributions to the joint programs have been managed has been a sharing

arrangement between New South Wales, Victoria and South Australia and latterly—in the last decade or so—

Queensland and the ACT. The whole basis of that has been a sharing arrangement built on joint contributions and

it is totally integrated. So for this financial year the reason why there was a limited impact on other operations that

are managed under the joint programs was because basically Victoria and South Australia subsidised the shortfall

from New South Wales.

The statements the chair was making were for future years. If all of the state reduce their contribution to the

level that, say, as South Australia did, 50 per cent, that is halving the contributions, or to the level that New South

Wales—the 73 per cent reduction; that is only 30 per cent of the contributions—that would have a massive effect

on asset management and the management of the river.

Senator RUSTON: Can I take it one step further, then, in relation to the legacy costs of this Basin Plan. We

are seeing already a huge reduction in the amount of money that is coming to the states in terms of the costs for

the operation and maintenance and the like of the assets. Where to from 2016? How are we going to fund the

maintenance, operation and upgrading of the assets that we have just made this massive investment in, when we

seem to have our recurrent budgets shrinking? I am concerned about how we are going to deliver into the longer

term. We have got stuff going out to 2024 but the budgets do not seem to be going with it in terms of the day-to-

day management of your organisation.

Dr Dickson: If I can get your question clear. The funding for the Basin Plan and the implementation of the

Basin Plan is funded separately by the Commonwealth. The states do not contribute to that. So the joint funding

we are talking about is for the management of river operations—the management of the Murray and the

maintenance of all the dams, weirs and locks—

Senator RUSTON: That exist now.

Dr Dickson: That have been in place for many, many decades. This is an arrangement that has been going for

a long time. The cuts are not into the implementation of the Basin Plan.

Senator RUSTON: So the cuts affect existing asset and existing programs as opposed to the Basin Plan.

Dr Dickson: That is correct.

Senator RUSTON: And the funding that goes without will deal with whatever is implemented in the assets

and operation of that. Basically they are two separate questions. You have answered the first one. Let's look at the

second one. Where is the money to be able to maintain the assets and the operations following the implementation

of all of the infrastructure works that are being proposed as part of the Basin Plan?

Dr Dickson: The assets I am talking about include the Living Murray works as well, which have progressively

been funded by government for some years. The money—and this is probably one for SEWPaC—that has already

been committed for the infrastructure relating to the Basin Plan is again through Commonwealth appropriation.

That money has already been set aside, so I am not sure I can—

Senator RUSTON: Maybe Mr Parker can answer.

Dr Dickson: The existing assets are jointly managed assets. The responsibility for funding those is with the

states and we act as their agent in managing it, so the decisions on that investment are really for the states.

Mr Slatyer: SEWPaC is chairing an interjurisdictional process with the Basin states to address the very issues

that you have just been raising about the longer term funding arrangements for these programs. That work is

currently in train, and discussions with the states are occurring.

Senator RUSTON: Do we have any idea of when we are likely to find out?

Mr Slatyer: In the first instance the ministerial council will need to determine a joint budget for the authority

for the 2013-14 years. That is the immediate priority of the negotiations that are currently in train. The council

will doubtless also wish to consider the longer term arrangements, so the work of the officials currently is focused

on both settling the budget position for 2013-14 and options for longer term arrangements.

Senator RUSTON: I am talking longer term, but I am sure my colleagues will pursue that one. I want to ask

you a couple of specific questions. What was the date when the Basin states agreed to their contribution of the

shared reduction targets? You may need to take that on notice. The southern connected Basin.

Mr Slatyer: I will have to take that precise date on notice.

Dr Dickson: Are you asking what was the date they settled their current share before the reductions?

Senator RUSTON: Yes, when did they agree to their shared reduction target?



Dr Dickson: The ministerial council decision was last June, and I think they finalised it in August. That was

when they agreed for this current financial year.

Mr Parker: Senator, I just want to ask a question for clarification: when you were talking about shared

reduction targets, there might be two things that you were talking about. One is the shared reduction in the water

availability under the Murray-Darling Basin Plan; the other is the reduction in the budget. So there would be two

different answers to that question.

Senator RUSTON: Water.

Mr Parker: It is the water one. Right, thank you.

Senator RUSTON: If you could get me that date. I am sure it is not something you walk around with in your

head. The other thing is—if you can answer this quickly, fine; if not, take it on notice—could you let us know

what is the situation with the Menindee Lakes upgrade.

Ms Harwood: So for the Menindee Lakes project, an update on how that is going?

Senator RUSTON: Yes, is it progressing.

Ms Harwood: Yes. There has been good work with New South Wales over recent months on the scope of a

suite of project works, but also potential changes to the way the lakes are operated, which would generate

savings—

Senator RUSTON: So when is that going to happen?

Ms Harwood: The next step is for us to work with New South Wales on bringing that scope of projects into a

project plan, essentially, for delivering them. There needs to be consultation with the other southern Basin states

on the proposed changes at Menindee, and obviously consultation with the local stakeholders, including Broken

Hill. There are a lot of different stakeholders with an interest in what happens at Menindee, and the project needs

to be worked through with them.

Senator RUSTON: Okay, so you are confident it will progress?

Ms Harwood: Yes.

Senator RUSTON: I will ask this question and put the rest on notice. Is there any hold-up with the

negotiations for the criteria for the Water Industry Alliance agreement in South Australia?

Ms Harwood: No. The Commonwealth government is funding the development of a feasibility study and a

business case for the Water Industry Alliance proposal.

Senator RUSTON: I understand that. My question was: is there any problem with the criteria? I understand

that the business case has been presented by the Water—

Ms Harwood: No, it has not. South Australia is still developing the business case. There are agreed criteria

for development of the business case.

Senator RUSTON: What about the criteria in terms of the specific projects?

Ms Harwood: That is a matter for South Australia to present in the business case as to how they intend to run

the program, including any subsidiary grants programs. Those are matters that are under discussion between the

Commonwealth and South Australia, but it is proceeding to the agreed form.

Senator RUSTON: You are happy that there is no issue?

Ms Harwood: I am happy that we are working through the issues to do with what ends up being the business

case for the Water Industry Alliance proposal.

Senator RUSTON: Thank you. I will put the rest of my questions on notice.

Senator JOYCE: I would like an update—and you might have touched on this already—of the negotiations

on the intergovernmental agreement between the states on the implementation of the plan. Has everybody signed

off on that now? Is it going ahead?

Mr Slatyer: The negotiations with the states are continuing. There has been no finalised agreement as yet, and

those discussions are proceeding at both the ministerial and officials levels.

Senator JOYCE: Is any type of end date envisaged for this?

Mr Slatyer: The IGA does not, in and of itself, have a must-start date, but officials are working as quickly as

they can to have the agreement finalised.

Senator JOYCE: Would it be correct to say that, without an intergovernmental agreement, you do not have a

plan?



Mr Slatyer: No, I would not characterise it that way. The intergovernmental agreement is seeking to settle

agreed approaches to some key implementation issues under the plan, but the plan still stands. It is in effect and

has full force of law and, absent the agreements, it still needs to be adhered to.

Senator JOYCE: So you can operate without the intergovernmental agreement?

Mr Slatyer: I think the objective of the intergovernmental agreement is to facilitate and assist all governments

in managing their implementation responsibilities. That is its purpose.

Senator JOYCE: There is a bit of a dilemma there: either you can operate with it or you cannot operate with

it. From what I understand, we have a plan and it can operate without the intergovernmental agreement.

Mr Slatyer: That is its legal effect.

Senator JOYCE: What are the areas of disagreement preventing this apparently non-essential agreement

from being struck?

Dr Grimes: It may be appropriate to characterise the discussions that are occurring at the moment as being

quite productive and cooperative discussions between the Commonwealth and the states. Water officials have

been working together now for some time and good discussions are continuing. It obviously would not be

appropriate for us to provide a blow-by-blow description of negotiations that are going on between the

Commonwealth and the states, but there are good and productive discussions occurring at the moment between

the Commonwealth and the states.

Senator JOYCE: Dr Grimes, thank you very much for that. With 'good and productive discussions' going on,

it sounds as though we are about to get to a conclusion on it.

Dr Grimes: Mr Slatyer has indicated that we are not putting a specific time frame on that at the moment. But,

as I indicated, they are good discussions and we are not in a position to give you a blow-by-blow description of

those discussions.

Senator JOYCE: If these good and productive discussions go on for another year?

Dr Grimes: That is taking us into the realm of speculation, Senator, and I would prefer not to do that.

Senator JOYCE: If these good and productive discussions just do not come to any conclusion and go on, how

do you see it, Dr Grimes? An agreement obviously has not been reached now. If it is not reached, from what I

understand things just go on as normal.

Dr Grimes: They do.

Senator JOYCE: It is irrelevant.

Dr Grimes: Once again, I would prefer not to get into the realm of speculating on that sort of outcome,

particularly when governments are working together well on these issues and developing an intergovernmental

agreement. As Mr Slatyer has indicated, the plan continues to have its legal force, irrespective of the

intergovernmental agreement. But governments are committed to the intergovernmental agreement and there are

very good discussions underway.

Senator BIRMINGHAM: With the indulgence of Senator Joyce, I have one question on this line. The

communique from the Murray-Darling Basin Ministerial Council meeting of 30 November states that 'substantial

outstanding issues remain' in relation to the negotiation of the intergovernmental agreement. Can you identify any

of the substantial outstanding issues that have been resolved since that 30 November meeting?

Mr Slatyer: No, we are not in a position to go into the detail of the particular state of negotiation over any

particular issue, but I think the characterisation of the discussions as positive and constructive is correct. That is

how they have been conducted, and at the moment, at officials level, there is no capacity for us to advise on

precisely what the nature of the outstanding issues is.

Dr Grimes: If it would assist at all, probably the best we could do is take something on notice and see if we

can provide you with further information. But generally we would not be providing updates on negotiations that

are currently underway between governments.

Senator JOYCE: No doubt we will find out that they are either good and productive or evil and indolent. The

Basin Plan requires, obviously, the state governments to develop environmental watering plans. How are they

going along? Are they good and productive?

Dr Dickson: Perhaps I can answer that. There are quite a number of things that we need to do on

environmental watering. In fact, by the middle of this year we need to have the annual environmental watering

priorities. That is our most urgent task, which we are already getting underway with. As well as that, we have a

broad strategy called the basin-wide environmental watering strategy that, under the plan, we have two years to



develop. The long-term state plans are required one year after the basin-wide environmental watering strategy, so

they have about three years to go. I might ask Jody Swirepik if she can tell you about the discussions we have had

so far with a number of the state agencies on how we are going to be managing the environmental watering side

of things.

Ms Swirepik: Yes, we have three tasks to embark on, as Rhondda just outlined. One is to develop the

priorities for the forthcoming water year, and that is our first and primary task, because we only have a matter of

months to do that. For the basin-wide watering strategy we have two years, and for the plans by the states there is

effectively three years under the Basin Plan, or they can be developed at another time agreed between the state

and us. At the moment we are just scoping how the states might approach that task and talking to them, but we are

trying to engage them on the two other activities to begin with. So we have talked to them about the watering

priorities and we are developing a framework for that and beginning to have consultation both with key

stakeholders and with the states.

Senator JOYCE: When you talk about scoping, what happens if this scoping does not actually lead to an

environmental watering plan? Where does that lie? The structure of my questioning is: with these agreements that

are in the ether, how do we land them so that we end up with a plan? My question naturally is going to be: if this

environmental watering plan does not actually land then how are we going to go operating the whole Murray-

Darling Basin Plan?

Ms Swirepik: The Basin environmental watering strategy is a requirement of the Basin Plan, so it has to be

delivered within two years. That does not stop us from using the water in the meantime. In fact, both the Living

Murray and the Commonwealth Environmental Water Holder have been operating, I suppose, in the absence of

that for quite sometime now, and actually doing coordination between them to try and get the best environmental

outcomes from that water.

Senator JOYCE: So how much water do you have in general allocation right now?

Ms Swirepik: I can answer that for the Living Murray. I think you would probably have to direct the

Commonwealth question to them.

Senator JOYCE: Okay—whoever knows. We are looking at 2,750 gigs, and then an extra 450 into the never-

never, which we really do not have the money for. Of that 2,750: what do we actually have now? Exactly?

Ms Harwood: The recoveries to date through the programs that the Commonwealth is responsible for—the

water infrastructure programs and the water buyback—is 1,601 gigalitres. And that is—

Senator JOYCE: You have 1,601, made up of?

Ms Harwood: Three hundred and sixteen of that is water that is under contract through infrastructure

programs and the rest is—

Senator JOYCE: General allocation?

Ms Harwood: water buyback plus some other contributions. But most of the rest is water buyback.

Senator JOYCE: So what is that? About 1,285, if my maths is correct.

Ms Harwood: I might just check because I need to check whether that figure includes the state-based water

recoveries. So I just need to check the figure of recoveries under the Restoring the Balance program.

Senator NASH: How can you not know that?

Ms Harwood: I do know, I just need to check my figures.

Senator JOYCE: So if you had 1,285—which has predominantly been allocation—and then you have 316

under infrastructure, how has this been operating at the moment? What is actually happening with that water?

Where is it?

Ms Swirepik: I think that the Commonwealth Environmental Water Holder is best placed to answer that.

There have been a number of reports developed, catchment by catchment, to try and determine what the

environmental watering opportunities are.

Ms Harwood: Can I just correct my earlier figures to clarify? The total recovery through the Water for the

Future program as at 31 December 2012 is 1,475.9 gigalitres, of which 1,117.1 has been recovered through the

Restoring the Balance program and 316 through infrastructure.

The larger figure I quoted included the recoveries through state based programs. So, all up, my understanding

is that around 58 per cent of the 2,750 has been recovered.

Senator JOYCE: So you have 1,117.1 as of the end of last year?



Ms Harwood: At 31 December, yes.

Senator JOYCE: So, where is this water? How much is in Dartmouth? How much is just a high flow?

Whereabouts is this water?

Ms Harwood: That is the entitlement base that is held by the Commonwealth Environmental Water Holder

and other water holders in the case of the state based programs. The allocations against those entitlements for this

year would be straight across the Basin, and that is a matter for the Commonwealth Environmental Water Holder

if you are asking for this year's allocations against those licences and where that water is held. That is not a

question I can answer.

Senator JOYCE: Basically, what I am getting to is that if we do not have an environmental watering plan,

and we do have 1,117 gigs of water, what are we actually doing with it at the moment?

Mr Parker: These are questions for the environmental water holder. The new holder, David Papps, is sitting

here in the background. At the request of the chair, if you like, the holder has a specific part of the program later

on the agenda. But if you wish, we can go to—

Senator JOYCE: It is just in the overall scope of trying to get to a plan. Is there a draft version of the

intergovernmental agreement available at the moment? Or has the draft version been circulated—completed?

Mr Parker: There is a draft of the agreement which is being worked on between jurisdictions.

Senator JOYCE: It has already been worked on?

Mr Parker: It is being worked on between jurisdictions. Do you mean intergovernmental?

Senator JOYCE: Yes.

Mr Parker: Yes, there is a draft agreement.

Senator JOYCE: How many drafts have you had?

Mr Slatyer: As is always the case in all such discussions, the drafts iterate and there would have been many

versions that iterate over time and it is quite normal practice for any development of any Commonwealth-state

document of this nature.

Senator JOYCE: So there is a lot, a few?

Mr Slatyer: Several.

CHAIR: Senator Joyce, can I just indicate that there are other senators seeking the call. I am not sure how

long you would require.

Senator JOYCE: As long as I can get but I will be guided by you, Chair.

CHAIR: I think I would have to wind you up about 'a quarter to'.

Senator JOYCE: Okay. When is the next meeting between the states to discuss the intergovernmental water

agreement? When is the next time you are going to get down and have a good and productive discussion about the

intergovernmental water agreement?

Mr Slatyer: The work is occurring bilaterally with the states at the moment. That is the way that this

negotiation is proceeding.

Senator JOYCE: So it is indeterminate; it is happening all the time.

Mr Slatyer: It is continuing.

Senator JOYCE: What is the latest as to the potential purchase of water at Nimmie-Caira?

Ms Harwood: The business case for the Nimmie-Caira project was presented by New South Wales last year.

We are nearing completion of the draft due diligence assessment. So the next step would be to share that as a draft

in confidence with the New South Wales government as is required under the water management partnership

agreement for state priority projects.

Senator JOYCE: Is it true at this point in time there has been interest shown from China in regard to the

purchase of water from Nimmie-Caira?

Ms Harwood: That is something you would have to ask the people in Nimmie-Caira who hold water

entitlements.

Senator JOYCE: Are you aware of it?

Ms Harwood: I had heard that there was something of that character but I know no details at all.

Senator JOYCE: Are you currently in negotiations as to the purchase of water from Cubbie Station after its

purchase by a Chinese based entity?



Ms Harwood: We have said before that we operate by open tenders in purchasing water in the Condamine-

Balonne. We have just completed the first of three tenders for this financial year. We do not discuss whether or

not we have received offers from individual proponents and individual sales or offers under the tender process.

That is commercial in confidence, respecting their privacy. So that would be my answer.

Senator JOYCE: If an external entity, a Chinese entity, as you have heard and as I have heard, were to buy

the water of Nimmie-Caira would that have undue effects on the capacity to deliver water downstream?

Ms Harwood: It is a hypothetical question. The entitlements as to Nimmie-Caira are currently held by

landholders who use them for irrigated agriculture. If they were to change hands to another party using them for

irrigated agriculture, I do not know what would change, because the configuration of the system is as it is.

Senator JOYCE: I notice that this agency does not break its spending up into departmental and administrative

budgets in the parliamentary budget statements. What is the break-up between departmental and administered

spending for the MDBA?

Mr Nicholas: We do not have any administered funds. It is all departmental funding.

Dr Grimes: Just to clarify, with 'department' were you referring to the authority or—

Mr Nicholas: MDBA.

Dr Grimes: Right, that is okay, because the department does have—

Mr Nicholas: It is MDBA.

Dr Grimes: Thank you.

Senator JOYCE: So the MDBA does not have any administered funds?

Mr Nicholas: No.

Senator JOYCE: So who does the administering of the MDBA?

Dr Dickson: Sorry, we do not have any administered funds so we do not have—

Mr Nicholas: As in the distinction between departmental and administered, our funds are departmental.

Senator JOYCE: But isn't that just a peculiarity? As for the terminology of the funds, if it were any other

department it would have that break-up, wouldn't it?

Dr Grimes: I may be able to assist. The distinction between departmental and administered largely goes to

whether you have direct control over the funding and whether it is a program administered on behalf of the

department. That is the reason why the MDBA's funding has been classified through the department of finance,

and it is departmental.

Senator JOYCE: I know you do it with the best of intentions. I understand that. I just found it peculiar that

there would be a purpose fund within that, even if of a minor magnitude, would be similar in other departments—

so why it wasn't categorised as such. The MDBA is spending about $180 million this year. How is this divided up

into different functions and programs?

Dr Dickson: Where did you get that figure from, Senator? What figure did you use?

Senator JOYCE: $180 million this year.

Dr Dickson: I am just trying to reconcile that. Can you tell us the source of that figure?

Mr Nicholas: Is that from the portfolio budget statements?

Senator JOYCE: Yes.

Mr Nicholas: It says in the statements that there is $50.8 million that is appropriation from the

Commonwealth. That activity takes care of the basin planning functions. It also includes interest equivalency,

which is interest earned on funds in our special account. Those funds normally go towards joint program delivery,

so the river management and NRM programs. It also includes $3.3 million being a Commonwealth contribution to

works at Hume Dam. The remaining $138.8 million depicted in there are funds from the joint governments to

deliver joint programs, so that is the river management operations NRM programs.

CHAIR: Thanks, Senator Joyce. I am going to have to move on, because I have a lot of senators seeking the

call.

Senator WATERS: I have some questions about coal seam gas and the Independent Expert Scientific

Committee on Coal Seam Gas. Have we got the right folk here? Great. I will just check, first of all, whether you

are aware that the New South Wales state government have not met the deadline for submitting their protocol on



how they will amend their state laws to take into account the advice of the Independent Expert Scientific

Committee on Coal Seam Gas. You are across that issue, I imagine.

Ms Nethercott-Watson: The National Partnership Agreement on Coal Seam Gas and Large Scale Coal Mines

has a number of responsibilities for the states that have signed up to the national partnership agreement. Those

responsibilities include engaging with the research agenda of the independent expert scientific committee to

provide advice on when the projects that will be referred to the independent expert scientific committee would

come through in their process in regard to a protocol, as well as participating in reporting and also amending any

legislation or other such things. At this point in time, under the national partnership agreement, three of the four

signatory states have met the two identified milestones that include the delivery of protocol. In your question you

talked about the amending of legislation and regulations—that is actually a secondary milestone that is not due

until March.

Senator WATERS: Yes, sorry, I conflated those two. It is firstly the protocol, which was due on 30

September from memory, and secondly the actual amendments. Am I correct that New South Wales has not met

that 30 September deadline for submitting its protocol?

Ms Nethercott-Watson: At this stage interactions with New South Wales are continuing on their protocol.

Senator WATERS: Has the department been asked to advise on options that the minister has available to

him, given the breach by New South Wales and their failure to meet that deadline?

Ms Nethercott-Watson: Can you repeat the question.

Senator WATERS: Has the department been asked to advise the minister—or have you advised the

minister—on what options are now available to him, given that New South Wales has not yet complied with that

time frame within the national partnership agreement?

Ms Nethercott-Watson: I think, in terms of working with New South Wales, we continue to discuss what the

protocol might cover.

Senator WATERS: Perhaps I will be clearer. The minister has said that he will act if New South Wales do

not. Have you advised the minister in what manner he could act?

Dr Grimes: I think it is probably correct to characterise this as a matter where there are ongoing discussions

between the Commonwealth and New South Wales. The minister has made the Commonwealth's position very

clear to New South Wales. It would not be appropriate for us to get into speculating on the next steps here,

obviously, but the Commonwealth's position is very clear and the minister has expressed that clearly to the New

South Wales government.

Senator WATERS: Okay. Let's leave New South Wales out of the picture for the moment, which doesn't

bother me since I am from Queensland. In relation to the department's advice to the minister about coal seam gas,

the minister has indicated that he may well do something—not before time, in my view. I am interested in

whether the department has canvassed the options that are available for the federal government to federally act on

this issue.

Dr Grimes: I do not think it is appropriate for us to get into that level of speculation.

Senator WATERS: All right. I will move on. On the Whitehaven mine: why wasn't the advice of the

independent committee made available to the public before the decision was made?

Ms Nethercott-Watson: The practice is for the advice of the independent expert scientific committee to be

released in the context of the regulator's decision.

Senator WATERS: What is the policy justification for that?

Ms Nethercott-Watson: That would be a question you would need to ask the regulator. In terms of the

information that is provided to the regulator, that regulator considers that and as part of the releasing of the

decision then information becomes available. That has been the practice.

Senator WATERS: So you're not the right folk to ask that question of?

Ms Nethercott-Watson: In terms of when it is a matter for the advice to be issued, at this point in time the

practice has been in the context of the regulator's decision.

Senator WATERS: I am just asking why that is. Are you able to help me or shall I ask someone else?

Dr Grimes: It allows the regulator to consider the matters. When a decision is made, the material is provided

and there is transparency around the decision making.

Senator WATERS: I am sorry, I missed the first bit.



Dr Grimes: There is transparency around the decision making when the decision is made. It has not been the

practice to release that sort of information while the decision maker is considering it, but when the decision maker

has made the decision the information is released.

Senator WATERS: I will move on, in the interests of time. There is obviously a detailed program that IESC

is responsible for under the provisions of the act. How much of that own-volition research has the committee

undertaken so far?

Ms Nethercott-Watson: The statutory committee has only been appointed since late November, so at the

moment the statutory committee is in the process of determining their research forward plan and the topics and

priorities that they would identify as part of that. The interim independent expert scientific committee had

commissioned a number of research programs that are available on the website and include a range of topics

across various themes.

Senator WATERS: Could you take on notice any of those section 505D, E, F or G activities that either the

interim or the final committee have undertaken, and provide details of that to me?

Ms Nethercott-Watson: Yes.

Senator WATERS: Thank you. On the bioregional assessments: in the last estimates we established that the

committee thought it would take about five years to roll out its research program. Has there been an update to that

time frame, or is it still the case that it will take about five years?

Ms Nethercott-Watson: Certainly on the time frame for bioregional assessments, given the recent

appointment of the statutory committee, it is the subject of discussion in terms of what the scientific approach and

the time frames would be, but at this point in time there would not be any indication of a change to that.

Senator WATERS: Can you talk me through the funding that the final committee receives? Has that changed

since the committee became final instead of interim?

Ms Nethercott-Watson: No. The government announcement in terms of funding for the function of the

independent expert scientific committee has not changed since the statutory, so the total funding is $200 million,

of which $50 million is associated with payments under the national partnership agreement for large scale

coalmines and coal seam gas. $150 million has been announced by the government for the support of the

independent expert scientific committee.

Senator WATERS: Does the committee get departmental administrative support?

Ms Nethercott-Watson: It is taken out of that $150 million.

Senator WATERS: Has the department advised the minister about the constraints that the minister faces in

acting on the advice given to him by the committee?

Ms Nethercott-Watson: I am sorry, would you repeat the question.

Senator WATERS: Has the department advised the minister about the limits placed on the minister in acting

on the advice given by the committee?

Ms Nethercott-Watson: As far as I am concerned, I can only cover in terms of the independent expert

scientific committee and the Office of Water Science. That would be a matter more directed to the regulator and

the support mechanisms for the decision making around that.

Mr Parker: We can take that on notice.

Senator WATERS: Thank you.

CHAIR: Senator Waters, we will have to move on.

Senator WATERS: I have one more quick question: has your division or section advised the committee of

the constraints? What I am getting at here is that obviously there is still no water trigger under the environmental

laws, so the committee can provide all the advice it likes. Are all parties to this whole thing aware that no-one can

do anything about it federally without that water power being in the act?

Ms Nethercott-Watson: The committee members are certainly aware—in terms of their terms of reference

and the association with the national partnership agreement—that the actual insertion into that agreement is for

the jurisdictions to take account of the advice of the independent expert scientific committee. The members of the

independent expert scientific committee are completely aware that they are not regulators, decision makers or

approvers of projects.

Senator XENOPHON: I have some questions for Ms Harwood, just following up questions that Senator

Ruston asked. Senator Ruston asked a series of questions in relation to the Water Industry Alliance's $265 million

allocated to South Australia a number of months ago—I think back in October. Was it October last year?



Ms Harwood: Yes, late October.

Senator XENOPHON: How much money has actually been allocated to projects? How many projects have

been approved and how much has actually been allocated to date?

Ms Harwood: Some of the total funding there is for projects that are the responsibility of this portfolio, and

others are not. The key one for us is the $180 million for the Water Industry Alliance program. At the moment

South Australia is developing the business case for that. The Commonwealth is funding the development of that

business case and the feasibility study to support it.

Senator XENOPHON: How much has been allocated for the businesses?

Ms Harwood: There is $1.2 million that has been agreed as the funding envelope for developing that business

case, and the South Australian government is well underway with that. That is against a set of criteria that have

been agreed in the funding agreement for development of the business case. The next step would be for a final

business case to be submitted to the Commonwealth for that program and for that to be subject to due diligence

assessment by the Commonwealth. Then, if it is approved, we would enter into a funding agreement for the

agreed project. It is not clear yet whether the proponent for that project would be a private entity or the state

government, and that is a matter for South Australia, which is working through that.

Senator XENOPHON: Sure. So we are looking at a time frame of what? Is it three to six months before a

project could be approved?

Ms Harwood: It depends on when South Australia submits the business case. It would take some months to

do the due diligence assessment and take it through to a funding recommendation.

Senator XENOPHON: You say 'some months'. So, once South Australia has done the business case, how

many months will it take for it to be approved?

Ms Harwood: I do not know, because that is something that we would not give a precise time line on. We

would need to do a thorough due diligence assessment for a $180 million project.

Senator XENOPHON: Going on past experience with similar projects, how long do you expect due diligence

would take?

Ms Harwood: Several months?

Senator XENOPHON: So three to six months would be a reasonable time frame?

Ms Harwood: Yes.

Senator XENOPHON: Going back to the PIIP—which I keep asking you questions about at most

estimates—I think there was about $113 million or $114 million—

Ms Harwood: It was $110 million originally.

Senator XENOPHON: Okay. How much has been allocated and how much has actually been approved for

South Australian projects?

Ms Harwood: Around $14 million of approved projects.

Senator XENOPHON: It is still $14 million?

Ms Harwood: That is right, because there have only been two rounds under the program.

Senator XENOPHON: When will the next round be?

Ms Harwood: That is a matter that the South Australian government have an interest in, and at present they

are not supportive of holding a third round for that program.

Senator XENOPHON: Do you know why?

Ms Harwood: I think it is that they are looking more broadly at the remaining funds that belong to their state

priority projects and the purposes to which they wish to put the total of their remaining funds from state priority

projects, including remainders from the Lower Lakes program et cetera—overall, what they wish do with those

funds.

Senator XENOPHON: But this $110 million was allocated primarily for the Riverland, wasn't it—or for

South Australian projects, rather?

Ms Harwood: It was for the irrigation industry investment program—correct.

Senator XENOPHON: Which, by virtue of the way that irrigation is structured in South Australia, would

largely favour the Riverland given the preponderance of irrigation in that area.



Ms Harwood: Yes, given that most of the irrigation is there, you would expect that. But South Australia

essentially has the call on how the remainder of its state priority project funding is spent, subject to assessment by

the Commonwealth of project proposals by South Australia for the use of that money. An example is that the

South Australian government has asked that $55 million of the remainder of that funding be used towards the

regulators project, which was agreed as part of the package that you referred to earlier.

Senator XENOPHON: Thank you.


CHAIR: We will resume with program 4.1—water reform.

Senator BIRMINGHAM: I want to follow up and perhaps tidy up a few loose ends from questioning by a

variety of my colleagues. Firstly, when is the next scheduled ministerial council meeting?

Ms Harwood: The next meeting is in June. I do not know the date, I am sorry.

Senator BIRMINGHAM: Is it expected that the IGA will be concluded and signed before then or is that the

target that the department is working towards?

Mr Parker: It is not the target that the department is working towards.

Senator BIRMINGHAM: Are you working towards an earlier target than that?

Mr Parker: We would hope so.

Senator BIRMINGHAM: Is there a time line that you are willing or able to put on that?

Mr Parker: Reflecting our earlier answers, we cannot put a precise time on that.

Senator BIRMINGHAM: Before June at least?

Mr Parker: We are hoping so.

Senator BIRMINGHAM: Can I go to the budget cutbacks by the South Australian government to the

authority. Question on notice No. 289 outlined the cuts that were applied after the New South Wales government

cut the budget to the authority. It lists a whole range of things from the South Eastern Australian Climate

Initiative to a range of river management operations: the Native Fish Strategy, the Sustainable Rivers Audit, some

emergency measures et cetera. What cuts have been made to authority operations subsequent to the South

Australian government decision?

Dr Dickson: The South Australian government's decision was for the following financial year, so 2014-15.

The task force that Tony Slatyer mentioned before is at the moment looking at the budget for this coming

financial year and as yet I think we are to finalise any position to take to ministers. So I cannot give you any

answer on next year's budget from the joint contributions or the future budgets, but we have been looking at what

the implications of those reductions of that scale would be if they were mirrored across all jurisdictions.

Senator BIRMINGHAM: In terms of reductions in activity undertaken to date, are any of those reductions

targeting the state—firstly, New South Wales—or states, once South Australia is taken into account, that have

reduced their contributions?

Dr Dickson: In the budget decisions for this current financial year that we are in, in the decisions that

ministerial council made in August there were some elements of the reductions that applied to New South Wales

only. There were the fish strategy facilitators and a few others.

Ms Swirepik: There were reductions to facilitators both in the Indigenous and fish areas. There were also

reductions in the monitoring budgets that we provide to states under programs like the Living Murray so that we

were not giving fees back to them to undertake monitoring and there was a reduction in the icon site management

contracts that we have with each state for New South Wales only.

Dr Dickson: That is right. As well as that, I think there was a small reduction for the asset management of

those areas where New South Wales is responsible, which I think is Hume. There was also some of Menindee.

But they were only small reductions.

Senator BIRMINGHAM: On notice, would you provide a bit of a breakdown for us in terms of the

reductions undertaken and where they have targeted New South Wales versus where they had been spread across

the board.

Dr Dickson: Certainly.

Senator BIRMINGHAM: I turn now to the $1.2 million in funding to explore proposals to improve irrigation

efficiency in South Australia, which I think Senator Xenophon may have touched on briefly. My understanding is



that the South Australian government was to submit a final business case to the Commonwealth by 31 January. Is

that correct and did they so submit?

Ms Harwood: That was the scheduled date in the funding agreement for provision of Commonwealth funds to

South Australia to prepare the business case. It has taken them a little longer to be prepared, so the final business

case has yet to be received from South Australia.

Senator BIRMINGHAM: There is a surprise, Ms Harwood. So when does the Commonwealth now expect to

receive the final business case from the South Australian government?

Ms Harwood: I cannot say a precise date on that. That is really up to the South Australian government to

complete the preparation of the business case and submit it. I would expect that within weeks, but I cannot say a

precise date.

Senator BIRMINGHAM: They have not given you any indication and the Commonwealth has not set any

new deadline? Is that correct?

Ms Harwood: I do not think we have a precise date for the provision of it.

Senator BIRMINGHAM: This was a requirement of the funding agreement, wasn't it, that South Australia

submit the business case to the Commonwealth by 31 January?

Ms Harwood: That was the scheduled date for provision of it. I have just checked but that was actually in the

funding agreement.

Senator BIRMINGHAM: To help, the answer to question on notice No. 84 does say: 'The South Australian

government is currently undertaking work on the feasibility study. The funding agreement requires the South

Australian government to submit the final business case to the Commonwealth government by 31 January 2013.

Ms Harwood: Yes.

Senator BIRMINGHAM: So are there any implications for the funding agreement with South Australia in

failing to meet the deadline?

Ms Harwood: No. The fundamental purpose of the funding is to assist South Australia in preparing the

feasibility study and the business case, and that is what they are doing.

Senator BIRMINGHAM: The fact that they have failed to meet the deadline does not impact on the payment

of funds under this agreement?

Ms Harwood: There are milestones in the agreement and they will be paid when those milestones are met.

Senator BIRMINGHAM: Just for the record, so that we are all clear, this funding is to achieve what, Ms

Harwood?

Ms Harwood: The purpose of the funding provided to South Australia is to do a feasibility study and prepare

a business case for the Water Industry Alliance proposal.

Senator BIRMINGHAM: And that is to allow the South Australian irrigators to more easily access some

sums of Commonwealth money in future rounds more successfully than they have done in the past?

Ms Harwood: They have already received funding under both the Private Irrigation Infrastructure Operators

Program in South Australia and through the On-Farm Irrigation Efficiency Program, including a substantial grant

to the SANRM board in round 3. But, yes, the Water Industry Alliance proposal is another program that will

support the irrigation industry in South Australia.

Senator BIRMINGHAM: This business case will be fundamental to the final funding of that program and the

ability of South Australian irrigators or others to access funding under that program.

Ms Harwood: Yes. The agreement is that South Australia will submit a business case. That will be subjected

to due diligence assessment and, subject to that assessment, the program can be funded.

Senator BIRMINGHAM: Under the milestones that have been outlined, when is it anticipated that funding

of the primary program will take place and what is the value of the funding?

Ms Harwood: The commitment is for $180 million. That was the in-principle funding announced in October

last year. The funding decision will be subject to when the business case is submitted and the timing for doing due

diligence. So it is not a precise timeline for the end of the process. We are at the stage now where South Australia

is preparing a business case. So it is not a precise time line for the end of that process in the stage now where

South Australia is preparing the business case.

Senator BIRMINGHAM: What is the funding profile for the $180 million?



Ms Harwood: The business case will set out a proposed budget profile how South Australia proposes that the

program roll out and the funding they seek, so there is as yet no funding profile for the Water Industry Alliance

program because we do not have a business case and it has not been assessed.

Senator BIRMINGHAM: Does the Commonwealth anticipate that funding would be available this financial

year or next financial year?

Ms Harwood: I think that is a matter for how the program unfolds and what South Australia seeks in its

business case.

Senator BIRMINGHAM: Could funding be available under existing allocations within the department?

Would it be funded out of SRWUI or somewhere else?

Ms Harwood: It will be funded from SRWUI and it is feasible that there could be funding next year and years

beyond.

Senator BIRMINGHAM: But obviously the longer the business case takes, the longer it will be to know

when such funding might start to flow—pardon the pun. In terms of budget decisions for next financial year, is

there a critical time line as to when the Commonwealth really needs to get this business case to undertake the

necessary assessments to make decisions for the next budget round?

Ms Harwood: Not as such in that we manage a very large number of commitments for SRWUI, both those

under contract and those under negotiation and those in preparation in project business cases. Our job is to

manage the program overall within the appropriation provided. Projects are coming to fruition already for

contracted times during the year.

Senator BIRMINGHAM: Lastly, the minister announced, on 1 November last year, funding of over

$668,000 towards a scoping study of future directions in managing Lake Albert water quality and the Narrung

Narrows. When will that scoping study be undertaken and have milestones to date in provision of that funding

been met?

Mr Slatyer: The scoping study I understand is underway. We would have to take on notice the precise

milestone deliverables under that project. I do not have those with me.

Senator BIRMINGHAM: So the funding is being provided to the South Australian government?

Mr Slatyer: The contract has been signed and initial payments have been made.

Senator BIRMINGHAM: Thank you. I will put further questions on notice.

Senator HEFFERNAN: Can I ask about what we all know as Nimmie-Caira. Where is it up to and when will

there be a decision?

Ms Harwood: They are preparing the due diligence assessment of the business case presented by New South

Wales. That is nearing completion. The next step would be to share the draft due diligence assessment in

confidence with the New South Wales government as required by the Water Management Partnership Agreement

which covers the way in which state priority project proposals are developed and assessed.

Senator HEFFERNAN: When will this committee see the valuations appropriated?

Ms Harwood: The next step is for us to share the draft due diligence assessment with New South Wales, for

them to provide their comments on that and then for us to go to preparation of the final due diligence.

Senator HEFFERNAN: Will you be doing an impact study on the effects on the flood plain for consequential

removal of the water?

Ms Harwood: The assessment is looking at a wide range of matters including the environmental aspects of

the proposal, the uses to which the water can be put against the entitlements and the future land use issues arising

in terms of the transition.

Senator HEFFERNAN: When do we mere mortals get to see what is proposed though? I just want to test

them out for practical purposes rather than science theory.

Mr Parker: You asked, I think, this question previously—

Senator HEFFERNAN: Why you are thinking about it, if you have not got an answer—

Mr Parker: We would be happy to refer the question to the minister.

Senator HEFFERNAN: Will you come and give us a briefing when we have hours to do it rather than

minutes?

Mr Parker: We can have that request considered by the minister's office.



Senator HEFFERNAN: Do you know the trigger point for overbank flow at Maude compared to the capacity

of the river between Maude and Balranald? If you don't know, you shouldn't be doing your job.

CHAIR: Senator Heffernan, you should retract! That is just outrageous!

Senator HEFFERNAN: I retract. Don't be a sook.

CHAIR: I am giving you a go here. If you behave like that—

Senator HEFFERNAN: I unreservedly withdraw. Is that good?

Senator Conroy: That is good. Thank you.

CHAIR: You are getting a fair go, but if you behave like that, I will go elsewhere—I'm telling you.

Senator HEFFERNAN: I appreciate that, but these are very important questions.

CHAIR: Yes, but you do not need to denigrate an officer.

Ms Harwood: Was that a question, Senator?

Senator HEFFERNAN: I think they are thinking up the answer there. While you are thinking up the answer,

if I could go to another question—

CHAIR: Mr Parker, do you have a response to that before we go any further?

Mr Parker: It is a question of considerable technical detail, so I have asked an officer to come to the table

who will be able to provide you some further information.

CHAIR: Okay, Mr McLoughlin, you have the call.

Mr Parker: Would you repeat the question for the benefit of Mr McLoughlin.

Senator HEFFERNAN: What it is all about is the trigger point and the capacity between Maude and

Balranald of the river versus the natural discharge down the Nimmie plain without an artificial diversion of

supplementary water. My question really goes to how the hell do you shepherd water of the floodplain and send it

somewhere else? What is the mechanism, because a lot of the 380 gigs of water—173 gigs net—in most years

does not get to the outer reaches of the floodplain, even though they are going to get 2¼ times the value of the

water that gets there sometimes? What have you done about the study of the impact on the floodplain to take the

water off it? How are you going to shepherd it through the floodplain if you do not send it down the river? And

what is the effective cost-benefit analysis of all that? Do you know the trigger point for the overland flow and

what is the capacity of the restriction between Maude and Balranald, for a start?

Mr McLoughlin: The questions you ask and the technical aspects of the hydrological modelling of those

flows, just as you describe, have been a significant part of the due diligence assessment. We have worked very

closely with the Murray-Darling Basin Authority modelling team. We are using the same model as the Basin Plan

has utilised, along with the same hydrological model that New South Wales Office of Water users for the lower

Murrumbidgee. Those questions that you have raised have formed a considerable part of the due diligence

assessment. Our ability to be able to extract water, consistent with claims on entitlement in terms of its volumes;

what would be lost in the watering actions for the environmental assets on the Nimmie-Caira flood plain; and

what might return to the flow under various conditions all form part of the due diligence. Those are the questions

we have been asking too.

Senator HEFFERNAN: You got no idea, in other words.

Mr McLoughlin: The modelling has been quite extensive. It has taken quite some time.

Senator HEFFERNAN: I know, but when are you going to put the goods on the table so people like myself

can have a look at it and tell you where it is right and where it is wrong?

Mr Grimes: I think the officers have indicated that this is work that is in progress; it is not work that has been

completed.

Senator HEFFERNAN: I will bet you a pound to a peanut, Sir, that the announcement is made before we get

to see the workings. Because this is a fraud on the public purse about to be perpetrated on taxpayers.

Mr Grimes: Thank you, Senator, and the officers have indicated that as a department we are taking an

appropriate due diligence approach—

Senator HEFFERNAN: All right! So 2¼ times the value of the water allowed for to do the remedial works. I

do not know whether you are going to have an environmental study of the destruction of the floodplain, which is a

natural lignum floodplain which you are going to turn into a poverty bush desert by either shepherding the water

off or magically sending it down the river. In the 2¼ times the value of the water, which is cooking the buyback



book, how much of that is actually for—when you said you would pay them 2¼ times, a decision that was taken

before you even issued the licences, how much of the money is for what above the value of the water?

Ms Harwood: Senator, you are describing pricing issues which are not things that we have said. You are

referring to public discourse as to what New South Wales may have proposed in their business case. The

Commonwealth will do its own assessment of what it considers to be a reasonable value for the water entitlements

involved in the proposal.

Senator HEFFERNAN: I think that what New South Wales is offering is a con job. I would like to think that

you are not going to conned in the process. I would like to know. As you know, Ms Harwood, on that Nimmie-

Caira floodplain, in most years the outer reaches do not get the water. In normal times there is a certain amount of

its regular water. My dear old mate started the floodplain farming down there and he used to get a fair cop of it.

As you know, they just eventually spread the banks and kept going. There was no environmental plan, they just

kept doing it and were issued licences based on the area they banked off. Now you are going to pay them 2¼

times the value of the water which they sometimes get. That is what New South Wales proposes, and I am hoping

that you come to some better figures. Through you, Mr Chairman, I would plead that before you make the

decision, you come and pay the parliament and the taxpayers of Australia the courtesy of what you propose to

offer New South Wales.

CHAIR: That is the end of the time allocated for 4.1. We now turn to outcome 6 and I call officers from the

department in relation to program 6.1, Protection and restoration of environmental assets, together with officers

from the Commonwealth Environmental Water Office. Mr Papps, would you like to make an opening statement?

Mr Papps: Thank you, Senator, no.

CHAIR: Senator Nash.

Senator NASH: I am mindful of time so I will try to be brief. Commonwealth environmental water holders

are established by the act—that is correct, isn't it? Okay. By my reading, a statutory office is designed to be

independent—yes?

Mr Papps: There are aspects of my role as Commonwealth Environmental Water Holder that are independent

of ministerial direction and direction from the secretary. That is correct, Senator.

Senator NASH: But in terms of the department, I think that under the act at 107, from memory, you are not

subject to the direction of the secretary of the department. Is my recollection right?

Mr Papps: That is correct for a certain range of my responsibility.

Senator CASH: Who was the water holder before you? Was it you, Mr Parker? I have been a bit in and out of

water lately—sorry if I am a bit vague.

Mr Parker: Yes. I have now relinquished that responsibility.

Senator CASH: Okay. You are assistant secretary in the department, obviously. Can you explain for me what

the Commonwealth Environmental Water Office is?

Mr Papps: The Commonwealth Environmental Water Office is the office staffed by public servants employed

by the department to support me in my role as Commonwealth Environmental Water Holder.

Senator NASH: Is that in the act?

Mr Papps: No, that is not in the act.

Senator NASH: How many are there at the water office?

Mr Papps: I am not sure, Senator.

Senator NASH: Can someone enlighten me?

Dr Grimes: Mr Parker will be able to talk about the history of that.

Mr Parker: The Environmental Water Office—and I will ask one of the staff to provide you with a precise

date when it was formed—was established as a separate entity within the department. It was separate in an

administrative sense not a legal sense. There was an identified group of officers whose sole responsibility was

related to Commonwealth environmental water holding matters and not to other policy matters or other

operational matters within the department. This was in response to the report by the so-called Windsor committee

in the House of Representatives, Of drought and flooding rains, which was one of the reports inquiring into the

Murray-Darling Basin Plan.

Senator NASH: Can you give me a rough ballpark figure while we are looking for exact date of when the

office was set up?



Dr Banks: The office started in December 2011.

Senator NASH: So who was water holder then?

Dr Banks: Mr Ian Robinson was the water holder at that point.

Senator NASH: Mr Parker, when did you take over as water holder?

Mr Parker: I think it was in May 2012 until December 2012.

Senator NASH: Who made the decision to set up the separate office? I am struggling a little bit here with the

issue of independence. If we now have a water office, which sits separate to the water holder, which sits in the

department that is staffed by the department—who made the decision to do that? If it is not in the act, who made

the decision to do it?

Mr Parker: The internal arrangement of the department is a matter for the Secretary. This was, as I said, an

administrative arrangement to, in a sense, buttress the independence of the water holder.

Senator NASH: How does it buttress the independence of the water holder if it sits under the department?

Why would you not have set it up under the water holder and left it separate and independent?

Dr Grimes: The Commonwealth Environmental Water Holder actually has management responsibility for the

office. The reason for that is a pretty simple one, and that is: why would we have a separate, very small agency

when, much more efficiently, we can have the Commonwealth Environmental Water Office served by

departmental staff while allowing the Commonwealth Environmental Water Holder to operate in a way that is

unfettered in the exercise of those statutory responsibilities and, indeed, with a group that is outward looking in its

orientation, working together closely with Basin communities and other stakeholders in the proper management

of environmental water? Setting up a separate agency would involve a significant number of overheads and

additional costs for limited or no real benefit. That was the basis of the government making its decision around

that part of the response to the Windsor committee recommendations.

Senator NASH: I appreciate what you are saying, but I suspect that in the overall pool of resources that you

have in the department—and I think there is often a lot of benefit in having some separation in these things—I do

not think the overheads would be too onerous to do this for the water holder. That is just my view.

Dr Grimes: Senator, you have our point. That is precisely the reason why the office has been created as a

dedicated office, taking away any other functions from that dedicated office with respect to reporting to the

Commonwealth and Environmental Water Holder—to get those benefits—without having to pay the

administrative overhead.

Senator NASH: But it is not independent, is it? Do its staff answer to you or do they answer to the water

holder?

Dr Grimes: When it comes to the exercise of the Commonwealth Environmental Water Holder's statutory

responsibilities, those staff will act at the direction of the Commonwealth Environmental Water Holder—that is

quite clear. This is not the only circumstance we have where there are statutory offices who are supported by

departmental staff.

Mr Papps: I will just add to that, if I may, even though I am relatively new in the position. I think the

fundamental point is around who makes the decisions and whether those decisions are independent. Am I

exercising my statutory responsibilities under the Commonwealth Water Act in the way that was intended? I can

assure you that I am doing so and that the situation in administrative terms is as the Secretary describes. It in no

way impacts on the decision-making process or the independence of my role in that.

Senator NASH: Thank you, Mr Papps, I appreciate that and I am certainly not reflecting in any way on your

independence. I just want to make sure that you have got the proper resources to do your job independently, as

directed by the water act itself. Thank you, Secretary, for your comments in response to my answers. One of the

reasons that I do not necessarily think that the resourcing of the water office within the department itself is not as

appropriate as it could be is, I think, that the water holder needs to be as independent as it possibly can, and I am

not entirely convinced, with the explanation that you have just given me, that we are acquiescing with the intent

of the water act itself. I would appreciate it if you would take on notice exactly what the overheads and costs

would have been that would have been attributable to setting up this particular entity under the water holder

independently rather than absorbing it into the department.

Dr Grimes: By all means, we can take it on notice. I am not sure we are going to be able to provide you with

specific information because we know that that would require us to go off and do further analysis to provide you

with that material, but we will take it on notice and see if there is anything that we can provide.



Senator NASH: Thank you, I would appreciate that. You seemed quite definitive in saying that the overheads

would have been too great, so I understood you must have done some proper diligent work on that to come to that

conclusion.

Dr Grimes: No, Senator—

Senator Conroy: Years of experience.

Dr Grimes: Yes.

Senator Conroy: Years of ugly experience.

Senator NASH: You've got years of experience, Minister, but sometimes it doesn't assist!

Dr Grimes: As the minister indicated, very substantial experience in these matters, both in the

Commonwealth and in state and territory jurisdictions. Every time, in every government that I have been involved

in, when a separate agency is established a whole range of additional costs come with that. I feel very, very

confident in making that point, Senator. We have not put a precise dollar on it, but I feel very confident in making

that point.

Senator NASH: Okay. I will put my last question on notice because I know colleagues have some questions.

Can I first have a very quick yes-or-no answer on this question. Is the water holder going back into the Lachlan

and putting water on the temporary market in the Lachlan, having purchased a significant amount of water from

Twynam through the $303 million purchase of all those water entitlements across all those catchments? My

understanding is that water is now going back from the water holder onto the temporary market in the Lachlan.

Also, could you take on notice for me if there is any buyback from a non-Australian owned entity that has

received funding through the buyback process?

Mr Papps: I will take the second question on notice. I can deal briefly with the first question. The

Commonwealth Environmental Water Holder is not engaged in any trade of Commonwealth environmental water

and is not planning to do so in the near future.

Senator NASH: In the Lachlan? I was specifically asking about the Lachlan.

Mr Papps: In the Lachlan, no.

Senator NASH: Not offering water back?

Mr Papps: No.

Mr Parker: Chair, can I add to an earlier answer?

CHAIR: Yes, Mr Parker.

Mr Parker: I am indebted to one of the staff behind me who has pointed out to me—I was aware of this but it

did not come to front of mind—that the Water Act itself, in section 116, requires structurally that the staff who

assist the Commonwealth Environmental Water Holder are employed in the department and that they be made

available by the secretary for that purpose. So the act itself prevents us, without an amendment to the act, from

setting up a separate agency for the Commonwealth Environmental Water Holder.

Senator NASH: There would be overheads.

Mr Parker: The overheads is a consideration, without doubt.

Senator JOYCE: I will start with a very basic question. There has been a purchase of water. I imagine it is

residing on the books somewhere as an asset. What is the value on the books of the asset in water that you are

currently holding?

Mr Costello: It is in the order of $2 billion.

Senator JOYCE: You are booking that asset at cost?

Mr Costello: There is a revaluation done each year.

Senator JOYCE: On the revaluation of that asset you would either appropriate an income item or an expense

item for the appreciation of the asset or depreciation of the asset?

Mr Costello: Or an impairment, yes.

Senator JOYCE: An impairment—a very important word, 'impairment'. Recently have you had an

impairment on the asset or have you booked a profit on it?

Mr Costello: There has been some impairment on the asset reported in the accounts over the last couple of

years as market prices change.

Senator JOYCE: What is the impairment you have booked for that asset?



Mr Costello: I do not have that information available. I would have to take that on notice.

Senator JOYCE: That is generally the way, isn't it—once it becomes evident that the value of the asset on the

books is less than the value you would get, you book an impairment on an asset, don't you?

Mr Costello: That is the audit process.

Senator JOYCE: What is the actual accountancy audit standard that the government uses for that?

Mr Costello: I am sorry, I would have to defer on that question to the chief financial officer in the department,

who manages the accounting process.

Senator JOYCE: Anyway, that is very important. With the asset that we are currently holding on the books,

there will come times—because that water is in many and variant forms—where you cannot possibly use it. What

are you going to do when you cannot use it and there are buyers out there who wish to purchase it from you?

Mr Papps: Basically, in very broad terms, we have three options available to us: one is that we use the water

to deliver on the environmental outcomes that I am obliged to deliver on under the act and under the

environmental watering plan; there is a capacity for us, as there is for all other water holders in the Murray-

Darling Basin, to carry water over; and the third option that is available to me is to trade. I am constrained in how

I may trade water, in very simple terms, to only those circumstances where I can demonstrate that there is a

significant net environmental benefit in so doing.

Senator JOYCE: A net environmental benefit or the status quo position?

Mr Papps: No, I think the obligation on me is to demonstrate that there is an improvement in environmental

outcomes by virtue of my trade. In other words, I can sell water and acquire water elsewhere where the

environmental outcomes might be improved.

Senator JOYCE: So you have to buy and sell exactly the same amount of water.

Mr Papps: No.

Senator JOYCE: I am going to pick an example: Copeton Dam. Let us say you are holding 100,000

megalitres of water in Copeton Dam and people are saying, 'The dam's full; it's going to spill.' There are people

who will buy the water from you. There is nothing you can possibly do with that water before the Mehi wetland.

In fact, you will probably do more damage than good if you let it go for an environmental flow. You do have a

buyer in the market, though. Do you have the capacity to say, 'Okay, we'll sell the water to them'?

Mr Papps: We have the capacity, providing that so doing complies with the provisions in the Commonwealth

Water Act covering trade. I might add that—as you would be aware, Senator—I, like everyone else in the basin in

this space, am also obliged to comply with the trading rules under the Murray-Darling Basin Plan, and those rules

and regulations that pertain to that particular state.

Senator JOYCE: What if there is a capacity where they say, 'Sure, sell that water out of Copeton Dam,

because we have Mr Costello'—actually, Costello is a name that is around there—'downstream and he'll buy the

water off you, and what we can do is then buy some water out of a ring tank in Queensland, drop it back into the

river and start watering the Culgoa Floodplain'—which we actually could do? Is there the capacity and flexibility

to do that?

Mr Papps: Provided I meet all those requirements, yes. We do take a basin-wide view.

Senator JOYCE: So you can shift from one environmental asset to the other.

Mr Papps: That is correct.

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

Senator JOYCE: Okay. Which has more staff—the office or the National Water Commission?

Mr Papps: I do not know the answer to that. I have 51.5 full-time staff. I do not know how many staff the

commission has.

Senator JOYCE: Are you a separate agency? Is the commission a separate agency?

Dr Grimes: The commission is a separate agency. We have dealt with the water office matter previously. We

have the commission on in just a moment.

Senator JOYCE: That is next, I think.

Dr Grimes: We will have the chief executive of the commission here to answer that question.

Senator JOYCE: Okay. I notice that in the budget program you allocated $154.5 million over the forward

estimates. In the additional estimates released recently, that amount has been reduced by $9 million, to $145

million. What is the reason for the reduction?



Mr Costello: We revised that budget based on experience and costs incurred, and there were some budget

savings assigned to that. We reforecast our funding requirements, so some of those savings have been returned to

the consolidated revenue or to the budget process. In addition, $5 million of savings has been made available to

employ local engagement officers of the Commonwealth Environmental Water Office out in communities in the

basin.

Senator JOYCE: Have you or has anyone in the department written to a state government asking for any

fees, charges or amounts owing to be deferred?

Mr Costello: No, not that I am aware of.

Senator JOYCE: What is the relationship that you have with the department itself?

Mr Papps: With the Department of Sustainability, Environment, Water, Population and Communities?

Senator JOYCE: Yes.

Mr Papps: I think that has been canvassed previously by both the secretary and Mr Parker—

Senator JOYCE: I will elaborate on that. What Chinese walls have you created between you and that

department?

Mr Papps: Does this relate specifically to my operations more generally or specific to part of my

responsibilities?

Senator JOYCE: As in the second part, the specific part of your responsibilities.

Mr Papps: Okay, I think you are probably referring to the potential for me to trade water and the concern that

has been expressed in some places in the Basin that there need to be Chinese walls or procedures or protocols in

place—

Senator JOYCE: Because you have the capacity, because you are the largest water holder, in the joint and

you have the capacity to manipulate the market in fact. I know you wouldn't but there is a potential if you did it

wrong to completely destroy the asset base that someone is holding.

Mr Papps: That is right. That is why there was a discussion paper on trade released late in 2011, I believe,

which canvassed these matters and which made a number of proposals. I will not go through those in detail but—

Senator JOYCE: This is the discussion paper Trading in environmental water, which was released in 2011?

Mr Papps: Yes, that is right. That proposes as range of rules, guidelines and protocols in order to deal with

this concern and again I repeat the observation that I made before, that like any other trader in water in the Basin I

have to comply with the Basin authority's trading rules, I have to comply with the state trading rules. We are in

the process at the moment of going through the submissions that we received on that paper and developing and

finalising our proposals to ensure that we have appropriate procedures and Chinese walls in place. I just want to

make one last point that when we do get to the position of trading it will always involve a very small percentage

of the Commonwealth environmental water holding. By definition most of the water that I hold will be put to

environmental use.

CHAIR: That concludes the questioning as to program 6.1.

National Water Commission

CHAIR: Welcome. Mr Cameron, do you have an opening statement?

Mr Cameron: No, Chair.

CHAIR: We will proceed to questions.

Senator JOYCE: You had a meeting in Toowoomba in November 2011 which was subsequently followed by

a tour of the Basin in regard to coal seam gas. Is that correct?

Mr Cameron: That is correct.

Senator JOYCE: What were the recommendations that came from that meeting?

Mr Cameron: That meeting was where we undertook discussions with a number of farmers in the community

and also coal seam gas businesses to understand their perspectives on the development of coal seam gas in the

region. At that time we had put out a position statement on coal seam gas where we expressed a number of views

about an appropriate set of policy principles for management of coal seam gas—

Senator JOYCE: Pertaining to water?

Mr Cameron: Pertaining to water and its impact on water resources. We also, in late 2011 when we released

our biannual assessment, reiterated our views in relation to coal seam gas.



Senator JOYCE: With the resources that are at your disposal I note that with some of that water—so I am led

to believe—it is 10 million years since it last saw sunlight, so we are borrowing a resource from a long, long time

ago, and this obviously raises concerns because when you are borrowing from savings of 10 million years ago

you had better make sure you are doing the right thing. Where did it leave you with your views as to

transferability of water between aquifers and how we deliberate over the utilisation of a resource? What are your

views now? Are they any different from when you started? What can we all benefit from given the experience?

Mr Cameron: As I said, in 2010 we put out a position statement in relation to coal-seam gas. The commission

recognises that any extraction of water for whatever purposes has the potential to have an impact on or does

impact on the water resource. In relation to coal-seam gas, what we identified is that there are a number of

uncertainties associated with the impact on the resource that existed at the time and, given the potential significant

volume of water that was likely to be co-produced as a result of the coal-seam gas extraction process, that there

were a set of risks associated with the resource such as interference between aquifers, potential impacts of

fracking activities and the way in which water once it reaches the surface is managed.

We articulated a set of principles which we believe should apply and indicated our view that there was a need

for a closer relationship between water management regulation and frameworks at a state level and coal-seam gas

approval arrangements. For example, in Queensland water extraction does not require a water licence and is not

always clearly managed within water planning and management processes. More generally, the decisions about

approval should be made on the basis of the best available science and there should be transparency about

accountabilities associated with any impacts on the resource and any activity which might be undertaken to

address those impacts. I think it is fair to say that a range of developments that have occurred in both Queensland

and New South Wales, as well as Commonwealth initiatives in relation to the independent expert scientific panel,

give us the potential for an improved management arrangement. But what we still see is that close, careful

management of both developmental approval and water management arrangements remains somewhat separate,

particularly in Queensland.

Senator JOYCE: Thank you very much for that very elongated answer. I appreciate it. We have got $150

million about to be spent on greater investigation of aquifers. Has the Water Commission had any input into

exactly who and where this money is going to be spent? One of the queries is that part of that process you did at

Toowoomba involves closer investigation of aquifers. You gave a strong answer in regards to the concerns and

risks that might be there in the transferability of water between aquifers. There is $150 million going towards the

research of that. A concern we have is that one of the bodies researching it is also sponsored by the mining

companies at the University of Queensland. Did you have a look into that and say, 'We had better get some of this

research'—has anybody discussed with you where those research bodies are going to be spent and how they going

to be spent and how we can do it so that it is an independent format that is without query so that the results that

come out, no matter which way they are, cannot be stymied and people say, 'I don't accept those results because

they came from this body,' such as using the University at Toowoomba, which is not sponsored by the mining

companies, and saying, 'Get them to do some of it. It is in the backyard.'

Mr Cameron: The commission does not have a role and is not directly involved in decisions about who and

where, as you described it in your question. But we have had discussions with the water science group in the

department about their broad approach and the sorts of issues that from our perspective would be important in

further developing our knowledge about the impact of these developments on water resources. Our other work is

available to them as well.

Senator JOYCE: You have got to do an audit on the MDBA. That is correct, isn't it?

Mr Cameron: That is correct.

Senator JOYCE: And that has got to be finished by 3 March 2013. How are you going?

Mr Cameron: The commission is in the process of finalising a report.

Senator JOYCE: Tell me about the criteria.

Mr Cameron: The commission is obliged under the act to undertake an audit of the effectiveness of the

implementation of the Murray-Darling Basin plan, so our focus is very much performance audit work associated

with how effective implementation activities are. Given that the plan was made in late November last year, there

has not been a significant amount of time between the making of the plan and the time at which our report is due,

so commissioners have taken the approach that the report will focus on a status report of the current status of

preparedness amongst jurisdictions and other parties to implement the plan and identify a program of continuing

audit work on our part and a set of expectations about where we would expect important limitation activities to be

undertaken over the next couple of years.



Senator JOYCE: What have we got with the band levels of payments for the national water commissioners?

Do we have any commissioners being paid between $200,000 and $300,000?

Mr Cameron: No.

Senator JOYCE: Between $50,000 and $100,000?

Mr Cameron: Our chair under the remuneration tribunal has a remuneration rate which is at the level of

$50,000.

Senator JOYCE: Last time you were here you had a vacant floor in your building which had a lease cost of

$133,877.42. Have you sublet that floor out?

Mr Cameron: No, we have not. We have had discussions with a number of parties but at this stage there has

not been an outcome.

Senator JOYCE: What building do you operate out of at the moment?

Mr Cameron: We operate out of a building on 95 Northbourne Avenue.

Senator JOYCE: Is there any reason you could not operate out of a building out in the country?

Mr Cameron: I do not think there is any reason.

Senator Farrell: Which town did you have in mind, Senator?

Senator JOYCE: Well, Wagga or Orange or Dubbo.

Senator Farrell: Not St George?

Senator JOYCE: No. I would love you to operate out of St George, but even I realise that there are only

certain people with the resilience to operate out of St George.

Senator FARRELL: What about Murray Bridge?

Senator JOYCE: How about Berri? Murray Bridge would be very good. Have you ever thought of it? In fact,

there is the potential for a whole range of departments, given the opportunity, to actually operate out of the

country, considering they are looking after the country. Is there a possibility of that because we have to look at

savings wherever we can get them?

Mr Cameron: The commission is not looking at an accommodation move outside Canberra.

Senator JOYCE: Because every dollar we do not save is a staff member who is under further pressure.




BROADBAND, COMMUNICATIONS AND THE DIGITAL ECONOMY PORTFOLIO

In Attendance

Senator Stephen Conroy, Minister for Broadband, Communications and the Digital Economy

Department of Broadband, Communications and the Digital Economy

Management and Accountability

Mr Peter Harris, Secretary

Mr Abul Rizvi, Deputy Secretary

Mr Ian Robinson, Acting Deputy Secretary

Ms Nerida O’Loughlin, Deputy Secretary

Outcome 1—Develop a vibrant, sustainable and internationally competitive broadband, broadcasting

and communications sector, through policy development, advice and program delivery, which promotes

the digital economy for all Australians.

Program 1.1 Broadband and Communications Infrastructure

Mr Ian Robinson, Acting Deputy Secretary

Mr Mark Heazlett, Acting First Assistant Secretary, Telecommunications Division

Mr Philip Mason, Assistant Secretary, Telecommunications Regulation Branch

Ms Elizabeth O’Shea, Assistant Secretary, Stakeholder Engagement Branch

Mr Greg Cox, Assistant Secretary, Policy Development Branch

Mr Daniel McCarthy, Assistant Secretary, Shareholder and Technical Advice Branch

Program 1.2 Telecommunications, Online and Postal Services

Mr Abul Rizvi, Deputy Secretary

Nr Richard Windeyer, First Assistant Secretary, Digital Strategy Division

Mr Andrew Maurer, Acting First Assistant Secretary, Digital Services Division

Mr Duncan McIntyre, Assistant Secretary, Consumer Policy and Post Branch

Program 1.3 Broadcasting and Digital Television

Ms Nerida O’Loughlin, Deputy Secretary

Dr Simon Pelling, First Assistant Secretary, Broadcasting Division

Ms Marianne Cullen, Project Director, Switchover Division

Mr Jason Dickie, Acting Assistant Secretary, Public Interest Broadcasting Branch

Ms Ann Campton, Assistant Secretary, Broadcasting Policy Branch

Ms Sylvia Spaseski, Assistant Secretary, Broadcasting Restack Program

Corporate and Business

Mr Simon Ash, General Manager, Corporate and Business

Ms Anne Fleischer, Chief Financial Officer, Corporate and Business

Australian Broadcasting Corporation

Mr Mark Scott, Managing Director

Mr David Pendleton, Chief Operating Operator

Mr Michael Millett, Director Corporate Affairs

Australian Postal Corporation

Mr Ahmed Fahour, Managing Director and CEO

Mr Paul Burke, Corporate Secretary and General Manager, Government Affairs

Ms Christine Corbett, Executive General Manager, Retail Services

Mr Chris Blake, Executive General Manager, Corporate Affairs and People

Ms Catherine Walsh, General Manager, Human Resources

Ms Jane McMillan, General Manager, External Affairs



Special Broadcasting Service Corporation

Mr Peter Khalil, Director Strategy and Communications

Mr Jon Torpy, Chief Financial Officer

Australian Communications and Media Authority

Mr Chris Chapman, Chair

Mr Richard Bean, Deputy Chair

Ms Andree Wright, Acting General Manager, Digital Economy Division

Mr Michael Poole, Manager Economic Research, Digital Economy Division,

Mr Giles Tanner, General Manager, Digital Transition Division

Ms Maureen Cahill, General Manager, Communications Infrastructure Division

Ms Jennifer McNeill, Acting General Manager, Content, Consumer and Citizen Division

Mr Brendan Byrne, General Manager, Legal Services Division

Mr Carsten Larsen, Acting General Manager, Corporate Services and Coordination Division

Mr Stuart Wise, Acting Executive Manager, Finance and Facilities Branch

NBN Co Limited

Mr Mike Quigley, Chief Executive Officer

Mr Ralph Steffens, Chief Operating Officer

Mr Kieren Cooney, Chief Communications Officer

Mr Robin Payne, Chief Financial Officer

Telecommunications Universal Service Management Agency

Mr Robert Lomdahl, Chief Executive Officer

CHAIR (Senator Cameron): The committee will return to its examination of the Broadband,

Communications and the Digital Economy portfolio. Mr Harris, do you have an opening statement?

Mr Harris: I do not, Chair.

CHAIR: Senator Conroy?

Senator Conroy: I think it should be noted that this is Mr Harris's last estimates as Secretary of DBCDE. He

has been demoted to be Productivity Commissioner and fled. Teasing and joking aside, I just wanted to put on the

record what a fabulous time and experience it has been working with him. I am sure the committee would concur

that it has been a pleasure to have him at the table.

CHAIR: Yes, I am sure that the committee would echo those words and adopt those words. I look forward to

having Mr Harris at the other side as the Productivity Commissioner. I have a particular interest in the

Productivity Commission. I think it needs some renovation, and hopefully, Mr Harris, you bring that to the

Productivity Commission. With that, all the best and thanks for everything you have done and for the way you

have conducted yourself before this committee. I will hand over to Senator Birmingham for questions.

Senator BIRMINGHAM: Thanks, Chair. On behalf of the coalition I will echo those remarks. Luckily,

Senator Joyce has left the room, so I will keep comments about the Productivity Commission at a high level.

Indeed, Mr Harris, I think it is safe to say that there are coalition members who can recall you working under a

different government as well and appreciate the service you have given to the Public Service through all

governments.

Mr Harris: I thank the committee very much for its remarks.

Senator BIRMINGHAM: Can I start off by asking whether the department has provided any advice to the

minister or the Prime Minister in relation to the interpretation of the election period definition in the Broadcasting

Services Act?

Mr Harris: Yes, the minister and I had a discussion about this matter.

Senator BIRMINGHAM: When were those discussions, Mr Harris?

Mr Harris: Last week, but I would have to get the precise day. In fact, it could even have been the Friday of

the previous week. In the break, when Australia Post is on, I will come back and tell you the precise day. It will

be in my diary.



Senator BIRMINGHAM: Thanks, Mr Harris. What pre-empted those discussions? Were they initiated by the

department or the minister?

Mr Harris: They were initiated by me, following reading the news media article in which it stated that Free

TV had taken a position on the election period having commenced. It quoted, I think, a legal source, but I may be

conflating a number of articles over a period. So I called and asked to see the minister to discuss this, because it

was obviously going to become a sensitive topic. I think the article alleged that there had been a letter, or there

was a letter, and I had not seen the letter. So, amongst other things, I wanted to ask the minister if he had seen

such a letter from Free TV. I was not sure whether it was a public letter or where it was going. I raised the matter

with the minister.

Senator BIRMINGHAM: I think there is an article today that refers to a letter from Free TV. I do not recall

whether there was a previous letter unless there was one sent to the government or the department, perhaps

seeking any clarification.

Mr Harris: No, but there definitely was by the Saturday. That is why I think we might have had the

discussion on the Friday. By the Saturday I think the Australian had quoted that there was a letter. But I am pretty

sure the thing I saw the day before also said 'in correspondence from' or something like that. So I was just trying

to find out whether there was a letter, because I did not have a copy of it.

Senator BIRMINGHAM: Sure. If you come back in terms of the time lines, that would be appreciated. Did

you arm yourself with legal advice or interpretation of the act before meeting with the minister, Mr Harris?

Mr Harris: No, I didn't. I have a general view that you ask for legal advice when you are ready to act upon it.

First off I wanted to know whether there was a real issue here. So that is why I was trying to track down the letter.

The Broadcasting Services Act is an act that belongs to the department, so we had people who were expert in the

Broadcasting Services Act. That is not a legal issue; that is a day-to-day public policy issue. Dr Pelling, as you

know, reports regularly to the committee. That is his division and his legislation. But I was interested in getting

access to this letter, which had alleged that a decision had taken place and I was not sure who had been involved

in this, because we certainly had not—or to my knowledge we had not. So I was seeking a copy of the letter. That

was my primary purpose in raising it with the minister.

Senator BIRMINGHAM: Did the minister have a copy of the letter, or was he able to assist you in obtaining

a copy of the letter?

Mr Harris: No, he did not have a copy of the letter. We were sitting there in joint bemusement. Obviously,

since it was our legislation it would be our ultimate responsibility to gain any legal advice necessary, but first off I

wanted to establish if it was necessary to get legal advice.

Senator BIRMINGHAM: Was it the determination of you and the minister from your meeting that it was

necessary to get legal advice?

Mr Harris: We will clarify what the meetings were after the break. I think the minister is trying to recall the

meeting, but it is better if I consult the diary.

Senator BIRMINGHAM: My question was: was it the determination of yourself and the minister, from your

meeting, that it was necessary to get legal advice?

Mr Harris: Not from that meeting but subsequently. Quite immediately subsequently. I will check my diary.

It will say on what date we actually met. Subsequent to whatever day it was—either the Friday or the Monday—

once I had established that there was not a letter and that no-one was quite sure about this, we decided that it

would worthwhile seeking legal advice on what the actual decision was, even though we still did not have the

letter by that point. Because it had run in the media on more than one occasion, it was obviously going to be a

matter on which we were going to be called to have a view, and it was our legislation.

Senator BIRMINGHAM: Did the department or the minister receive any queries from any media

organisations or representatives of media organisations about the interpretation of the act?

Senator Conroy: Do you mean journalists—

Senator BIRMINGHAM: No—

Senator Conroy: Media companies or free to air—

Senator BIRMINGHAM: Media companies or representatives of organisations of media companies.

Senator Conroy: Did the minister, did you say?

Mr Harris: My recollection, as I said, is that we were sitting there in joint bemusement in this initial

discussion, because we did not have the letter. From that, the minister had not been consulted by anybody.



However, Ms O'Loughlin had received phone calls, I think, from Free TV in the same time frame as this—I guess

once the thing is in the media it is a public issue—seeking our response. Except the letter did not seem to be

addressed to us, so it was an unusual set of circumstances where a letter was not addressed to us but we were

being asked for a response. Ms O'Loughlin may need to help me further if these are the questions that you want to

pose about it—who is doing what consulting.

Ms O'Loughlin: I had a very brief discussion with Free TV sometime during that week on a number of

matters in which they raised that their inclination was to write to the people they normally write to alerting them

that the election period had commenced.

Senator BIRMINGHAM: Senator Cameron has asked that we move on at present. I would like us to come

back to this issue, so perhaps you could consult relevant diaries and get the timeline accurate for us for us to come

back to the timing of when Ms O'Loughlin heard from Free TV and when this meeting between Mr Harris and

Senator Conroy took place and therefore when advice was sought and received by the department and what

actions were taken from there.

Senator SINGH: I want to ask questions in relation to international mobile roaming. I was very pleased to

hear the PM announce on the weekend that the government has agreed to work with New Zealand on bringing

down mobile roaming prices between our two countries. I want to know what steps you are taking to lower

mobile roaming rates across the board and what you expect to happen to mobile roaming rates between Australia

and New Zealand as one example but also beyond those as well.

Mr Harris: As I am sure you know, a substantial report was published along with the prime ministers'

decision and exposed very substantial margins being earned on international mobile roaming and I think

confirmed the general public impression that it was a very expensive business that people engaged in either

accidentally or deliberately when overseas and incurring roaming charges. As a consequence of the decision by

the two prime ministers, the two competition authorities will engage in a cooperative examination of practices in

this area. We think the single greatest contribution to date is the degree of transparency that shows the size of the

margins that are potentially being earned in this area and the difficulty of relating them to the kinds of cost that

would justify the level of apparent risk premium in the charges that are being made. What happens from here in

part is dependent on the attitude of the competition authorities, but substantial power has been given to them to

make decisions. So taking the transparency theme one step further, substantial power has been given to the

competition authorities to decide what more action may be necessary in this area if we do not see variation in the

future in the kinds of rates that are being charged.

I should put an overall explanation on this that it is a very complex area because by definition it engages the

nationals of one country incurring charges in the territory of another country, so it is somewhat of an interesting

piece of public policy development. But the European Commission has been engaged in this for some time and it

is our general impression from pursuing this general question of roaming rates over a couple of years in other

international trade negotiations that increasingly countries are taking quite a lot of interest in this because of the

prices being charged to their citizens and the level of complaint that they get. In my own experience, three years

ago when I might first have raised this with some countries overseas, the concept that roaming rates might

become a very serious issue, I got relative passivity, but in recent times far more interest across a group of nations

in pursuing this.

Senator SINGH: So despite the complexities in the arrangement between the two countries, is this something

that you envisage could happen for Australia partnering with other countries and having a similar kind of

arrangement? As you say, it is a really important issue for a number of Australians travelling overseas. I know of

a number of cases of people getting $2,000 or $3,000 bills on their return.

Mr Harris: That is the transparency issue. We think the greatest contribution to this is, frankly, the more

attention paid to it the more people might realise how exposed they are. That is not to say there is not pretty good

word of mouth and it is not to say the telcos are not doing better at informing consumers, but the primary thing is

to help people recognise that you will incur these charges unless you take particular action. That is the primary

public interest, and the ongoing interest is in the hands of our competition authorities. Mr Rizvi is at the table and,

if there are more detailed questions, he has been heavily engaged in running this over some period.

Mr Rizvi: I might just supplement Mr Harris's response. Last year the minister announced that the ACMA

would make a standard in terms of the information that carriers would be required to provide to consumers who

are travelling overseas so that they were fully informed about the higher charges before they incurred them. We

think that will help also with the transparency point that Mr Harris is making. That standard is scheduled to be

introduced in August this year, and we think that will make a substantial difference. Another aspect of the

legislation that will empower the two regulators, as far as Australia is concerned, is that the intention is for the



legislation to be able to be extended to other countries. We have been in dialogue with other countries, and as

those discussions reach fruition they may lead to further agreements of this sort.

Senator SINGH: What countries are they?

Mr Rizvi: It would be premature for me to list those countries. Those are informal discussions that we have

been having with them, and I think it would be best to make announcements about which countries they are once

they have reached a point where they are prepared to reveal the outcome of those discussions. As Mr Harris has

pointed out, we believe actually taking this step and empowering the regulators will increase pressure on

telecommunications providers to act ahead of the legislation being introduced. We know from the joint

investigation that Australia and New Zealand undertook that during that time prices did fall somewhat. We

believe the act of introducing this legislation will put further pressure on the telecommunications carriers.

Senator SINGH: Thank you.

CHAIR: Can I just indicate that I did not do the formal statement we normally do before we start, but I think

everyone here is well aware of the formalities required of officers and of senators, so I will not go through that

again. I now call officers from Australia Post.

Australian Postal Corporation

[15:23]

CHAIR: Welcome, Mr Fahour. Do you wish to make an opening statement?

Mr Fahour: Yes, I would like to.

CHAIR: Could you in that opening statement just advise us of the welfare of the Australia Post employees

who were injured yesterday.

Mr Fahour: Certainly. Speaking of our workers, I was going to start on that basis, actually, and also pay some

tribute to our workers and our team nationwide for their phenomenal effort in the face of a fairly heavy workload

that occurs leading up to Christmas but also—very importantly and very concerningly from my side—during all

of the natural disasters that have taken place over that Christmas time period and over the last few months. It is

important to acknowledge the truly amazing work of our people who are living and working in areas affected by

the bushfires throughout Tasmania, Victoria, South Australia and New South Wales and by the floods in

Queensland and New South Wales.

As the chair of the Senate knows, we are community based business and Australia Post has a presence in all of

these disaster affected areas. I am relieved to report to the Senate that all our staff, licensees, contractors have

emerged safe and well. Unfortunately, though, during that time period, our services were fairly severely disrupted

across the network in those affected areas. But, once again, our people have worked through the exhaustion and

the appalling conditions to re-establish the postal services while also helping the massive recovery effort in the

communities that they live in.

I would like to put on the record my sincere thanks for their hard work and their self-sacrifice. Our people are

tremendous ambassadors for our brand at that time of year, but especially when there are disasters as will they

really become a crucial stitching together of the fabric of Australian community life. Of course, the disasters that

occurred throughout January came on the back of a significantly busy time period over the Christmas break. The

November-December period is a crucial time for us. Australians rely on Australia Post to deliver the Christmas

gifts and greetings to their loved ones, so our performance is really in the spotlight during this period.

Our workload reached record levels in the Christmas period, with our domestic delivered parcel volumes

growing at double-digit and higher than the previous year. This really reflects the ongoing and rapid rise of online

shopping throughout Australia. We did plan for this increase in volume and invested heavily in the resources to

manage for it. We opened hundreds of our stores on the weekends and increased staffing levels right across the

network. I am pleased to report that we exceeded our service performance targets by that delivering 97 per cent of

parcels on time through that peak operational period. This is one of the better performance records over a number

of years.

While our parcels business, both Australia Post and Star Track, continue to grow, unfortunately the decline in

our physical mail volume is ongoing. In the first half of this financial year our mail volumes were down a further

five per cent on the previous year. This year we will deliver 180 million fewer letters than we did last year.

Compared to the mail peak of our business five years ago, our addressed letter volumes will be almost a billion

items less than 2008. That is an approximately $400 million revenue hole that has developed over the last four

years, equivalent to 20 per cent of our annual mail revenue. Given this volume and revenue decline, and our

community service requirements, it is not surprising that we lost $190 million in our traditional mail business, as



outlined in our annual report last year. This loss has been growing and will continue to grow as customers

continue the shift from physical mail to digital communication.

While in the past our parcels growth has offset the decline in mail business, this can only remain the case as

long as the rate of deceleration does not go any faster. As I mentioned when I appear before this committee last

year, we are addressing this terminal decline in our mail business by investing $2 billion in rebuilding this great

business so that we can take advantage of the growth opportunities presented to us in the digital economy. We are

growing our parcels and our retail business and investing in our digital capabilities. We are focused on shifting

staff and resources into this growth areas and we are allowing natural attrition to help us withdraw roles and

resources from our declining business and the shift from the physical business of mail into the physical business

of parcels.

I want to finish now by just assuring you that our management team feels the heavy responsibility of managing

this transition well for the benefit of our shareholder, the Australian community, and for our workforce. We are

all very focused on the goal of maintaining Australia Post as a self-sustaining business and a vital piece of

community infrastructure. We have done this successfully over the past three years by meeting our service

performance goals and growing dividend payments to the federal government.

Chair, in regard to your specific question about yesterday's hazardous material, I am pleased to report that there

were no injuries, no issues with our workforce, but we did send a few of them to the hospital just to make double

sure and follow procedure. They were relatively quickly checked out as having no issues. I would like to take this

opportunity, though, to say that if citizens are mailing hazardous items they need to make certain declarations and

they need to ensure that they follow the rules and procedures. We followed our procedures. Thank goodness,

nothing happened, but it does cause me some alarm when some people do move some things through the postal

systems and do not make the appropriate declarations so we can handle them in the appropriate way. This is now

a matter for the Federal Police to investigate this specific incident.

CHAIR: Thank you, Mr Fahour. You have indicated you have had your highest parcel delivery percentage—

97 per cent?

Mr Fahour: For Christmas in parcels, yes.

CHAIR: What does that three per cent represent in numbers?

Mr Fahour: The three per cent is what was delivered the next day. The way we measure this is not so much

that we are saying 97 per cent got there and the others did not get there; what it means is that what did we deliver

on the prescribed service standard. Our prescribed service standard, Chair, is, as you know, from the letter side of

our business, is 94 per cent. We are operating at 97 per cent, which means that the rest of the items get delivered

the next day. This is in comparison to historical numbers, where during the Christmas period anywhere from as

low as 80 per cent to 90 per cent get delivered. Say, for example, if the period is next day, then that item is

delivered the next day but there are some items that are held over two days. Our performance standard that we

offer to our customers is that we say, for example, for this item, intrastate, in Victoria, for this parcel is one to two

days. We measure against the higher standard of one day. But if you measure it against the one-two days, then we

are comfortably in excess of all of our targets.

CHAIR: When I was a union official I was on the best practice committee and we did a tour to look at the

best practice around the world. One of the things that kept coming back to us was the Six Sigma approach, which

you would be aware of.

Mr Fahour: Yes.

CHAIR: Just looking at it here, that is 99.99966 per cent—it is almost perfection.

Mr Fahour: Yes.

CHAIR: Sure, that is for manufacturing and other processes. How does that relate, because three per cent

seems to be still a long way away from the Six Sigma approach that businesses strive for around the world?

Mr Fahour: This is a topic near and dear to my heart, having implemented Six Sigma techniques in the last

three jobs that I have had. The efficiency and productivity of the system is something that we do measure and we

do look at that very, very closely. We apply these kinds of techniques for processes, as you would know, end to

end. To compare the 97 per cent service to target to the Six Sigma approach is like comparing apples and oranges,

as you were alluding to, Chair. They are two completely separate points. Within the processes that we have inside

Australia Post, for example, express post, its target level to the service standard is 99 per cent. We deliver 99

point something per cent, so it is above that. So different products have what we call different 'prescribed service

standards' against those. If you are exceeding the target it means that you could theoretically be a Six Sigma



company—that is, if the target is 94 per cent and you are doing 96 per cent, then you are doing 100 per cent plus

in excess of what you are required to do. Where we get excited is not only are we delivering on our promise; we

are actually exceeding on our promise. These techniques are wonderful techniques, especially if you engage the

workforce, because they take great pride in delivering the past the service standard. I think the best example of

that took place in our mail business in early 2000 when we nationalised a lot of the processes and the service

levels of our mail business went from the low 90s to 96 per cent. I think that is a wonderful improvement in

productivity.

CHAIR: I am smiling: I have not heard 'nationalisation' being the topic of any of my committees for a long

time.

Mr Fahour: I am sorry, do I need to have something struck from the Hansard?

CHAIR: No, that's fine.

Mr Fahour: I have obviously been drawn in somewhere I do not want to go.

CHAIR: Mr Fahour, I do not want to take up any more of the committee's time. The reason I am looking at

this is that one of my constituents wrote to me complaining about Australia Post in quiet vehement terms. I

understand that, if you are waiting for something and it does not turn up, then it is a personal issue and there is a

bit of angst, but the person did raise issues about your complaints procedure. I do not want you to go through the

complaints procedure now, but could you on notice provide us with some details about how your complaints

procedure works, and I might come back to that in the next estimates hearing?

Mr Fahour: Chair, that is not a problem. We will take that on notice. Also if you could let us know the

specific individual so we can at least see what the issue is as well with the specific case.

CHAIR: Sure.

Senator McKENZIE: It is great to hear that Australia Post is shifting towards changes in the digital economy.

I am wondering how you are supporting your licensees through that shift in terms of the processes that they

undertake now that they are obviously doing things very differently to when they signed their agreement.

Mr Fahour: As I am sure you know, we have 4,400-plus shops and are the biggest national footprint in the

country. We have in excess of 2,500 of these in rural and regional Australia, which I know is near and dear to

your heart. It is really important national infrastructure that allows us to allow these communities to stay in touch

with what we do. I would like to ask Christine Corbett, who is the executive in charge of our entire retail network,

to give you some information, but let me make one really important observation here. For a lot of these licensees

Australia Post is one component of their business. They have many other aspects of the business that they do. One

of the advantages of us moving to a licensing model is that they can diversify into other products and services to

keep themselves sustainable. Many of them have thanked us for investing heavily in our parcels operation

because as they see one part of their business going down, which is mail, they see another part of their business

going up, which is the parcel opportunity. Let me hand over to Christine and she can elaborate little further on the

journey.

Ms Corbett: Thank you for the question. As you may be aware, we have over 4,400 outlets and the vast

majority of our network is made up of our licensees. In fact, as at December we have over 2,900 LPOs in

existence. I think what is important to understand in the business model is that some of those licensees operate as

stand-alone businesses just for Australia Post—44 per cent of our licensees are stand-alone—and 56 per cent

operate in conjunction with another business. When you have a network the size of Australia Post, especially in

rural and remote Australia, they may be a post office but it may be in conjunction with a corner store, a

newsagency or a pharmacy.

Senator McKENZIE: Yes, I understand how it works. I live in rural and regional Australia. I am very

conscious of the number of other senators who want to ask questions in this area. Just get on to the specific

support that Australia Post supplied for licensees because of the changing nature of their work since they became

licensees.

Ms Corbett: Part of that is how we have gone about diversifying our business. I think when we started the

licensed post office model the majority of our business income was actually derived from letters. Over that time

we have invested in new technology, which our licensees have benefited from, in terms of our point of sale

equipment. We have invested in new technology like scanners, which aid and assist our licensees to be more

productive in the processing of some of our parcel environment. We have also invested in new agency

opportunities, particularly in the identity services space, and taking on more and more agency principals for

customers to pay their bills over the counter. So licensees' income streams have diversified over the more than

two decades that they have been in existence.



Senator McKENZIE: In terms of responding to some representations made to me and other senators by

licensees and noting your desire within your annual report for a deeper understanding of their needs, I am

wondering if you can respond to claims that the goals seem to shift quite often within their interaction with

Australia Post. Secondly, I wonder how you assess your relationships with your licensees?

Ms Corbett: Certainly. With regards to how we support our licensees from a physical support perspective, we

break up into geographical areas. We have a national retail network partnership area and we also have people who

represent and work with those licensees on a weekly basis, so in terms of how we communicate we have a

monthly site visit program that is in place and Australia Post staff who actually then look at and support our

licensees with everything from how that outlet is performing to what their KPIs are and what promotional

campaigns are underway. We also have the more formal forums in place. That is with POAAL, who is our formal

consultative body, and we also have a Licensee Advisory Council. The establishment of the Licensee Advisory

Council was to look at other business development opportunities and to create a forum for licensees to be able to

bring those opportunities to Australia Post.

Senator McKENZIE: In terms of bringing those issues to Australia Post, have they raised the increase in

carted articles over time along with the subsequent changes to their own work practices that has required and the

lack of remunerative response for them?

Ms Corbett: That issue has been raised. As a result of the issue being raised, a working party has been put

together.

Senator McKENZIE: When was that working party put together?

Ms Corbett: The working party was established approximately 18 months ago. The primary issue that was

brought up in the first instance was the growth in parcels that we were experiencing at Australia Post as licensees

are also obviously experiencing the same issues. That has caused some capacity constraints for some licensees

and some operational constraints in terms of the physical limitations and space that may be required.

Senator McKENZIE: Another issue that was raised was the increase in PO box rentals—to 132 per cent

since 1993, whereas licensees have only seen a 33 per cent increase over the same time.

Ms Corbett: I think the 33 per cent figure that you are quoting actually relates to increases in the basic

postage rate, not necessarily to licensed post offices overall. The payment figure and how LPO payments are

derived are that some come from a commission base and some are directly linked to the basic postage rate

increases. The figure you quoted is the increase in the basic postage rates since 1992 and the flow on effect of

that.

Senator McKENZIE: Finally, how much of your CSO do your licensees supply? What percentage?

Ms Corbett: We have over 4,428 outlets, of which the other important one for us is the number of licensees

we have in rural and remote Australia. We have 2,556 outlets in rural and remote Australia.

Senator McKENZIE: In terms of the delivery of the service obligations, what percentage of the delivery of

those are achieved by licensees?

Mr Fahour: There are several aspects of the CSO, just to be very clear. Number of retail stores is only one

aspect of the broader CSO but, in terms of that, we are more than happy for the total number as a percentage to be

put on notice as a question and we will get back to you with the exact number.

Senator WHISH-WILSON: I have a very quick question. Are you aware of the relationship that Australia

Post has with the Tasmanian wine industry body, Wine Industry Tasmania?

Mr Fahour: No, I am not aware of that specific relationship, but could you please help me understand.

Senator WHISH-WILSON: It is a longstanding relationship with the wine industry. If you are posting wine,

and a lot of wine goes by box, there is a special rate that is altered each year based on certain metrics and if you

are a member of that industry you can participate in that. I have received feedback from a number of members

that they then have to claim their freight equalisation subsidy for each box they send. They have to claim every

time they do that, and they might send 200 or 300 boxes in a year, so they have to fill in 200 or 300 forms to

claim back that subsidy. It would not just be the wine industry in Tasmania but lots of other industries that would

use your service, so I was wondering if the rates that Australia Post charges could already reflect the subsidy to

save on administration costs for those businesses. Would that be at all possible?

Mr Fahour: I think that is an interesting suggestion: how do we cut the extra work that people need to do and

can we do it in a different way? I am more than happy to take that on notice and, if you wish, to dialogue with you

afterwards to say what we can and cannot do and how we do it. But I would not mind just making one observation

for you, which is that we are one of the leaders in Australia in moving wine around and there is reason for that,



other than the fact that we are really good and we have got great services. Our prices are actually very attractive

as well. As you can imagine, you have to have both attractive prices and a good service for people to give you the

kind of business that they give you. I think we have done an excellent job for the industry Australia-wide. I hear

nothing but really positive comments about it. We really fundamentally re-engineered our system to allow the

movement of wine in such a way that it is handled in a delicate and careful way.

I am sure you are not saying this, but I am sure you would appreciate that we must recover our costs, we must

cover the investment and make a fair rate of return because it is a commercial activity. But if there are ways to

make it easier for our customers to do their business and get a fair deal either way then our ears are fully open and

I am more than happy to follow up on that issue with you.

Senator WHISH-WILSON: Thank you. I understand it is different to dealing with another government

department who might be charging our freight equalisation schemes versus your business model, but it certainly

would be something that the industry would be appreciative of.

Mr Fahour: I am more than happy to follow that up because that industry is very important for us.

Senator BOYCE: I think my questions are directed to Ms Corbett. Mr Fahour earlier made the point that you

had a double digit or more growth in your parcel volumes, over the Christmas period, I suppose. Does that mean

that your licensed post offices received double revenue in that area?

Mr Fahour: When we grow our business overall there is no question that one of the beneficiaries of the

growth in our overall business tends to be the shops, because we pay a fee if they are involved in the process of

handling and so forth. Each shop has a different level of business that it does and each one will reflect the nature

of the skew of their business. For example, some shops, as I am sure you would be aware, do not handle parcels

but have other activities in their shops, and some shops do a very robust business. Each one is on a case-by-case

basis and it depends upon how they are set up to take advantage of these opportunities. We are working with them

to try to give them as many opportunities as possible as their letter business goes down and they are making less

money, because we are all making less money—all of us. We are losing $190 million—

Senator BOYCE: Only in one section of your business, Mr Fahour.

Mr Fahour: But the licensees do not share in the loss. I hope you are aware of that. They get a percentage of

the revenue of letters, and we could lose a lot of money and they do not share that. I am just saying, Senator, we

have to be very careful how we manage this very difficult position we are in.

Senator BOYCE: That is exactly why I am asking these questions. I have had it put to me by some licensees

that, irrespective of whether they are delivering 13 boxes of wine to a street address or a soft cuddly toy to the

address, in one delivery, they would get paid the same. Is that correct?

Mr Fahour: I will ask Christine to answer that specific question.

Ms Corbett: I think you are referring to the carded parcel item.

Senator BOYCE: Yes, a carded article.

Ms Corbett: For some licensees that is correct.

Senator BOYCE: How much would they get?

Ms Corbett: There is actually a negotiated payment.

Senator BOYCE: Is that negotiated individually or across the board?

Ms Corbett: On average, I think the payments that you are referring to for carded parcel is in the vicinity of

29c per item.

Senator BOYCE: So if I deliver 13 boxes of wine I get 29c?

Ms Corbett: It is actually—

Senator BOYCE: In one delivery?

Ms Corbett: Yes, it is when a delivery has already been attempted by the parcel contractor. They have

attempted to go to someone's home. That person has not been there and the item then comes back to a post office,

and that fee is for handing it across the counter.

Senator BOYCE: Irrespective of how much room it is taking up in the post office?

Ms Corbett: Yes, the size of the parcel is related to the assessment. From a retail perspective, as our

managing director referred to, as we get growth in our parcels volume, our licensees and our post offices benefit

because they get a percentage of the sale. So where they would benefit in terms of size of item and weight of item

is at that assessment part of the process.



Senator BOYCE: Does a franchisee and a licensee get the same payment for delivering the same-street

carded article?

Ms Corbett: They are two entirely different business models. The entire payment structure is different.

Senator BOYCE: Could you briefly explain what it is that is different?

Ms Corbett: The entire business model is different. From a licensed post office perspective, our licensees

have an indefinite licence and the majority of their payments are commission based. As well there is a fixed

component for some of the delivery functions that they perform. Our franchisees—and we have 29 of those

franchisees—are on a fixed term 10-year agreement and as a result of that, as I said, there is an entirely different

payment structure—

Senator BOYCE: So they have to get a return out of this faster. That is what your model suggests.

Ms Corbett: No, they are entirely different models. You cannot compare the two models.

Mr Fahour: They do not have the same upfront capital costs. They do not have the same business model. It is

comparing apples and oranges. I was just going to come in before and, if you do not mind, Senator, I just want to

make this observation. The retail shop gets involved if the customer is not at the premises, and if they are not at

the premises and we have, what we call a 'failed delivery' and we have to take the item back, at that stage

Australia Post has gone backwards. We do not have a lot of profit margin at this point. So one of the things that

we are conscious of here is that we have a very, very thin margin business and if we are not careful how we

manage this commercially and balance out the items, not only will we lose money, we are all done for.

Senator NASH: The agreement that Australia Post has with its licensees—when was the last reviewed?

Ms Corbett: The agreement was struck in 1992. There have been amendments in terms of various appendices

and addenda over time, but the basis of the agreement was in 1992.

Senator NASH: And it has not been reviewed overall in that time?

Ms Corbett: Not holistically, but elements of it have been adjusted over that time.

Senator BOYCE: Is every licensed post office in Australia undertaking trace and track of articles?

Ms Corbett: I am assuming that you mean: are they scanning items?

Senator BOYCE: Yes.

Ms Corbett: Yes.

Senator BOYCE: And express post as well.

Ms Corbett: Basically, we have over the last 12 months deployed scanners. Scanners are part of our EPOS

network. But we also have a number of manual outlets. So the answer to your question is that not every licensee

would be scanning because we do have manual outlets still that do not have that technology.

Senator BOYCE: I will put some more questions on notice, but I wanted to ask you about the closure of the

front counter at the Business Centre in Albion, and I understand that Kelvin Grove and Caboolture post offices

are also closing. Why is that?

Mr Fahour: Senator, we are happy to take those on notice. The reality is that we assess our network all over

the country. There are some areas where we will change the type of service that we offer. Over the last several

Senate committees that I have come to, it has been a rare pleasures for me in being able to say that we have

actually grown our total network, and in particular we have grown our regional and rural network. But we have to

put our stores where the customers are and where they want to do business.

Senator BOYCE: Absolutely. Do you consult with local businesses and other stakeholders before you decide

to close down a post office?

Mr Fahour: We have what I consider to be one of the best consultative processes. We are not going to make

everybody happy—

Senator BOYCE: Then why would—

CHAIR: Senator Boyce, please allow Mr Fahour to answer the question.

Mr Fahour: Of course we do and yes we do. I can assure you it is a very robust system and one that takes into

consideration all stakeholders. It is a protocol we have outlined. We are prepared to be held to account to it. Can I

also say that we do not satisfy everybody because that is not our intention. Our intention is to consult and discuss

and dialogue, but we have more stores today than we had before. Secondly, we are putting those stores where the

community is growing, not where the community is shrinking.



Senator BOYCE: Do you take into account how long is the travel and parking time to the nearest post office,

not just its physical distance from a post office you might be looking to close?

Mr Fahour: Yes, we do. If you look at the majority of post offices that have been closed or the types of

service offering has changed—this is quite important, because sometimes when we close a post office we might

open a different type of post office in the immediate neighbourhood, and we take all that into consideration and

we are very pleased with where we have got to.

CHAIR: Senator Boyce, I am afraid we have to move on. I have to go to Senator Heffernan. He is getting a

bit agitated and I do not want to have him agitated.

Senator BOYCE: Senator Heffernan is a very patient person. I will put the rest of my questions on notice.

Senator HEFFERNAN: Just to refresh my memory, prior to this you were at NAB, were you? Where were

you before this?

Mr Fahour: That is part of my career background, yes.

Senator HEFFERNAN: You sound very commercially aware and sometime if you have got time I would

love you to come to Junee and see our little post office. It works well. But have you ever thought about privatising

Australia Post? You sound the sort of person—

Senator Conroy: Absolutely not.

Senator HEFFERNAN: I did not ask you, I asked him.

Senator Conroy: I know it is a secret plan for the Liberals, and the Nats will roll over, so we do not have to

worry. Let me assure you that Labor will not be proposing or supporting—

Senator HEFFERNAN: You took the bait. I notice the witness did not answer.

Senator Conroy: It is a policy question and a policy question comes to the minister.

Senator HEFFERNAN: I love the commercial aggressiveness of the managing director. I will bet you $1,000

to one peanut it is in your mind.

Senator Conroy: That the Liberal Party will privatise it. It is no doubt that that is the secret plan.

Senator HEFFERNAN: No, don't crap on.

Senator Conroy: But it is a policy question, so and Mr Fahour is not in a position to answer. Policy questions

are for the minister.

Senator HEFFERNAN: I congratulate you on your commercial awareness because you can tell you have

come from somewhere else.

Senator Conroy: That is called in business the kiss of death! Just for the record.

Senator HEFFERNAN: Junee post office send their kindest regards.

Senator BOYCE: Could I have on notice the customer patronage of all the post offices that are being closed

up to the end of June?

Mr Fahour: I am not sure that we will be able to give you that confidential information because some of these

are private businesses. If they are owned by private businesses we do not want to reveal what their private

situation is. So I would request that—

Senator BOYCE: As much detail as possible, particularly in Queensland.

Mr Fahour: A lot of these shops, we are competing with other businesses around us and there are other

licensees who have legal contractual rights. We have to follow a process. All I am asking is that, rather than on

the public record that you reveal somebody's private business interests and what the customer numbers are so

forth, if there is something specific in Queensland, for example, we are happy to deal with you personally to

discuss this. But I would ask the chair and the Senate to think about what we can and cannot put on the Senate

record.

Senator BOYCE: Given the concern of businesses in the Albion area, the question is far broader than a

private conversation. It is about the interests of businesses within a lot of smaller business communities in

Queensland. If you are not able to give me the exact figures up until 30 June, perhaps you could give me the

figures up until when you believe the provision of that information might cause commercial harm to a business.

Mr Fahour: We will take notice your question about the Albion area and we will provide you what

information we are able to provide you on notice. I will reiterate, though, that my obligations according to the act

are to act in the commercial best interest of Australia Post and to meet the community service obligations as

outlined by the parliament of Australia.



Senator McKENZIE: Do they need changing?

Mr Fahour: My obligations are very clear. I will obviously want to take into consideration other businesses

that are around our post offices, but the most important consideration that I will bring is what is in the interest of

Australia Post and what is in the interest of what we do to meet our community services obligation. I am sure that

is what you would like me to do.

Senator BOYCE: Yes, and in the interests of our constituents—

Senator HEFFERNAN: And could you provide some competition to Woolies and Coles.

CHAIR: I indicate that if you do ask questions of a government business organisation at estimates and they

provide the information, it is public information. If you have been offered a private briefing then that may be the

way to go. Thank you very much, Mr Fahour, to you and your team. We will break until 4.15 for afternoon tea.


CHAIR: I now call officers from the department in relation to program 1.2—telecommunications, online and

postal services.

Senator BILYK: I want to ask about the first National Telework Week. I think it was held in November last

year—I know it was late last year. Are you able to tell us about the role of the federal government in providing

teleworking and why it is important?

Mr Rizvi: Yes, you are right; Australia's first National Telework Week was conducted in November last year.

We worked in conjunction with a range of industry stakeholders, including a range of industry peak bodies as

well as organisations heavily involved in telework to promote National Telework Week. We were able to partner

with over 150 organisations to help us in the promotion of National Telework Week, which we believe was very

successful.

From an employer perspective there are perhaps five important reasons why telework is important. Firstly, the

research strongly indicates that telework delivers productivity benefits and it derives those productivity benefits

predominantly from two sources. Firstly, it is from the hours saved by people not having to commute. The

research suggests that many of the people who telework contribute those hours back to the employer—or a

portion of the hours that are saved. Secondly, it has an impact on productivity because it avoids the stress impacts

on individuals when they arrive at work, having commuted significant distances. You can imagine someone who

has gone through an hour, an hour and half or two hours of traffic in Sydney and gets to work. They are probably

not in the best state to do anything particularly that requires a high level of concentration. So it has a productivity

benefit. It has a benefit in terms of attracting and retaining staff. A lot of surveys are showing that people are in

fact prepared to sacrifice a salary increase if they are able to get the flexibility to telework. That is the situation in

many places.

Another significant benefit from telework is the cost savings that are achieved by the employer. A really good

example of that is both Microsoft and the Commonwealth Bank in Sydney. Recently they have reduced the

number of workstations in their main offices in those places, such that the Commonwealth Bank now only has 80

per cent of the workstations for 80 per cent of its staff. So at any point in time they do not expect more than 80 per

cent of their staff to actually be in the building. That is a substantial cost saving. Microsoft have said that they

have achieved savings of up to 25 per cent of their accommodation footprint in Sydney as a result of telework.

They are some of the employer reasons.

There are, of course, significant benefits for the employee both in terms of reduced stress, cost savings from

driving into work or catching public transport, as well as in terms of work-life balance. Finally I think there are

benefits across society. There are benefits in terms of reduced peak hour effects, reduced carbon emissions and,

more broadly, the benefits of a society that is not as frazzled as it would otherwise be through the benefits of

teleworking. Those are the kinds of benefits that the research is highlighting.

Senator BILYK: Is there any research where, for example, people with disabilities or people in rural and

remote areas might benefit from this sort of work as well?

Mr Rizvi: We commissioned some work where an organisation by the name of Colmar Brunton did some

surveys for us of people in regional Australia, people with carer responsibilities, older Australians as well as

people with disabilities. Was that highlighted was that a wider availability of telework would attract many of

those people back into the workforce. For example, it found that on average older Australians would be prepared

to continue to work for an average of up to an additional six years if telework opportunities were available to

them. As a result of those potential benefits, the researchers concluded that, if there were a wider adoption of

telework in the way that is envisaged, potentially up to an extra 25,000 jobs could be created and a



disproportionate number of those would be in regional Australia—people who at the moment living in regional

Australia unable to access jobs that might be in the cities would, through teleworking, now be able to access them.

Senator BILYK: Is that 25,000 jobs you mention, is a time line on how long it might take to get there?

Mr Rizvi: That would be 25,000 by 2020.

Senator BILYK: That is great. What tools are available for employers to work out whether it is to their

benefit or not to actually have their staff do telework?

Mr Rizvi: We secured the assistance of Access Economics to develop a return on investment model that

enables employers and employees to put in data regarding their own circumstances—assumptions about the level

of teleworking, the travel distance between work and the employee's home and a range of other factors—and from

that they can work out what return on investment they can secure. That return on investment tool is available on

our website.

Senator BILYK: What is it called? Does it have a name

Mr Rizvi: It is a return on investment tool. It is on our telework website—that is www.telework.gov.au—and

the tool is available on that site for people to use?

Senator BILYK: And that is for both employers and employees?

Mr Rizvi: That is right.

Senator BILYK: So they both see the benefit. I presume that rolling out the NBN will have a great impact on

the take-up rate and potential for people to telework. Do you have any comments on that?

Mr Rizvi: I think the research showed that high-speed broadband is really crucial to facilitating an increase in

telework. If people have experienced trying to telework with a relatively poor broadband connection, they end up

spending a lot of time being frustrated with slow response times, dropouts, buffering and those sorts of things. It

leads to a situation where people simply get frustrated and abandon working from home. Certainly working from

home, if you want to be able to use video or multiparty video amongst clients or with colleagues, would be very

difficult without high-speed broadband. So those sorts of factors are really crucial to boosting telework.

Senator BILYK: Thank you for that.

I am very interested in the Digital Local Government program. I know that tenders were called for round 3. I

am not sure where we are at.

Mr Rizvi: That is correct. We have gone through the process of tendering for the Digital Local Government

program. At this point we have identified 34 local councils that we are working with to take advantage of the

NBN to deliver local government services to local residents.

Senator BILYK: Is that 34 in round 3 or in rounds 1 and 2 as well?

Mr Rizvi: That is 34 in total.

Senator BILYK: Do we know how many are in round 3?

Mr Rizvi: I do not have a division by rounds.

Senator BILYK: If you could take that on notice, that would be handy. How much have we spent on the

Digital Local Government program to date?

Mr Rizvi: The total allocation for the Digital Local Government program—

Senator BILYK: You can take that on notice because we are short on time.

Mr Rizvi: I might have to take that on notice. I do not have the total amount.

Senator BILYK: I know the Tasmanian communities are at the forefront of the program. I have seen

numerous examples of it all around Tasmania. You might also need to take this on notice, but could you give us a

breakdown of where the other successful tenders have been. Could you also provide the dollar value they have. I

understand local government has to financially have some input. Is that correct?

Mr Rizvi: That is right. They are required to have a minimum of a 25 per cent matching contribution to the

program. That can be either in kind or in cash. A number of local councils have actually provided even more than

that to get the services up and running because, essentially, they see it is in their own interests to get more

services online and to secure the efficiencies that that can deliver.

Senator BILYK: Yes. I have seen numerous examples of how successful it is in Tassie. Could you take on

notice for me who the successful tenderers have been, including round 3 if that has already been determined, how

much money they have and what the programs are actually for. Just a sentence if that is not too much trouble.



Mr Rizvi: Yes.

Senator BILYK: That is all from me then.

Senator BIRMINGHAM: I go to the spectrum auction, in particular the auction for the 700 megahertz

spectrum. What price has finally been set for that spectrum?

Mr Harris: I think it is $1.36 per megahertz per head of population.

Mr Maurer: The reserve price has been set for the 700 megahertz component of the auction and it is $1.36, as

our secretary has described.

Senator BIRMINGHAM: Thank you. What would the available spectrum yield if the reserve price were met

for all of the available spectrum?

Mr Maurer: If all lots were sold in the 700 at that price, it would yield approximately $3.1 billion.

Senator BIRMINGHAM: Are you able to identify any other countries where comparable spectrum has sold

at that price or higher?

Mr Maurer: Basically, few other countries have sold their digital dividend, which is the band of spectrum TV

has vacated when they have done the digital switchover. In a few of the European countries, that band is the 800

band, which is where Telstra, for instance, runs its Next G at the moment, so it is treated as being an equivalent.

In terms of a breakdown of other prices—

Mr Harris: I think we have a range in our briefing of between 41c and $1.97 across European countries.

Mr Maurer: Yes. For instance, in the United States there was an auction in 2008 where the reserve was set at

6c but the outcome was $1.85. So we get a fairly large range. The reason the prices are done on a population basis

is that the concentration of population has a big effect on the economics of doing a rollout. I do not have the

figure in front of me, but a Hong Kong option yielded a figure in the range of $1.90. But that was quite a

concentrated area. The other factors, of course, are the level of competition in the auction itself, how much

spectrum is being brought to market and how contested that space is. As the secretary has identified, we have had

ranges going from basically a cent up to $1.85 or even higher.

Senator BIRMINGHAM: What advice or inputs did the minister seek before setting that price?

Mr Harris: There was a very long series of exchanges between the minister and his colleagues up to and

including cabinet-level exchange. It involved this department, central agencies and the ACMA. That was through

the period of, roughly speak, October, November and December last year.

Senator BIRMINGHAM: Thank you. In terms of formal advice, did the minister, government or ACMA

seek any external advice or reports into the reserve price for this spectrum?

Mr Harris: In framing the auction process formal advice was obtained from external parties. I know that we

received formal advice when we were doing the renewals. I look to Mr Maurer. Did we also receive formal advice

on this?

Mr Maurer: Yes, we did.

Mr Harris: So we have sought advice from external parties, as obviously the ACMA did as well in framing

the auction design.

Senator BIRMINGHAM: Are you able to inform us who those parties were?

Mr Harris: I cannot recall them, but Mr Maurer might.

Mr Maurer: Plum Consulting are international experts in spectrum valuations and auctions. They were our

primary advice. You would have to ask the ACMA.

Senator BIRMINGHAM: Have their reports been made public?

Mr Rizvi: No, they have not. They were for the 15-year renewal because there was a process where we were,

effectively, setting the market price following discussions with the telecommunications providers. This is heading

into a market process where an auction will be held and the competitors will be setting a price there. We are very

aware that it is a fairly market-sensitive exercise, so us putting information out there that the telcos might act on is

probably not entirely appropriate. They should be determining the value of the spectrum for themselves and

bidding accordingly.

Senator BIRMINGHAM: Okay. Mr Harris indicated that the series of long exchanges involved up to and

including cabinet level. Does that mean that various propositions were put to cabinet or simply that the minister

had exchanges with particular cabinet colleagues?



Mr Harris: At estimates we do not traditionally analyse cabinet processes. I put cabinet in there quite

deliberately to assure you that the matter was considered. All I could reasonably add is that it was considered in

detail. So, if your question was attempting to elicit a view on whether cabinet was not really involved, that would

be wrong. It was a proper process of consideration, as has occurred, I am assured—because I asked this question

myself—in the past, when reserve prices were set.

Senator BIRMINGHAM: So in answer to my question you have made clear that it was considered by the

cabinet and not simply by discussions between the minister and certain cabinet colleagues.

Mr Harris: That is correct.

Senator BIRMINGHAM: And was it subject to consideration by the cabinet on multiple occasions?

Mr Harris: I really do not feel comfortable speculating further on the nature of cabinet business.

Senator BIRMINGHAM: I appreciate that. I am conscious that it is indeed convention that the content of

cabinet deliberations is not disclosed here or elsewhere—aside from, perhaps, the well-placed leak—but it is not

unusual at these committee hearings to canvass when considerations took place in cabinet or, if a topic or decision

was simply taken to cabinet, what the recommendations, findings and discussions were. It is legitimately off the

ground.

CHAIR: Mr Harris, you are not required to divulge any issue relating to cabinet. If it becomes an issue, I will

rule on it.

Mr Harris: I am trying to be helpful, but I really do not feel comfortable going further than that. I can assure

that cabinet was involved in setting the reserve price.

Senator Conroy: Extensively.

Senator BIRMINGHAM: Thank you. I will take 'extensively' to probably mean more than one discussion at

cabinet.

Senator Conroy: I am not going to go into individual discussions, but you can work on the basis that it was a

collective decision.

Senator BIRMINGHAM: Okay, thank you. When did the ACMA provide a recommendation or indicate

their decision on the reserve price?

Mr Harris: We would probably have to take that on notice, but they have certainly provided the government

with a view. The ACMA's view was taken into account in this price-setting process.

Senator Conroy: You asked a date, though.

Senator BIRMINGHAM: I asked when they provided their view.

Mr Harris: We do not have the precise date with us.

Senator BIRMINGHAM: I am assuming it was in this long series of exchanges between October and

December.

Mr Harris: It was within the period and communicated in the context of setting this price. They

communicated their view, and the minister ultimately took a view to his colleagues.

Senator BIRMINGHAM: And so their view was communicated to the minister at some stage, obviously,

because he could not have decided to take his own view without having heard their view in the first instance.

What was the ACMA's view?

Senator Conroy: That is advice to government. As you know, the advice from officers or departments is

advice to government, but we took it into consideration before we made our decision.

Senator BIRMINGHAM: What is the formal process that exists here? ACMA would be the default setter of

the reserve price normally but for the fact that you chose to intervene?

Mr Harris: Yes, that is right. But as I think I said earlier, and I made inquiries on this to assure myself, on a

previous occasion—at least one and probably more than that—the government has considered the price rather

than simply leaving it to the ACMA to set the price. It predates my time, but I asked the question because I

wanted to be sure that we were not acting in a fashion that was unprecedented.

Senator BIRMINGHAM: Why did the minister feel it necessary to intervene in the process of setting the

reserve price?

Senator Conroy: I have said this on the record and the officers may be able to give me an exact date,

Vodafone communicated to us that they would not be participating in the option. Was that in September?

Mr Harris: Yes, my recollection is late September.



Senator Conroy: That meant we had two bidders possibly for two blocks and they were not allowed to bid for

each other's block. This could see two global bids put in and be successful, unlike the rent-seeking behaviour that

you are engaged in and Malcolm Turnbull has been engaged in where you have advocated that we should give

away at below reasonable price some of the most valuable property that the Australian taxpayer has. We are not

prepared to see a situation where taxpayers do not get the best possible price. Despite rent-seeking behaviour by

the coalition, we are not prepared to sell Australian taxpayers cheap.

Senator BIRMINGHAM: Taking the advice of the chair and not biting, and sticking to your decision,

Minister, your decision changed the structure of the parcels on offer as well as the price?

Senator Conroy: We increased from a minimum of 20 to 25 for one of the two. A whole range of things

could have happened, but essentially the change was from 20 to 25 for one parcel. Some people may view that as

an enormous change and others might view it as a marginal change. People can make their own commentary on

that, but there was a change in the block size maximum bid from 20 to 25. I always talk about the singular rather

than two times 20 for the purpose of anyone wanting to commentate on it.

Senator BIRMINGHAM: For the benefit of those not expert in spectrum auctions, which happens to be a

good many people—

Senator Conroy: Everyone in this room. ACMA are the only people that can explain the combinatorial clock

team, but if you would like information I am willing to let you be subjected to it.

Senator BIRMINGHAM: What is the benefit of getting a higher return to the taxpayer, aside from the higher

reserve price, from the change to the structure that you made?

Senator Conroy: It is a very, very valuable piece of real estate.

Senator BIRMINGHAM: I am not asking for the international outcomes that are starting to crop up.

Senator Conroy: As opposed to saying, 'Look what people paid just after the global financial crisis,' we

ensure that we get the best possible value.

Senator BIRMINGHAM: I am asking for an explanation for these structural changes you made to how the

auction would be undertaken, aside from the increasing of the reserve price. How will those changes derive a

better return for the taxpayer?

Mr Harris: The larger amount of spectrum being made available to any one party, the lift from two by 20 to

two by 25, meets a nominal objective in these circumstances of trying to ensure spectrum is used as soon as

possible—that is, if two by 20 had been left as the maximum we would have been guaranteed that five at

minimum. Two by 20 means only 40 sold. If there are only two participants, five would be left on the shelf. It is

consistent with the objectives of the relevant legislation that would make the spectrum available in a way that

ensures it is used as quickly as possible. That is one benefit: it is going to be used as quickly as possible if the

parties buy the full amount, whereas under the previous number they could not have bought it if there were only

two participants.

For the price itself, we establish a price which we consider to be a fair market value. One issue taken into

consideration is the question of where the price is so high that it would shift materially the rates charged to

consumers. We did not think that was likely to be the case with this price. On the other hand, if you rationalise

that you should give it to carriers at a cheaper price, the question is: what would force them to provide an ongoing

benefit to consumers in the same circumstances? The answer would be a highly competitive market. If only two

parties have that spectrum and a third, which is the force that helps us create a competitive market, does not then

it is not clear that the forces are strong enough to ensure that giving the spectrum away at a cheap price would

induce a benefit to consumers. It could, but it is not clear.

Senator BIRMINGHAM: What additional information or evidence was provided to the minister in his

decision-making beyond that which had been provided already or was available already to the ACMA in its

decision-making?

Mr Harris: We gave the minister a series of options to consider. The ACMA does not provide options to the

minister, the department does. The minister has reminded me that central agencies are involved. He saw advice

from the central agencies as well in the nature of this process, but the department provided a number of options to

try and deal with the set of circumstances that we are faced with when we were putting into the market some of

the most valuable radio spectrum at a time when one participant had advised us that they were not able to take

advantage of it.



Senator BIRMINGHAM: Was there are any additional external advice, such as the Plum Consulting work,

made available to the minister for his decision-making purposes that had not been available when the ACMA

made their recommendations?

Mr Harris: I do not think any more formal analysis was provided from an external party, no.

Senator BIRMINGHAM: It was all within government departments?

Mr Harris: This is our primary role.

CHAIR: Thank you.

Special Broadcasting Service Corporation

[16:48]

CHAIR: The committee has received correspondence from Mr Ebeid advising of his inability to attend the

committee and the committee has dealt with that correspondence. We welcome Mr Khalil. Would you like to

make an opening statement?

Mr Khalil: Yes, thank you. I am representing the managing director, Mr Michael Ebeid, and I want to thank

the committee for their understanding in giving him leave to attend some important existing commitments made

prior to the scheduling of these hearings. He has asked me to update the committee on a number of items. SBS

finished 2012 on a high with the successful launch of the National Indigenous Television Network on free-to-air

television. That was done on the 12th of the 12th of the 12th, with a special day of programming from Uluru. It

was great to have several federal and state representatives attend, including Minister Conroy and Minister

Macklin. With the NITV on free-to-air television, SBS will be able to share the stories of the first Australians

with the wider Australian audience and help to preserve stories about Indigenous culture for future generations,

and we will contribute to reconciliation. I am very pleased to report that in its first month alone NITV attracted

just above 2.7 million viewers which is a great result.

On football which is another important area, as you would all be aware SBS is the spiritual home of football.

We were very excited to have secured the free-to-air rights for the domestic A-League and the World Cup

qualifiers. That brings football back to where it belongs for fans, on free-to-air television. In many ways we are

bringing the game home. You would all be aware that over 30 years SBS has championed football, even when it

was not as popular as it is now.

We have started the year on a terrific note. In January our serious Dirty Business, which explored the impact of

mining on migration in Australia, was a great success across our platforms. SBS won two awards at the annual

Australian Academy of Cinema and Television Arts, the AACTA awards, in Sydney on Australia Day. They were

for two wonderful documentaries, Go Back to Where You Came From and Once Upon a Time in Cabramatta. We

have also received 10 nominations for the upcoming Australian Interactive Media Industry Association awards.

These are Australia's most prestigious online awards.

In January this year we have had a 40 per cent increase in online traffic year-on-year from last January, which

is really a great result. It is also a significant challenge for us. In some ways we are the victim of our success

online, because we have incremental distribution costs which are driving up our cost base. Of course, all of this in

digital is unfunded, which means we need to take money out of other areas to fund the online offering. The more

people that use our online offering the more we pay, so we will be talking to government about that in our future

funding arrangements. We are very excited about the opportunities with more demand for video growth in a fast-

broadband world, but it is also quite concerning for us because it is going to make it harder for us to fund the

growing amount of online activity.

As you may recall, the managing director previously mentioned SBS last year conducted its first major review

in 18 years of its languages broadcasts on the radio schedule to bring them into line with the demographic make-

up of today's Australia. I am pleased to advise that the new schedule includes six new languages, more

programming for language groups which have grown significantly during the past 18 years and a new digital

radio channel. There will be 74 languages on the new schedule, and SBS will continue to be the most multilingual

radio broadcaster in the world. To put that into context, BBC Worldwide broadcasts in only 27 languages.

We are very cautious about commercial revenues over the next 12 months given the constricting market, but

despite limited resources we continue to do some great across our platforms and look forward to doing more.

Senator ABETZ: I could not let the opportunity go without asking the minister whether he has had a cup of

coffee with Mr Ebeid as opposed to Mr Obeid.

Senator Conroy: Not having had a cup of coffee with the second one, I have had the occasional cup of coffee

with the first one.



Senator ABETZ: Good. In Mr Ebeid's absence, I am not sure whether we can take this must further

regrettably. On page 69 of the Hansard on Tuesday, 16 October 2012, last Senate estimates, I was canvassing the

issue of a particular deficient Dateline program, I was told by Mr Ebeid:

Might I also add that Ta Ann in correspondence with SBS have accepted our apology and as far as I am aware are satisfied

with the process.

Is anybody at the table aware of a letter from Ta Ann to SBS dated 7 September 2012?

Mr Khalil: On that, I know there were a lot of questions. I was at the hearing last year and I recall that the

managing director gave detailed and fulsome answers on that occasion. Nothing further has occurred, but I can

say that we have not received any further complaints on this matter nor any complaints or criticisms around our

handling of the matter.

Senator ABETZ: When I am told on 16 October 'as far as I am aware they are satisfied with the process' yet

after that hearing I was given a letter addressed to SBS dated 7 September which says: 'Thank you for the apology

… however, I am concerned that the on-air and online clarification and apology made by Dateline management

does not reflect the strength of the ombudsman's findings, specifically that the totality of the report was inaccurate

and misleading. Therefore I ask the managing director to review the online apology and amend it to reflect fully

the ombudsman's finding.' It goes on further:

It is appropriate that the program should be removed from the program's website and YouTube.

How on earth could Mr Ebeid have been of the view that Ta Yann was satisfied with the process when you must

have had this correspondence? After estimates somebody surely would have pointed this correspondence out to

Mr Ebeid and said, 'In fact, no, they are not satisfied'. The fact that I am asking here today is indicative of the fact

that Ta Ann are not satisfied. How was Mr Ebeid able to say that to us?

Mr Khalil: I have to take that on notice. I have not seen that letter that you referred to.

Senator ABETZ: Yes, 7 September 2012, addressed to Ms Alison Angles

Mr Khalil: She is in the Ombudsman's office. I can say that SBS considers that the apology that went on air

immediately and also the one that was placed online and the action that we have taken to date have been

appropriate. Outside of estimates hearings and your questions we received no further complaint in relation to the

program of handling of it.

Senator ABETZ: We will have to agree to disagree on that. When the Minister for Foreign Affairs gets letters

from international organisations referring to the SBS program that puts Australia in a very difficult situation

where a taxpayer funded organisation is attacking an Australian business. Then we have to say in response that

the taxpayer funded organisation completely misrepresented the position and the totality of the report was found

to be inaccurate and misleading. It does not put any aspect of Australia in a good light on the international scene.

Having said that, I asked in relation to the journalist who perpetrated this program: has that person been spoken to

because at the last Senate estimates he had not been and had gone overseas?

Mr Khalil: I can confirm that the journalist in question has received retraining in our codes of practice and

that occurred when he returned from overseas.

Senator ABETZ: What about the lawyer and all the other people that let it slip through?

Mr Khalil: I can confirm that the journalist in question has received training in our codes of practice.

Senator ABETZ: Let's hope we do not have a recurrence.

Senator SIEWERT: In relation to SBS's new radio network which you alluded to in your opening remarks, I

understand it is incredibly impressive, now having 74 languages from 68 previously. But I know that in that

make-up there are a number of new languages but there are also some languages that have dropped off the radio

network. I presumed that decision is made based on the census data of usage of or multicultural population sizes

or the like. Is that how you make those decisions as far as what languages to include and what language is to

exclude in this new radio network?

Mr Khalil: Thanks for the question. I can just explain to the process that was undertaken. A bit over 18

months ago the board agreed to review the schedule which had not been reviewed for 18 years. Obviously

demographics in Australia have changed significantly over almost two decades. There was a real need to address

issues and to ensure that a number of new language groups would receive some services that they were otherwise

not receiving as they have come into Australia. The board and the management had a very thorough methodology

in process which included using the census data in 2011 as the central data point around all the different language

groups. Frankly, if we were to try and do our surveying ourselves outside of the census data it would probably



cost more than the radio budget in its totality. I think we had quotes for $40,000, $50,000 and $60,000 per

language just to do that surveying, so we had to use the census data and that was the main data point.

It is not just based on population out of the census data; we added some weighted categories. For example, for

high-needs groups. We added an age weighting, categories around socioeconomic need and status, around English

proficiency or lack thereof and a couple of other important categories. I can provide you all the details as you

wish, not to take up the time of the committee.

Senator SINGH: That would be good.

Mr Khalil: In short, we put all of the language groups out of the census data through that process. Obviously,

a number of new languages are now receiving hours where they did not in the past. A number of languages have

lost hours; that is partly because of the change in their demographics—they have obviously dropped in number

and they have lost a number of hours because of that. We have also tried to ensure that there is a minimum, if you

like, for the high-needs categories, particularly the ageing populations.

So I am aware that some of the language groups have lost hours. We are actually working with those

communities. We are doing a lot of community outreach to listen to their concerns and issues. I have met with a

number of the community leaders over the past several months and we are trying to address those concerns

internally within our management, and we are referring them to our board as well.

Senator SINGH: Okay. I can imagine that those who speak Malayalam and Punjabi would be pleased with

the increase. But I understand, as you have alluded to, that there were some ethnic groups that were not happy

with the changed network. The way you are dealing with that, obviously, is not by going back and changing your

network, is it?

I am thinking of the Maltese community in question. I understand that the Maltese high commissioner was

quite outspoken about it. They put out a press release about it. What do you do now? You have set your network,

and I understand it has been a very long time since any review has taken place. Eighteen years is a long time, and

multicultural Australia has changed a lot in those 18 years. I think it is a really good idea, and the fact that you

have those new languages is a really good thing as well—the fact that you have 74 in total is an incredible thing!

But how do you deal with those ethnic groups who are not happy in this change, like the Maltese, and addressing

their concerns?

Mr Khalil: It is a good question. Just to confirm the 16 languages: we have Malayalam, the southern Indian

language, Pashto, Hmong and three African languages as well—Tigrinya; Dinka, which is a southern Sudanese

language; and also Swahili, which is the lingua franca out of East Africa. They are all very much new

communities that have entered Australia more recently and that require those services.

We take our role in providing basic information services to new migrants seriously; it helps with the settlement

process and it helps social cohesion as well. As to the language groups that have lost some of the hours; you

specifically mentioned the Maltese. I have met with the high commissioner on a number of occasions. I have met

with many of the Maltese community leaders in Sydney and Melbourne—I have not quite got out to Brisbane and

some of the other capitals yet, but I certainly have met all of the community leaders.

You ask how we are addressing this issue? Obviously, we cannot be subjective about this; we cannot go back

and change the rules for particular groups because they make the loudest complaints, for example. But when there

are genuine concerns that are raised by communities such as the Maltese around their ageing population and

around their access to other language services, we are taking that very, very seriously. We have a limited budget,

so we are trying to provide services for as many language groups as we can. We would love to get more funds for

radio—that would be a great thing. But we have a limited budget and we have to work within that and be as fair

as possible.

So, to answer your question: we have met with those community leaders. I made a commitment and the

managing director—I briefed the managing director on those meetings—made a commitment to go to the board in

December and discuss their issues, which we have done. The board has asked management to go away and work

on some options to address some of their issues that were raised. We are going back to the board again with some

of those options in late February and then, hopefully, will be able to get out to the community just after that board

meeting with some of our options. We will not be popping the champagne corks, obviously, but we hope we can

provide some satisfaction.

Senator SINGH: Right. This is in part a budget issue for this particular community, at least. At the moment

you are going through a new training or funding agreement; would that be for the next budget?

Mr Khalil: That is right. We are in the middle of a triennial funding agreement. I am not saying that we make

these decisions based on that, but we are mindful of that. I am just stating the obvious that we have a limited



budget on radio and we have to try to fit in 74 languages. No language group has lost the program. Some

language groups have had their number of hours a week cut.

Senator SINGH: But you will be making these kinds of considerations in your budget submission no doubt

on all the needs of SBS going forward meeting your charter.

Mr Khalil: That is right.

Senator SINGH: The documentary Go Back to Where You Came From obviously has been given quite a lot

of accolades, and rightly so, in its broad appeal. Do you know how broad that has gone beyond the TV; how it is

used as a tool for educational purposes, for example, in Australia now?

Mr Khalil: That is a very good question. In fact, part of what we do around these national interest programs

like Go Back involves community engagement or a community outreach element. That does include educational

materials for various high schools and schools around Australia. We had an entire program around that with

regard to Go Back and it has been used in various parts of the educational process around these issues for students

around Australia. I can provide you with quite a bit of detail around our community outreach program. We do

have a very extensive one. There is also a social media element. Obviously there are different student bodies,

NGOs and entities involved in discussions and forum around the program. We do not just broadcast the doco and

leave it at that; we take our responsibilities seriously around education and engagement with communities around

these very important issues because it provokes debate, opens up debate and is actually a useful educational tool

as well.

Senator SINGH: I presume that ensures that students, younger Australians learn or at least are challenged

beyond what they see on the news, in the newspaper, through social media or wherever they are getting their

information. It actually challenges some of their ideas and beliefs about those types of issues. Is that the main

point in SBS getting that educational material out there?

Mr Khalil: Obviously documentaries like Go Back cover very complex issues that are discussed in national

debate sometimes in a very provocative way and sometimes with a lack of facts, if you like. It is important we use

material like that and content like that to help inform a more reasoned debate and have students really think

through the issues in a more complex way rather than just reverting to extreme positions. Things are very

complex. We are not taking any sides but we are opening up the opportunity for students to learn about this issue

in a more complex way rather than just have a knee-jerk reaction. We think that fits into our charter obligations as

much as anything else.

Senator SINGH: I agree.

Senator BILYK: I want to ask about NITV and the launch of NITV. How is that all going and how does it

help SBS to deliver it charter obligations?

Mr Khalil: Thank you for the question. As I mentioned in my opening statement, we see this channel as really

a vital component in delivering on our charter obligations and contributing to a cohesive society. With NITV as

part of SBS we were really trying to reflect Australia's true diversity, pretty much like no other broadcaster has

done before. I think it is unique and special.

The SBS charter is largely focused on contributing to social cohesion and promoting social cohesion. Through

NITV we will be able to do that in two core ways. Firstly, we will be able to significantly expand the number of

Indigenous Australians who can learn about their own history, their traditions and their stories. Importantly, they

can see themselves reflected on the television screen. This is a big part of it. My own story is like that too. I

remember seeing George Donikian reading the news when I was a little kid. I could see multicultural Australia

there and I felt part of my country. So Indigenous people seeing themselves reflected on the screen in a positive

way is tremendously important.

Secondly, it also brings stories of Aboriginal and Torres Strait Islanders to a wider Australian audience. I think

that is really important as well. We can contribute to reconciliation through this and it helps break down the

barriers between communities.

There are a lot of positive stories to tell in the Indigenous community and often the wider Australian

community does not get to see that, so they are very important reasons.

We also think that this channel can maintain Indigenous culture for future generations. It is an important tool

today that and it will also allow a window for non-Indigenous people in Australia to better understand those

different Indigenous cultures—and I say that in the plural because it is not just one culture; there are so many

different Indigenous cultures.



We have a vision for the channel, and I think it is an important one. We want to make it successful; we have all

got an interest in ensuring it succeeds. We have done a bit of survey work on NITV while it was on pay TV

before it went free to air and it had already generated a fair bit of interest in non-Indigenous Australians, largely

around the sport offering—people love watching barefoot footy and barefoot sports, which is fantastic, up in the

Territory and the outback. We are trying to extend that interest more broadly and have the wider Australian

community engage and understand different Indigenous cultures.

Now that we are taking it from the 30 per cent of homes to every Australian home with television, we can

really build on the NITV reputation. That is really important got non-Indigenous viewers. We hope that in five

years time we would really love to see NITV making a real mark on the television landscape and cementing its

position in Australian broadcasting by shining a new light on these Indigenous culture and making these stories

accessible to all Australians. As I mentioned in my opening statement, in the first month we have had just over

2.7 million viewers, which is a fantastic result already.

Just on the launch, I think you referred to the launch—

Senator BILYK: Yes, I did.

Mr Khalil: it was very successful. We had it on the 12th of the 12th of the 12th in the heart of the nation at

Uluru. There was a live broadcast that went to 95 per cent of households in Australia and also overseas. It was

broadcast live in New Zealand through Maori TV network and there was a lot of enthusiastic response over there

as well. From Uluru, in this particularly remote location, NITV was able to broadcast several hours of live

production, including a concert with some great Indigenous talent. As I said earlier, we heard Minister Conroy

and Minister Macklin as well as other members of parliament from the other side of politics—I think there were a

couple of senators from the Northern Territory. We had it simulcast on radio.

It was a great launch. It gave national exposure to the new network and it was something that was embraced by

the local Mutitjulu community as well, so we were very pleased with the day.

Senator BILYK: I do not get much chance to watch television but I have had it on when I was at home. It

seems that there is a broad variety of things being shown. I saw an animation one day, part of a concert another

day and another show another day. I think that is really helpful. How many hours a day do they broadcast?

Mr Khalil: I think it is now 24 hours. There might be some repeat hours on various programs. You have

touched on one of the problems that it had in the past: because it was being funded hand to mouth year on year,

they could not really do any forward planning. When you are in TV, you have got to plan your programming in

the out years because you have got a have a bit of a pipeline and a slate. Now that they are part of SBS and have

that certainty in their position, they can really start to plan ahead and there are fewer repeat hours of content—you

are not repeating the same thing again and again. The variety even in the first couple of months is fantastic on that

front.

You mentioned animation, NITV has some award winning children's television too: Yuendumu Kids and other

programs. I was referring earlier to the Indigenous people seeing their reflection on TV: having kids see positive

role models in children's programs is critically important for their development. We are proud of that element of

NITV.

Senator BILYK: As an aside, does SBS have a production unit? How will the shows be made?

Mr Khalil: For example, a lot of content is commissioned and you cannot really commission Australian

Indigenous content outside of Australia, so you have got to work with the Indigenous production centres in all

parts of Australia, and we do that. Some of the programs are produced in-house, so the news and current affairs—

NITV news, which is a great news service with the team there—is produced as part of our news operation. Living

Black which is an SBS program that has been on air for almost 14 or 15 years is also produced in-house, but much

of the content is commissioned content, working with local producers. We are trying to reach out to remote and

regional areas as well to tell those stories.

Senator BILYK: So it should help with some employment hopefully.

Mr Khalil: That is a big aspect of it. We had a visit to most of the remote and regional areas in the Territory,

Western Australia and northern Queensland to talk to local production sector and let them know that NITV is

starting to think through the future of how it produces content. That is starting to happen now. We are engaging

with production companies, creating employment in those regional and remote areas. That is a great spin-off,

obviously, of NITV for those communities.



Australian Communications and Media Authority

[17:15]

CHAIR: Welcome. Mr Chapman, would you like to make an opening statement?

Mr Chapman: Thank you. I will not. I just wanted to indicate that, as per our usual practice, I am here with

my deputy chairman Richard Bean and the senior management team. I think from previous practice you and your

members would appreciate that we cover such a diversity of matters that I like to have the senior executive

responsible. So often questions will be asked of me and the general managers will take their cue from there.

Senator BIRMINGHAM: Today you have issued a statement regarding ACMA's view of the election period

definition in the Broadcasting Services Act. When did ACMA finalise that view?

Mr Chapman: I think the view of the ACMA arises out of advices we received last Wednesday evening, as I

recall. I may be out by a day but indicatively it was last Wednesday.

Senator BIRMINGHAM: You used a plural description of advice there.

Mr Chapman: I used it incorrectly. I am sorry. It was the advice we received.

Senator BIRMINGHAM: From whom did the ACMA receive its advice?

Mr Chapman: The advice was provided to us by the department.

Senator BIRMINGHAM: The advice took the form of legal advice that had been provided to government?

Mr Chapman: That is correct.

Senator BIRMINGHAM: Was the legal advice provided within the department or elsewhere?

Senator Conroy: Could you just clarify that question?

Senator BIRMINGHAM: Was the legal advice provided by the department's in-house lawyers or from

elsewhere?

Mr Chapman: It was provided by external lawyers to the department.

Senator BIRMINGHAM: Are you able to advise the committee as to which firm or who that external lawyer

is?

Mr Chapman: It was the Australian Government Solicitor.

Senator BIRMINGHAM: When was that advice provided to government?

Senator Conroy: Are you asking me now?

Senator BIRMINGHAM: I am happy for whoever makes an answer.

Senator Conroy: Mr Chapman would know when it was provided to government. That was what I was trying

to clarify. I am happy to ask the departmental officials to say exactly when it was received. I would not want you

to get the wrong date. It was sometime last week but I am happy to get you the exact date. I just do not know if

off the top of my head.

Senator BIRMINGHAM: If they could, thanks.

Senator Conroy: If anyone is watching, and I am sure they are.

Senator BIRMINGHAM: Hopefully, indeed. Mr Chapman, had the ACMA asked for this advice?

Mr Chapman: The ACMA and the department have an iterative discussion about all matters of legislation. It

is my recollection that there was discussion at the end of the week before. The department indicated that they

were seeking advice; we indicated that we would wait until that advice was provided. That advice was provided, I

think, last Wednesday afternoon.

Senator Conroy: I think we got a message from Mr Harris at Wednesday lunchtime.

Senator BIRMINGHAM: Right. So, the department received advice from the AGS on Wednesday and

transmitted it to ACMA on the same day. It is now Tuesday of this week. Why did it take nearly a week for

ACMA to digest that advice and issue the public statement that has been made today?

Mr Chapman: Last Wednesday, for example, we had an authority strategy session; we were in conference

with Communications Compliance. On Thursday we had an authority meeting—we needed to consider the

advice. We have considered the advice, and I issued a guidance note today, which essentially was as helpful a

guidance note as I could provide in the circumstances without waiving privilege on the advice. I think the short

answer to your question is—



Senator Conroy: Not everybody is breathlessly hanging on it, as you are. Common sense is applied to the rest

of the country, but not to the opposition.

Mr Chapman: It took me a day or two to work my way through the advice, and to work my way through the

way in which I would provide that guidance to the market. It is Tuesday and, to me, in the circumstances that is

not an inordinate period of time. It was done in a measured way; it was not a rush to get it out. I issued it this

afternoon.

Senator BIRMINGHAM: Did ACMA have any communication from media companies or the representative

organisations of media companies seeking ACMA's opinion on the definition of the election period since the

Prime Minister's speech to the National Press Club on 30 January?

Mr Chapman: There was some interaction between officers of Free TV Australia and maybe CRA—which is

Commercial Radio Australia—at the end of the week before. Clearly, we were comparing notes about the issue

you are discussing with me.

Senator BIRMINGHAM: So that was around Friday, 1 February or thereabouts, in the day or two after the

Prime Minister's speech. That would be the end of the week before?

Mr Chapman: That is correct.

Senator BIRMINGHAM: Did ACMA provide any response to those queries from Free TV or Commercial

Radio Australia prior to its public statement being issued today?

Mr Chapman: I believe that we initially indicated a preliminary assessment that the election period may have

commenced under the BSA—the Broadcasting Services Act—but it was not a definitive view, and it was without

the benefit of the legal advice that we have discussed.

Senator BIRMINGHAM: Thank you. When was this indicative view of the ACMA provided to Free TV and

Commercial Radio Australia?

Mr Chapman: It would probably have been at the end of that previous week, the Thursday or Friday,

probably the Friday—Friday the 1st.

Senator BIRMINGHAM: Around about Friday, 1 February. Did ACMA provide any further indication to

Free TV or Commercial Radio Australia in the subsequent week and a half leading up to today that the ACMA

was seeking legal advice or that the government was seeking legal advice on the matter?

Ms McNeill: The answer to your question is that we did have discussions with CRA on Friday evening, I

think—the evening of Friday the 1st—indicating that, notwithstanding our earlier preliminary view, the matter

was going to receive closer consideration and we would get back to them.

Senator BIRMINGHAM: What, during the course of that day, had caused ACMA to determine that it was

going to require closer consideration?

Mr Chapman: Through our iterative discussions between my officers and the department's officers, the

department indicated to us that they were going to seek legal advice.

Senator BIRMINGHAM: Minister, can you confirm that is also around the same time, I think we assessed

earlier, that you and Mr Harris had discussions?

Senator Conroy: Mr Harris, we might need to clear that up.

Mr Harris: I have the time line. Should we go to it now?

Senator Conroy: It is germane to this answer.

Mr Harris: From consulting diaries and looking at the dates of press articles and things like that, the position

is roughly that on the Friday the 1st I first heard about this matter as an issue. I heard about it from Ms

O'Loughlin, a deputy secretary of the department, who had had a discussion with Free TV, who had indicated that

they had a view on this. As I think I said earlier, my initial inclination was not to try and settle this as a sort of

legal issue. But I read the article in the newspaper on the Saturday morning, in the Australian. The article quoted

somebody else's legal advice that I assume Free TV had received. It was in the article. It made it look therefore

more like it was going to require a legal opinion.

I sought a meeting with the minister on the Monday following that, but the minister was engaged in a caucus

vote—

Senator Conroy: I might have been fractionally distracted this particular weekend, Senator Birmingham.

Mr Harris: I was unable to access him on the Monday and we met on the Tuesday morning, where I asked

him had he got the copy of this letter that had been referred to in the media articles, because that would clarify for



me what the Free TV view was—I thought that it might assert a position which was capable potentially of

analysis at what I call a policy level rather than a legal level. The minister did not have the letter.

It was not in the discussion with the minister but it was subsequently confirmed later that day that we should

get legal advice. So we asked for legal advice from the Australian Government Solicitor and received that at

around one o'clock on the Wednesday and sent it on to the ACMA I guess later that day, although I did hear the

chairman say perhaps early next day, but around that time frame. Quite clearly by that stage it had become

enough of an issue of public notoriety that a view had to be expressed and that view would have to be definitive

as to the interpretation of the legislation. The definitive party we tend to use to interpret legislation is the

Australian Government Solicitor.

Senator BIRMINGHAM: Mr Harris, I invite you to go away and perhaps come back to us later, if possible

later today or this evening, with regard to this letter that you keep referring to that may have been mentioned in

newspaper articles. I have to say from my review of newspaper articles since you mentioned this earlier today the

first reference to a letter I can find is in today's media, certainly not the story of 2 February that was released on

that Saturday. There was talk about legal opinion and certainly there is the media law partner at Corrs Chambers

Westgarth quoted on that Saturday indicating that, for the purpose of the Broadcasting Services Act obligations,

the election period started with the public announcement. Certainly, there are opinions expressed by Commercial

Radio Australia and there is subsequent opinion from a partner with Banki Haddock Fiora:

It seems to be fairly plain on the face of it that the election period has commenced. I don't think there's any ambiguity when

you look back at the Prime Minister's words.

Indeed, there was other legal opinion expressed by Johnson Winter & Slattery partner, Mark O'Brien, that his

interpretation of the act was that the election period had begun. There seemed to be plenty of legal commentary

during the week; today is the first day I have seen a reference to a letter from any of the organisations.

Mr Harris: Yes, that is right. But as I referred to an hour and half ago, I was putting a number of things

together, and you asked me to do a time line. I have not yet clarified that, but if that is of particular interest to you,

Ms O'Loughlin told me on the Friday night that from her discussion with Free TV either that there was a letter or

there was going to be a letter. And you can see my logic from that is I have not seen a letter, and the person to

whom Free TV would normally write—if it were a letter saying, 'We believe we have a legal interpretation'—

would be the minister, which is why I wanted to ask him if he had a letter. But, as has subsequently been

explained to me, it was a letter from Free TV to its partner organisations—

Senator BIRMINGHAM: Member organisations.

Mr Harris: Member organisations. I only mentioned the letter because I was trying to put in sequence why it

was I would seek the view of the minister immediately, because I would not normally ring him about something

that was just running in the media. But I thought the letter would create clarity as to why Free TV had a particular

view. I am not saying one way or another, because I am not a lawyer and over many, many years I have learned

never to give myself legal advice because I am almost always wrong. But I wanted to see the letter.

As it turned out, the letter is not the most pivotal thing as I understand it. That was the sequence of events that I

was explaining earlier. Ms O'Loughlin was the source of the advice to me, and it was in the same time frame as

when I was looking at the newspaper articles.

Senator BIRMINGHAM: Back to Mr Chapman and ACMA. On that Friday after receiving calls from Free

TV and Commercial Radio Australia, and indicating to them that your initial and indicative opinion was that the

election period had been triggered, did ACMA then make contact with the department—and perhaps Ms

O'Loughlin in particular—to inform them of this contact that had been had and to seek their opinion, or simply

inform them? How did the communication between ACMA and the department come about that then caused

ACMA to think that perhaps there might be some legal advice on the way? As it turns out, the department did not

make any firm decisions to seek advice until Tuesday the following week.

Ms McNeill: If I can clarify: on the Friday we were not contacted by the broadcaster groups. Rather, we

initiated contact with the broadcaster groups to give them a heads-up that there might be an issue around the

election period. It is my understanding that Free TV had itself formed a preliminary view that the election period

provisions may have been activated. I do not know if that was a view that CRA shared—at least at that point.

I just wanted to correct that we were not having our doors knocked down by the broadcaster groups seeking

clarification; we contacted them to give them a bit of a heads-up. We had some earlier contact in the course of the

day with departmental officers on the issue and they came back to us subsequent to our contact with the

broadcaster groups, indicating that the matter was a matter of more complexity than it may initially have

appeared.



Senator BIRMINGHAM: ACMA took the likelihood that the election period had been triggered seriously

enough to take the proactive step of contacting the representatives of commercial television and radio

organisations?

Ms McNeill: We thought it was appropriate to give a heads up that the issue could be in play, yes.

Senator BIRMINGHAM: I just read through several senior legal opinions that were expressed publicly

during the week. We now all know that Free TV Australia have written a letter—the mysterious letter from

discussions with Mr Harris—confirming that their opinion was that the election period had been triggered. Will

the government give consideration to releasing the legal advice upon which this decision has been made?

Mr Chapman: The advice was sought by the government. It was provided to the ACMA under privilege. It is

not our gift to waive that privilege, so that is a matter that you need to take up with the government.

Senator BIRMINGHAM: Minister? Do you think it might be beneficial, given the number of contrary

opinions that have been expressed, for the government simply to clear this up?

Senator Conroy: I think I have indicated publicly that, as is normal, we will not be releasing our legal advice.

Senator BIRMINGHAM: On this occasion it is not like there is anything that is commercially sensitive about

this legal advice. Government does often release legal advice when it suits it to clear up matters of interpretation.

Senator Conroy: The government does not 'often' release legal advice. Your previous government did not, the

one before that did not and this one does not—regularly.

Senator BIRMINGHAM: When it suits the government, it does. Indeed, in one of my areas of portfolio

responsibility I can cite Minister Burke releasing some legal advice relating to the interpretation of the Water Act

only in the last year or two.

Senator Conroy: I saw you got a promotion in the paper! You are the shadow communications spokesman, I

read. Ah—have you told Malcolm? Does Malcolm know this?

Senator BIRMINGHAM: Given there is nothing commercially sensitive, I would have thought, about the

advice received by government on this matter, why will the government not release this advice and settle it once

and for all? It is not unprecedented to release advice.

Senator Conroy: We are not in the habit—or practice, despite your attempt to claim that we are—of releasing

legal advice. And we are not going to—

Senator BIRMINGHAM: There are precedents, though, Minister.

Senator Conroy: No, you used the word 'regularly', and I am simply reiterating the point that that is not an

accurate statement, and we do not intend to release the advice in this circumstance.

Senator BIRMINGHAM: What does the government have to hide on this one?

Senator Conroy: Nothing.

Senator BIRMINGHAM: What are the grounds for not releasing this advice?

Senator Conroy: We are not hiding anything, but we do not make a practice of releasing legal advice. Now, if

there are examples—one or two—that you can point to, fine. But in this circumstance we are not, which is the

normal practice.

Senator BIRMINGHAM: Your own statutory authority's initial instinct was that the election period had been

triggered. And now numerous senior legal opinions have cited that the election period had been triggered. Surely,

the government is now going to say—

Senator Conroy: We have received—

Senator BIRMINGHAM: 'We stand by our position that it is not the case.' The government should back that

up with more than a statement—

Senator Conroy: No, we—

Senator BIRMINGHAM: and some secret advice.

Senator Conroy: We have received a legal advice, and that is the position we have taken. And we do not

intend to release it.

Senator BIRMINGHAM: Given the extent of opinions that were made by various legal experts in the field of

media law—

Senator Conroy: Having been tortured by one of the country's self-appointed foremost legal experts

yesterday, everybody is entitled to their legal opinion.



Senator BIRMINGHAM: Has the government considered—

Senator Conroy: Our legal advice does not agree with the ones you cite.

Senator BIRMINGHAM: Did the government seek any other opinions other than this piece of advice from

the AGS?

Senator Conroy: No, I do not believe so. I think the solicitor-general's was the legal advice that we sought

and received. Sorry: the Australian Government Solicitor—apologies.

Senator BIRMINGHAM: The AGS—thank you.

To the ACMA: what further discussions were had with CRA or Free TV Australia leading up to today's

announcement?

Ms McNeill: I telephoned representatives of both Free TV and CRA earlier today to communicate the

ACMA's position on the election period.

Senator BIRMINGHAM: Was there any communication during the course of last week subsequent to

ACMA's receipt of this advice and prior to today's announcement of the interpretation of that advice by the

ACMA?

Ms McNeill: There was no communication of a position. It may be that CRA did call up at one point or more

points—I am not sure how many times—and said: 'How is it going? Has the position been clarified yet?'

Senator BIRMINGHAM: Was there any contact with FreeTV, who obviously sought their own advice and

came to the opposite conclusion?

Ms McNeill: No.

Senator BILYK: Could you tell me how the fairly new online resource Zippep’s Astro Circus is progressing?

Ms Wright: We launched that program for five- to seven-year-olds last October. It has had good take-up. I do

not know if you were aware that it is the first program that we have released with an application, as well as having

it available in more standard delivery modes, and we are very pleased with the take-up because we think the five-

to seven-year-old audience is one that attention is now being paid to as cyber usage is embraced by younger and

younger children. We are pleased to be in that space. We have used the circus theme and the circus paraphernalia

to communicate with that younger audience and it appears to be a very successful approach.

Senator BILYK: On that same note, was it Safer Internet Day last week?

Ms Wright: It was indeed.

Senator BILYK: What did ACMA do to mark the occasion?

Ms Wright: Yes, we were very aware that it was the 10th anniversary of Safer Internet Day and now 90

countries or more participate around the world. We launched a number of new products and lesson plans, but we

also sought, as is our wont, to engage using social media and various interactive activities because we find that

children and teenagers are often very comfortable in those spaces. One of the things that we had, which we are

very proud of, was a virtual classroom. We had one of those a year ago on Safer Internet Day. We had 3,200

students at that time and we thought that was wonderful. You can imagine how we feel, having 243 schools

online and approaching 22,000 students in our virtual classroom.

Classroom responded particularly well to multichoice questions that the students discussed in groups and then

voted on what they thought the answer was. We used an interactive polling tool so that the moderators could

come back to the students in real time and let them know what the correct answers were. They used emoticons to

express how excited they were when they had the right answer and we got lots of great feedback when they were

leaving the classroom saying that they had learnt lots and had had lots of fun. The teachers and moderators said

that it was certainly the most extensive webinar that they had had and probably the most successful given its

interactive nature. We used a number of other interactive activities, too, with another couple of thousand students,

but we also had an internet streamed radio program, and I might turn our cyber ambassador, Richard Bean, who

was very active with that program, to give you a little more detail.

Senator BILYK: Just before Mr Bean tells us that, can you tell me what age group was the virtual classroom

targeted at, or what year group?

Ms Wright: Teenagers.

Senator BILYK: Teenagers, great. That is very important.

Mr Bean: The interactive cyber classroom was clearly a big highlight of the day, but we finished the day by

starting as the opening segment of an international radio program which we webcast. It was carried on from 5 pm



in Australia, hosted here by the ACMA, and we continued that program for three hours through to 8 pm, which

was a packed program with interviews with school students and international experts. We had interviews with, for

example, the Family Online Safety Institute in the United States, which is a kind of equivalent of the Cybersmart

program here, and with people in Britain and in New Zealand. At the end of our three hours, we handed over to

Childnet in the UK and the radio program continued from the UK for another 12 hours. We will be evaluating

that, of course, as we do with all of our activities, to see how well it went in terms of audience cut-through and so

on, but it was an interesting and exciting initiative for us on the 10th anniversary of Safer Internet Day. It will be

interesting to see. Of course, web streaming is a medium with which our target audience is comfortable and

familiar.

Senator BILYK: Was the type of audience for that teenagers once again?

Mr Bean: And parents. We had discussions with experts in adolescent development, for example. There was a

lot of material there of interest to parents—perhaps more so than material earlier in the day, which is of course

during the school day and targeted at students.

Senator BILYK: Thanks for that. Just quickly, can you tell me if there are any programs that have been

delivered specifically to Indigenous communities in regard to cybersafety.

Mr Bean: I might hand back to Ms Wright.

Ms Wright: Yes, we are aware that that is an area where there are special needs. The Indigenous youth

interacting at times with social media have not been the best mix. We were aware of that and we have been able

to conduct a pilot in the Indigenous community. We started off in Geraldton to look at the particular issues there

with a view to crafting specific resources for Indigenous communities. We engaged with members of the local

Indigenous communities and we trialled the types of resources that we use in our outreach programs. We were not

surprised to find that, while they liked the materials, they want those materials, as they said, with black faces.

Senator BILYK: What was that material? Was it similar to the virtual classroom type stuff, or was it more

short videos?

Ms Wright: What we did was to use our face-to-face. We had one of our senior Cybersmart Outreach trainers

conduct the sessions and interact with the communities with our advice tools, taking them through available

resources and listening to them answering their questions. I think it was very good two-way communication.

Senator BILYK: And that was done through schools?

Ms Wright: No, it was done through the Indigenous communities in regional areas that we had contact with. I

think Telstra also assisted in setting those up.

Senator BILYK: Okay. Great work.

Senator RONALDSON: Mr Chapman, for want of a better word, I know you are described as the chair, but I

presume you also effectively are the CEO, for want of another description. There is not a separate CEO, is there?

Mr Chapman: No. I am the chairman of the authority and the CEO of the agency.

Senator RONALDSON: Thank you. Has ACMA recently rebuilt or is it rebuilding its website?

Mr Chapman: It is in the throes of designing and commissioning a new website, yes.

Senator RONALDSON: You might want to take this on notice, but what contracts were or are in place

relating to any preliminary or ongoing development and design, and what are the contract ID numbers for these

contracts? Could you take that on notice.

Mr Chapman: Certainly.

Senator RONALDSON: How long would it take to get that information, do you think?

Mr Chapman: A day.

Senator RONALDSON: Thank you very much. Just out of interest, is there a dedicated SES position in

ACMA relating to this design and development of the website, or is it mainly tendered out?

Mr Chapman: There is an executive manager responsible for our media communications and stakeholder

engagement. Within that responsibility the new website is being designed, road tested, commissioned and

interfaced with the actual builder of the site.

Senator RONALDSON: So who in ACMA has oversight of these contracts?

Mr Chapman: Ultimately, as the CEO, I do.

Senator RONALDSON: But presumably you are not overseeing these contracts. Who within the organisation

is overseeing them?



Mr Chapman: Tom Burton is the executive manager whom I just referred to.

Senator RONALDSON: How long has Mr Burton been there for?

Mr Chapman: I would say about 2½ years.

Senator RONALDSON: Do you know if Mr Burton has any personal relationships with any contractors in

relation to the developing and design program that is going on?

Mr Chapman: There are none that I am aware of.

Senator RONALDSON: Would you necessarily know?

Mr Chapman: I wouldn't necessarily know, but I would be disappointed if that were the outcome, because I

have enormous faith in my management team to be very cognisant of the necessity to avoid conflicts of interest.

Senator RONALDSON: I am always reluctant to do this, but I have received an anonymous letter in relation

to nepotism within the organisation and I think I am duty bound to ask you these questions to clarify and to check

the veracity of the information. Were there any alterations to your office over the last two or three years?

Mr Chapman: Alterations to our office?

Senator RONALDSON: Your office.

Mr Chapman: Yes. You mean physical alterations?

Senator RONALDSON: Yes.

Senator Conroy: Normally, when you are trying to clarify an anonymous thing, you do not actually name the

officers involved.

Mr Chapman: We moved office in Sydney 18 months ago.

Senator RONALDSON: What were the alterations to your office?

Mr Chapman: My personal office?


Mr Chapman: We moved offices 18 months ago. We all moved into a new building.

Senator RONALDSON: Minister, I would have thought this was a bit serious, and you are guffawing over

there.

CHAIR: Senator Ronaldson, you should just ask questions.

Senator Conroy: Why don't you actually ask a question instead of running commentary?

Senator RONALDSON: In your office how many points of access are there?

Senator Conroy: In the old office or the new office?

Senator RONALDSON: The new office.

Senator Conroy: And you are talking about Mr Chapman's personal office?


Mr Chapman: There are two points of entry.

Senator RONALDSON: And were they both there when you moved office?

Mr Chapman: They were.

Senator RONALDSON: Okay. Was there one particular contractor who was given the bulk of the website

design, either preliminary or ongoing?

Mr Chapman: For the new building?

Senator RONALDSON: No, I am back to the website.

Mr Chapman: There is with regard to the development process one contractor who has had the lion's share of

the work, yes.

Senator RONALDSON: Who is that? I presume it will come up in the contracts anyway.

Mr Chapman: It is a chap called Eamon Akt through his company. I do not recall the name of his company.

Senator RONALDSON: Given your answer in relation to the points of entry into your personal office, I do

not intend pursuing this matter even further without some confidence that what information I have been given is

correct. I have another very quick question. There is a contract with KIT Digital Australia, formerly Hyro

Australia. Is anyone aware of this contract?

Mr Chapman: Relating to what?



Senator RONALDSON: They have gone into administration. KIT Australia does not ring a bell with anyone?

Senator Conroy: What was the name?

Senator RONALDSON: KIT Australia, formerly Hyro.

Mr Chapman: We have about 160,000 stakeholders, licensees—

Senator RONALDSON: This is contract CN441776, which was amended by CN441776-A2. It was for

components for information technology or broadcasting or telecommunications. Does anyone have any

knowledge of this at all?

Mr Chapman: Such as?

Senator RONALDSON: There is no-one in this office who can access the contracts?

Mr Chapman: We have 160,000-odd licensees, customers, consumers, stakeholders—

Senator RONALDSON: I am surprised that there is no-one here who can answer the question, given that KIT

went into administration.

Mr Chapman: You are surprised at what, Senator?

Senator RONALDSON: That there is not someone who is able to access this contract information.

Senator Conroy: I think that is a little unfair. You have a range of officers here. Most of the key officers—I

am not being unkind to anyone who is not sitting at the table—are here. If none of the officers have information,

they are happy to take it on notice and find out for you.

Senator RONALDSON: In many other committees those contract details are available. If they are not

available—

Senator Conroy: They are just unknown at this point of time.

Senator RONALDSON: If you are going to take it on notice, that is fine. But can ACMA confirm that it has

a contract with KIT Digital Australia, formerly Hyro Australia Ltd, for $276,200, between September 2011 and

19 September 2014? Can you detail what that contract related to. Are you aware that that company has now gone

into administration? Can you ascertain for me why the original contract with Hyro Australia was for 12 months—

Hyro became KIT Digital—and it was extended to 2014. Can you tell me what parts of the contract KIT Digital

have so far performed? Can the contract be completed with a new provider and, if so, who? Can you ascertain

what the cost to ACMA will be of this company going into administration?

Mr Chapman: So taken on notice.

CHAIR: I would like to ask you about digital radio and receiving digital radio in the Sydney metropolitan and

surrounding areas. The capacity to access digital audio is a bit spasmodic, is it not?

Mr Chapman: Mr Tanner, as part of his division, Digital Transition Division, has responsibility for planning

for digital radio, so I will ask Mr Tanner to address that.

Mr Tanner: There are some difficulties with the Sydney and with some of the other metro multiplexes in

terms of matching the coverage of FM radio. I guess that is the criterion for a VHF service. A pretty major cause

for this is that digital radio is still sharing spectrum with television and so there has been a necessity to operate the

power in certain directions at a slightly lower level than might be optimum in terms of serving the city. There are

also other geographical reasons why you get black spots to do with the hilliness of the terrain.

We are aware that there are some black spot problems in Sydney. I do not have on hand a list of sites, but I can

assure you that we have been working closely with the radio industry over the last year on a program which

should see a number of what are called on-channel repeaters introduced. This is a concept that the radio industry,

with ACMA's full cooperation, has been trialling in a black spot area in Melbourne. I am aware that the industry

are in negotiations to have a much larger rollout of on-channel repeaters to fix black spots. So, yes, we are aware

of the issue. For that reason we are working closely with the radio industry on on-channel repeater solutions.

CHAIR: I am not sure if you can access it, but you have got a map on your website. Are you aware of that

map that shows the spread of the digital radio?

Mr Tanner: Not offhand. I have not looked at that map for a long time.

CHAIR: It looks to me as is if after you leave the Sydney metropolitan area it becomes really patchy in terms

of whether you can access it. For instance, if I am reading this map correctly, areas like Richmond, Wilberforce,

Windsor, Mulgoa, Luddenham and Horsley Park—very heavy populated areas—do not have access to digital

radio.

Mr Tanner: I would have to take the particular sites on notice. I apologise.



CHAIR: I may not be reading the map properly at all. It is a 2010 map. The legend does not give me a clear

understanding that if the colour I am looking at is for the penetration of digital radio. If it is, there is still a

problem. I am not sure whether it has improved since 2010. Are there any plans for repeater stations or booster

stations in areas outside of the Sydney metropolitan area?

Mr Tanner: We are working with the radio industry on a number of on-channel repeater proposals for Sydney

and for other metropolitan areas. I do not have in memory a list of all of the sites in the Sydney area, but that is

certainly the most immediate initiative that we are working with the radio industry on. In some areas there may be

scope to boost the power in directions of digital radio multiplexes, the main transmitters, as we progressively see

the clearance of analog television services and the restack of digital services. One of the benefits of this for radio

is that we will see television channel 9 and television channel 9A progressively cleared of all services other than

digital radio. Hopefully, in the medium term that will open the door to some increases of power in particular

directions. I would have to take the specifics on notice. I do apologise for that. I was not prepared for that line of

questioning and the sorts of detailed answers that you want.

CHAIR: It is my fault. Maybe I should have alerted you that I wanted to go down this path. In the lower Blue

Mountains, for instance, the digital television signal is pretty good—you pick up Wollongong stations and all

Sydney stations—yet if you move a couple of metres one way or the other you can lose digital radio. Why is that?

Mr Tanner: You are not comparing like with like. Although they are both related digital technologies and

although they both use a similar part of the radio frequency spectrum, radio is a very robust signal designed for

reception in a mobile as well as a fixed environment, so there are somewhat different planning criteria that apply.

I would be quite interested to unpick where you are coming from about the kinds of radio reception you are

actually talking about.

In order to get good television reception you typically need a fixed antenna a certain number of metres above

the ground, usually on a roof top or on a chimney and that is pointed directly at the receiver. You are going to get

reliable reception once you invest in that. With radio you are down on the ground. You are in your room with a

clock radio, you are in your car driving about the streets. If the signal is patchy, you are going to experience

problems, either because the signal is not getting into the building or because your receiver is moving about. The

short answer is you are not comparing like with like.

CHAIR: Could you take on notice then as to whether the Windsor-Blue Mountains area will achieve boosters

to improve digital radio reception?

Mr Tanner: We will certainly look at that question. I should make the point that digital radio has only been

licensed for operation in the metropolitan licence area, so to the extent that the Blue Mountains is in different

radio licence areas the issue may simply be that we have not commence digital radio there. Certainly some of

those areas that you have named are within the Sydney licence area. We will take the question on notice and give

you detailed answers.

CHAIR: A linked question to that is: could you also advise us what the priorities are for putting booster

stations into place? How do you make the determination as to who will get access to booster stations and what

areas?

Mr Tanner: I will give you a more detailed answer on notice. What I can tell you here is that we work closely

with the radio industry on this. Ultimately it is the radio industry's willingness to pay to install boosters, as well as

the feasibility, that determines where they are put in because the radio industry itself and not the ACMA needs to

pay for this. Digital radio is a multiplex medium where you have national, commercial and community licensees

all together. The industry is in the somewhat new situation of having to negotiate how it proceeds en bloc. Those

negotiations have been proceeding with as much help as we can offer them over the last year.

Senator BIRMINGHAM: Who does your consumer alert issues?

Ms Cahill: Is this in the telecommunications space?

CHAIR: I am talking about SMS spam.

Ms Cahill: That would be my division in conjunction with the communications team, I think.

CHAIR: Can you take us to some of the issues that consumers should be concerned about in relation to SMS

spam?

Ms McNeill: It is not necessarily widely appreciated that you can be SMS spanned rather than simply emailed

spammed. I think have flagged before this committee previously that because of our work in relation to the Do

Not Call Register and in spam that we often have early visibility of scams that might be going around. There is a



need for consumers to be alert to that possibility and they should also beware of the facility to report SMS spam

to us.

CHAIR: Once it is reported to you, what action do you take to alert consumers?

Ms McNeill: If we are seeing a pattern of conduct that suggests the existence of a scam we will sometimes

release a specific consumer alert dealing with that subject. If we are seeing a pattern of behaviour from a trader,

we have an approach to compliance with the spam obligations which sees us first engaged by sending an informal

advisory letter. Then if we continue to see spam reports about a particular trader, we will escalate through to

formal processes if necessary. We find, typically, that informal advisory letters generally cause behavioural

change. It is in the order of 60 or 70 per cent of instances where we send advisory letters that we do not see

traders repeating their behaviour.

CHAIR: Who can help me with the Bytecard decision in the Federal Court?

Ms McNeill: I hope to be able to do that.

CHAIR: Can you just briefly take me to the key issues that ACMA were involved in in this?

Ms McNeill: That Federal Court case and outcome represents the pointier end of our approach to

telecommunications consumer issues. You would be aware that companies providing telecommunications

services to consumers and small business are obliged to be members of the Telecommunications Industry

Ombudsman's Scheme, and they are obliged to comply with determinations made by the Telecommunications

Industry Ombudsman on disputes.

The Bytecard matter concerned a trader, Bytecard, which had failed, firstly to comply with determinations

made by the Telecommunications Industry Ombudsman, and which subsequently failed to comply with directions

that the ACMA had given it to comply with those TIO determinations. And so it was that the TIO commenced the

Federal Court proceedings that you referred to against Bytecard and its principal. We welcomed the decision

handed down very recently, which imposed penalties on Bytecard and the principal of the company for their

failures.

CHAIR: The Federal Court decision was to award $75,000 in penalties against the company, and $37,500

against its director. Was this a big company?

Ms McNeill: The company is a modestly sized company.

CHAIR: What sort of turnover do they have—do you have any idea?

Ms McNeill: I do not have the information to hand.

CHAIR: Could you take that on notice, because I would be interested to know what the size of the penalties

against both the company and the director are in relation to turnover. I suppose if it were a Telstra-sized company

then $75,000 is not a lot of money, but for a small company it could be quite a significant penalty. I am just trying

to get my head around what these Federal Court penalties are.

Ms McNeill: Yes, the size of the entity is a matter that the court has regard to. But you will remember from

the judgement that it was also extremely important to send a message of general deterrence, because compliance

with the scheme and the obligations in the scheme ought not to be optional. This was a case where the company

involved had failed to comply with several determinations made by the Telecommunications Industry

Ombudsman and had failed to comply with several directions given by the ACMA over a period of time.

CHAIR: One of the issues that ACMA has been involved in is the program called Reconnecting the

Customer.

Ms McNeill: Yes.

CHAIR: I have to say that there is one thing that most people you talk to are utterly confused about, and that

is the number and scope of packages that are offered by mobile telephone companies. Is this part of trying to deal

with that?

Ms McNeill: One of the key planks to the Reconnecting the Customer initiative was the inquiry that the

ACMA conducted between 2011 and 2012—it may actually have kicked off in 2010. One of the matters of

particular interest to the ACMA was customer confusion—that it was not always clear to customers who were

signing up for particular plans what the nature of the technical product was that they were getting, and what the

details of the plans might have been. We noted that there was a very significant cost involved to Australian

consumers and to the economy in making the wrong choice.

Following on from that inquiry, changes have been made to the industry's Telecommunications Consumer

Protection Code. In March this year, a requirement to provide a critical information statement to customers will



come into effect, and we are optimistic that it will assist consumers to understand the key matters that their

contract deals with and that it will also assist consumers to compare offerings across different carriers.

CHAIR: When will we have some finality to this approach that you are taking?

Ms McNeill: You will see that the critical information statements are required to be in the market from 1

March. But we have already seen some providers introduce this kind of disclosure material, and it does seem to us

to be very helpful.

CHAIR: I thank ACMA for your evidence tonight. That concludes the time we have for evidence from you.

We will now break until 7.15 pm and will return with program 1.3—broadcasting and digital television.


CHAIR: I now call officers from the department in relation to program 1.3, broadcasting and digital

television. Senator Birmingham.

Senator BIRMINGHAM: I have a question following on from where I was a little earlier. Based on the legal

advice the government has received, when does the election period commence?

Mr Harris: One element of the legislation is the issuing of the writs. The other is the question of the election

period. So it is one or the other.

Senator Conroy: I thought the discussion was three months prior to the 14th according to convention.

Mr Harris: Yes, but that is also not relevant.

Senator BIRMINGHAM: The election period as defined by the Broadcasting Services Act.

Mr Harris: The answer to your question is, in our view, when there is a formal approach to the Governor-

General.

Senator BIRMINGHAM: Or the issuing of the writs.

Mr Harris: Or the issuing of the writs.

Senator BIRMINGHAM: Thank you for clarifying that.

I go to some issues around digital switchover. Is the government aware of problems that residents in the Hunter

region appear to be experiencing with the digital switchover with what I understand is described as 'atmospheric

ducting' causing many residents not to have any access to digital television?

Senator Conroy: Unfortunately, the parliament has not moved into the digital century yet. I was hoping to be

able to demonstrate some slides on a screen for you, but the committee felt that standing orders would be

breached if we introduced 21st-century technology into a Senate committee!

Senator BIRMINGHAM: I'm sure in a future life we can appoint you to the procedures committee!

Senator Conroy: I am sure we will get some attempt to move into the 21st century in my lifetime in

parliament.

Ms O'Loughlin: Yes, we are aware of the issues in the Hunter. The Hunter has had particular issues with its

broadcasting reception for many years. This in the analog world would have been evident to people living in that

area through analog ghosting or snow which would have diminished the viewing quality for people in that area,

but it was probably not as disruptive as digital, where some of that interference will result in pixelation and

bluescreens where people will lose their channel. It has been a feature of the landscape in the Hunter for many

years. It is a particular atmospheric phenomenon called ducting that usually happens over the summer months

when there is clear and very still weather. I am not an engineer, but I shall describe what happens in those

circumstances. The signal from the Illawarra, which is operating on the same channel, bounces right across

Sydney and up to the Hunter, where it will interfere with the local signals because they are on the same channel.

Yes, we are aware of it. We are aware that this year has been particularly bad in terms of ducting and it is

exacerbated by the fact that people now have converted to digital and they are getting pixelation and bluescreen,

which they are not used to and which is of course much more disruptive for them. We are in active discussions

with the broadcasters and the ACMA. The ACMA will be in the area in the week beginning 18 February to do

some testing. We have a joint meeting tomorrow afternoon with the broadcasters and the ACMA to discuss the

issues further and to see if there is any further advice we can provide to the local community or any longer term

solutions that we can look at.

Senator BIRMINGHAM: In terms of the testing that is being undertaken next week, you must have some

idea, then, what options might be undertaken to try to give the local community a service that is, as has been

promised, as good as the analog signal they previously received.



Ms O'Loughlin: It is actually not clear to us at this stage what the long-term solution would be. Part of what

we will be doing with testing—as we normally do with testing—is not just to look at the transmission issues in the

area but also to look at the reception issues in the area. The broadcasters have established a couple of new gap

fillers in that area to try to address this problem, so we also want to make sure the local community have their

antennas set up appropriate to that local antenna rather than where they might have been getting things previously.

So it is looking at transmission issues but also looking at the experience of people on the ground, what their

antenna set up is and whether they have maximised that for the local gap fillers.

Senator BIRMINGHAM: Has the establishment of those local gap fillers been at the expense of the

broadcasters?

Ms O'Loughlin: Yes.

Senator BIRMINGHAM: Was the government aware of these difficulties before the switchover occurred in

the Hunter region?

Ms O'Loughlin: We at the ACMA have been aware for many years.

Senator Conroy: This is not a new problem. I think we have identified that it is a pre-existing problem that

engineers are looking at on the ground to see if there are potential solutions.

Ms O'Loughlin: Part of the difficulty, of course, is that it comes and goes. It has been a feature of that

landscape really since broadcasting services were established through that region. The difficulty is that you have

the Sydney market quite close and the issue of coastal areas and what happens with signals around this time of

year. I do not believe we had similar issues last year; it is just a factor of the weather conditions, so it does come

and go, which makes it quite difficult for the engineers to come up with something that is a suitable solution.

There are also spectrum constraints around that region because of the different overlap. That is one of the issues

we need to engage with the ACMA and the broadcasters on. Long-term solutions may require additional

spectrum, and there are real spectrum-constraint issues in those areas. But those are the types of things that we

want to explore with the ACMA and the broadcasters.

Senator BIRMINGHAM: To be clear: the problem itself has been around for a long time, but is it correct to

say that, in terms of the outcome or result of the problems, it seems a more severe effect through digital

transmission than it had from the analog transmission?

Ms O'Loughlin: It is quite possible that people were having the same issues when it was analog, but they

would have experienced something that might have been a bad picture but was possibly still watchable. People

can put up with a lot of interference when they are looking at televisions. With digital in some circumstances—

and it is not clear to us how often it happens or whether it is a regular occurrence per day—some people will find

pixelation, which they find more annoying, and they may have signal dropout, which obviously is much more

disruptive to their viewing.

Ms Cullen: I want to add—Ms O'Loughlin already said this, but this is to emphasise it—that atmospheric

conditions this year have been particularly conducive. People last year may not have experienced the same

problem and associate it this year just with the switchover; whereas, had the atmospheric conditions in fact been

present last year, they would have had similar problems. So it is comparing analog to digital but it is also that a lot

of people had been converted last year and were probably happy and this year may not have been. It is that very

hot, dry weather that has caused particular problems this year.

Senator BIRMINGHAM: Thank you. Has there been any consideration to measures such as turning the

analog signal back on?

Ms O'Loughlin: No.

Mr Harris: Could we clarify the number of people affected here?

Ms Cullen: Part of why the ACMA is going in is to try to determine that. We are aware of 300 to 400

complaints. Out of the entire region, it is a very small number, but we are trying to ascertain how widespread it is.

Some people do not complain and others are very vocal. So we are aware that it is a problem.

Mr Harris: If you were to reverse it for a large group of people, you would be creating a lot of destabilisation

for people who have just done the switchover, so it is not as simple as that by a long shot.

Ms O'Loughlin: We will also be exploring for areas across Australia where digital signals are difficult to get

into. The government has funded the VAST satellite service, which is a solution for people in those black spot

areas. We have not approached the area with that sort of solution at this point in time, because we really want to

do further investigation to make sure we can provide the local community with the right advice about improving

their own reception and also to see if there are other options available.



Senator BIRMINGHAM: What sort of broad communication with the Hunter region has the department

undertaken to inform them of what actions the department is taking to try to address these issues?

Ms O'Loughlin: We have provided information on our website in terms of the general issues. At this point in

time I think we have notified the local community that ACMA is going out there.

Ms Cullen: Yes.

Ms O'Loughlin: We have a lot of contacts in local communities in terms of our local council contacts and we

have also been in contact with the local MP, who has received a vast number of complaints directly to his office,

so we have been trying to make sure that we have been advising people on the ground that we are actively looking

at the situation. We will be doing further testing and I think I might have gone on radio in that area quite recently

and confirmed that.

Ms Cullen: It is also important to add that we did quite a lot of on-the-ground community work prior to

switch-over because we were aware that it was likely to be an issue. We were advising people and making sure

our website was up to date about what they could do to try and minimise it. We expect that that has had some

impact, and probably quite a lot because, although the overall level of complaints is quite high for a particular

region, given the total population it is not that high. But we are planning more activities, and part of what we will

be doing with ACMA and the broadcasters at our meeting this week is working out how we can get more

messaging out to the community.

Senator BIRMINGHAM: Why couldn't the testing or the measures that are being considered now have been

undertaken prior to the switch-over?

Ms O'Loughlin: As Ms Cullen pointed out, because this atmospheric ducting comes and goes, most of the

infrastructure rollout in those regions was done some time ago and it has been a pretty consistent signal. The

broadcasters are obviously required under law to replicate or provide equivalent coverage to their analog service,

which they have done and the ACMA have ticked off that report. Then we go into this time of the settled hot

weather and have a large ducting issue emerging. So it is quite difficult, and the signal behaves sometimes quite

differently from year to year as well.

Ms Cullen: Can I also add that the broadcasters had agreed to put in these new gap fillers or transmission

towers, which was expected to assist in alleviating the problem. The last one of those only occurred just a few

days before switch-over, so the last one of those towers was turned on quite late before the switch-over date. We

were expecting that that would alleviate a lot of the problem.

Ms O'Loughlin: Senator, in summary, we are taking the issues there very seriously. We do recognise that it

comes and goes and it is really annoying. It is a matter that is right on our radar to get some sort of long-term

resolution through discussion with the ACMA and the broadcasters and get information back to the community as

quickly as we can.

Senator BIRMINGHAM: Will there be assistance available to householders if they find that they need to

upgrade equipment in any way or, indeed, possibly shift over to the VAST system?

Ms O'Loughlin: At this stage our assistance programs have closed in those areas, so we are not looking at that

at the moment. I think that will really depend on what is the long-term solution that we need to develop for that

area. Our assistance programs are now full speed ahead in the other switch-over areas, so we are not envisaging

additional assistance at this point in time. That would be a matter for the government after we had finished our

investigations and worked out what the best long-term future approach may be. It may be that, conversely,

additional infrastructure from the broadcasters might be a better solution for the local community.

Senator BIRMINGHAM: Okay. Moving on to areas a little closer to home for me, what proportion of

Adelaide households are now believed to be digital ready?

Ms O'Loughlin: The good news is that we are finding that in most of the metropolitan areas the conversion

rates are well over 90 per cent. The switch-over date for metro Adelaide is 2 April, just after Easter. As at the end

of December 2012, 92 per cent had converted to digital, so our household assistance scheme is now open in that

area. It may be different in Adelaide but in the previous switch-overs in regional areas we have found that

between three and five per cent of the local community has been converted through the household assistance

scheme. So if you add to the 92 per cent another four or five per cent that may be converted through HAS you are

up around 97 per cent. We also find from our post-switch-over surveys that we undertake that some people leave

it until the very last minute, or indeed past the very last minute, to convert. So we are quietly confident that the

conversion rates both in Adelaide and in the other metropolitan areas are looking good for this year.

Senator BIRMINGHAM: How does the 92 per cent in Adelaide compare with the other capital cities?



Ms O'Loughlin: Very well. Tasmania—not just Hobart but Tasmania—is 92. Perth is 93. The highest is

Melbourne, which is looking at 95 per cent. Adelaide is just below Sydney at 93 per cent, so it is looking pretty

strong.

Senator Conroy: What would possibly be helpful to Senator Birmingham would be if you could give an

indication of what the rates were in places we have already turned off—for instance, Canberra or other major

centres.

Ms O'Loughlin: Certainly. In most cases, at our switch-over survey dates, it would be about 96 per cent. It

was 94 per cent in regional South Australia, 95 per cent in regional Victoria, 97 per cent in regional Queensland

and 96 per cent in southern New South Wales. So, as I indicated, some people do leave it till the very last minute

and some people leave it, indeed, until after switch-over to convert.

Senator Conroy: The other factor is that you never get to 100 beforehand because we do not include Foxtel

subscriptions, where you get your TV through the Foxtel. So you never actually get 100 per cent.

Senator BIRMINGHAM: When did the HAS open in Adelaide?

Ms O'Loughlin: The first invitation letter for HAS in Adelaide went out on 9 July. We sent reminder letters

on 24 September and 10 December. We asked people to apply by 9 November last year, but HAS actually stays

open right through until a month after switch-over. So what we did was invite people to get in early so that we can

schedule their installations well in advance and get on the ground as quickly as possible.

Senator BIRMINGHAM: Do you have raw numbers in terms of the number of HAS applications that have

been accepted and the number of installations done to date?

Ms O'Loughlin: The number of installations done to date, at 22 January, was just over 14,000.

Senator BIRMINGHAM: Do you have an indication of how many outstanding applications are still to be

installed?

Ms Cullen: My recollection is that we have installed about 65 per cent of the applications that we have

received to date.

Senator Conroy: We have a process.

Ms O'Loughlin: We have had 24,000 opt-ins—this might be slightly different because it is a different date—

and 14,000 installations completed.

Senator BIRMINGHAM: Thank you. Lastly, in terms of how the department measures households in this

regard, what does one per cent of the Adelaide area equate to?

Ms O'Loughlin: The total households in Adelaide equate to 565,752.

Senator BIRMINGHAM: Thank you. Can I jump around the country further. Has the HAS now ceased in

the WA areas of Mandurah, Falcon and Pinjarra?

Ms O'Loughlin: No.

Senator BIRMINGHAM: Have set-top box installations in the Mandurah, Pinjarra and Falcon areas

temporarily ceased at all due to any particular upgrades, changes or installations of a new tower in those areas?

Ms O'Loughlin: Mandurah and Singleton are a gap filler. A new transmission tower is going into that

community to improve reception. When we are rolling out the household assistance scheme that tower may

improve the service in the area, so we may hold back on delivering the HAS until the gap filler goes in because

otherwise you go out there and then you have to go back again.

Sometimes we actually do go out there and go back again. As Ms Cullen mentioned, particularly for things that

are quite close to the switchover we do not want people to be left behind, so we may go out twice. But if there is a

gap filler going in we normally would try and align the household assistance scheme for the installation to happen

once the gap filler is in.

Ms Cullen: We call that delayed service, rather than cancelled, on hold or—

Senator BIRMINGHAM: Sure. So the benefit, if nothing else, is providing the Hansard extract back to the

local member and him being able to explain such things to his community. The gap filler and the reason—sorry, I

have forgotten the words you used just then, Ms Cullen?

Ms Cullen: Delayed service.

Senator BIRMINGHAM: The reason for delayed service is, of course, say that aerials can be pointed in the

right direction for a new tower that is being installed.

Ms Cullen: Exactly.



Ms O'Loughlin: If a gap filler goes in it might be in a different location to the previous transmission tower,

which means that the installers need to make sure that they are pointing antennas towards the right tower for the

best reception.

Senator BIRMINGHAM: Okay. For the gap filler in this area, are you able to give us any indication of

where that is, how it is going and what the total area of the service is, please?

Ms O'Loughlin: I might have to take that one on notice.

Senator BIRMINGHAM: No worries. I will put any others in that topic on notice as well then.

Ms O'Loughlin: Obviously, what we work towards is making sure that all the installations for HAS are

completed well in advance of the switchover. That is what we also push with the broadcasters and making sure

that gap fillers go in as quickly as possible so that people are not without services.

Senator BIRMINGHAM: Yes. I should just check there: when is the switchover for those areas?

Ms O'Loughlin: I think they are in Perth—

Ms Cullen: I think they are in metropolitan Perth on 16 April.

Senator BIRMINGHAM: 16 April. So when would you expect to resume service in those areas?

Ms O'Loughlin: I might need to take that on notice—

Ms Cullen: We need to check the date of the gap fillers going in.

Ms O'Loughlin: Yes—

Ms Cullen: But when the gap fillers are in we will then go out and service them as a priority.

Ms O'Loughlin: We will try and get back to you tonight on that. We should be able to find that out.

Senator BIRMINGHAM: Certainly, anybody who has an application in those areas—

Ms O'Loughlin: They should not be concerned that we are going to leave them behind, no.

Senator BIRMINGHAM: They will definitely get their service delivered well before 16 April.

Ms O'Loughlin: They certainly will.

Mr Harris: And if they have not made a decision and do qualify, they should not hold off. They should not

hold off: we still want people to register.

Senator BIRMINGHAM: Do not wait: call now!

Mr Harris: Please call now!

Ms O'Loughlin: 1800 201013

Senator BIRMINGHAM: Can I now roll with digital radio for a second? Is the department able to provide an

update for the rollout of digital radio services to regional Australia?

Ms O'Loughlin: As previously mentioned, digital radio has started in a number of the capital cities. That is

pretty much where it stands at the moment.

Senator BIRMINGHAM: What work has been done on the planning and policy issues on the rollout of

digital radio to regional areas since the Review of technologies for digital radio in regional Australia was tabled

in October 2011?

Dr Pelling: I think it is true to say that following the review we have continued to look at and think about the

issues. In particular, quite recently the radio industry has been around with the proposal—a fairly substantial

proposal, which we have been looking at—for rollout of digital radio in regional Australia. I think we have just

been considering possible ways forward but it is not something that the government has formed a view on yet.

Ms O'Loughlin: There has not been a large call from the broadcasters on the ground to commence services. It

would be open for them to go to the ACMA to start services in some areas. That is available to them, at least in

Hobart, and there are trial services on air in Canberra and Darwin.

Dr Pelling: There are trial services on air in Canberra and Darwin. The minister has a trigger under the

legislation in that he ultimately declares the day or flicks the switch which will start the rollout in a particular

areas. So for example if the broadcasters wanted to roll out a service in Hobart, my understanding is that they

could do that in several ways. They could, first of all, approach the ACMA to look at a trial service in that area.

The Canberra and Darwin services are what we call scientific trials; in other words, the intention is to try and

learn new things about the operation of digital radio in those particular environments, but ultimately there is a

process that would have to be gone through if they want to start a permanent service in a particular area.



Ms O'Loughlin: At this stage, Senator, I think it is fair to say that the proposal from Commercial Radio

Australia would indicate that there is an expectation from the commercial radio sector that they will roll out

digital radio with the assistance of quite substantial government funding, so that would be a matter for the

government to consider.

Senator BIRMINGHAM: So noting that request for funding from commercial radio, is there any time line in

terms of consideration in place or is it simply something that will sit on the books until such time as the

government decides to look at such investment?

Ms O'Loughlin: I think the earlier discussion that we have had with CRA is that they are interested in

engaging on the issues and interested in talking about the proposals, so in that regard there is not a definitive time

frame but we are engaged with them to talk through their proposal and look at the issues that it raises.

Senator BIRMINGHAM: Is the government able to confirm what the future of the Australian Music Radio

Airplay Project is and whether there is any funding that extends beyond the $250,000 allocated in December that

runs to June of this year?

Ms O'Loughlin: That would be a matter for consideration by the government in the budget context.

Senator BIRMINGHAM: So any certainty in that regard will not be provided until the May budget?

Ms O'Loughlin: That is correct.

Senator BIRMINGHAM: Are there any implications for the project of living in a very hand to mouth way in

that sense?

Ms O'Loughlin: Sorry, Senator?

Senator BIRMINGHAM: Are there any implications for the project, in terms of their operations, of living

with that uncertainty until a month before their funding would otherwise run out?

Ms O'Loughlin: We have been in consultation with AMRAP. They did receive funding from the Community

Broadcasting Foundation and the minister announced additional funding very late last year. They are aware that

the longer term decisions will be made in the budget context, so they continue delivering the program until such

time as those announcements and those considerations are completed.

Senator BIRMINGHAM: Can I ask you this, in regard to commercial television licence fees and the decision

that has been taken, as to whether the level of rebate is now settled.

Ms O'Loughlin: The minister announced on 30 November that the government would permanently reduce the

licence fees paid by commercial television broadcasters by 50 per cent.

Senator BIRMINGHAM: So that is now permanent. Is that reflected in the forward projections in the

budget?

Mr Harris: It would have been taken into account in the MYEFO.

Dr Pelling: I think it is worth noting also that the Governor-General made regulations in December as a first

step in that process to provide a 50 per cent rebate on licence fees payable in 2012-13 to allow time for the

legislative changes that are needed to implement the rebate. They have already extended the previous rebate

through regulation.

Senator BIRMINGHAM: How much was collected by 31 December of last year in the 2011-12 fees?

Ms O'Loughlin: That is probably a question for the ACMA. We can certainly take that on notice. I am not

quite sure that has been published at this stage. We would have to take it on notice. The ACMA is responsible for

the collection of the licence fees.

Mr Harris: And there is a delay.

Ms O'Loughlin: There is a delay.

Mr Harris: Because it is relating to advertising revenue, I will just explain it to you.

Senator BIRMINGHAM: I gather 31 December is the deadline for when it is payable for the previous

financial year.

Mr Harris: Yes.

Senator BIRMINGHAM: That is why I am asking you about times?

Ms O'Loughlin: We can certainly take it on notice and provide to you the most current figures.

Dr Pelling: I can give you some further information. The 2010-11 budget estimated the total cost of the initial

licence fee rebates at $209.5 million over four years.



Senator Conroy: They were probably fractionally more profitable back then. I am not sure Channel Ten will

be getting a lot of rebate.

Ms O'Loughlin: But we can certainly take on notice the most current licence fee payment.

Senator BIRMINGHAM: If you could provide the most current licence fee payment and for three years prior

that would probably be useful. You could also provide what the rebate impact has been through that time as well.

CHAIR: I had some discussion with ACMA about digital radio and some of the problems and some of the

commuter corridors into the main cities. An area where I live and where I am a duty senator is the lower Blue

Mountains-Windsor area. There was a discussion about some booster stations going in there. Does the department

have any input into where the booster stations will be or when they would go in or why they would be put in?

Dr Pelling: No, that is a matter entirely for the commercial industry. I listened to Mr Tanner's testimony this

afternoon. As he indicated, I think there are ongoing discussions with the ACMA because the ACMA will have to

allocate frequencies to operate in. The number of boosters that will go in and when they go in will be matters for

the industry with the ACMA.

CHAIR: Would it be true to say that, in terms of the roll-out of digital radio, there is a bit of a market failure

and it requires government support?

Ms O'Loughlin: I think digital radio is a somewhat different beast to digital television in many respects and

some of these issues are also evident in national roll-out of digital radio. Unlike digital television, digital radio is

seen as a supplementary technology to existing technology, so there is no emphasis as there was in television on

moving to a replacement technology for AM and FM and no argument that we would be turning off AM or FM

any time in the future nor any return to the government of spectrum which would be reallocated. I think it is fair

to say that it has quite different dynamics. While it offers some quality improvements, we have a country that is

very keen on its AM radio, its local radio, and digital does not necessarily provide a replacement path for that. It

has quite different dynamics to it.

The commercial broadcasters have put to the government in their latest proposals—I am going to paraphrase

them—that they see that any long-term rollout in digital radio in regional areas would have to be the subject of

government funding because it is not commercially viable for them to do so. I think that obviously the

government would need to consider about whether or not the longer term future of commercial radio should be

totally government funded. That is a matter that is an ongoing debate.

Internationally, you will find in the United Kingdom, which is probably the largest area that has taken up

digital radio, that they are still only looking at conversion rates of around 30 per cent to 35 per cent. It can be up

to about 50 per cent if you look at the way they talk about conversion for digital radio, where people can receive it

through a digital radio set but also, possibly, through their digital television. They are looking at the different

delivery paths. Digital radio is not necessarily just about getting it through a radio that sits on your desk. You

might get it through your mobile phone or your digital television set. There is a lot of technological advancement

where a lot of people are receiving digital radio, through the internet in particular, through streaming or through

their television sets, as well as the more traditional transmitter base. It is fair to say that the commercial

broadcasters would argue that they do not see a new revenue stream coming through digital radio at this point in

time, hence they would be needing to call on the government for funding.

CHAIR: I suppose there is another delivery platform as well, which is internet radio. Do you know what is

happening in the UK with internet radio? Is that leapfrogging digital radio? What is happening?

Ms O'Loughlin: The latest figures that the industry provided earlier this year indicated that it is not

leapfrogging as yet. The take-up of digital radio has slowed somewhat, but internet radio take-up has not quite

surpassed it yet. The industry will also raise arguments that internet radio may be more suited to provision in the

home, whereas they are interested in digital radio being available not only in the home but also in cars and while

travelling. People are choosing to access radio services through a variety of sources, some of it terrestrially based

and some of it through the internet as well.

CHAIR: Why do you say Australians are locked in—I am not sure if these are the exact words you used—to

AM transmissions? What is the benefit of AM?

Ms O'Loughlin: The benefit of AM is reach and stability. You notice that, particularly in times of emergency

broadcasts, people rely on AM. AM is the oldest of the technologies in terms of radio. It has been around for a

very long time and it travels a long way. It is reliable, it is robust and it goes for much further than FM.



CHAIR: Can I ask about the National Indigenous Television—the NITV—and the Indigenous Broadcasting

Program. With the introduction of NITV, what are the implications for the Indigenous Broadcasting Program, if

any, and for organisations like Imparja?

Ms O'Loughlin: The National Indigenous Television station is now part of SBS, so its funding, which the

government agreed to the year before last, is within the SBS's allocation. The Indigenous Broadcasting Program

does not fund the NITV. That is funded through the SBS appropriations.

CHAIR: I understand that, but I am asking you whether, because of the establishment of the NITV, are there

any implications for the Indigenous Broadcasting Program?

Ms O'Loughlin: The Indigenous Broadcasting Program just proceeds onwards and there as been no reduction

in funds for that program. Where it has been quite beneficial is for the organisation like ICTV, where we have

been able to use the IBP to put the Indigenous Community Television station up on the VAST satellite service,

which is also where NITV is, and the reach of that service is far greater than it has ever been before. We think that

has been a good result of not just the IPB funding but also the capacity to use VAST to distribute signals,

particularly in the most remote areas of Australia.

CHAIR: What about Imparja Television? That has been around for a while, has it not?

Dr Pelling: Yes, Imparja has been around for a while. It gets two or three grants under the Indigenous

Broadcasting Program and has done for a number of years.

CHAIR: Has that got a specific and limited reach?

Dr Pelling: Imparja uplinks—

Ms O'Loughlin: It uplinks to VAST.

Dr Pelling: Yes, Imparja uplinks services to the VAST platform.

Ms O'Loughlin: It is one of the joint venture partners for the VAST.

Dr Pelling: To provide the VAST service, yes.

Senator Conroy: So VAST is not competing with anybody; it is just relaying.

CHAIR: Yes. I just see, with Indigenous Community Television and Imparja, probably NITV competing with

them. Would that be the case?

Dr Pelling: They are quite different services, I think. ICTV was always a community-based service, and in

fact prior to moving onto the VAST platform it was delivered, I think, in shared time over the weekend with one

of the services on the previous platform—what was called the Aurora satellite platform. It is very much a

community-driven service. NITV has, I think, over its history tried always to be a more professionally developed

and operated service and now, of course, having been taken over by SBS, it gets all the benefit of the professional

management through the SBS process.

Ms O'Loughlin: Just with Imparja, the IBP has supported Imparja to support the compiling and distribution of

Indigenous broadcasting content on VAST for ICTV and to support compilation and distribution of Indigenous

broadcasting content, including the purchase of the local content. So we do see that NITV and ICTV are very

complementary services. You have the really localised content, as Dr Pelling mentioned, which we can now get to

a much broader audience, and you have NITV, which is probably the more professionally produced content as

well.

[20:01]

CHAIR: Thanks. That completes the questions for program 1.3. I now call officers from the department in

relation to program 1.1, Broadband and Communications Infrastructure.

Senator BIRMINGHAM: I will quickly start off on NBN-related advertising. How much is left out of the

$20 million kitty, and is anything beyond that still planned?

Mr Harris: I think the order of magnitude of what has been spent so far is about $18 million.

Mr Robinson: Fifteen million.

Mr Harris: Perhaps I should let Mr Robinson, who is more across the detail, answer.

Mr Robinson: Up to 23 January we had spent just a bit short of $15 million on the metropolitan campaign.

Senator BIRMINGHAM: Is the rest scheduled to be spent? If so, when?

Mr Robinson: It is scheduled to be spent. There is a measure in the portfolio additional estimates for some

additional funding. We have not scheduled finally the second stage of the campaign, but we anticipate there will

be a second stage in March and into April.



Senator BIRMINGHAM: What will be the total spend for that second stage?

Mr Robinson: Approximately $9 million.

Senator BIRMINGHAM: Does that account for the remaining $5 million plus the extra through additional

estimates, or will there still be some left?

Mr Robinson: No, it accounts for both components.

Senator BIRMINGHAM: So there will be another $9 million capital city television advertising campaign

around March and April.

Mr Robinson: Yes.

Senator BIRMINGHAM: Thanks, Mr Robinson. Will that be the same content or the same advertisements as

previously, or is the department updating those campaigns somewhat?

Mr Robinson: We are updating, but it will have a consistent theme and look. We are updating them to bring

some additional messages. It is not entirely television. Like the last campaign, it will include probably some radio

but also digital ads and website upgrades and that sort of stuff.

Senator BIRMINGHAM: What information has the department commissioned to inform that updating of the

advertisements?

Mr Robinson: There was some research commissioned originally, and it essentially suggested a two-stage

approach and that the second stage would have some more detailed messages in it.

Senator BIRMINGHAM: Has there been any evaluation of the first campaign?

Mr Robinson: Yes.

Senator BIRMINGHAM: Undertaken externally to the department or by the department?

Mr Robinson: Externally.

Senator BIRMINGHAM: By whom?

Mr Robinson: I will take that on notice. It was an external firm, but I just cannot recall the name.

Senator BIRMINGHAM: And did it prove the $15 million spend of the taxpayers' money to sell messages to

the taxpayers had been a rip-roaring success?

Mr Robinson: I will just answer that question I took on notice.

CHAIR: Work Choices.

Mr Robinson: The firm that has done the work for us is a firm called DBN Consulting.

Senator IAN MACDONALD: I thought it would have been Hawker Britton, Minister.

Senator Conroy: It is fair to say that the NBN ads have been well-received and they demonstrate that the

NBN project is well supported in the broader community, but there is still some work to be done to overcome the

lies that are regularly told by those opposite, Senator Birmingham. There is still some work to be done.

Senator IAN MACDONALD: You are deputy leader now, just—

Senator BIRMINGHAM: No, he is the leader now.

Senator Conroy: I am leader now, thank you. You just demoted me!

Senator IAN MACDONALD: Sorry—

Senator Conroy: There are still some misconceptions that we need to overcome that you constantly peddle,

Senator Macdonald. You are not the main proponent of them, so I do not hold you responsible.

Senator BIRMINGHAM: Senator Macdonald and any of the rest of us will obviously wear it as a badge of

honour that you and your colleagues are so inept that you cannot manage to overcome us and you have to spend

$24 million of taxpayers' money to overcome all of us.

Senator Conroy: I did not say you were the cause, I just said you were the spreader, so you should not wear

that badge too proudly or too high.

Senator BIRMINGHAM: The person responsible for at least some of the ghostwriting of NBN-related

articles in the department—

Senator Conroy: I really wish you were not going there. That is just grubby.

Senator BIRMINGHAM: What investigations were undertaken and what has become of the person

responsible for those ghostwriting activities?

Mr Robinson: Sorry, Senator, I do not understand your question.



Senator BIRMINGHAM: You are aware of the issue that has been canvassed at previous estimates of the

department having ghostwritten articles that have been found out across the country?

Senator Conroy: No, not 'articles'. That is completely untrue. There was only one that fell into the category

that you are describing that we are aware of.

Mr Robinson: That is correct, Senator.

Senator BIRMINGHAM: And ghostwritten material that was found out across the country, of which at least

a dozen instances were used in some form.

Senator Conroy: Do you write every one of your speeches, or does someone ghostwrite them for you? Did

someone ghostwrite those questions?

Senator IAN MACDONALD: Can we have the answer?

Mr Robinson: Senator, I am not sure what articles—plural—you are referring to. The one article we

discussed at the last Senate committee was an article that was sent to the IPA organisation, which had an email on

it that, on reading of it, said the department was okay with it not having a by-line on it. The reason I say that that

is a single article is, as we indicated at the last estimates committee, we have had a look at the record and, as best

we can, checked emails et cetera and we believe that was the one example of that occurring. That email—

Senator Conroy: Your ghostwriter is in action as we speak, Senator Birmingham. Prepare for incoming.

Mr Robinson: really should be read in the context of previous emails and the discussion that apparently

happened, as we understand it, between the officer and the publication—

Senator Conroy: Did you write that email you have just received?

Senator BIRMINGHAM: Okay, I have not received an email for close to 20 minutes.

Senator Conroy: You are on your own; he has ditched you.

Senator BIRMINGHAM: Mr Robinson, answers to questions on notice—I do not have the actual answer

here—did identify 12 other instances and that the department had committed to change a policy here. There may

not have been identical instances—

Senator Conroy: That is not true at all. Where is Christian when you need him? That is completely untrue,

Senator Birmingham.

Mr Harris: The answer to the question on notice did not indicate what you have just suggested. The 12

articles were in response to a specific question that was asked in relation to the broadband champions. It was not

anything to do with this particular issue, and to conflate the two would be inaccurate.

Senator BIRMINGHAM: Coming back to the IPA issue, were any disciplinary proceedings undertaken as a

result of that?

Mr Harris: No.

Senator BIRMINGHAM: Is the staff member responsible still working in the department?

Mr Harris: No.

Senator BIRMINGHAM: Did this staff member leave of their own volition?

Mr Harris: It was the person's choice.

CHAIR: I have some questions on this issue. I received a visit from Mr Godfrey, the person who wrote the

article, along with his union. It was indicated to me that the emails that were published did not actually present the

full scope of the discussions that took place between the IPA Review editor, James Paterson, and Mr Godfrey. Are

you aware of that?

Mr Harris: Yes.

CHAIR: Mr Godfrey has raised with me that his ethics were under question. In the context of what he

indicated to me, I would say that he has done nothing unethical. I want to take you through what he has put to me

and get your view as to his ethics in terms of what he claims was the process that was undertaken. There were

email and phone conversations with the IPA Review editor, James Paterson; are you aware of that?

Mr Harris: Yes, there was an email exchange.

CHAIR: Have you seen the emails?

Mr Harris: I have seen the emails.

CHAIR: Mr Godfrey indicated to me that the final email that we saw in the press was after these discussions

and emails and after considerable alteration to the article. Are you aware of that?



Mr Harris: As I understand it, there were oral discussions as well as email exchanges and that those may have

indicated that the article was to be in a form that would enable a journalist to decide that it was their own article. I

am not privy to that exchange, but I understand that that may have been the case.

CHAIR: Mr Godfrey has put to me that there were detailed discussions with James Paterson from the IPA; the

conversations were conversations that would be a normal practice between a government person dealing in

communications and an external body; deep alterations and cuts were made to the article to the extent that—Mr

Godfrey calls it 'an acceptable level of abstraction'—the article was not then the article that he had delivered; and

it was perfectly appropriate for James Paterson to put his by-line on the article, because of the extensive changes

and cuts that were made. Would that be, on your understanding, appropriate?

Mr Harris: If that were the case, it may well be so. The difficulty is that some of these exchanges were not

recorded. I had occasion to say at the previous estimates that the important thing when providing information of

this kind from our communications area to a journalist is that we offer them that information as being a

perspective on a government project, in order to inform the public. The choice about whom this is attributed to is

a matter for the journalist concerned and their own ethics. That is the judgment to be made here.

CHAIR: The judgment to be me made is whether there was any unethical conduct. I have had a look at the

position classification standard and the definition of the work that Mr Godfrey had to undertake, and this is

exactly the type of work that a journalist within the department would undertake. Is that correct?

Mr Harris: Yes, without a doubt it is the right type of work for him to undertake.

CHAIR: So, there was nothing unethical in what he was doing?

Mr Harris: As I said previously, this was a unique circumstance. Mr Godfrey's work has been excellent, and

this is a circumstance possibly justified—or possibly not—by events which are not recorded. Nevertheless, it is an

unusual circumstance and not one that should be seen as setting an exemplar for how we expect this information

to be provided.

CHAIR: But you can understand the concern of Mr Godfrey who, after decades of unblemished professional

work, ended up being accused of unprofessional conduct. He takes the view—when he indicated to me what

happened—that he was the victim of Mr Paterson from the IPA and a victim of what he describes as vexatious

feigning interest in the publication and entrapment for political purposes. That is the view that the individual

takes, and, knowing the IPA, maybe that was the case. Let me not talk about that specific position, but if—

Senator IAN MACDONALD: Is there a question in this, Mr Chairman?

CHAIR: Yes, I am coming to it. If an individual employed by the department in that journalistic area sent an

article out saying, 'This is what we've done,' and the by-line would be from the department, and an individual then

said, 'We want to change it, cut it and put it under our by-line,' would that be unethical?

Mr Harris: It would be for the journalist who received the article to make a judgment according to their

ethics.

CHAIR: There is nothing unethical about changes being made and then going under another by-line, is there?

Mr Harris: We provide the information for the purposes of the publication.

CHAIR: That is a judgment that the journalist would make. If the journalist says, 'The story has changed

significantly from what I have put out; the article has changed,' then your by-line can go on it. Is that unethical?

Mr Harris: No.

CHAIR: If one of your journalists was vexatiously entrapped for political purposes and there was a feigning

interest in the publication, is that then unethical for the individual?

Mr Harris: I think it is a bit beyond my pay grade to analyse the ethics of journalists. I am primarily

concerned with the incident itself. As I have said, it is not an exemplar of what I would like to see happen, but I

believe it was a unique, one-off circumstance, and Mr Godfrey was certainly not discouraged from continuing to

work in the department. I think he feels very personally affected by this—

CHAIR: Yes.

Mr Harris: and that is a very unfortunate outcome. The department did not feel he was a bad employee.

CHAIR: Is that how you would put it: 'He was not a bad employee'?

Mr Harris: The judgment that was implied in earlier questions is that we may have discouraged him from

working in the department. That is not the case.

CHAIR: We have not put that.



Mr Harris: No, I am sure that is right, Chair. If you want me to put it the other way, we think he was a good

employee. I am not trying to do a character analysis here. I am trying to elaborate that this was a circumstance

which is, as I said, unique.

CHAIR: Are the emails from James Paterson to Mr Godfrey available?

Mr Harris: I am informed that they have been published in some form. We are not planning to release them.

Obviously, somebody could seek them under FOI. We are doing a lot of analysis here of the affairs of an

individual, and I think in many respects that is quite unfortunate.

CHAIR: What's unfortunate?

Mr Harris: This issue—and any fault that was attributed probably could have been quite reasonably dealt

with without naming a person and affecting their reputation. I personally would have been a lot more comfortable

with that.

CHAIR: Once the egg has been scrambled, it is pretty hard to unscramble it.

Mr Harris: Yes, that is right. We do not have the choice as public servants. If your name is on the bottom of

an email and you have been involved in an exchange like this, then you are exposed to that. That is the lot of

those working in the Public Service.

CHAIR: Mr Harris, were the responses you and Mr Robinson made at the last Senate estimates informed by

the knowledge of the email correspondence and the telephone correspondence? Were you aware of that at the

time?

Mr Harris: Certainly the emails. I am not confident about the telephone discussions that have been elaborated

on since.

Mr Robinson: I was aware that there had been telephone conversations, but none of us know the full detail of

those.

CHAIR: Did you ask Mr Godfrey about the telephone conversations?

Mr Robinson: Yes. Can I say, consistent with what Mr Harris has said, that we do not have any concerns

about the professional integrity of that officer.

CHAIR: So you have no question about the professional integrity of Mr Godfrey?

Mr Robinson: No. To be honest—which is what I think I said at the last meeting—one of those emails was

not well written, but that has nothing to do with his professional integrity. That is the circumstance.

CHAIR: Okay. It is just a pity that we are not having a look at the professional integrity of Mr Paterson of the

IPA; it might be a different matter. We will go to Senator Birmingham.

Senator BIRMINGHAM: Could the department please outline the payments to Telstra beyond those that

NBN Co. is responsible for, and whether and where all of those payments are reflected in the budget?

Mr Harris: Would these be the payments in relation to the USO and the TUSMA funding arrangements?

Senator BIRMINGHAM: There are the TUSMA funding arrangements. I believe there is some training

funding as well.

Mr Harris: Money for training—that is correct.

Senator BIRMINGHAM: I think the value that has been put to Telstra is around $2 billion. I gather that is

not all cash payments. But could the department outline the quantum that does relate to cash payments; which

agencies are responsible, if it is not TUSMA; and when those payments are made and where they are in the

budget?

Mr Harris: Mr Heazlett will do that.

Mr Heazlett: You have categorised it as three main components of payments. There are the TUSMA

payments, which involve payments for the continued provision of fixed-line copper services in areas outside the

NBN fibre footprint. Then there are some ancillary payments associated with that with regard to continued

provision of payphones. They are the payments to Telstra. Then there is a retraining payment grant that was made

to Telstra. That was made last financial year. It is certainly disclosed in the grants payments that we make. In

terms of the actual budget documents, it was included in the contingency reserve so it would not have been

apparent because of the contingent nature of that at the time of the budget in terms of meeting conditions

precedent.

There was also another payment to Telstra, which had a net present value to Telstra of $190 million, which was

a payment to balance the agreed value. The actual payment, which was made in March last year when the



agreements became effective, was a number slightly in excess of $300 million. I would have to check what the

precise number was, but that was also disclosed in our disclosure of grants payments and, again, was in the

contingency reserve prior to that.

Mr Harris: The latter two payments have now been made and have appeared in the budget documents. The

former is the TUSMA arrangements, which cover, as Mr Heazlett said, not only the ongoing maintenance of

copper in the seven per cent—the area that is not going to be covered by NBN fibre—but also other payments that

will be undertaken for maintenance of public phones, the transfer effectively of USO obligations. The concept

behind TUSMA, as I think I have explained here a number of times, is that if the network is to be given up by

Telstra then the USO obligations that go with the network have got to go to somewhere else. They do not go to

NBN Co. because it is a broadband-providing company. They go to now an entity called TUSMA. This creates

some classic transparency opportunities, and contractual obligations have been put in place to give those clarity.

There are review structures attached to them and formalised arrangements now in place. TUSMA has been up and

running for six or so months.

Senator BIRMINGHAM: So the slightly greater than $300 million—and you will get us the exact figure, Mr

Heazlett—constitutes those two areas of payments?

Mr Harris: Yes.

Senator BIRMINGHAM: There are no further payments in either of those categories to be made under the

arrangement?

Mr Harris: No.

Senator BIRMINGHAM: So the only ongoing payments made fall within TUSMA going forward?

Mr Harris: That is correct.

Senator BIRMINGHAM: Noting that Telstra previously contributed to the industry levy that partly funded

the USO and now is levied under the TUSMA arrangements, is the department able to provide an estimate of

what the net yearly gain to Telstra is via TUSMA?

Mr Harris: Telstra continues to pay its share of the USO.

Senator BIRMINGHAM: Yes.

Mr Harris: In the context of your question, it sounded like—

Senator BIRMINGHAM: I did say 'and continues to be levied under the TUSMA arrangements'.

Mr Harris: Okay. The amounts involved here, the USO amounts, are assessed under a formula run by the

ACMA.

Senator Conroy: The genesis of the formula I think was Senator Alston and it had something to do with his

mother's birthday multiplied by his shoe size. If you want to ask us where that comes from you probably need to

give Richard a ring.

Senator BIRMINGHAM: Meanwhile, I was trying to get the net benefit to Telstra out of the new

arrangements.

Mr Heazlett: That depends on a range of assumptions which Telstra calculated themselves for their own

shareholder purposes which make certain judgements about how much revenue in the market they would attract in

the period of the agreement. So we did not seek to precisely estimate that. That is a matter of them to calculate the

value to them, which they have advise the market of the total value of the package—

Senator Conroy interjecting—

Mr Harris: The bottom line ultimately is, as Mr Heazlett said, this is done in a commercial negotiation with

Telstra where we put on the table some specific amounts that we thought would crystallise and make transparent

the USO obligations which had previously been non-transparent. There had been long debate with Telstra on the

one hand saying the USO was costing over $600 million and the industry contributing around $145 million. We

solved that debate in the course of this by putting certain amounts of money on the table and saying, 'What about

this as a proposition?' Telstra took those amounts of money away and gave us a lower discount factor than they

gave NBN Co. In taking that discount factor they extended out over a period of I think 20 years and came up with

that $2 billion net present value estimate. It was done by them quite consciously.

We do not put anything like that amount of cash, as you said, Senator, on the table. The value to them as much

as anything is future cost avoided both in the case of the training program and redundancies. They are a larger

value to them than the actual cash that we put on the table and they are quite clearly demonstrable. In an analysis

that they had prepared by Grant Samuel I think—anyway for the purpose of their shareholder meeting they had



analysis prepared for that. In the case of the TUSMA arrangements it is this value that they had about being

underpaid for the USO for many years and expectation that if we did not solve this they will continue to be

underpaid. Just to be clear: when we took the numbers with their estimate of $600-odd million and the industry's

view of $150-odd million I think we settled around $245 million or something like that. It was quite a balanced

judgement. We have that done on effectively an expert opinion. We jointly agreed to appoint an expert to come

up with a number because in the past no-one had ever been able to come up with a number, as the minister was

implying earlier. We felt this was a practical way of suiting the purposes of structural separation of the network

from Telstra and at the same time potentially creating some value towards their estimation of what their overall

network was worth.

Senator BIRMINGHAM: Noting your statement that the only ongoing payments now to Telstra through the

department or the government relate to the TUSMA payments, are there any other additional non-cash expenses

that the government has as part of the agreement with Telstra?

Mr Harris: I am going to say no from my period doing the negotiations. I will ask Mr Heazlett: did anything

pop up in the later stages of the DAs?

Mr Heazlett: There are no sort of direct non-cash benefits that the government is providing to Telstra as part

of this, but part of the agreement with Telstra covered their clear allocation of responsibilities in relation to the

provision of public information on the migration process for which Telstra recognises some value to them and

that is an activity that NBN Co. is undertaking.

Mr Harris: The advertising campaign.

Mr Heazlett: So the public information in terms of notifying all people in areas covered by the NBN that the

fibre is available and what they have to do. It is a quite detailed and developed communications program that

NBN is running. That provides additional value to Telstra.

Mr Harris: Just to explain that: in the course of the negotiations Telstra made quite clear that, if the

information campaign was not handled well, they expected to be left with a lot of legacy and liability equipment

previously supplied to businesses, analog type equipment. But if people were educated in knowing that a switch

to digital was coming then that equipment could be replaced by those businesses in advance, as it were, which

both reduces this legacy equipment issue and also facilitates the swifter transfer of exchange areas ultimately

switching off the copper. So they saw value in this—and we agree there is value in it—but the actual estimation

of what it was worth was a matter that ultimately they opined upon with their independent expert for the purposes

of putting a proposition to their shareholders.

Senator BIRMINGHAM: Thanks, Mr Harris.

CHAIR: I now call officers from the NBN Co.

Senator IAN MACDONALD: I will put on notice questions about Clarke Creek and Diamantina optic fibre

and natural disaster management, but in doing so I note that a government member used 20 minutes of the 30

minutes available for this to do something he could have done directly with the minister and the union

representative that came.

CHAIR: That government member was me. I chair the committee and I run the committee.

Senator IAN MACDONALD: Yes, I know. So you will do what you like.

CHAIR: I will run the committee in a fair and reasonable way.

Senator IAN MACDONALD: That is not fair.

CHAIR: Just be quiet for a minute. No-one has accused me of being unfair.

Senator IAN MACDONALD: Well, I am now. I have done it many a time.

CHAIR: But that is you, and I do not think many people pay much attention to you.

Senator IAN MACDONALD: That is fine—20 minutes out of 30 minutes, and all about a union matter you

could have taken up with the minister.

CHAIR: We are ready for NBN Co. Let's get some serious work done.

Senator IAN MACDONALD: Never mind. We will remember it in six months time, Doug.

NBN Co. Ltd

[20:37]

CHAIR: Mr Quigley, do you wish to make an opening statement?



Mr Quigley: Yes, I will. You may be aware that in the JCNBN hearing in October last year we presented a

number of charts which showed our rollout progress at that time and also provided a forecast to the end of June

this year. I would like, if I could, to update the committee here tonight on our progress since then, so I will ask

that those charts be distributed.

CHAIR: I think they have been distributed. Could someone move that we accept those charts as tabled. It has

been moved. Thanks, Mr Quigley.

Mr Quigley: First of all, I think the fact that we are now providing this detailed information is an indication

that we are quite happy to provide such information when we can. I will just also mention, on the subject of

transparency, that we welcome and comply with all the regular reporting requirements set out in the GBE

guidelines and the CAC Act. We appear before Senate estimates three times a year and regularly before the

JCNBN. Last year alone we responded to some 400 separate questions on notice from these hearings. We are

subject to the Freedom of Information Act and to scrutiny from the Auditor-General. NBN Co. is not required

under the CAC Act to publicly release the corporate plan, but in the interests of transparency the government has

asked us to do so, and of course we do. Also, last month the ACCC informally requested that we provide

confidential financial information to allow them to assess the operation of certain aspects of the pricing

arrangements in our special access undertaking. This was the first time that they had made a request for further

information since our lodgement of the SAU in September 2012. We will, of course, provide all of the

information that the ACCC requests of us. So NBN does provide a great deal of information to a variety of

parties, and as a GBE we are obviously happy to do so.

I will now move to the set of charts that we have distributed. The first chart that you will see there is on our

fibre to the premises brownfields performance. You will see that the lower set of five bar graphs is what we

presented to the JCNBN in October. You can see that we have labelled those as the baseline. Our intention is to

keep a running comparison compared to that baseline, so what we have done this time round is to present another

set of charts, the upper set, which is the actuals to the end of January and the forecast to June. As you can see, we

are tracking reasonably well against the projections we made in October, although, as you would expect in a

project like this, there are some ups and downs as we progress through the roll-up ramp. Just to remind you, the

network design documents and the construction commenced graphs—which are the first two starting from the

left—are largely in NBN Co.'s hands. The Telstra commencement notices and the final contract instructions

graphs—which are the third and the fourth that you will see there—require collaboration between our

construction partners and ourselves. Once the contract instructions are finalised, the premises passed—which is

the last graph on the right—is largely in the hands of our construction partners.

As you know, we have four construction partners working towards the June 2013 target of 286,000 premises

passed in brownfields. The chart shows that, collectively, our construction partners achieved the numbers we

projected by end of January. You will also notice, if you look carefully there, that we have slightly lowered the

number of premises forecast to be passed by the end of June 2013. In October we were forecasting just under

300,000 premises passed; we are now forecasting almost exactly the target of 286,000. The reason for the change

is that one of our construction partners has significantly reduced its forecast since we presented back in the

October time frame. As it now stands, we have four construction partners: Silcar in Queensland, New South

Wales and the ACT, who are targeting approximately 60 per cent of the June target; Syntheo in Western

Australia, South Australia and the Northern Territory, who are targeting approximately 17 per cent; Transfield in

Victoria, who are targeting 13 per cent of the total; and Visionstream in Tasmania, who are targeting about 10 per

cent of the June targets. I would also remind you that it takes approximately one year from construction

commenced to an FSAM being passed. As I have mentioned previously, that is an average time. We expect it to

take somewhat longer at the beginning of the build and reduce over the first three years—and that is a clear

indication of what we are seeing.

What is not shown on these charts—

Senator IAN MACDONALD: Chair, can I just ask if you can find out from Mr Quigley how long this

opening statement is going to be. Estimates is about senators asking questions about things they want to know

from the witnesses.

CHAIR: Senator Macdonald, I know what estimates are about and—

Senator Conroy: I know the facts terrify you, but there are facts that are relevant.

Senator IAN MACDONALD: This is an estimates committee.

Senator Conroy: There are facts that are relevant that you just do not want to hear—

Senator IAN MACDONALD: You borrow money to advertise your things.



Senator Conroy: so you can continue to spread the misinformation and mislead the Australian public.

Senator IAN MACDONALD: This is about senators having the opportunity to question public servants about

the expenditure of money.

Senator Conroy: This is all about expenditure.

CHAIR: Order, Senator Conroy! Order, Senator Macdonald!

Senator IAN MACDONALD: This is about us asking the questions, not about a presentation that you are

spending $20 million on trying to convince the Australian public.

Senator Conroy: You cannot stand to find out how well the project is going.

CHAIR: Senator Conroy, we are interested in the facts and Mr Quigley is presenting the facts. How long do

you think, Mr Quigley, it will take to present these facts?

Mr Quigley: Probably about as long as it took Senator Macdonald to ask that question. A couple of minutes.

Senator IAN MACDONALD: I beg your pardon.

Mr Quigley: Probably the same amount of time that you have just spent asking that question, Senator

Macdonald.

Senator IAN MACDONALD: You are incredible!

CHAIR: Okay, carry on.

Mr Quigley: For those FSAMs where we have now been in service for more than 12 months or more, take-up

is about 25 per cent, and in some locations it is above 50 per cent. The average overall across brownfields is

currently about 17 per cent. As we add more footprint over the coming months, that percentage will obviously

drop until we activate more customers. This is a very high take-up rate on any international comparison and it is

simply incorrect to say that take-up rate is slow on the NBN. As you all know, the whole issue of take-up is

somewhat moot anyway, as we have now initiated the disconnection process. The next three charts you can see on

LNDN capital expenditure, wireless and satellite—

Senator IAN MACDONALD: Mr Chairman, I again raise the point of order. Could you ask this witness how

long he is going to take.

Mr Quigley: Probably about another 30 seconds, I think.

CHAIR: Senator Macdonald, Mr Quigley has indicated that it will not be long. Senator Macdonald, we have

been here since nine o'clock this morning and the whole program has operated without any angst or rancour. You

have been in spasmodically from time to time today—

Senator IAN MACDONALD: But, Mr Chairman, I do not need a lecture from a chairman as bad as you are.

So just keep your advice to yourself. I am not interested in lectures.

CHAIR: Well, Senator Macdonald, that just demonstrates it. You will have to listen to it. When you have

finished I will start again.

Senator Conroy: Senator Macdonald, I know that is your standard form of operating but you are —

CHAIR: Senator Conroy, I do not need your help on this, far from it. Senator Macdonald, if you would just

behave then maybe we can get this through.

Mr Quigley: So the next three charts, as I said, show capital expenditures are unchanged since October

because they reflect, I think, our growing confidence in those projections. The final chart is similar to brownfields

but it is for greenfields or new developments. You can see that is also going pretty well. We have been putting a

focus on premises activated in the last few months and we will continue to do that, together with a focus on

increasing footprint. We would expect to update the JCNBN with our March numbers at the meeting in April and

update this committee with our April numbers at the estimates hearing in May. My colleagues and I are now

happy to take questions.

Senator BIRMINGHAM: Mr Quigley and team, can I start with some answers to questions on notice that

were provided to the committee this afternoon, being answers Nos 374, 366, 324, 386, 391. There may be others

but all of them start with the same paragraph and that paragraph states, 'Now that NBN Co. has reached volume

rollout it is impractical for NBN Co. to provide ad hoc updates on financial and deployment metrics to a level of

granularity not already provided for in public releases, parliamentary reporting processes and regular rollout

information provided on our website for the use of access seekers.' In the main these answers all go on to simply

provide an identical table, no matter what the question asked was, of four columns with some metrics from June

2011, June 2012, December 2012 and June 2013. Mr Quigley, could you explain for the benefit of the committee,



given this now appears to be, I assume, a statement informing the committee of what NBN Co. expects its new

standard operating procedure in answering questions to be, what this will mean in terms of the level of

information provided in answer to detailed questions asked by senators.

Senator Conroy: Now, look, your as usual ability to distort shines through, Senator Birmingham. That is your

verballing of the answers you have got. What I think you will actually find is that the information you have been

provided is the latest material produced not that long ago, only a few weeks ago. I actually think if you look at

that information you will see it is very useful. I think if you actually took the time to do your own research instead

of wasting taxpayers' money you would find almost everything that you were seeking is available online, on

NBN's website—all the construction and all of this is actually all there if you are not too lazy to go and look for it.

So you have been given a summary. What I can probably say—

Senator Ian Macdonald interjecting—

Senator Conroy: Why don't you just be quiet, Senator Macdonald.

Senator HEFFERNAN: With the computer off your brain would go dead.

Senator Conroy: You have never turned your brain on, Senator Heffernan, okay? Like the computer you have

never turned on, you have never turned your brain on, so don't try and surprise us today.

Senator HEFFERNAN: Full of shit.

CHAIR: Order! You should withdraw that.

Senator Conroy: Senator Birmingham, what I was going to finish up by saying is that I think NBN are in the

process of pulling together a different level of detailed information. So they are still in the process of pulling that

together and I think there will be lots of information more regularly than has been the case, as has been agreed by

the parliament, and they are still finalising how they can pull all that together at the moment. So I actually think

you will find there is very regular information going to be coming from the company in a relatively short period

of time. But I do not want to pre-empt it. They are still working internally on this. But there will be lots of

information, not as you have chosen to try and characterise it as no information.

Senator BIRMINGHAM: Senator Conroy, firstly, in relation to your aspersions about how much

consideration I have given to these answers that have been given, you know full well that I have been sitting in

this chair all day today and these answers have only been provided to senators this afternoon.

Senator IAN MACDONALD: Yes.

Senator BIRMINGHAM: So you know completely well that the capacity to sit down and seriously digest

this information, whether it is the stuff that was given to the committee on Friday afternoon or the stuff given to

the committee yesterday—let alone stuff given this afternoon—is limited.

Senator Conroy: Senator Birmingham—

Senator BIRMINGHAM: Senator Conroy, I listened to your diatribe in silence.

Senator HEFFERNAN: Full of shit.

Senator BIRMINGHAM: Thank you.

CHAIR: Senator Heffernan, if you keep making remarks like that you should withdraw it. You should not be

swearing at Senator Conroy.

Senator HEFFERNAN: I was not swearing.

CHAIR: You are.

Senator Conroy: Senator Heffernan, you clearly uttered a profanity.

CHAIR: You should withdraw.

Senator Conroy: You clearly uttered a profanity. You have obviously been drinking. Go somewhere else and

annoy somebody else.

Senator HEFFERNAN: Excuse me?

Senator Conroy: Go somewhere else.

Senator HEFFERNAN: You can withdraw that if you like. I have not been bloody drinking.

Senator Conroy: I just assumed that your bad language was due to that.

Senator HEFFERNAN: No, that is just the bush, mate.

CHAIR: Order!

Senator Conroy: Go in the bush. There is no excuse for your conduct.



Senator HEFFERNAN: There is not one single, solitary soul in government in the parliament who lives in

the bush.

Senator Conroy: There is not any excuse for your conduct.

Senator HEFFERNAN: Not one single, solitary soul lives in the bush.

Senator Conroy: You cannot utter profanities in the chamber or in here.

Senator HEFFERNAN: Well, you cannot put remarks like that and get away with it.

Senator Conroy: I withdraw.

Senator HEFFERNAN: Then I withdraw too, so we are all okay.

Senator Conroy: Fine.

CHAIR: We cannot go on like this all night.

Senator IAN MACDONALD: A bit of fairness in chairmanship would stop it.

Senator BIRMINGHAM: I think there was a mutual withdrawal just given.

Senator Conroy: There was.

CHAIR: So we can make progress.

Senator BIRMINGHAM: With that, of the examples I just gave, I draw the minister's attention or Mr

Quigley's attention to question on notice No. 324 from my colleague Senator Bushby, who is sitting here at the

table. The question asked:

Can you also take on notice to find out how many new customers have signed up to the NBN in Tasmania in the last 12

months? How are business take-ups going in Tasmania?

The answer is the paragraph I read to the committee before—'it is impractical for NBN Co. to provide ad hoc

updates on financial and deployment metrics to a level of granularity not already provided for'—and then this

table that provides not one iota of information specific to Tasmania. So how am I, or how is Senator Bushby,

meant to find in this answer the answer to his question?

Senator Conroy: Senator Birmingham, as I said, there is a whole range of information publicly available. If

your side are too lazy to go into the website and look for it—and a large amount of this material is available

online—we are not going to do your work for you as a government. So you go and do your own work. As I said—

and I repeat it for both you and Senator Bushby—NBN are in the process of pulling together internal reporting

procedures about extra information—more than has been produced before, and more regularly. They are in a

process of doing that, and I think that will satisfy—well, it will not ever satisfy you and the opposition in your

constant negativity. But I think you will find that the level of information that you will be getting in the relativity

near future—I am not saying tomorrow or next week, but relatively soon—will be substantially more than you

have got more regularly. A lot of the information you have asked for you are just too lazy to go and look for

online.

CHAIR: Senator Conroy, just before we go, could I ask you to please answer the questions. Do not make

commentary, because this is going to be a long, hard night for everyone if it continues the way it is going. I do not

mind, but I really do not think it does the Senate estimates process much credit, and we really need to try and deal

with it. The NBN is an important part of building the infrastructure of this country, and I would like to see it

treated seriously at this committee. I say that not just to Senator Conroy but to everyone.

Senator HEFFERNAN: Can I thank you, Mr Chairman.

CHAIR: No, no thanks.

Senator BIRMINGHAM: Thank you, Chair, for those comments. Senator Conroy, does NBN Co. accept that

the Senate estimates process is a parliamentary reporting process?

Senator Conroy: Absolutely.

Senator BIRMINGHAM: In that case, seeing as NBN Co. is acknowledging that it will at least provide a

level of granularity in its parliamentary reporting processes, why has it been unable in the period since October of

last year—having provided these answers only today—to give answers to the questions that were asked?

Senator Conroy: As I said, at the moment NBN Co. are going through a process of pulling together a whole

range of new metrics that will inform the parliament. They currently meet all of their reporting requirements.

Much of the information you are seeking is online. If you bother to go and look and do a little bit of adding and a

little bit of subtracting, I can promise you, people have already done this. You are even too lazy to read other

people's work online who have calculated a lot of the things that you are asking. If you were not too lazy to go



and do your own work and demand everybody else waste taxpayers' money because you cannot be bothered

reading online, that is fine.

Senator BIRMINGHAM: Senator Conroy, as you continue to accuse us all of being lazy it seems—myself,

Senator Bushby and everybody else around the table—firstly I point out to you that NBN Co. nowadays has more

staff than every Liberal and National Party MP put together currently have—

CHAIR: You cannot actually blame the broadband on NBN.

Senator BIRMINGHAM: Most of that is contracted out, Senator Cameron. Frankly though—

Senator Conroy: It is a very simple thing to do.

Senator IAN MACDONALD: According to you. Full of Labor Party apparatchiks right from the top.

Senator BIRMINGHAM: Frankly, Minister, these answers show complete contempt to this Senate

committee. Rather than NBN Co. demonstrating any desire to work with the Senate committees, we have been

stuffed around since October of last year in terms of getting answers to these questions, and then they get dumped

on us today and completely ignore the questions that have been asked. Now, is the contempt your fault, NBN

Co.'s fault or a combination of all of you?

Senator Conroy: As I said, there is a whole range of new information being pulled together at a much greater

level of granularity than is currently publicly available, and I am sure by the next estimates, you will have so

much information that even you will not be able to complain.

Senator BIRMINGHAM: Does NBN Co. not know how many new customers they have had in Tasmania

since October?

Senator Conroy: As I said, the level of granularity that you are seeking is—

Senator IAN MACDONALD: What is this granularity?

Senator WILLIAMS: Give us that in shearer's language, will you?

CHAIR: Order!

Senator Conroy: We have already had some bush talk in your absence Senator Williams.

Senator WILLIAMS: I am sorry I missed that.

Senator Conroy: We will try not to go back there.

Senator HEFFERNAN: We have called a truce on that.

Senator Conroy: Yes, we have called a truce on that. There will be so much information, even you will

struggle to criticise the performance.

Senator Bushby interjecting—

Senator Conroy: Seriously Senator Bushby, I am sure you will not have a problem with the amount of

information you will have, but the NBN are in the process of pulling together—


CHAIR: Senator Birmingham, you have the call and I ask other senators not to engage while Senator

Birmingham is asking questions.

Senator BIRMINGHAM: Senator Conroy, do you think it is showing respect for the Senate estimates

process to answer these questions with non-answers an hour ago?—questions that NBN Co. has had since

October last year?

Senator Conroy: It is more respect than previous ministers sitting on this side treated the committee with, I

can assure you. I would be getting answers after the Senate estimates were started, held back till after the Senate

estimates were finished. I was regularly treated like that.

Senator IAN MACDONALD: That is a lie.

Senator Conroy: That is not a lie. That happened regularly, Senator MacDonald—

Senator BIRMINGHAM: And I thought you promised a higher standard, Minister.

Senator Conroy: I am treating this committee far better than this committee was treated by previous Liberal

ministers.

Senator BIRMINGHAM: Well this is a completely contemptuous way to treat the committee, but can I go to

the specific question here, and that is to take the easy one of Senator Bushby's that I have highlighted—because

there are numerous others—how many new customers has NBN Co. signed up in Tasmania in the last 12 months?



Senator Conroy: I am happy to take that on notice.

Senator BIRMINGHAM: You did take it on notice and we did not get a bloody answer!

Senator Conroy: I am happy to take it on notice.

Senator BIRMINGHAM: You took it on notice and the answer does not tell us.

Senator Conroy: I am happy to take it on notice for you.

Senator HEFFERNAN: There is a bloke sitting next to you that gets paid twice or three times what you get

paid—has he not got a tongue?

CHAIR: Senator Heffernan, order!

Senator Conroy: Questions come through the minister.

Senator HEFFERNAN: Well he is sitting there on $500,000 or $600,000 and he cannot talk.

CHAIR: Senator Heffernan, order!

Senator Conroy: As I said, at the next estimates there will be a greater degree of information available,

because NBN Co. are working to pull all that together—

Senator Heffernan interjecting—

CHAIR: Order!

Senator Conroy: You can feel free to quote this back to me.

CHAIR: Order! Senator Conroy! Senator Heffernan, will you withdraw that remark! You said that Mr

Quigley is brain-dead!

Senator HEFFERNAN: Yeah, well I'm—

CHAIR: Will you withdraw?

Senator HEFFERNAN: I didn't—

CHAIR: You should withdraw!

Senator Conroy: Can you talk?

CHAIR: This is a joke! Senator Birmingham.

Senator BIRMINGHAM: Thanks, Chair. Senator Conroy, I will express quite simply, and as politely as

possible, extreme disappointment that the efforts of coalition senators, be they myself or any other who have

sought to ask simple, straightforward questions about NBN Co. have been treated with such contempt in terms of

the complete ignoring of those questions. When you come into this place, as you did earlier this evening, and say

that the government needs to spend $24 million of taxpayer money advertising the NBN Co. because of

misinformation that exists—

Senator Conroy: No, we have put it to the Australian public to debate—

Senator BIRMINGHAM: Senator Conroy, there is little doubt that misinformation is hardly aided, if it does

exist, by your failure to answer the most simple of direct questions.

Senator Conroy: Do not even pretend you are interested in information! You have just tried to shut down Mr

Quigley, who was giving you facts. You are not interested in facts, Senator Birmingham. You and your

colleagues are interested in spreading lies and misinformation about the NBN consistently. Consistently!

Senator WILLIAMS: That is because we cannot get answers!

Senator Conroy: You get plenty of answers; you just do not want to hear them. Mr Quigley has just read out

to you—and you tried to shut him up—information about the rollout: where the rollout is at, where construction

commenced is, what the targets are and how a company is meeting them. You do not want to hear facts about the

NBN.

Senator IAN MACDONALD: We want to hear the facts that we are talking about—

Senator Conroy: You consistently want to mislead the Australian public, to mislead—

Senator IAN MACDONALD: It is the role of the parliament—

Senator Conroy: It is not the role of parliament to mislead the Australian public!

Senator BIRMINGHAM: Mr Chairman—

Senator Conroy: Now, if you would like to ask some questions—

Senator BIRMINGHAM: We are asking for—



Senator Conroy: If you want to ask some questions, we can move on.

Senator BIRMINGHAM: When are you going to answer them?

Senator Conroy: I am happy to sit here for the next two hours making this—

Senator BIRMINGHAM: At least one question—

Senator IAN MACDONALD: You are the one—

CHAIR: Senator Macdonald, it is very difficult—

Senator IAN MACDONALD: Can I express disappointment—

Opposition Senators interjecting—

CHAIR: Order!

Senator HEFFERNAN: Could I just—

CHAIR: Order! Oh!

Senator BIRMINGHAM: I will—

CHAIR: Order! Look—this is your time, Senator Birmingham, and I have to say to you—

Senator BIRMINGHAM: Yes, and I—

CHAIR: Senator Birmingham, just let me say this: I do not care, really, if your people here—the coalition

senators at the table—behave this way. It just means that you do not get to asking the questions that you want to

ask.

Senator HEFFERNAN: We are not getting the answers! That is the point. I mean—

CHAIR: Well, you can keep this up all night!

Senator HEFFERNAN: —shut up and—

Senator BIRMINGHAM: Chair: out of greater respect for you than the minister has shown to the committee,

I will leave these answers, or non-answers, to one side and we will try asking some new questions.

Senator Heffernan interjecting—

CHAIR: Order! Senator Heffernan—

Senator BIRMINGHAM: We will see if we can get any sense with new questions.

CHAIR: Mr Quigley was trying to give you some answers.

Senator HEFFERNAN: I am trying to get a word out of the bloke with the glasses to the left of—

Senator BIRMINGHAM: Between June 2011 and March 2012, the NBN contractor Syntheo commenced

work, as I understand it, on 25 fibre-serving area modules in South Australia, Western Australia and the Northern

Territory. Is that correct?

Senator WILLIAMS: I take it they don't know.

Senator HEFFERNAN: Don't know! He can talk—ooh!

Mr Quigley: Would you repeat the question, Senator Birmingham?

Senator Conroy: He was seeking information—you caught him by surprise.

Senator HEFFERNAN: He was asleep!

Mr Quigley: I was not paying attention to you, Senator Heffernan.

Senator BIRMINGHAM: Between June—

Senator HEFFERNAN: Do you want to—

Senator Conroy: Bill, please—

CHAIR: Mr Quigley, do not engage with Senator Heffernan. It would be totally counterproductive.

Senator IAN MACDONALD: Try answering the question!

Senator BIRMINGHAM: Between June 2011 and March 2012, did the NBN Co. contractor Syntheo

commence work on 25 FSAMs, or fibre-serving area modules—in South Australia, Western Australia and the

Northern Territory?

Mr Quigley: That sounds the right order of magnitude. I would have to check on exactly those numbers—

obviously, I do not have them with me—but that sounds about right.

Senator HEFFERNAN: You could bring them and—



Senator BIRMINGHAM: Okay. And would the order of magnitude in terms of the number of premises those

25 FSAMs cover constitute about 66½ thousand premises?

Mr Quigley: That is about right also, yes—2,500 x 25 is about right.

Senator BIRMINGHAM: Okay. Noting that this work was commenced between June 2011 and March 2012,

how many premises in these FSAMs are able to obtain active services today, 19 months after that work first

commenced?

Mr Quigley: That we will have to have a look at. I have not got that detail with us tonight, but we can work it

out.

Senator BIRMINGHAM: Are you able to tell me whether particular localities have been switched on as yet

or whether premises are able to get an active connection in them yet?

Mr Quigley: We have certainly publicised on our website every locality and every premise that has active

service.

Senator Conroy: As I said, you can go to the website and have a look. They are the purple areas.

Senator BIRMINGHAM: So Geraldton in WA?

Mr Quigley: Geraldton is not active at this time.

Senator BIRMINGHAM: Darwin in the Northern Territory?

Mr Quigley: No, it is not active.

Senator BIRMINGHAM: Modbury in South Australia?

Mr Quigley: No, that is not active.

Senator BIRMINGHAM: Prospect in South Australia?

Mr Quigley: No, these are all under construction. These are all contract instructions we have with Syntheo.

As I said, Syntheo are doing Western Australia, the Northern Territory and South Australia.

Senator BIRMINGHAM: Victoria Park in Western Australia?

Mr Quigley: No, that is not switched on yet.

Senator BIRMINGHAM: Mandurah in Western Australia?

Mr Quigley: No, these are all listed as being under construction.

Senator Conroy: These are all listed as being under construction, just to be very clear.

Senator BIRMINGHAM: These are the 25 FSAMs that commenced work between June 2011 and March

2012, 19 months after work first commenced. Are any premises able to access a connection?

Mr Quigley: In Western Australia, no. At this time they are not.

Senator BIRMINGHAM: In South Australia, are any—

Mr Quigley: In South Australia there are some premises. As you know, we have Aldinga, which has services

running on it—or Willunga. But the Northern Territory, not at this time.

Senator BIRMINGHAM: Of the 25 FSAMs that commenced work in that time frame none have a single

premise—

Mr Quigley: That is correct. They have not been switched on yet.

Senator BIRMINGHAM: Why is that the case?

Mr Quigley: Because the contractor we are using there is ramping up and obviously facing some challenges.

We are working with them to try to overcome those. As I mentioned earlier on we had a shift in the forecast of the

number of premises since October till now. It is in those regions that that shift has taken place.

Senator BIRMINGHAM: Your website indicates and provides a list of current rollout locations. It was

updated 12 February 2013, which happily appears to be today.

Mr Quigley: That is part of our normal, routine, regular updating of our website.

Senator BIRMINGHAM: Excellent. What locations are there in South Australia that are described as current

rollout locations?

Senator Conroy: I am confused by your question.

Senator BIRMINGHAM: What locations in South Australia are currently having rollout occurring?

Mr Quigley: There are a number of areas.



Senator Conroy: It is online, Senator Birmingham.

Senator BIRMINGHAM: On the table I found earlier today—and I have a copy in front of me—

Senator Conroy: So you have been doing some work online. I told you it was all there if you went and

looked. It is all there—dates and everything. It is all there online.

Senator BIRMINGHAM: Your smart-arse comments really do not endear you to anybody, Minister.

Senator Conroy: I do not wish to be endeared to you. I am just pleased that you have found the website.

CHAIR: I think we should all stop being so precious. If you want to play the game the way it is being played

then it will just continue like this.

Senator BIRMINGHAM: Minister, I just had to start going through individual FSAMs to get Mr Quigley to

give me an answer on whether any areas have been switched on, and we got the answer that none of them have.

This list, claiming to be updated on 12 February 2013, lists current rollout locations. It lists a range in New South

Wales, Victoria, the ACT and Tasmania but none in Western Australia, South Australia or the NT. Is that correct,

Mr Quigley?

Mr Quigley: As you can see on the website, Senator, we update regularly the new locations in which

construction has commenced, we provide the locations of which services have been turned on and we provide an

estimate of when we expect services to be available in each of those locations. We do it, as you can see, FSAM by

FSAM, so there is a lot of detail on that website.

Senator Conroy: And a lot of FSAMs have been turned on and are in the process of being turned on. I turned

one on last week.

Senator BIRMINGHAM: Mr Quigley, I am happy to give you a copy of this. It is actually your 'registering

your strata building' information that I was looking at earlier today, but it has this list at the bottom. Perhaps you

can explain to me how it is that everywhere outside of the eastern states finds nowhere on that list of current

rollout locations.

Mr Quigley: Are you taking about the fact that we have not turned on services yet in some of those locations

in Western Australia, the Northern Territory and South Australia? Is that the question, Senator?

Senator BIRMINGHAM: This is your document, Mr Quigley. Wait until the copy gets to you and you can

explain to the committee what it actually means.

In your opening statement you did indicate that one contractor had caused you to have to reduce your estimates

of June 2013. You did not indicate that contractor at the time, but can we assume from the exchange we just had

that that is Syntheo?

Mr Quigley: Yes, that is correct. The issue is, as you have seen, in Western Australia, the Northern Territory

and South Australia. We are working closely with Syntheo to try and recover their original forecast.

Senator BIRMINGHAM: What are the issues as to why delivery is not occurring in those states?

Mr Quigley: There are a variety of them. There are a range of issues. In projects such as this, where

contractors are mobilising, there are a range of issues.

Senator BIRMINGHAM: Such as? Perhaps, Mr Quigley, you could tell me how much Syntheo have had to

write down their estimations of what they will achieve by June this year.

Mr Quigley: At this point in time I feel, since we are in discussions with the contractor, it is probably not

appropriate for me to start talking about the exact numbers, other than to say there has been a significant

reduction—

Senator Conroy: He has tabled a graft.

Mr Quigley: I have also indicated on the current forecast from our four construction contractors what

percentage each of them is committing to achieve of that. I have given that information, but to talk about a

specific contractor and the actual shift in the numbers I think is inappropriate, given we are in discussions with

them.

Senator BIRMINGHAM: How many premises will be passed in South Australia by June this year?

Mr Quigley: I cannot give you the number on South Australia directly, but what I can tell you is in the

Syntheo footprint, which is the Northern Territory, Western Australia and South Australia, and I said 16 per cent

of the total of the target, which we are aiming for in June.

Senator Conroy: So 16 per cent of 286.

Senator BIRMINGHAM: Sixteen per cent of the total target?



Mr Quigley: Sorry, it is 17 per cent.

Senator BIRMINGHAM: Does NBN Co. have any contingencies in place for achieving its rollout targets if

Syntheo advises in any further way that it is unable to deliver according to the schedule set out in the corporate

plan?

Senator Conroy: That is called a hypothetical. Mr Quigley has already indicated they are working closely

with the company to achieve the target.

Senator HEFFERNAN: Is the company financially distressed?

Senator BIRMINGHAM: What contingencies does NBN Co. have in place where contractors fail to meet

their targets?

Mr Quigley: We have a range of the usual commercial conditions you would expect in such contracts if a

contractor is in default.

Senator HEFFERNAN: Such as?

Mr Quigley: We apply, obviously, penalties. We are not going into details of the contracts.

Senator Conroy: This is a hypothetical question. The company are not in default.

Mr Quigley: No, they are not in default.

Senator HEFFERNAN: Do they get paid in arrears or—

CHAIR: Order, Senator Heffernan! You do not have the call.

Senator HEFFERNAN: I think it is a fair question to ask.

Senator Conroy: You are asking commercial-in-confidence questions.

Senator BIRMINGHAM: What is the nature of payments made to Syntheo? Are there up-front payments

made?

Mr Quigley: Yes, there are up-front payments made for mobilisation for all of our construction contractors.

Senator BIRMINGHAM: Can you talk us through the different types of payments that are made?

Mr Quigley: The payments are phased relative to the different phases of the project. There is a design phase,

then there is a build phase, and there are various phases in the build. The payments are obviously paid at the

different phases, as they are completed.

Senator BIRMINGHAM: What payments have been made to Syntheo to date in relation to these 25 FSAMs?

Mr Quigley: I do not have that number with me. There have obviously been some payments made for the

designs of each of those FSAMs and some mobilisation payments. I could not give you the number off the top of

my head. I would have to take that one on notice.

Senator BIRMINGHAM: When did NBN Co. become aware of this critical problem with Symbio that they

were unable to meet the rollout target set by NBN Co.?

Senator Conroy: Sorry, the premise of your question is false.

Senator BIRMINGHAM: It is not a problem? You said they are not meeting the rollout targets.

Senator Conroy: No. We set a corporate target of 286 and, notwithstanding some challenges, NBN Co. still

believe they can meet that target. The premise of your question is flawed. Would you like to ask Mr Quigley

whether or not the target can still be met rather than try to suggest that it has not been met? If you choose to look

at the information provided to you right here this evening, information you were trying to stop Mr Quigley talking

about, you will see that the company is on target. It is right here in front of you if you choose to look. The truth

hurts but why don't you take a look?

Senator BIRMINGHAM: Does NBN consider it a problem or a concern that Symbio has failed to meet its

targets?

Mr Quigley: They have not failed to meet their targets.

Senator Conroy: They have not failed to meet their targets. I repeat: that is just a false statement that you are

asserting. It is just an assertion you are making. It is not a fact.

Senator BIRMINGHAM: Perhaps if Mr Quigley gets the chance to not have to try to talk over the top of you

like the rest of us have to try to do, Senator Conroy, I might be able to hear what Mr Quigley just said.

CHAIR: Senator Birmingham, it is quite clear that both Senator Conroy and Mr Quigley have answered the

question. They may not have answered the question how you would like them to answer the question.



Senator BIRMINGHAM: Could Mr Quigley please repeat what he said?

Mr Quigley: In terms of concerns, we monitor all of our contractors at various sites and we have 25 major

ones of which four are construction contractors. We are constantly working with them if issues arise to overcome

those issues. They arise all the time and we overcome them on a regular basis. As of now we are giving you the

latest information that says we have had a reduction since October in the forecast that I talked about. We are

working with contractor to recover that situation.


Senator SINGH: Mr Quigley, I wanted to ask some questions that would be of interest to the Australian

public—

CHAIR: Senator Singh, before you do, can I just clarify one issue in the last session: Senator Macdonald said

that I took up 20 minutes of the time.

Senator Conroy: Was he exaggerating?

CHAIR: According to the secretary, who takes notes on these issues, it was 12 minutes. That is just to

clarify—12 minutes out of 30. Thanks, Senator Singh.

Senator Conroy: You said 20? The truth is out there somewhere.

CHAIR: Yes, the truth is out there, and I will back the secretariat any day.

Senator SINGH: Mr Quigley, I have some questions that I think would be very relevant and very interesting

for the Australian public, who, after all, are the people that we represent here. The questions that we ask should be

of interest to them, not just to ourselves.

My question is in relation to retail prices on the NBN. Before I get to that, I wanted to ask about the average

revenue per user, ARPU. NBN Co.'s special access undertaking, or SAU, sets out that NBN Co.'s prices will

decline in real and nominal terms. However, the press has given some attention lately to NBN Co.'s ARPU—

average revenue per user—mainly in response to some claims made, I understand, by the member for Wentworth.

Are you happy to clear this up for the committee in the sense of whether NBN Co.'s prices will go down in real

and nominal terms?

Mr Quigley: In our corporate plan we project that our prices will decline over time. What I mean by that is as

for the prices, for example, for a 25-5 service or a 50-20 service we are projecting that they will decline over time

both in real and nominal dollars. Likewise on the other component, which is the connectivity virtual circuits,

which is a kind of usage charge, we are expecting also per megabit per second that will decline. Simultaneously,

of course, we expect people to be upgrading their speeds and upgrading their usage. They will be using more and

more downloads.

Senator Conroy: But that will be their choice.

Mr Quigley: That will be their choice. They do not have to, of course. They will get a greater utility, which

means that our average revenue per user we are projecting to increase while prices per unit go down.

Senator SINGH: So they will actually go down?

Mr Quigley: Yes.

Senator SINGH: So can I follow from that question with this: now looking at the retail prices on the NBN if

you can provide the committee with an overview of the current retail pricing on the NBN and how it compares to

the existing ADSL, ADSL2+ that we all know of and pricing on the copper network.

Mr Quigley: We have in fact on the last couple of corporate plans put in a plot that does that comparison of

NBN based retail pricing. Remember we are a wholesaler—

Senator SINGH: Yes, I understand.

Mr Quigley: but we do not control the retail prices. The retail price is compared with the retail price for

services on DSL/HFC. What we find when we do that comparison, and we compare it looking at different plans,

so in other words how much download people are allowed on a monthly basis in gigabytes, is you would have to

say that we compare pretty well. The prices obviously for different plans are dotted about but they are largely

comparable in terms of retail prices but for a superior service.

Senator SINGH: On average?

Mr Quigley: If you look at our 25-5 service you will find that has much the same retail prices as an ADSL2+

service, the difference being with ADSL2+ it is very, very unlikely that you would get 25 megabits per second

download and certainly not five megabits per second upload. It is almost impossible because the peak speed is at



24 and it is distance dependent. So what you have basically got is a very, very similar retail price but for a quite

superior product.

Senator SINGH: Okay. I understand that recently NBN Co. has also announced that it will be able to provide

those speeds of 25 megabits down and five megabits up on fixed wireless and satellite as well—

Mr Quigley: That is correct.

Senator SINGH: which I think will be obviously great news for the bush in that sense. Mr Quigley, obviously

this is of recent interest for those senators that come from Queensland, I am sure, and from northern New South

Wales. In the context of flooding that has affected those areas of Queensland and New South Wales, the subject

of network resilience has become increasingly urgent in those areas. Can you talk about the resilience of the

network that you are building and how it performs in those kinds of circumstances compared to, say, the existing

copper network? Obviously, in the future we could have more extreme weather conditions—we talked a lot about

that yesterday in this committee—and with the rollout of broadband it would be good to know, compared to our

copper network, how it performs as to resilience in those kinds of environments.

Mr Quigley: Probably the most vulnerable area of a network, obviously, is the outside plant particularly if

there is active equipment in the outside plant or if there are conductors carrying current. For a copper based

service the copper actually carries a current. It is metallic and it carries a current whereas if it is fibre there is no

current; there is no electricity travelling down the fibre, obviously. So what tends to happen is the fault rates that

are found overseas on fibre based networks are considerably lower than fault rates on copper networks, and I

think Mr Steffen probably knows the numbers in places such as Verizon and BT and other places. I think it is

probably five or six times, so a factor of five or six—isn't it, Ralph?

Mr Steffens: Yes, seven to eight, actually.

Mr Quigley: Seven to eight—the difference in the number of outages you get. In talking about Queensland,

by the way, the other thing we noticed is that, where we did have outages due to the floods, they did not occur on

the fibre-to-the-prem network, they occurred on our greenfield where we put nodes or cabinets outside.

Subsequently, by the way, those will be retired all the way from the exchange to fibre. They were where we had

failures, which is not surprising, because that is active electronics in a cabinet, in a node, deployed out in the field.

In terms of resiliency overall, if you are asking a larger question, we have tried to make sure that we have built

resiliency into the network. So we duplicated fibre loops back from the fibre distribution hub—that is the little

cabinet that supplies about 200 homes—back to the fibre access node. Then we have rings in our transit network.

So, once again, resiliency duplication of the paths between the fibre access nodes and the points of interconnect.

We have duplication in the exchange buildings themselves, so if there were a card failure, another card can take

over. You cannot duplicate the entire network but, where it has been prudent and sensible to duplicate facilities

and build in resiliency and redundancy, we have done so.

Senator SINGH: It would be remiss of me to not ask a question, as a Tasmanian senator, about Tasmania. My

Tasmanian Senate colleague Senator Bushby is here as well and, I am sure, interested in Tasmania, and of course

my Senate colleague Senator Bilyk.

Senator Ian Macdonald interjecting—

Senator SINGH: I noticed, Senator Macdonald, you were very quiet when we were hearing answers about

Queensland and I am pleased to see that you are interested in my state. I would like to know—and perhaps this is

more for Minister Conroy—about providing the committee with some kind of overview of NBN Tasmania's

recent activities. We know about the rollout and we have been provided with a lot of information about that side

of things. We are very pleased that, through the foresight of good Labor governments, we have Tasmania as the

first state having that rollout flexibility. If we could find about NBN Tasmania's recent activities so that we

actually know what is going on around, that would be very useful. Thank you, Minister.


Senator Conroy: Senator Bushby makes the point that that was one of the questions which I wanted to hold

back so that I could give you a detailed answer. Believe it or not, there are some people around the table, Senator

Bushby, who do not like Tasmania. I saw it coming from Senator Bushby and I was getting ready to answer that

when he raised it, but it has now been raised before. Not everybody wants to support Tasmania like you do,

Senator Bushby, and you might be shocked to hear that.

The charter of the NBN Tassie board outlines that the key role of the board is to work with NBN Co.

management to promote the successful rollout of the NBN in Tasmania and to stimulate innovation, new means of

delivering health, education and community services and the generation of business activity. So, I am very happy



both to Senator Singh for asking this and to Senator Bushby for putting this question forward. The board is

working with local councils and the state government to promote the opportunities presented by the NBN and to

ensure a smooth transition. The board also continues its stakeholder liaison with a range of other organisations

relevant to the rollout in Tasmania. These include key education stakeholders such as the University of Tasmania,

the CSIRO with its Australian Centre for Broadband Innovation, and the Institute for a Broadband-Enabled

Society. The board assisted the business sector to understand the benefits of the NBN engaging with the following

stakeholders: the Tasmanian Chamber of Commerce, the Launceston Chamber of Commerce and the Tasmanian

Institute of Chartered Accountants. The board conducted the following stakeholder engagements. It met with the

Premier of Tasmania, Mr David O'Byrne the Minister for Workplace Relations, Economic Development,

Innovation, Science and Technology and the Secretary of the Department of Economic Development, who made a

presentation to the Tasmania Department of Parks, a presentation to the board of the Department of Economic

Development, Tourism and the Arts.

It launched the Digital Coaching project with Minister David O'Byrne. It has had further meetings with Premier

Giddings and also further meetings with the deputy secretary of enterprise and regions, in the Department of

Economic Development, Tourism and the Arts, Ms Ros Harvey, and the minister, David O'Byrne. There were

further meetings with the secretary of the department of economic development and the Premier. There was a

meeting with Mr John Mcgee, director of Digital Futures Strategy and Innovation Division, Department of

Economic Development, Tourism and the Arts. It has made a presentation to the Launceston City Council's

Strategic Planning and Policy Committee.

NBN Co. has met with the mayors and councillors of Launceston City Council. The mayor of the Meander city

council, the mayor of the Dorset Council, the mayor of the George Town Council, the deputy mayor of the West

Tamar Council. NBN Co. met with the mayor and the deputy lord mayor of Hobart, the general manager of

Kingborough Council, the general manager of Sorell Council, the general manager of Launceston City Council. It

has also met with the Centre of Excellence project at the Launceston City Council. It has met with the Tasmanian

Chamber of Commerce and Industry Small Business Expo.

Senator IAN MACDONALD: Why don't you just say 'everybody in Tasmania'?

Senator Conroy: Now you are being unkind, Senator, to your colleague there. You have a Tasmanian senator

sitting next to you, Senator Macdonald.

Senator IAN MACDONALD: You are reading a list of every person in Tasmania!

Senator Conroy: There was the Australian Institute of Company Director's presentation at a small media

enterprise briefing. NBN Co. has met with the CPA, business and the boardroom, the national skills conference

and a small business forum. There was the 5 Days of Innovation festival, the Launceston Chamber of Commerce

board, Brand Tasmania Council network, the tourism industry state conference, the Tasmanian Institute of

Chartered Accountants—

CHAIR: Senator Conroy—

Senator Conroy: I am almost finished, Senator. NBN Co. met with the Australian Automobile Association

national conference. They are working with Human Interface Technology, HIT Lab, and Professor Thomas

Furness, the founding director. They are working with the Digital Futures Advisory Council for the strategy,

Professor Paddy Nixon. There is also the SenseT project with the University of Tasmania; the Australian Centre

for Broadband Innovation, with Mr Colin Griffith; the Digital Hubs program in Tasmania; the Institute for a

Broadband-Enabled Society, University of Melbourne; and many community forums and launch events and

federal departmental briefings. I am very pleased to get these updates from the Tassie board, and I look forward to

getting further reports as the ramp up of the rollout continues and more and more people are starting to use the

National Broadband Network. Apologies for the length, but they are doing an awful lot.

Senator SINGH: On the basis of the list, Minister, which is quite an extensive list and shows the breadth of

IT business and outreach in Tasmania, do you think Tasmania could become a silicon island?

Senator Conroy: Look at what is happening in the US with Google—whom Mr Turnbull derided to their face

in a famous conference over in Paris, where he told them they could not make a quid from rolling out a fibre-to-

the-home network. Google then announced that they were investing in Kansas—to fibre up in Kansas—and you

are seeing extraordinary interest in this from around the world but also from within the innovation community in

the United States. Kansas is now being described as a 'silicon prairie', because of the innovation that is starting to

flow. That is exactly what I would hope for. I am working with the Tassie board and those who are interested to

ensure that Tasmania could achieve that status. Tasmania will be, as you know, the first state fully completed.

Senator SINGH: That is right.



Senator Conroy: It has first-mover advantage and it has every opportunity to grab the sort of future that you

are seeing in Kansas. The support from the Tasmanian government has been tremendous. There are a few

knockers down in Tasmania. I do not actually count you as one of them, Senator Bushby, but there are a few

knockers down in Tasmania who want to see things go wrong—but the rollout is good. I think in the early stages,

the first 12 months, in Tasmania you are seeing 25-27 per cent in a couple of the areas. But every single

community in Tasmania has exceeded our early forecast of about 11 per cent take-up; every community in

Tasmania has exceeded that.

Senator IAN MACDONALD: So how many customers?

CHAIR: No. I understand, Senator Bilyk, you have got questions.

Senator BILYK: I do have just a few, Minister.

Senator Conroy: Another Tasmanian senator.

Senator BILYK: It is a very important issue to Tasmania, which takes me to my question. What would be the

result for Tasmania's ability to capitalise on the NBN if the rollout of the NBN were to be discontinued by a

future government? We have heard that the opposition are going to cut out the rollout of NBN, and another line

we have heard is that the opposition will leave it in Tassie. But, to me, that would not make it a national

broadband network; it would make it a Tassie broadband network. I am wondering what the implications might be

for the people in Tasmania who are trying to benefit from the NBN.

Senator Conroy: Thank you. That is another great question, Senator Bilyk.

Senator BILYK: Thank you, Minister.

Senator Conroy: It is hard to take a breath sometimes, partially out of excitement but partially out of trying

not to take up too much of the committee's time with my answers.

Senator IAN MACDONALD: Entirely hypothetical.

Senator BILYK: It is not hypothetical, Senator Macdonald. Your government said that that is what they are

going to do!

Senator Conroy: Can I make the point: Mr Abbott slithers down to Tasmania and says: 'Don't worry. We'll be

keeping it all.' What he does not say to them is that Mr Turnbull, just last week, called on NBN Co. in a fit of

arrogance—because he already thinks he is the minister, ignoring the election and the people of Australia—and

said: 'Pause all contracts. No more contracts to be signed.' So Mr Abbott is down in Tasmania, telling the people

in Tasmania, 'Don't you worry about it,' and Mr Turnbull is saying, 'Stop signing contracts.' These are not

consistent positions; but, most importantly, as I have said many times, the business model and the pricing model

of NBN Co. is based on a cross-subsidy—a cross-subsidy that essentially comes from Sydney, Melbourne and

Brisbane. So, if the network is not built in Sydney, Melbourne and Brisbane, the prices that people in Tasmania

are paying today cannot be cross-subsidised and will have to go up. So Mr Turnbull and Mr Abbott will slither

around this country, deceiving people about the prices that existing customers are going to be paying, because that

cross-subsidy is going to be ripped out. It is the official policy of Malcolm Turnbull and the official policy of Mr

Abbott that they will end this cross-subsidy. This mean those prices will go up. You cannot build a Tassie NBN

by itself at the prices that we are charging in Tasmania. So Sydney, Melbourne and Brisbane must be completed if

the prices are to stay down in Tasmania.

Senator BILYK: So it is like building the approach roads to a new bridge but not actually building the bridge.

Senator Conroy: Exactly.

Senator BILYK: Thank you, Minister.

Senator BUSHBY: Just going back to the answers to the questions on notice: first of all, I had four

outstanding questions on notice as of this morning, and a number of those have been answered. The due date was

7 December, as I understand it. I am just curious initially as to why—

Senator Conroy: We have already had a bit of this discussion. I am happy to revisit it.

Senator BUSHBY: You did not talk about why they are late.

Senator Conroy: What I said was that I was accused of treating the committee with disrespect, and I said that,

regularly, in the past, ministers had handed them out as we sat down or during the course of proceedings and

afterwards. I am treating the committee with more respect than the committee was treated with by previous

ministers. You have all the answers.

Senator BUSHBY: I do not have all the answers.

Senator Conroy: I do confess there was one that was outstanding potentially, I think.



Senator BUSHBY: One question remains unanswered.

Senator Conroy: One was outstanding but I think I just answered that very comprehensively.

Senator BUSHBY: No, there is another one that remains unanswered at this point.

Senator Conroy: I will genuinely chase that one up, because I thought all were now in, Senator Bushby.

Senator BUSHBY: That is the cost of NBN offices. There were actually two questions: The cost of NBN

offices—the leasing costs. I do not believe that has been answered.

Senator Conroy: My apologies. I will chase that up.

Senator BUSHBY: And also one on expenditure on taxis, coffee machines and other bits and pieces.

Senator Conroy: The coffee machine question. No, I am guilty as charged. I could not resist that one so that

you could ask me directly about it. It is pitiful that in a project which is changing the face of this country that you

want to start quibbling about coffee machines. I mean, seriously! This is a bill that will change the face of

Tasmania. Tasmania will be the first state in the country, and you want to ask about many coffee machines, as if

there is some implication that NBN Co. are wasting money on coffee machines.

Senator BUSHBY: Minister, it is my right to ask questions as to what taxpayers' money is being spent on.

Senator Conroy: You can ask. It just demeans you to ask such absurd questions. There is no suggestion—

Senator BUSHBY: It demeans you to sit there—

Senator Conroy: There is no suggestion that the NBN Co. are wasting money on coffee machines.

Senator BUSHBY: Are you going to answer the question?

Senator Conroy: As I said, I wanted you to ask it because I wanted to be able to just point out what a waste of

taxpayers' money and what a waste of time it is for an official at NBN Co. to have to spend their time digging up

invoices so that they can answer your idiot questions about how many coffee machines—

Senator BUSHBY: Every other taxpayer funded department manages that.

Senator Conroy: I did not say you could not ask it. I just said that you make an idiot of yourself by doing it.

CHAIR: Senator Conroy—

Senator Conroy: I will have it chased up for you.

Senator BUSHBY: Thank you. Now coming back to the answer that we did receive, and that is the one where

the NBN Co. says that it is impractical for NBN Co. to provide ad hoc updates et cetera. Minister, you were

saying earlier that that information exists on the website. If the information exists on the website and is easy to

access, why is it impractical for NBN Co. to access it?

Senator Conroy: No, you will have to—

Senator BUSHBY: The answer was not that it is on the website and I can go and have a look; it was—

Senator Conroy: There are two aspects to what I said earlier. I am not sure whether you were here for the

whole conversation.

Senator BUSHBY: I was here.

Senator Conroy: I am happy not to waste the committee's time further. A large amount of the information is

readily available. As Senator Birmingham has just demonstrated, you can just click onto the website and access

the information.

Senator BUSHBY: That is not what the answer says. It does not say—

Senator Conroy: You actually have to—

Senator BUSHBY: You have to be practical to—

Senator Conroy: No, I said there are two aspects to it. If you do a little bit of adding and maths and take your

time to go through the tables—and they are extensive—you can actually work out the answers. That is the first

point. The second point is that NBN Co. are in the process of gathering a greater degree of granularity to supply

to the committee, more than they are required to do, more—

Senator BUSHBY: At next estimates, that will no doubt be very useful. We are currently at the February

estimates. We are asking questions. That information is not available—

Senator Conroy: We have just released a whole range of data, at the end of December. You want to ignore all

of that. The sort of information, if it is possible to put it all together for you, is in the process of being put together



so that you can get the degree of information. Believe me, by the time we get to the next estimates, you will be

drowning in information.

Senator BUSHBY: Maybe so. The information is out there. The Launceston Examiner quotes—it does not

actually say who—an NBN Co. spokeswoman that there are around 4,000 Tasmanian families and businesses

using the NBN—34,500. Part of that question is answered by the NBN Co. spokeswoman and yet the answer that

comes back to me says that it is impractical for NBN Co. to provide it, yet they are out there talking to the media

about it.

Senator Conroy: They have not given the granular detail that you are seeking. But, as I said—

Senator BUSHBY: Those are two of the questions that I asked which NBN Co. could not answer because it

was impractical—

Senator Conroy: Now you are trying to cut across dates and when people said something—

Senator BUSHBY: That was in December; that was after—

Senator Conroy: After the December figures were tabled.

Senator BUSHBY: That was 1 February 2013.

Senator Conroy: A whole heap of information was put out at the end of December, early January and through

January which goes to answers—

Senator BUSHBY: And yet it was impractical for NBN Co. to give it to the committee.

Senator Conroy: And, regarding the greater granularity that you are seeking, NBN Co. are pulling together

the information and looking to provide it. It will not be as late as Senate estimates. More information is going to

become available to you than is required by the reporting of GBEs and the joint parliamentary committee.

Senator BUSHBY: I am sure we all look forward to receiving that information. In the meantime, we are in

estimates in February and it is not available. I will move on. There is the Launceston roll-out. According to NBN

Co.'s website—and we have had a look at that—

Senator Conroy: Sorry, I am informed that what you were seeking has actually been tabled. It might not have

quite got around but it has been tabled.

Senator BUSHBY: It has not made it to the table today. According to NBN Co.'s website, the roll-out of the

fibre network in Launceston commenced in January 2012. I think we heard tonight from Mr Quigley that the

average time of roll-out is about 12 months.

Senator Conroy: You know what an average is—

Senator BUSHBY: I am not going to be holding you to saying that, but I am curious as to the fact that the 12-

month time frame has passed. So where are we in terms of switching it on? How close are we, given that we have

reached that average figure—

Senator Conroy: As I said, it is actually on the website.

Senator BUSHBY: I am asking about Launceston.

Senator Conroy: It is actually on the website. We will be able to get it to you very soon if we do not already

have it. My office will be listening. We have some information that we could possibly give to you quickly about

the FSAMs in Launceston. We are just chasing that up right now.

Senator BUSHBY: You do not have it on the chart you have?

Senator Conroy: No, it is different. On the website there are pages and pages and pages. There are not just

commencement dates, as Senator Birmingham chooses to read out, but also completion dates.

Senator BUSHBY: Very good. Those completion dates are hard completion dates?

Senator Conroy: The website makes it clear that these are indicative. By definition, an average means that

some will take longer and some will be quicker. In the ACT, Mr Quigley, what is the shortest FSAM that has

been done recently?

Mr Quigley: We have had some that have been done certainly well under the 12-month—

Senator BUSHBY: What is it about one system that—

Mr Quigley: Seven or eight months is probably the shortest—

Senator Conroy: To be fair, the earlier FSAMs—Mr Quigley will possibly be able to add more information—

have taken a little bit longer. We are getting better and more improved at the actual process, as we have learnt a

lot over the last 12 months—



Senator BUSHBY: You have learnt a lot in Tasmania, rolling it out; you are looking at Launceston now.

Senator Conroy: Absolutely. They are totally different sorts of rollouts. I think the first switch-on is in May,

so I look forward to you coming along and saying congratulations.

Senator BUSHBY: You don't tend to invite us along to those!

Senator Conroy: You are welcome to come.

Senator BUSHBY: Well, I probably wouldn't go anyway, but—

Senator Conroy: I know you probably won't come!

Senator BUSHBY: That said, I am yet to receive an invitation.

Senator Conroy: I will personally make sure that Senator David Bushby—if anyone is listening—gets an

invitation to the Launnie turn-on!

Senator BUSHBY: Does that information that is being fed through to you on your laptop show the order in

which the suburbs will be switched on in Launceston?

Senator Conroy: I do not know that we can get that right away. We can find out. But the NBN does not work

on suburbs; it works on FSAMs of 2½ thousand homes. So it cuts across some bits sometimes. The maps are all

out there; they are on the website—

Senator BUSHBY: Showing the order of commencement, or the order that they will be passed by?

Senator Conroy: There are different things. There are maps, and then there are tables, which if you hunt

through you will find the relevant information.

Senator BUSHBY: The NBN spokeswoman I referred to earlier said in the Launceston Examiner that there

are a number of modules being counted as complete. She uses the word 'modules', but I do not know if 'modules'

is a technical term or whether it is something she has used just to try to help people understand the way it works.

Mr Quigley: She may have. An FSAM is a fibre serving area module.

Senator BUSHBY: Yes, I imagine that she might have been talking about an FSAM in using the word

'modules'.

Senator Conroy: She just shorthanded it to the last of the four words.

Senator BUSHBY: So, we will assume she is talking about FSAMs. Is the completion of an FSAM counted

as that area being complete, in terms of the tables you provided earlier?

Senator Conroy: This is something that there has been some discussion of recently. I defer to the experts on

this, but quite a bit of disinformation has been spread recently on this very question.

Senator BUSHBY: Well, that is why I am trying to clarify it.

Senator Conroy: Yes, I appreciate that you are genuinely seeking information. Mr Quigley or Mr Steffens

might be able to help.

Mr Quigley: Generally for the planning of the rollout we broke things up into three layers. We talked about

fibre serving areas, we talked about fibre serving area modules—and there are a number of fibre serving area

modules in a fibre serving area, depending on the size—and then we broke fibre serving area modules down into

smaller entities called fibre distribution areas. That is where you have what we call a fibre distribution hub where

the splitters are that go out to all the individual homes. Our planning is based on trying to provide increasing

levels of granularity, if I can use that term, in our spreadsheets.

We talked about fibre serving area modules, and we have given maps for those, but when we actually work on

the ground with, for example, Telstra, in doing remediation, we have an agreement with them now that they can

hand over the areas at a lower granularity than fibre serving area modules. In other words, of FDAs. So we are in

fact finishing construction, FDA by FDA making a fibre serving area module, and we in some cases will be

making those services available on a fibre distribution area by FDA—FDA by FDA. And all that is good, because

I think it allows people to be turned on faster, which I think everybody thinks is a good thing.

Senator Conroy: Except Mr Turnbull, who prefers people not to be turned on.

Senator BUSHBY: Well, I think you are probably putting words in his mouth there. I now want to ask you

some questions about the NEC box replacement in the trial site towns. You will recall that I asked some questions

about this at previous estimates. You indicated that 700 boxes would have to be replaced—about 300 at Midway

Point, 150 at Scottsdale and 200 at Smithton. Have all those boxes now been replaced?

Mr Steffens: We basically competed our change-out before Christmas, bar a few handfuls of customers who

we could not reach because they were either on holiday or not at home. But way over 90 per cent—



Senator BUSHBY: Have any of those customers opted not to change over? Or is it just that you have not been

able to get hold of them?

Mr Steffens: We have not been able to make an appointment with them.

Senator Conroy: It is a free switchover, so—

Senator BUSHBY: Yes, I understand. I was just curious as to whether there were any intransient—

Mr Steffens: No, we did not have any pushback.

Senator BUSHBY: What was the final total cost of actually changing those boxes? You estimated that it

would be $1.2 million. Did it come in at that, or above, or below?

Mr Steffens: I cannot give you the exact number, but it was not a budget component. The number is

directionally correct.

Senator BUSHBY: In the vicinity of $1.2 million would be right?

Mr Steffens: Yes.

Senator Conroy: I do have some of those dates about switch-ons and which bits of Launceston and surrounds.

Senator BUSHBY: Can we run through that?

Senator Conroy: I am happy to. The file says: 'Launceston, June 2013; Launceston, Newstead, East

Launceston, July 2013; Newstead, South Launceston, East Launceston, June 2013; West Launceston, South

Launceston, August 2013; West Launceston, Trevallyn, Riverside, October; Mowbray, Invermay, November;

Waverley, Ravenswood, December; Riverside, January.' Some of them are partial switch-ons, rather than full

switch-ons. This is on a computer.

Senator BUSHBY: Some of them are outer suburban areas, where I imagine that you are not going to fibre

everybody.

Senator Conroy: We have the wireless also up and operating, as you saw. I am sure you are excited by that

25/5 announcement for satellite and the wireless.

Mr Quigley: Wireless is a very important part of any broadband plan, whether it is yours or anybody else's.

Senator IAN MACDONALD: Mr Harris, could you tell me the process for the submission advances to

estimates committees, particularly in relation to NBN? Does NBN send them to you?

Senator Conroy: They send them to me.

Senator IAN MACDONALD: Or do they send them straight to the minister? Or NBN?

Senator Conroy: I am saving you time.

Mr Harris: Senator, if the minister chooses to answer a question, even if you direct it to me, the proprieties of

the committee are the minister answers the question.

Senator Conroy: And I answered the question.

Senator IAN MACDONALD: This is the only estimates committee where that occurs.

Senator Conroy: It is standard practice. I have been doing it for 17 years and that is the way it has always

worked.

Senator IAN MACDONALD: Mr Harris, for questions of the department responsible, do they go from you to

the minister?

Mr Harris: Yes, that is right.

Senator IAN MACDONALD: The minister has told me that NBN's go straight to the minister. You do not

see those answers before they are delivered to the minister's desk.

Mr Harris: There is a process of clearance that I am aware of, but are you asking a question of sequencing or

are you asking a question of knowledge?

Senator IAN MACDONALD: Knowledge.

Mr Harris: Yes, we are aware of the content of the content of the NBN Co.'s proposed answers.

Senator IAN MACDONALD: In relation to the questions that have been answered in the last few days, could

you tell us when you became aware of them?

Mr Harris: I cannot, because I do not read all of them personally.

Mr Lomdahl: I think we would have to take it on notice, Senator. I cannot recall the exact timing of them.



Senator IAN MACDONALD: That is in relation to NBN's questions. What about your own questions, when

were they submitted to the minister?

Mr Harris: I have a listing here, Senator. I will take you through them. Due date of 7 December, the

department had 21 per cent of its questions lodged with the committee and 63 per cent were with the minister's

office and 15 per cent were still with us. By 21 December 78.6 per cent were lodged with the committee, 11.2 per

cent were with the minister's office and 10 per cent were still with us. On 24 January that became 85.7 per cent

with the committee, 10.2 per cent with the minister's office and 4.1 per cent with us. And today, 12 February, it is

100 per cent. I think most of ours were lodged within the last couple of days. There were not any lodged today.

Senator IAN MACDONALD: You will get for me on notice when the NBN's questions were presented.

Mr Harris: Yes. The specific questions you are referring to are the ones that were most recently tabled or the

whole lot?

Senator IAN MACDONALD: All of them. The schedule you have given us for your questions is very useful.

If we can get the same for the NBN.

Mr Harris: I can.

Senator IAN MACDONALD: Has either NBN or the department done any assessment of the cost in-house

of connecting the fibre to voice-only customers who will not be reimbursed? In answer to a question I asked you,

question No. 274, you indicated—I am summarising here—that TUSMA will reimburse Telstra or other

participating RSPs for the cost of the minimum amount of cabling required to enable a voice telephony service.

The answer went on: if there were more than one socket, we were told you would have to pay for that yourself.

Mr Harris: Yes, we do one. And preferably one closest to the point of the network termination device.

Senator IAN MACDONALD: And similarly with broadband and voice customers, the entire cost is borne by

the householder?

Mr Harris: No, the internet service provider will do the in-house wiring in the case of a broadband customer.

TUSMA picks up the customers who choose not to be a broadband customer and remain voice only.

Senator IAN MACDONALD: For voice only.

Mr Harris: Yes. So your retailer will do your in-house wiring in the case of the vast majority of people, but

for that minority who choose to remain a voice-only customer—

Senator Conroy: What are we defining as in-house wiring? Could we just clear something up? What are we

talking about 'in-house wiring'?

Senator IAN MACDONALD: What I am asking is: will the RSPs—

Senator Conroy: You unplug it from the wall; you plug it into the UNI-V port?

Senator IAN MACDONALD: Are the RSPs charging for that and for alarm systems that were previously

connected? Anyone who had broadband and a voice up to now, their houses are wired for it, as I understand it,

and your answers confirm this, but with the NBN they will have to be rewired, re-fibred—

Senator Conroy: That is not what Mr Harris was seeking to say.

Senator IAN MACDONALD: I am quoting from your written answers.

Mr Harris: I am saying—

Senator Conroy: To install just a voice service, you can unplug it from the wall and plug it into the UNI-V.

There is no rewiring involved in doing that.

Senator IAN MACDONALD: I am told that TUSMA will pay for that anyhow, if requested.

Mr Harris: It is in our costings to pay for that, and depending on where the network terminating device is—

Senator IAN MACDONALD: I have the answer on voice only, thank you; I am now saying for broadband

customers. I go back to the question I originally asked: has either the department or NBN done any costing on

what the additional costs to a householder would be?

Senator Conroy: To do what?

Senator IAN MACDONALD: In fairness, you have said that the RSP will provide that. Do you know if they

are doing that at their own cost, or are they charging the customer for it?

Senator Conroy: You are now actually putting a second question in the same context as the first question, and

Mr Harris was only answering your first question. So the premise of your question is not correct.

Senator IAN MACDONALD: I am sure Mr Harris understood the question.



Senator Conroy: No.

Senator IAN MACDONALD: Mr Harris can ask me if he did not understand it.

Senator Conroy: Let us be clear: the issue of wiring and rewiring has been dealt with extensively before at

this committee. The NBN Co.—

Senator IAN MACDONALD: Chair, can I possibly get an answer please?

Senator Conroy: I am in the process of answering your question.

Senator IAN MACDONALD: You are telling me you have answered it before.

Senator Conroy: No, I am pointing out that it has been asked and answered before. So depending on exactly

where you want the boxes, or as a standard installation distance—it is all online; you can look it up. There is a lot

of nice information available if you take the time. So for a standard installation there is no charge. If people want

to move it around to 72 different places—just like if you want more than one Foxtel extension, if you get Foxtel

installed—there is a charge. But equally you do not need to be any of that. There is this marvellous invention

called wi-fi, which actually plugs into your one socket and wi-fi can be spread throughout the house. So to use wi-

fi—I know this will come as a shock to you—you do not need to do any extra wiring.

Senator IAN MACDONALD: I want to go back to the original question I asked. Has the department or NBN

done any costings of what it might cost a customer to connect with their internal cabling to the NBN? Has any

costings been done?

Senator Conroy: I doubt it because—and I am happy for the officers to correct me. But let us be very clear:

you do not need to rewire to use the NBN. If you make a choice to rewire, that is your own choice. But you do not

have to.

Senator IAN MACDONALD: Can I ask Mr Harris my question again.

Senator Conroy: I confirm that there are no estimates.

Mr Harris: We have made no estimates.

Senator IAN MACDONALD: Wow! Thank you.

Senator Conroy: Because you do not need to rewire. Do you understand what wi-fi is, Senator Macdonald?

Senator IAN MACDONALD: It has taken seven minutes to get, 'No, we didn't.'

Senator Conroy: Do you understand what wi-fi is?

Senator IAN MACDONALD: I have wi-fi in my own home.

Senator Conroy: Excellent. Have you rewired for it?

Senator IAN MACDONALD: Could I ask NBN the same question. Have you done any estimates on what

the cost to a householder might be of internal cabling over and above what is provided free by Telstra?

Mr Quigley: There should not be a need to rewire or recable the home unless the householder wants to do

something unusual. So we can go in and install our NTD. They can plug their telephone into it. The retail service

provider will probably plug in a residential gateway device, so there should not be any need for rewiring.

Senator IAN MACDONALD: But your answer is that you have not done any assessment. That was my only

question. Have you done an assessment?

Senator Conroy: Do you need to do an assessment for something that does not need to happen? The answer is

no.

Senator IAN MACDONALD: Thank you. That is 10 minutes to get two 'No' answers. One wonders why

Kevin is being looked at so well. What about monitored alarms? What happens in the case of those? Who wires or

cables them—things that are currently connected to the copper—

Mr Quigley: That is quite a complex area. A lot of work has been done between us and various agencies

around the country to look at the whole issue of alarm systems. Overall, solutions are being developed that can

use the NBN facilities to carry, by and large, existing alarms. There are going to be some cases where, if you

really do need DC, probably some new equipment will be put in there.

Senator IAN MACDONALD: That has not yet been resolved, has it?

Mr Quigley: It is an ongoing piece of work.

Senator IAN MACDONALD: What about people who have already been connected or passed by?



Mr Quigley: As far as I am aware, we have not had any problems or issues in not being able to solve each

case of somebody having an alarm. I know of no cases; there could be. Maybe some of my colleagues do. But I

know of no cases where an alarm facility has not been able to be reconnected over the NBN.

Senator IAN MACDONALD: Thank you for your brevity. It has taken me 11 minutes to get two 'No'

answers. My time is up. I will have to put the rest of the questions on notice, just demonstrating the absolute farce

of this committee.

CHAIR: Have you quite finished, Senator Macdonald? I am happy if you have more questions.

Senator IAN MACDONALD: I have a lot more, but I defer to my colleagues who also have a lot of

questions. I have, regrettably, used the time allotted to me, to get two 'No' answers.

Senator BIRMINGHAM: Is it still the NBN Co's target or commitment or promise—whatever the right word

is—that areas where construction has commenced will be completed within 12 months?

Senator Conroy: That is a complete fabrication. It makes it quite clear, it is indicative and it is an average

over the three years. So do not sit there and deliberately misrepresent what is said on a website, when it is quite

clear.

Senator BIRMINGHAM: So it is completely acceptable for a whole range of areas—in fact, all of the areas

in South Australia, Western Australia and the Northern Territory to have taken up to 19 months?

Senator Conroy: As I said, the average is 12 months. Some are now being completed and what you continue

to deliberately not want to do is give an indication of when some of those FSAMs that you are pointing to are due

for completion. Mr Quigley might be able to add some information on that.

Mr Quigley: Just on the questions you asked about Western Australia and South Australia: we expect to

complete Mandurah in April; Victoria Park, May—I think you mentioned that—South Perth, June; South

Australia, Modbury, May; Prospect, May; and Aldinga, April. I think those were some of the sites you nominated.

Senator BIRMINGHAM: At least a couple of them are some of the sites that I quizzed about when trying to

get answers as to what had happened with these sites. Will NBN Co. please advise when it is likely to renew

contracts for the brownfields rollout with contractors such as Symbio, Silcar or Transfield?

Mr Quigley: We are in the process of having discussions with all of our contractors. I cannot give you a date

when they will be concluded or contracts signed. Obviously with all of our contracts we look to renewing them as

they fall due.

Senator BIRMINGHAM: The initial contracts were on the basis of two year plus one plus one year?

Mr Quigley: With the construction contractors, yes.

Senator BIRMINGHAM: Is NBN Co. looking at a variance to that for the renewables?

Mr Quigley: We may. Until we finish the discussions I cannot give you an answer on that.

Senator BIRMINGHAM: Are reports that you are offering fixed four-year terms for contractors correct?

Mr Quigley: I will not comment on what we may or may not be offering with particular contractors.

Senator BIRMINGHAM: Why is NBN Co. looking at changing its contract periods?

Mr Quigley: We only look at changing contract periods if we believe there is an advantage to NBN Co. to do

so—in other words, we can get the build done with greater certainty and at a lower rate.

Senator BIRMINGHAM: When does NBN Co. need to resolve those contracts by?

Mr Quigley: I suspect we will want to have some of them that are falling due in the middle of this year done

before then. We need to renew them before then.

Senator BIRMINGHAM: Will you make clear publicly such terms then like the length of those contracts

once those renewables are complete?

Mr Quigley: I believe we have in every other contract that we have released so far. We have indicated the

term of the contract.

Senator BIRMINGHAM: In reply to a question on notice, the Senate was told that data on the cost of rollout

per premise for the fibre to the premise component of the rollout is commercial-in-confidence. Now that NBN Co.

has reached what NBN Co. itself describes as volume rollout, and obviously with that each contractor has

supported fibre and variable geographies and conditions with different costs under different contracts, will NBN

Co. be able to provide a per premise cost?



Senator Conroy: You do attend the joint parliamentary committee that supervises it, don't you? I know you

did miss some weeks quite legitimately but Mr Quigley actually tabled a chart at the joint parliamentary

committee back in?

Mr Quigley: In October and again today.

Senator Conroy: When was it first tabled?

Mr Quigley: October.

Senator Conroy: October of last year and it has again been tabled today giving you all the information you

want. You have chosen to ignore, as usual, information provided back in October, but Mr Quigley has helpfully

tabled it. It is called FTTP Brownfields LNDN Capital Expenditure. It is on the back of the first page. It actually

has been on the public record pretty much since October. So Mr Turnbull' claims of $3,000, $4,000 and $5,000

per home are shown once again to be completely misleading rubbish.

Senator BIRMINGHAM: If I can quickly attempt to interpret this, are you claiming $1,500 per premise or

premises passed in financial year 2013?

Mr Quigley: I am saying that the cost estimate is between $1,200 and $1,500. You can also see in orange and

pink the corporate plan assumption for FY 2013. Our latest forecast is between $1,200 and $1,500 per premise for

the LNDN, the local network and the distribution network.

Senator Conroy: Which is exactly what was tabled .

Senator BIRMINGHAM: Why on this this table are there no dollar figures for the earlier ones?

Mr Quigley: The bars there are an indication because they were obviously lower volumes. They are the

numbers that we got for those three sites. I think we discussed this at the time we tabled these.

Senator Conroy: I could be doing you a disservice; you may not have been there, or you may have been

bored senseless by Senator Macdonald's questions and gone for a cup of coffee, but this information was

discussed and tabled in October last year.

Senator BIRMINGHAM: For the record, the odds are that I quite possibly was not there then, depending on

which part of October. Anyway, Mr Quigley, what components comprise the $1,200 to $1,500 estimate? Are

there any exclusions amongst NBN Co.'s costs for that figure?

Mr Quigley: What this relates to is the local and distribution network which is shown in the diagram below

the number. That is a component. That is why we drew this picture underneath.

Senator BIRMINGHAM: Excellent. It is such a simple picture that obviously I can absorb it in just a couple

of seconds of glancing at it!

Senator Conroy: It was tabled in October.

Mr Quigley: This is between the FAN site and includes the fibre distribution hub. So the distribution part of

the network is between the FAN and the thing labelled FDH where the splitter is, and then the local network is

between the splitter and the network access point in the street outside the home.

Senator BIRMINGHAM: Does it factor in any of NBN Co.'s overheads?

Senator Conroy: What?

Senator BIRMINGHAM: Does it factor in any of the corporate overheads?

Senator CONROY: It factors in the cost of construction.

Mr Quigley: These are capex numbers. If you are talking about travel and the like, that is normally opex.

Senator BIRMINGHAM: What is the overall cost per premises? You have given an estimate for financial

year 2013; I assume that is 2012-13, so we are a reasonable way through that now. What is the overall cost per

premises?

Senator Conroy: There is a target band there, listed between $1,200 and $1,500 with an orange bit there, and,

for reasonable commercial sensitivities, it is not absolutely identified, but it is within the target range that the

corporate plan set.

Senator BIRMINGHAM: No, my question is: in terms of all of the construction undertaken to date, what is

the average cost per premises?

Mr Quigley: We will obviously get to that, and our intention is to progressively provide that information but,

at the moment, for example, the transit network is being built. It is very difficult because the transit network in

fact is being built early; it has been built so that it can be there for the satellite services, the fixed wireless

services, the greenfields and obviously the brown fields we are talking about here. At this point it is really too



early to try and split that transit network; we wouldn't be making arbitrary distributions across those four

components and the numbers are simply too low. As to the transit network, while we have turned on now,

roughly—24, Mr Steffens? Twenty-five; 25 points of interconnect now are live. It is a major piece of work. We

are progressing quite rapidly. I cannot give you an answer at this point in time because it would take some—

Senator Conroy: Perhaps, Senator Birmingham, I know you have been focused on the right hand side of the

bar graph, but if you look at the earlier three black bar marks you can see, roughly, expenditure in the early

stages. In Tasmania, pre-release, it was higher; Tasmania, stage 2: coming down; mainland: first premises. You

can see the total number of homes, and then you can see the corporate plan estimates for roughly between 1,250

and over 256,000 premises. So, while there are not absolute, categorical numbers on those three black bars, you

get a relative idea. They are actually done to scale, if I could use that phrase. If you want to get a ruler out and

measure it, you might be able to do that; people did that back in October. That gives you an indication of the

rough prices early on, but it also gives you the number of premises so that you do not just do a simple distortion

of adding four prices together and dividing by four. It gives you the relative weightings, meaning how many

premises there are at each of these areas.

Senator BIRMINGHAM: How large a component of costs are things like the lead-in network that is not

included in these costs per premises?

Mr Quigley: If you go to the corporate plan there is a breakdown, I believe, of each of those components,

including the transit network and the lead-ins. By the way, I think we will be able to give you, next time we come,

a breakdown of the transit network in the same way as we have done for the fixed wireless and the satellite. So

you will see that component as well. As we get confidence that we have enough data so that what we are seeing is

not start-up distortions but what we think is likely to be the long-term trend in costs, we will certainly be

providing that information. But all of our best estimates are built into the corporate plan, which, as you know, we

released a little earlier.

Senator BIRMINGHAM: Can I go to some of these user prices and some of the issues that Senator Singh

was touching on before. Optus has been quoted as saying the rate of return regulation 'creates a systematic bias

favouring excessive expenditure'. What is NBN Co.'s view of that quote from Optus and what controls or

oversight would prevent such overinvestment in NBN Co. akin to what the Prime Minister and others have

described as gold plating by electricity distributors?

Mr Quigley: We have had various independent analyses done, one by a well-known international company

called Analysys Mason, on the prudency of our expenditure. That was part of our input to the ACCC for our

special access undertaking. I believe the conclusions of that report—and it was quite a large report which we gave

to the ACCC—was that, in their view, the build of the NBN was in fact being carried out in a prudent manner.

The network has obviously being looked at by the ACCC. Part of our whole SAU is ensuring that our build and

our cost base is incurred on a prudent basis. That is all part of the LTRCM—long-term revenue constraint

methodology—that underpins our SAU.

Senator BIRMINGHAM: On 14 January this year, NBN Co.'s general manager of engagement and group

coordination Richard Home stated to Optus's Andrew Sheridan that:

The initial prices (as set out in the SAU) were developed in consultation with access seekers so as to enable a smooth

transition for end users from legacy networks to the NBN. As such, the initial prices are not the result of modelling of

NBN Co's costs and demand, and NBN Co has been very clear on this in consultation with access seekers.

Is this a correct statement—that current prices are not a reflection of NBN Co.'s actual costs or actual demand? If

so, can you outline when such prices will reflect true costs?

Mr Quigley: I understand that Mr Home is saying there, but let me tell you how the corporate plan was built

up. We obviously needed, as you do in every business, to make sure that we could put prices forward into the

market that matched the market. We knew what the range of retail prices were. Our aim was to see if we could in

fact match the market retail price. That allowed us to then calculate, estimating what input costs for retailers

were—which we did, by the way, by having quite a number of discussions with retailers—what our wholesale

price targets would be. We were very fortunate that in our network design and our calculation of capex the two

matched. In other words, we could achieve a seven per cent return for the government, given our costs and given

our target wholesale prices. So that was the outcome of the corporate plan.

Senator BIRMINGHAM: Can I turn to you where you are undertaking your build. As of June 2012, the ABS

reported 52,000 fibre connections around Australia and, according to data you released around that time, about

3,900 or so of those were NBN Co. constructions. How is the NBN Co. prioritising—

Mr Quigley: I did not quite follow that.



Senator BIRMINGHAM: In June 2012, how many NBN Co. fibre connections were there?

Senator Conroy: We have a December figure.

Senator BIRMINGHAM: I am trying to compare with ABS data. The ABS data indicated there were around

52,000 fibre connections in Australia at that stage.

Mr Quigley: In June 2012—I have to go back in history a little there—

Senator BIRMINGHAM: Does 3,900 connections sound accurate?

Senator Conroy: I cannot remember back that far. What is the date of the document you are reading from?

We are not trying to disagree with you; we just want to make sure we are accurate.

Mr Quigley: Senator Birmingham, that looks, on the basis of our data, about right.

Senator BIRMINGHAM: Thank you. How is NBN Co. then treating the nearly 50,000 fibre connections

around Australia that existed prior to the NBN network reaching them in terms of your prioritisation of rollout

areas?

Mr Quigley: We are not treating them in any way in particular. We have a rollout plan based on the factors

that we have taken this committee through before and an algorithm that produces the rollout plan—that is what

we are doing.

Senator Conroy: There is a process by which companies can seek—

Mr Harris: to be declared as adequately served in their district.

Senator Conroy: So, if a company applies and it is granted, NBN Co., I think, does not go there. Companies

apply and we publicly say, 'You've been given an adequately served condition,' and therefore NBN does not go

there.

Senator BIRMINGHAM: Why is it that companies have to apply to say that an area has been adequately

served rather than government recognising that, with all the data available already, many areas have been

adequately served?

Senator Conroy: There is a public definition of adequately served and I think it is out there. It may come as a

surprise to you, but not everybody who claims that they are adequately served are accurately adequately served.

But it is not just a test of a piece of fibre to the home. I will pass the officials to give a description, but it is more

than just a piece of fibre connected to the home.

Senator BIRMINGHAM: Perhaps the officials can explain with reference to an example, the local example

perhaps being best, namely TransACT. Does TransACT provide a service that is adequately served? As I

understand it, it has passed around 11,000 premises with fibre to the premise, it has around 18,000 under contract

to pass with fibre to the premise and it has around 5,500 connected. Are those premises adequately served?

Senator Conroy: The question is: have they applied for an exemption? There is a process that TransACT are

aware of and all the companies involved in fibre to the home are aware, and they can apply.

Senator BIRMINGHAM: Have they? Would those premises be adequately served if they applied and have

they applied?

Senator Conroy: I have not knocked on any of the doors in those areas, so I do not know whether they meet

all the criteria, but, as to whether they have applied—

Mr Lomdahl: We do have a process underway at the moment which is in response to the government paper

that was put out in April last year. I think we would prefer not to say who is seeking to be adequately served

because that whole process is still being assessed. For individual companies that might be an important bit of

information, but—

Senator Conroy: I have granted some exemptions already under the process.

Mr Lomdahl: There are criteria in the paper that was put out and there are some assessments being made at

the moment as to whether those proposals meet the adequately served test in the paper.

Mr Harris: It is quite important to understand that, for the purposes of a National Broadband Network rollout,

to be adequately served it is not just a question of whether you have plugged in a certain number of homes; you

have to say that you will be the wholesale provider of last resort—in other words, that all parties within that area

can get a fibre service or an equivalent service to NBN standard from you. If you are not prepared to do that—if

you are just selectively picking homes based around preparedness to meet a particular price—then, definitionally,

it is not going to be adequately served. Some homes will not be able to be supported. With the concept of

'adequately served', there are other standards—speed, wholesale open access and things like that—which are all



criteria, but it is best, in trying to consider 'adequately served', to recognise that you would have to take on the

obligation of servicing all customers in a particular area, not just the ones that you choose to select by price.

Senator Conroy: There is also the question of whether or not the owner of the fibre is providing a wholesale

service—in other words, to allow competition. If a company does not allow anybody else to use that fibre, then

you would probably say that they are not going to be able to provide a lot of competition in price for the

householder. So there are a variety of tests that go.

Senator BIRMINGHAM: Noting that some premises are under assessment and so on at present, if the NBN

rollout schedule is delivered and executed as currently scheduled, how many premises by June of this year or by

the end of this year will have been passed where there is existing fibre or other technologies that might meet the

definition of being adequately served?

Senator Conroy: I am not familiar with each fibre home. It is not like there are tens of hundreds of builders. I

am just not familiar with the individual circumstances of each built, so I am not sure I can answer your question. I

will take it on notice and see if there is anything I can do to assist, but I do not know that I can give you a

definitive answer, because I do not know what the build process—whether each of them is open access, whether

everyone is selling. I do not know the answer to those questions, so I cannot prospectively give you a tick.

Senator BIRMINGHAM: Have NBN Co. undertaken research themselves as to where—

Senator Conroy: No, we have a process whereby, if somebody believes that they provide the service, they

apply. If they believe they meet the criteria, they apply to the department. It is given consideration, and it is yes or

no. But if they do not apply then they do not apply.

Senator BIRMINGHAM: Otherwise, no matter how good the service, NBN Co. will roll on down the street?

Senator Conroy: This is not a reflection on the service. The quality of the service is excellent on fibre. It is

one of the reasons we are building it all around the country. But there are other tests than just, 'Is it a piece of fibre

and can it deliver the speeds?' There is a question of wholesale access—whether they allow anybody else to use

the network. To crystallise it for your thinking, Senator Birmingham, if Cameron Communications has built into a

new housing estate because it has contracted with the developer, and Cameron Communications says, 'We're not

going to let anybody else use our network,' that would probably not pass as 'adequately served' because it does not

allow competition. Therefore, would NBN Co. build into Cameron Communications' housing estate? I would

probably hazard a guess to say yes. But is it an excellent service in terms of the quality of the service? Yes. I

would probably hazard a guess and say that the pricing might not be so flash, but is it an excellent service? Yes.

Would we overbuild it? Yes. You are asking a question very subjectively.

Senator BIRMINGHAM: Last year Mr Harrison Young, the NBN Co. chairman, said in a speech:

Having multiple suppliers of natural monopoly services is socially wasteful. They make inefficient use of an economy’s

resources.

Why is it then that there would not have been more effort at the outset to ensure that NBN Co. is not duplicating

services in any areas of Australia?

Senator Conroy: We have a process whereby, if an owner of a fibre network believes that they are adequately

serving—

Senator BIRMINGHAM: But why is the responsibility on them rather than NBN Co.?

Senator Conroy: Because NBN Co. cannot walk up to someone's house, knock on the door and say: 'We've

come to check that piece of fibre. We'd like to know who owns it. We'd like to know: is it open access? We'd like

to know: will the provider be the guarantee of last resort?' NBN Co. is involved in a rollout. It is a regulatory

process.

Senator BIRMINGHAM: This at best comes to a matter of prioritisation by NBN Co.

Senator Conroy: No, it is a government responsibility to make the decision. It has nothing to do with the

NBN Co.

Senator BIRMINGHAM: In the early days, while this work may be being done to assess these sites, why

would NBN Co. not be taking a precautionary approach and focusing on underserved premises instead?

Senator Conroy: NBN Co. are not building where somebody is defined as adequately served. To become

defined as adequately served there is a public test, and people can apply. It is not rocket science; it is very

straightforward.

Senator BIRMINGHAM: They are also not targeting building where anybody is underserved either, are

they?



Senator Conroy: They are building—as we have discussed at length, despite your attempts to mislead the

Australian public—on the basis of the points of interconnect that were dictated by the ACCC and the networks. If

you overlay the builds with the POIs, you pretty much find—not absolutely 100 per cent, but pretty much—that

they grow from the POIs. So there is this fantasy that you have that there is underserved, or not underserved. The

ACCC made their decision. You campaigned for the decision. Mr Turnbull campaigned for the decision made by

the ACCC. I personally and NBN Co. do not agree with the decision, but we accepted the umpire's decision. So

the build starts, essentially—

Senator BIRMINGHAM: As I recall, NBN Co. wanted fewer points of interconnect.

Senator Conroy: Yes.

CHAIR: Order!

Senator BIRMINGHAM: So, on your logic, there would have been even fewer areas that it spread out from.

Senator Conroy: No.

CHAIR: Senator Conroy and Senator Birmingham, enough.

Senator BIRMINGHAM: But you are saying it spreads out from the points of interconnect. That is what you

said.

Senator Conroy: No.

Senator BIRMINGHAM: You said that, if you overlay the map, essentially it spreads out from the points of

interconnect.

Senator Conroy: You do not understand the ordering of the builds.

CHAIR: Senator Conroy, order!

Senator BIRMINGHAM: I am only quoting back what you said.

Senator Conroy: You are not quoting back at all.

CHAIR: I have some questions.

Senator Conroy: You are totally—

CHAIR: Senator Conroy, order! I have some questions. I will go to the first issue.

Senator Conroy: It works differently on 14 POIs—totally different.

CHAIR: Mr Quigley, in passing after questions from Senator Singh you said that there were problems with

fibre to the node during the Queensland floods. Can you expand on that a little bit for me.

Mr Quigley: If I can just correct you there, I did not say there was a problem with fibre to the node; I said the

problem was with our greenfields nodes that we put down. Normally when people talk about fibre to the node

they talk about bringing fibre to the node and using copper from that node to the premise. In our case, we are

using fibre into a node but then it is fibre from that node into the homes. We had to do that because we had to do

the greenfields earlier than we had a rollout of the network, so we are putting down a limited number of nodes.

They are active pieces of electronics with batteries in these nodes, as you would need for fibre to the node if you

are going to do that. Whenever you have a cabinet with active electronics and battery back-up power to it,

obviously if you have a flood then you have an exposure, and that is what we found. Where we were running the

normal fibre to the premise in our brownfields areas, we did not have, I think, any outages at all. We had a

number of outages because water got into these cabinets—into these nodes, which were active.

CHAIR: I am not sure whether I raised this issue with you at the NBN joint committee, because you are here

a lot answering lots of questions, but I will put this to you again. When we were in New Zealand we were shown

some fibre to the node which was the copper and fibre to the node. Chorus, I think, explained to us that they had

to put heating components and fan components into some of the cabinets. They had to build special cabinets just

to make sure the equipment was as well protected as possible, and even with all that protection they still had to

have back-up generators to keep some of the equipment operating. Is that a problem that would be replicated in

Australia with a fibre-to-the-node copper network?

Mr Quigley: With a fibre-to-the-node network, you do need to have environmentally hardened cabinets.

Obviously, because they have active equipment in them dissipating power—especially in Australia, even more so

than New Zealand—you have to make sure you look after the thermal loads as a consequence of that equipment

dissipating power inside the cabinet. The fact is that you have to keep all the water out of it if it rains, which

means you are also keeping the heat in, which means you need to actively cool it. So, yes, there would be the

same issues. Whether it is in New Zealand, the US, the UK or Australia, you would have the same issues to



address. You need batteries in the cabinet and you need fans in the cabinet because you have got active equipment

there.

CHAIR: If there were to be a fibre-to-the-node network in Australia, has anyone looked at how many cabinets

would be required? Is there a figure?

Senator Conroy: I think Nick Minchin once claimed there would be 70,000 needed—in a Senate estimates

committee, actually, and on the front page of the Financial Review.

CHAIR: So that is 70,000 weaknesses in the network, given the evidence in New Zealand and what Mr

Quigley has just indicated. Is that correct?

Mr Quigley: That is roughly the right number, I think. If we looked at places you need to put nodes—where

the pillars are today—to serve 200 premises or so, to get short enough distances on the copper loop you would

probably need around that number, somewhere between 60,000 and 80,000 nodes, I think. And, yes, each one of

those nodes needs to be powered and thermally hardened: it has active equipment inside it.

CHAIR: Okay. Could you explain the ramp-up, because I think there is some confusion about the current

situation and that being extrapolated as an ongoing situation. There is a ramp-up situation in operation now, isn't

there?

Mr Quigley: Yes. You can see that, in fact. On the front page of the brownfields, you can see each one of

them. We are in fact ramping up, and that will plateau when we hit full volume. So we are in that interesting part

of every large project and every large rollout I have ever been associated with, where it is like peeling an onion.

You address issues as they come up and you work your way through them. I have to say, frankly, from my

experience when we did the future mode of operation of the Telstra network, which I was involved in, it was

exactly the same; when we did the rollout of the U-verse network at AT&T in the US, it was exactly the same. It

is always a struggle to get these big projects going, and I am sure Mr Steffens has had that experience at Colt and

BT and various other places. This is not uncommon. You have to ramp up. You hit issues, you solve them, you

get on top of them and then you get yourself ramped up.

Senator Conroy: Could I just add to that, because, not surprisingly, Mr Turnbull and his office are promoting

more disinformation this evening, Senator Cameron. They are seeking to portray what Mr Quigley said earlier in

his opening statement as saying that we are not going to meet our targets, whereas what Mr Quigley's chart shows

is that we continue to be on target. It is not surprising, as I said, to see Mr Turnbull behaving like that; it is

standard in his office. But let's be very clear about the misrepresentations—even of what Mr Quigley has said

tonight. His graph demonstrates we are meeting our target.

CHAIR: There is also a variation on that position. Back in August, in an opinion piece in the Financial

Review, Paul Fletcher, Liberal MP, compared the NBN rollout to what Optus and Telstra had achieved with their

HFC networks. Is that a fair and reasonable comparison?

Mr Quigley: No. I think those private companies rolled down what was largely aerial, obviously, as fast as

they could go, and I do not think they were subject to the same constraints and requirements that we have. This is

a national network we are building. It is not just HFC, by the way; it is not just one technology. We are doing

fibre to the prem in brownfields, we are doing greenfields, we are doing a fixed wireless rollout, we are doing a

satellite rollout and we are doing an interim satellite rollout on top of that. We have to work through the ACCC.

We are using Telstra's infrastructure, so a deal had to be done. It is a very different type of scenario. It is a much

bigger, much more complex rollout than HFC.

CHAIR: As you are aware, Mr Fletcher is a former Optus executive, he worked in the industry, so if he says

these things people may say that he knows what he is talking about. Is there any other industry analysis that you

have seen similar to this analysis by Mr Fletcher?

Mr Quigley: I do not know if you want to comment, Mr Steffens.

CHAIR: Is this an analysis by Mr Fletcher and not by anyone else?

Senator Conroy: I think Mr Fletcher trades on his Optus affiliation extensively. As you say, unfortunately

people tend to think he knows something about building a network. He has no experience whatsoever in building

a network, so I did not think we should take it too seriously. What I would recommend is you read his book. He

does understand about the regulatory scenario because he was the regulatory officer. He very much argues for

structural separation of Telstra. I would recommend you read his book, but I would not take him too seriously on

the build.

CHAIR: I think I have quoted his book in the past.

Senator Conroy: I think his book is worth reading. I encourage him to reread it in case he has forgotten it.



CHAIR: The other criticism from Mr Fletcher and other coalition MPs is on the changes to the corporate plan.

Is it unusual for start-up companies, or even companies that have been operating for some time, to have changes

to their corporate plan based on changed circumstances?

Mr Quigley: Not at all. If you are comparing the December 2010 corporate plan with the August 2012

corporate plan, the December 2010 corporate plan was done barely a year after the company was started—and,

remember, I was the only employee at the end of July 2009. So we produced a corporate plan at the end of 2010

and our board has remarked on the fact that the corporate plan we produced in August 2012 was almost exactly

the same as that produced in December 2010, accounting for the differences in assumptions that we had to make.

We did not have in the December 2010 plan the Optus deal. There was also a nine-month difference from our

assumption of when the Telstra deal would be finalised to when a commencement could take place. There was

also a greenfields requirement that the government had asked us to execute on and there were a number of other

changes. When you take all of those into account you will find that the two corporate plans are, in fact, very close

indeed—remarkably close.

CHAIR: How do you view the proposition put by Mr Fletcher in another opinion piece, on 4 December 2012,

in the Australian:

Broadband Minister Stephen Conroy and NBN Co have tried every trick in the book to disguise the poor performance. They

abandoned the original corporate plan and issued a new one in August this year.

Why would this executive who claims to be an experienced telecommunications expert not understand the need to

change corporate plans for changed circumstances?

Senator Conroy: I am not sure that Mr Fletcher has got quite the experience that you are attributing to him in

this area.

CHAIR: I am trying to be kind.

Senator Conroy: I know you are and I do appreciate that. If it is possible, Chair, there are a couple of things I

would like to say before we finish.

CHAIR: Maybe you could take that on notice and come back to us on that if you think it could add something

to our deliberations. I am happy for you to make a few closing comments.

Senator Conroy: Thanks, Chair. I have already noted that Mr Turnbull and his staff are spreading

misinformation. Already some of the reporting borders on the hysterical. Returning to our original forecast for

NBN's premises passed apparently represents a massive blow to NBN Co., according to some former journals of

note. If you look at the information that Mr Quigley gave today and tabled, you will find that we remain on target.

The ramp-up is working exactly as Mr Quigley has forecast. It is there in black and white in front of people.

For Senator Birmingham and others: if you would information about many of these issues I encourage you to

go to Whirlpool and read many of the threads. You could start with some of the individuals. Just to assist you,

these are their titles on Whirlpool. You could read Mud Guts, Ungulate, UTC, Cabidas, seventech, Frood, jwbam,

aarq-vark, Jacketed, Diachronic, Djos, Tailgator, Murdoch, The Monsta, Denis, PCknight. Are any of these

people will lift your knowledge of the NBN debate. As usual, Senator Birmingham, you walk out. You are just

not interested in facts, just like you tried to close Mr Quigley down at the beginning.

CHAIR: Thank you, Senator Conroy. That concludes the evidence from NBN Co. I thank Mr Quigley and his

staff for being here tonight.

Senators are reminded that written questions on notice should be provided to the secretariat by close of

business next Tuesday, 19 February. I thank the minister and officers for their attendance. I thank Hansard,

Broadcasting and the secretariat staff.

Committee adjourned at 23:00

Documents

Environment and Communications Legislation Committee_2013_02!12!1702