Senate Committees

Chapter 3 - Agriculture, Fisheries and Forestry portfolio

Department of Agriculture, Fisheries and Forestry

3.1       The committee heard evidence from the department on Tuesday, 14 February 2006. The hearing was conducted in the following order:

• Management Services and Corporate Policy
• Food and Agriculture (including Wheat Export Authority)
• Biosecurity Australia
• International
• Product Integrity, Animal (including aquatic animal) and Plant Health
• Australian Quarantine and Inspection Service (AQIS)
• Australian Bureau of Agriculture and Resource Economics (ABARE)
• Bureau of Rural Sciences (BRS)
• Rural Policy and Innovation
• Fisheries and Forestry
• Natural Resource Management

3.2       In his opening statement, the chair repeated the comments made on the first day of hearings in relation to the lateness of answers to questions on notice. No answers were received from DAFF by the due date of 16 December 2005. The majority were received on the Friday afternoon before this hearing, with the remainder sent on Monday afternoon, 13 February 2006.[48]

3.3       This was also an issue during questioning of the Fisheries and Forestry division. Officers indicated that questions asked by the committee had already been answered as part of written responses to questions on notice from the previous round of estimates. However, due to the late submission of these answers, committee members did not have time to go through them. The secretary of the department expressed regret at the delay and undertook to 'do better next time'.[49]

Minister's opening statement

3.4       The hearing began with the following statement by the minister, Senator Abetz:

The government has directed that officials appearing before Senate legislation committees should not answer questions directed to them on matters before the commission of inquiry being conducted by the Hon. Terence Cole into certain Australian companies in relation to the oil for food program. While examination of officials by the committees might be appropriate in the future, the government believes that it would be in the public interest for Mr Cole to be able to proceed with his inquiry and present his findings without parallel public questioning that would not assist consideration of complex issues.[50]

3.5       The committee questioned the minister about the basis for purporting to direct officers from a statutory authority. The minister replied that those in independent statutory authorities are under the CAC Act and therefore not subject to ministerial direction.[51]

3.6       The committee also explored the use of the phrase 'parallel public questioning' and whether the ban would still apply if the committee decided to hear this evidence in camera. The minister said that if there was a departure from the normal process of conducting estimates hearings in public, the government's position would be considered at that stage.[52]

3.7       The secretary of the department, Ms Hewitt, informed the committee that she had been made aware of the cabinet decision through a minute of cabinet. She had informed senior departmental officers of the directive at a meeting to prepare for their appearance at the estimates hearing. A short time later, Ms Hewitt corrected her evidence by recalling that a brief written instruction to staff was also issued.[53]

3.8       The chair then read out advice from the Clerk of the Senate prepared for the committee on 9 February 2006:

If a minister wishes to raise a claim of public interest immunity and decline to answer questions on the basis that the matters are before a commission of inquiry, that is the responsibility of the minister, not a matter for the chair to rule on that. If the minister persists with such a claim, the committee can only report the matter to the Senate.[54]

3.9       The chair interrupted proceedings to challenge the appearance of several television camera men in the room, who had not sought the committee's formal approval for their presence. They were requested to leave until formal approval was sought and granted.[55]

3.10      The department advised that it did not provide any documents directly to the Cole commission but documents were provided in response to a request from the Department of Foreign Affairs and Trade (DFAT). The secretary was unwilling to make any further comment about the nature of the documents submitted.[56]

Management Services and Corporate Policy

3.11      The committee was interested in the compensation claim lodged by Marnic Worldwide Proprietary Ltd relating to the importation of marine worms for recreational fishing. The department confirmed that a claim had been lodged with the Department of Finance and Administrative Services and it was forwarded on to DAFF for assessment. The original timeframe for assessment was 31 January 2006 but the minister has approved an extension until 28 February 2006, due to the complexity of the claim. The applicant has not yet been advised of the extension.[57]

3.12      Other matters raised by the committee included:

• Departmental expenditure; the difference between 'appropriation reprofiling' and 'appropriation rephasing'; revenue projections; capital expenditure for new accommodation; and exceptional circumstances payments (Estimates Hansard, 14 February, pp. 8–10).

Food and Agriculture - Wheat Export Authority

3.13      The committee questioned the Wheat Export Authority (WEA) at length about its knowledge of allegations relating to the Australian Wheat Board (AWB) paying kickbacks in Iraq and its role in monitoring AWB.[58]

3.14      The committee began by referring to a question it had asked at the last estimates about whether WEA had any knowledge of the Jordanian trucking company.[59] At the time, WEA had informed the committee that it had none. In the week before this hearing, the Chairman of WEA, Mr Besley, had sent a letter informing the committee that his previous answer was:

factually incomplete. The WEA was made aware in mid 2004 from material in its possession that AWB(I) was supplying wheat into Iraq under an arrangement that included over land transport by a Jordanian trucking company.

Consistent with its function of reporting on the outcomes of the export performance of the national pool and in response to public allegations of AWB(I)/AWB Ltd paying "kick backs" in Iraq the WEA undertook to address the issue in its 2004 performance monitoring activities.[60]

3.15      The committee was interested to know how Mr Besley had failed to recall an issue that WEA had in fact been investigating in 2004. Mr Besley replied:

It is a matter of regret that I gave the answer I gave. The question you could ask is whether I am forgetful or I was improperly briefed. I do not want to speculate on either of those things...When it became clear to me, as we were providing information to the Cole commission, that I ought to revisit some of the documentation, I did so...I then finished up writing a letter to the chairman and discussing it with the minister because, in fact, the information that I did not have in my mind—you could ask why I did not and the answer would be that I just did not have it in my mind—was contained in a report we sent to the minister in about October 2004, which did refer to the Jordanian trucking company...[61]

3.16      The committee then raised a number of issues with WEA, including those in the following list. A summary of WEA's answers is reported in paragraphs 3.17 to 3.27:

• Whether WEA had reported to the minister on its investigation into the rumours of kickbacks and included references to the Jordanian trucking company (Estimates Hansard, 14 February, pp. 12–13).
• Whether WEA's investigation went beyond asking AWB if they were paying kickbacks (pp. 12–13).
• WEA's interpretation of AWB's corporate governance charter (pp. 13–14).
• Whether its investigation had been reported in WEA's growers report to the shareholders and farming community (p. 14).
• The reason why WEA did not use its compulsory powers to carry out an investigation (p. 14).
• WEA's role in monitoring AWB (pp. 13, 15, 32, 34–35, 41–42, 48–49 and 53).
• Legal interpretation of WEA's role (pp. 48 and 56–57).
• The scope of WEA's investigation and whether it carried out a full audit of AWB's books or was confined to checking a sample of 17 contracts (p. 15).
• The purpose of WEA's investigation (pp. 47–49)
• Who made the decision to conduct the investigation into AWB and when it was made (pp. 17 and 32).
• Whether the minister's office was advised of this decision (pp. 17–18).
• How the request for information was communicated to AWB (p. 19).
• Whether AWB provided WEA with complete files on the 17 contracts or just part of them (pp. 19–22).
• Whether WEA saw information relating to contracts only or a wider range of documents (pp. 23–24 and 32).
• How and when WEA became aware that AWB had engaged a Jordanian trucking company (pp. 24–29).
• Whether WEA looked into the cost of transport (pp. 33 and 43–44).
• Steps taken by WEA to assess the implications of the payment of kickbacks on the pool both in financial and legal terms (pp. 14, 32, 45 and 47).
• Whether WEA had seen the Volcker inquiry report and took any action as a result (pp. 29–31, 34 and 47).
• Whether WEA had been provided with a copy of the 2003 report prepared by the US Defense Contract Audit Agency on its investigation of contracts awarded under the oil for food program, as stated by Mr Vaile in parliament (pp. 16–17, 18 and 43).
• The terms of reference for the 2004 Williams review which examined AWB(I)'s management arrangements relating to the single desk (pp. 37–40).
• The reason why an out-of-performance bonus payment was made to AWB in 2002–03 (pp. 15–16 and 50).
• The role of the export consent arrangements working group (pp. 51–52).
• Material provided by WEA to the Cole inquiry; material provided to other government agencies (pp. 31, 33–34 and 45–46).
• WEA's value for money to the wheat growers (pp. 54–55).

3.17      All of the committee's questions were answered by WEA or taken on notice, with only one attempt to restrict the scope of questioning. Senator O'Brien asked if WEA had investigated the payment of kickbacks in the context of its effect on AWB(I)'s tax liability. The chair stated that the question impinged on the Cole inquiry. Senator O'Brien pursued his question and Mr Besley replied that WEA had not investigated the issue.[62]

3.18      In relation to WEA's investigation, the committee was advised that:

• WEA is required to report to the minister each year on the results of its monitoring of AWB's management of the pool. The last performance review report, sent to the minister in October 2004, also reported on WEA's investigation into the media allegations and referred to the use of a Jordanian trucking company.[63]
• WEA first became aware of allegations of kickbacks through the media and it decided to investigate. This decision was taken at a joint board meeting between WEA and AWB in February 2004.[64]
• A senior WEA officer examined 17 contracts at AWB International's offices in August 2004. Later in the hearing, WEA clarified this further by saying that the essential elements of the contracts were presented in a folder to the WEA officer to check. It was not known whether the complete contracts were seen as the officer has since retired. The WEA officer made a file note recording what was viewed in the documents. WEA undertook to provide this information on notice.[65]
• Mr Besley later clarified that the WEA officer did not only see information relating to 17 contracts. The annual report to the minister also mentioned that WEA had examined various records, certification of export details and authorisation letters from the United Nations. The WEA officer also met face-to-face with two officers from AWB.[66]
• In its examination of the contracts, WEA focussed on checking that the FOB (free on board) costs, which are charged to the pool and affect the pool price, were correct and consistent with previous information.[67]
• During the investigation, AWB denied any wrongdoing and stated that if the price of wheat seemed higher than the benchmark, this was because it included the high cost of transportation up country. WEA did not inquire into the cost of transport. WEA also looked at AWB's corporate governance charter which included a requirement that any agency payments were required to be approved and reported. WEA checked AWB's record of agency payments and there were none registered for Iraq. On the basis of these investigations, WEA was satisfied that it was not impacting on the price of the grain pool.[68]
• When WEA asked AWB if it was paying kickbacks and AWB denied any wrongdoing, WEA did not pursue the issue further as it believed it had developed a good working relationship of trust with AWB.[69]
• WEA's annual report to the minister is a confidential report. Information about the investigation was not included in WEA's growers report to the shareholders and farming community as it was regarded by AWB as part of its commercial negotiations which it preferred not to have publicly disclosed. WEA has an arrangement with AWB not to disclose commercial-in-confidence information or information that WEA has acquired through the use of its compulsory powers.[70]
• WEA did not feel that it was necessary to use its compulsory powers to carry out the investigation as AWB had been cooperative with its inquiries.[71]
• WEA first became aware of the Jordanian trucking company when it was mentioned in a short briefing document from AWB in May 2004 which outlined their approach to doing business in Iraq.[72]

3.19      WEA also advised the committee that:

• It did nothing specific as a result of the publication of the Volcker report.[73]
• The CEO, Mr Taylor, was responsible for overseeing the collation of material for the Cole inquiry. He checked for every reference that the WEA had, in any record, to AWB(I) wheat sales to Iraq. It was a very broad request covering a vast range of material, including hard copies, electronic copies, copies of data files and briefing material from AWB.[74]

3.20      The committee questioned WEA extensively about its role and powers under the Wheat Marketing Act. WEA explained that it has no power to investigate what is done with the wheat once it is shipped from Australia.[75] In relation to WEA's role, Mr Besley commented:

Let me clarify our role. Our role is to monitor—monitor, not regulate—the performance of the AWB as the manager of the pool in the interests of growers. It is not our role to get into their commercial operations or the way they run their business or, indeed, how they operate as a board. That is a matter for them, their directors, ASIC, ASX and all of that. That is not where our role lies at all.[76]

3.21      In response to a question from the committee about the action taken by WEA to inquire into the trucking contract, Mr Besley stated:

Can I just clarify that we are not a policing organisation. I do not hold with kickbacks or anything like that personally and I do not think any of us do, but our role is to monitor the performance of AWB(I) as it manages the grain pool. Once wheat leaves this country, charges of freight, insurance and so on are costs to the buyer. They do not impact on the pool, so we had no reason to go there.[77]

3.22      Mr Besley went on to explain that WEA's primary purpose in carrying out the investigation was to make sure there was nothing that was impacting on the grain pool:

One thing you could say is: if they were paying bribes, was that a disadvantage to the growers, with the pool paying them? As it turned out, even if they were paying bribes—and that is for Cole to decide—that money came out of an escrow account and had no effect whatever on the pool costs.[78]

3.23      WEA did not consider it was responsible for investigating corruption within AWB(I).[79] In response to further questioning about its powers, Mr Besley informed the committee that WEA does not scrutinise AWB Ltd—its role is to monitor how AWB(I) manages the single desk for the benefit of growers. WEA investigated AWB(I) in 2004:

For the purpose of finding out, if they were [paying kickbacks], what impact if any it was having on the pool—not for the purpose of pursuing that issue itself.[80]

3.24      The committee expressed the view that WEA's monitoring of AWB(I) was inadequate. Senator O'Brien remarked:

But, in this case, having decided to investigate kickbacks; to not inquire—apparently—about the value of the trucking contracts, which were an unusual arrangement; and to not inquire as to what sort of financial transactions were taking place completely; how could you possibly have had a proper insight into whether kickbacks were being paid? And do you seriously ask us to believe that you were happy to accept, given the allegations that were about, that a simple denial from AWB International was sufficient?[81]

3.25      The committee challenged WEA's explanation for not looking further into the kickback allegations that its only responsibility is the impact of issues on the grain pool. Senator Siewert asked whether the negative publicity surrounding the allegations and the Cole inquiry was not ultimately impacting on the pool. Mr Besley responded that it was 'an issue which I cannot answer'.[82]

3.26      The committee requested advice sought by WEA on a legal interpretation of its role to be made available to the committee. WEA agreed to provide it to the committee, subject to the minister's approval.[83]

3.27      The committee was interested to know whether Mr Besley and Mr Taylor had discussed their forthcoming evidence to the committee with the Minister for Agriculture, the minister's office or the department. Mr Besley responded that he had not, but the minister at the table, Senator Abetz, clarified that Mr Besley had been present in his office when he discussed with DAFF officials the government directive not to answer questions relating to the Cole inquiry (referred to above in paragraph 3.4). Senator Abetz added that he had indicated that the directive did not apply to Mr Besley and Mr Taylor, who as the Chairman and CEO of an independent statutory authority could answer questions as they saw fit.[84]

Food and Agriculture – other issues

3.28      The committee requested an update on the implementation of the Sugar Industry Reform package. The department advised that:

• The second tranche of the sustainability grant, $73 million, was paid in September 2005. This followed advice from the industry oversight group that the process of reform had advanced sufficiently to warrant payment.
• The industry oversight group is finalising its strategic plan which will go to the minister soon.
• One round of payments for regional community project grants has been made and the second round is under consideration.
• Out of the original allocation of $444 million, $227 million has been spent as at 3 February 2006.
• It is possible that some of the funding for re-establishment grants may remain unspent as it is subject to demand from farmers.
• There have been 642 applications for the $100,000 exit grant to leave the sugar industry, with 368 approved and 175 rejected to date. This grant is available to the end of this financial year and then it will drop to $50,000 for the next financial year.[85]

3.29      In response to a request from the committee for copies of the regional advisory group plans at the previous estimates hearing, the department provided an abridged public version of the seven plans. The committee asked why the detailed plans were not made available. The department explained that the plans are owned by the regional advisory groups (which include local community groups and businesses) who had concerns about releasing sensitive commercial-in-confidence information.[86]

3.30      The committee was critical of the plans as they did not appear to meet the criteria originally specified by the industry oversight group in terms of setting targets and other benchmarks that could be used to measure progress. Senator O'Brien commented:

Unfortunately, not all the concise plans do provide details of benchmarks or targets. In some cases, even those which do provide targets are so vague as to be next to useless.[87]

3.31      The committee also heard evidence about:

• Money provided to South Johnston mill (Estimates Hansard, 14 February, p. 63).
• Introduction of new country-of-origin labelling laws for food (pp. 63–64).
• Strategic planning for the production of biofuels and bioenergy (pp. 64–65).

Biosecurity Australia

3.32      The committee was interested in Biosecurity Australia's (BA's) draft policy for the importation of mangoes from Taiwan which is being treated as an extension of the existing policy allowing mangoes to be imported from the Philippines. BA explained that where there is an existing policy that presents a similar pest and disease risk to the commodity under assessment, it determines whether to carry out a policy review rather than starting from scratch and doing a complete import risk assessment. In this case, the issues relating to Taiwanese mangoes are substantially the same as Filipino mangoes.

3.33      The proposed requirements are vapour heat treatment (VHT) to kill fruit flies, orchard registration, pest control programs for other insects, and general good hygiene in the management of the orchard, as well as AQIS inspections on arrival. The committee expressed concern that mangoes could be imported into Australia from orchards in Taiwan that have fruit flies, provided the fruit itself is treated with VHT.[88]

3.34      The committee sought information on the impact of restrictions by Taiwan on the Australian fruit industry. This follows the government's recent announcement that Taiwan will now only accept fruit exports from Tasmania and the Riverland of South Australia on the basis that these areas are fruit fly free. BA advised that the ban has directly affected crops grown outside of the two fruit fly free areas that are currently in season such as cherries and stone fruit. However, other crops may be affected as they come into season. In the short term, Tasmanian fruit exports have also been affected as they are still awaiting administrative approval from Taiwan.[89]

3.35      BA outlined the steps it has taken to put an export protocol in place since Taiwan listed Queensland fruit fly as a prohibited pest in April 2005. The secretary indicated that it has been given a very high priority by the department and the minister who are actively seeking a resolution.[90]

3.36      The committee asked whether there was a connection between Taiwan's refusal to accept fruit containing Queensland fruit fly and BA's decision to fast-track an importation policy for Taiwanese mangoes carrying fruit fly. BA responded that it stresses to other countries who request market access that it does not do 'tit-for-tat' deals. Because of Australia's quarantine regime, all decisions are made on a scientific basis. However, BA also recognises that for Australia's market access requests of other countries to be advanced, we need to be seen as making progress on their requests, without committing to any particular result.[91]

3.37      The committee raised concerns about BA's contingency policy for the importation of Specific Pathogen Free (SPF) chicken eggs. BA explained that these eggs are used in vaccine production and to produce sentinel chickens for quarantine purposes. Australia currently has one SPF egg producer who supplies all of the eggs for Australia. After one of their two flocks broke down with a disease, there was great concern that no SPF eggs would be available if the other flock broke down. In the event of such a contingency, BA has developed a policy to source eggs from overseas. The committee expressed the view that it might be imprudent to rely on imported eggs in the event of a worldwide disease outbreak such as bird flu and would like consideration given to creating another egg farm in a separate location in Australia.[92]

3.38      Other matters raised by the committee included:

• Update on the draft uncooked chicken meat import risk assessment (Estimates Hansard, 14 February, p. 65).
• Timetable for completion of the Philippine's banana import risk assessment (p. 65).
• Import risk assessment for apples from New Zealand (pp. 65–66).
• Permit for the export of Tasmanian devils to Denmark for a christening present (pp. 66–67).
• Government review of options for dealing with any future BSE cases (p. 70).
• Background to compensation claim lodged by Marnic Worldwide Proprietary Ltd (pp. 72–76 and 77–78. See also discussion at pp. 10–11 and 83–84).
• Prawn import risk assessment and monitoring of the disease risk presented by imported prawns (pp. 78–79).

International

3.39      The committee held a brief discussion with officers from the International Division about:

• Funding for Keniry technical cooperation assistance committed as part of the negotiation of MOUs on live animal exports with several countries in the Middle East (Estimates Hansard, 14 February, pp. 79–80).
• Department's role in the development of a free trade agreement (FTA) with China (p. 80).

Product Integrity, Animal (including aquatic animal) and Plant Health

3.40      The committee requested information on lessons learned from Exercise Eleusis which was staged in November 2005 to test Australia's preparedness to deal with an outbreak of bird flu.[93] The department advised that a draft report on the exercise was completed at the end of January and is under consideration by the ministerial council and its standing committee. Mr McCutcheon stated:

The exercise was considered to be highly successful in both demonstrating Australia's capacity to deal with a zoonotic animal disease outbreak. It also served its other main objective of being a very good training program for all the officials and other participants in the exercise.[94]

3.41      The department explained that experience gained from a previous exercise which dealt with a simulated outbreak of foot-and-mouth disease, Exercise Minotaur, influenced the factors that were focussed on. Exercise Eleusis demonstrated:

• The need for a clear national policy to be in place to assess the risk to human health;
• The need to consider personal protective equipment and additional medical measures such as antiviral prophylaxis;
• Good working relationships between the agriculture and health agencies through information sharing and placing officers from each department within the emergency management arrangements of the other;
• The level of resources needed in the area of public communications;
• The vast quantity of information generated;
• The need to keep disease response strategies up to date; and
• The need for very clear national objectives in terms of managing the emergency and making sure links have been established within government, between departments, and more broadly between government, industry and the wider community so that everyone has a clear understanding of the disease strategy.[95]

3.42      The committee also discussed:

• Increase in receipts from the agricultural and veterinary chemical levy due to the easing of the drought (Estimates Hansard, 14 February, p. 81).
• Update on the national livestock identification schemes for sheep, pigs and cattle (p. 81).

Australian Quarantine and Inspection Service (AQIS)

3.43      The committee asked about sample testing conducted by AQIS on 97 items of imported horticulture.[96] A press release by the minister claimed the results demonstrated that imported horticultural products are safe, however, two products were found to contain pesticide residues and 14 contained E. coli. Ten of the 14 detections of E. coli came from one importer from Fiji. The rest were from China. Pesticides were found in garlic (fenvalerate) and sun-dried tomatoes (procymidone).

3.44      AQIS responded that the detections were referred to the competent food safety authority in Australia, Food Standards Australia New Zealand (FSANZ), for advice. The action taken depends on the level of detection and whether that is considered to be harmful to human health. The findings have not led to any changes in AQIS' border regime for testing imported food but have resulted in further survey work of horticultural products, targeting E. coli 157. AQIS will provide the survey results to FSANZ for it to determine whether additional testing is required as part of the normal testing regime.

3.45      AQIS' normal testing regime for imported agricultural product varies depending on the commodity. Generally, pesticide screens are applied to vegetables, with additional tests for processed vegetables.

3.46      The committee questioned the need for this promotion of imported horticulture and the purpose of the minister's press release. AQIS explained that it was a response to concerns raised in the media about imported food. AQIS wanted to be satisfied that its sampling arrangements were adequate and provide reassurance to the Australian public.

3.47      The committee sought an update on the citrus canker outbreak in the Emerald district in Queensland. AQIS advised that it is still under investigation by its compliance and investigations unit. Discussions are continuing with the Director of Public Prosecutions (DPP) who will advise whether it can be taken further. The committee will hold a follow-up hearing for the citrus canker inquiry on 1 March 2006.[97]

3.48      Other matters discussed included:

• Further information on the compensation claim lodged by Marnic Worldwide Proprietary Ltd relating to the importation of marine worms for recreational fishing (Estimates Hansard, 14 February, pp. 83–84. See also discussion at pp. 10–11, 72–76 and 77–78).
• Protocol for the export of Australian tripe to China (p. 86).

Australian Bureau of Agriculture and Resource Economics (ABARE)

3.49      The committee was again interested in the discussions between ABARE and the National Water Commission in relation to ongoing water research. ABARE advised that it has tried to develop a close working relationship with the commission, providing regular advice to the commission on the National Water Initiative through publications, seminars and meetings.[98]

3.50      The committee asked for ABARE's outlook for major rural commodities. There is expected to be a decline in prices for beef due to lower exports to Japan and Korea following the potential return of the US to the North Asian market. Sugar prices are expected to rise quite strongly in the next year as a result of much of the sugar production in Brazil being directed to the ethanol industry instead of being exported. Cotton prices are expected to ease due to high production out of India, China and Pakistan. Demand for lamb remains strong in the US and Asia with some price increases expected.[99]

3.51      There has been a fundamental shift in demand for wool. The longer term trends in apparel and competition from other fibres have contributed to the decline in demand. In addition, there does not seem to be a strongly growing market for wool in China, the largest potential market.[100]

3.52      In relation to crops, wheat prices are expected to increase because of lower production or yields coming from China, Russia, the Ukraine and the US. Production of canola was very strong last year due to good seasonal conditions, particularly in Canada. Demand is very strong and is expected to increase as Canadian production falls back after a return to normal growing conditions.[101]

3.53      The committee was concerned about allegations raised in a recent Four Corners program about the undue influence of Australia's largest energy users on the government's climate change policies, including allegations that ABARE is part of this so called 'climate-change mafia'. ABARE responded that it was not aware of the existence of a group known as the mafia, however, it was aware of the Australian Industry Greenhouse Network (AIGN). ABARE does not have a formal relationship with the AIGN but may consult with members of the AIGN as part of its normal broad consultation process.[102]

3.54      The committee was interested to know whether ABARE receives any funding from members of the AIGN. ABARE was unfamiliar with all of the member companies, so took the question on notice. A number of other questions relating to ABARE's projections for greenhouse emissions were also taken on notice.[103]

3.55      The committee inquired about ABARE's sources for funding for the modelling on climate change, emissions abatement and energy use. ABARE advised that its funding is principally from the Department of Industry, Tourism and Resources and DAFF.[104]

3.56      The committee also discussed ABARE's forecasts for:

• China's economy (Estimates Hansard, 14 February, p. 88).
• US economy (p. 88).
• Australian economy (pp. 88–89).
• Demand in the minerals and energy sector (p. 89).

3.57      The committee followed-up on ABARE's work on the cost effectiveness of the environmental water flows for the Murray-Darling. ABARE provided the committee with a copy of its report.[105]

Bureau of Rural Sciences (BRS)

3.58      The committee sought an up-date on the national agricultural monitoring system (NAMS).[106] Dr Ritman explained that it is:

on target for a draft website by April this year and a final by June-July this year...it is a jointly funded exercise between the states and the Commonwealth to produce information that will assist in drought exceptional circumstance assessments. It covers only the dryland and broadacre areas in its first production in June-July. There will be investigation as to the more intensive agricultural areas in irrigation, as a next step.[107]

3.59      NAMS is being developed to improve both the speed of assessment for exceptional circumstances (EC) applications and the objectivity and consistency of the information available to the National Rural Advisory Council in carrying out assessments.[108]

3.60      The committee also raised the following matters:

• National social data study (Estimates Hansard, 14 February, p. 93).
• Water 2010 project (p. 95).

Rural Policy and Innovation

3.61      The committee questioned why expenditure for Farm Help has been revised down from $42.5 million to $15 million. The department explained that there has been a reduction in demand which is largely drought related. Many farmers have applied for income support under drought exceptional circumstances assistance instead of Farm Help and the availability of other assistance such as the sugar reform package has also affected demand.[109] At the same time, additional funding has been provided to meet increased demand for the Agriculture–Advancing Australia (AAA) Rural Financial Counselling Service.[110]

3.62      The committee also discussed:

• Requirement for the minister to table a statement that he is satisfied that Dairy Australia is fully compliant with the terms of its statutory funding agreement (Estimates Hansard, 14 February, p. 96).
• Update on areas in receipt of exceptional circumstances assistance (p. 97).

Fisheries and Forestry

3.63      The committee was particularly interested in the steps being taken to deal with illegal fishing in north western Australian waters. The committee noted it has been well established that existing Navy and Customs patrol vessels intercept a minute fraction of illegal fishing vessels plundering the Australian fishing zone.[111] The committee focussed their questioning on deterrence of illegal foreign fishing vessels and crews who have been intercepted.

3.64      The committee sought information about:

• Penalties for illegal fishing;
• Whether penalties apply to crew, skipper and/or owner;
• Ability to pay fines;
• Steps to prevent crews reoffending;
• Purpose of the automatic forfeiture provisions of section 106A of the Fisheries Management Act 1991;
• Difference between automatic forfeiture and apprehension and the numbers of each over the past year;
• The reason why every illegal foreign fishing vessel is not apprehended and destroyed;
• Destruction of vessels at sea;
• Commonwealth government's prosecution policy relating to illegal foreign fishermen; and
• Difference between Western Australian state laws and federal laws in relation to apprehending and charging illegal fishermen.[112]

3.65      The department advised that penalties are determined by the courts and range up to a maximum of $625,000. However, penalties for Indonesian fishermen are usually significantly less. Between January and December 2005, 384 people were charged with penalties ranging from good behaviour bonds of $750 to fines of up to $130,000. Of these, 182 were crew and 202 were skippers. Usually the skipper is charged, but crew members are also charged if they can be identified as recidivist offenders. In reality, there is very little chance of large fines being paid. The deterrent for crew members is a short period of detention and then they are sent back to Indonesia with no money.[113]

3.66      The committee expressed the view that this was not much of a deterrent, with fishermen free to return to Australian waters within a few days on another ship. The department agreed, with Mr McLoughlin stating:

I think that is the operational reality for us. The other approach that we are taking in conjunction with colleagues from DAFF and other agencies is really what is going to be the longer term and more difficult, in some respects, approach: which is education, communication and Indonesian government support for trying to stop these people coming to Australia to fish in the first place. That is a really longer term investment and approach.[114]

3.67      The committee heard that vessels can be seized under the Fisheries Management Act for 30 days, pending appeal. If there is no appeal, they are automatically forfeited to the Commonwealth. In 2005, in northern Australia, 280 vessels were apprehended and a further 327 vessels were sent home after forfeiting their gear and catch only. Forfeitures are often used when Customs or the Navy are targeting a larger vessel and they encounter smaller vessels on the way. An increasing trend over the last couple of years has been the appearance of larger numbers of smaller Indonesian boats called bodhis which only carry two or three crew.[115]

3.68      The committee disagreed with the department's view that it is having an effect because it is catching increasing numbers of Indonesian fishing vessels. The committee expressed the view that greater numbers are being apprehended because there are far more incursions. The committee does not regard these measures as successful or sufficient to deter illegal fishermen from reoffending.[116] In response, the department explained that judgments are being made on a daily basis about the best use of available resources to make the greatest impact on illegal fishing.[117]

3.69      The minister agreed that the situation is unacceptable and a more cooperative approach between state and Commonwealth governments is required, along with an increase in resources and greater deterrents in the way of penalties. The minister also raised the issues of disease and security.[118]

3.70      The committee was interested to hear about work being carried out on a regional management approach to fisheries.[119] The department's Mr McLoughlin advised that he met with his counterpart in Indonesia for two days in October last year. They agreed on the principles and main headings of a shared stock management plan between Australia and Indonesia for the red snapper fisheries, which refers to half a dozen species of highly valued commercial fish, including saddletails and emperors. It was also agreed that the management plan would utilise Australia's policy approach to sustainable fisheries rather than Indonesia's.

3.71      Fisheries officials in Indonesia were keen to learn how fisheries are managed in Australia and they saw the shared plan as an opportunity to have a greater impact with their own fisheries management in regional areas. They will travel to Canberra in April to do further work on the plan before it is presented to respective ministers for consideration.

3.72      The committee requested an update on the fisheries structural adjustment package.[120] The following issues in relation to the package were discussed:

• Proposed expenditure for this financial year on the business exit tender (to buy concessions from fishers) and business planning assistance (to assist fishers to decide whether to stay in or exit the fishery) (Estimates Hansard, 14 February, p. 112)
• Tender process to allocate funds (pp. 112–113).
• Grants for fishers to seek professional financial planning (p. 113)
• Public consultation on proposed marine protected areas (pp. 113–114).
• Fishing community grants programs (pp. 114–116).
• Grants for skippers and crew who lose their jobs (pp. 115–116).
• Northern prawn fishery (pp. 110–111, 116 and 117–118).

3.73      Fisheries officers indicated that the government has laid down general principles for these programs and the department has been working out the structural detail. It has been negotiating with each individual fishery to find the best way to do this. Once the structure of the package has been finalised, it will go to the minister for approval and the tender documents will then be released.[121]

3.74      The tender process to allocate funds for the fishing concession buyout is an area that is still being finalised. There are a number of complex elements to be taken into account including the different fisheries concessions of each fishery and the development of marine protected areas, which are the responsibility of state governments and other Commonwealth departments.[122]

3.75      Mr Quinlivan stated that the objective of the program:

is to solve the problem of overfishing and also improve the structure of the fishing industry and provide people who are currently struggling with a dignified way of leaving the fishery.[123]

3.76      The target fisheries are the southern and eastern scalefish and shark fishery, the eastern tuna and billfish fishery, and the Bass Strait central zone scallop fishery. The species in those fisheries have been assessed as being overfished and their allowable catch for next season and the future has been quite significantly reduced. The other fishery that is a target for the package is the northern prawn fishery, on the basis that it has been very close to being overfished in recent times.[124]

3.77      The department is aiming to provide fishermen with a clear idea of likely catch levels and management strategies that will be applied in the future so they can make an informed decision about whether to stay in the fishery or offer the business up as part of the tender and buy-out process.[125]

3.78      The committee also sought information about:

• Incursions by large vessels of Chinese, Taiwanese, Korean and Thai origin (Estimates Hansard, 14 February, pp. 101–102).
• Size of the illegal fishing take in Australia's northern fisheries (p. 107).
• Increase in AFMA's budget by $1.8 million to provide additional funding for border protection; establishment of Horn Island facility; extra expense of vessel destruction; use of Willie Creek centre (pp. 107–108).
• Marine pests carried by illegal fishing vessels; possible risks to shore based fisheries and the pearling industry (pp. 108–109).
• What happens to the illegal catch after it has been confiscated (pp. 109–110).
• Why the illegal catch is usually dumped at sea or destroyed; why some is offered for tender for removal from Australia for sale in export markets; treatment of apprehended shark fin (p. 110).
• Restrictions on mud crabbing in north Queensland (p. 118).
• Extent of closure in the fishing industry in the Great Barrier Marine Park over the last 10 years (p. 119).
• Department's role in determining the boundaries for marine parks (p. 119).
• Department's intention to no longer use state based contracted Fisheries officers to carry out foreign compliance work (p. 120).
• Agreement between Australia and Indonesia to work on shared stocks; agreement between surveillance agencies to work together (p. 120).
• Bilateral fisheries forum (pp. 121–122).
• Consideration given to the effect on fisheries in other countries by the reduction of the fishing capacity in Australia (pp. 121–122).
• Joint investigation study into the illegal fishing trade (p. 122).
• Darwin detention facility (p. 122).
• Eden Regional Adjustment package for the forestry industry; Matilda's Bakery; Boydtown Pty Ltd (pp. 122–124).

Natural Resource Management

3.79      The committee had a brief discussion with officers from Natural Resource Management about:

• Department's work on water rights issues in Queensland (Estimates Hansard, 14 February, pp. 125–126).
• Budget for the Natural Resources Management Account; funding for the National Landcare Program (p. 127).
• Budget for the National Action Plan for Salinity and Water Quality (p. 127).
• Budget for Tasmanian water infrastructure; Meander Dam project (p. 127).

Senator the Hon. Bill Heffernan

Chair

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