Report to the Senate
1. On 8 February 2006, the Senate referred to the Committee for
examination and report, the following documents:
Particulars of proposed additional expenditure
for the service of the year ending 30 June 2006; and
Particulars of certain proposed additional
expenditure for the service of the year ending 30 June 2006 relating to
the Defence portfolio and the Foreign Affairs and Trade portfolio.
2. The Committee has considered the
proposed additional expenditure for the year ending 30 June
and has received evidence from the Minister representing the Minister for
Defence, the Minister for Foreign Affairs and the Minister for Trade; also the
Parliamentary Secretary representing the Minister for Veterans’ Affairs and officers
of the departments and agencies concerned.
3. The Committee met in public session on 15 and 16 February.
Further written explanations provided by departments and agencies will be
presented separately in volumes of additional information. This information
will also be placed on the Committee’s internet site (www.aph.gov.au/senate_fadt).
Questions on notice
4. The Committee resolved, under Standing
Order 26, that written answers and additional information should be submitted to
the Committee by close of business on Thursday,
30 March 2006.
Department of Defence
5. The Committee acknowledged the presence
at the hearings, of Mr Ric Smith, AO, Secretary of the
Department of Defence, and Air Chief Marshal, Angus Houston, AM, Chief of Defence Force
Matters of procedural significance
6. Before proceeding to outline matters examined during the
hearing, the Committee draws attention to a number of matters of procedural
significance that arose while taking evidence.
7. The committee sought information on advice received from Australia's security units with regard to Australia's presence in Iraq and insurgency. The CDF declined to answer the
question on the grounds that he believed it touched on intelligence assessments
which he stated were 'very sensitive matters'.
The Committee did not pursue the matter.
8. A similar question was put to Defence officers later in the
hearing. This time it dealt with DIO presence in Iraq after the Iraqi Survey Group had finished its work.
The Secretary of Defence urged the officer answering the question to be
cautious about describing the functions of Australia's intelligence officers
stating 'the functions of our intelligence officers is a matter which I think
intrudes into the kind of territory we are sensitive about on the basis of not
discussing intelligence issues'. The
committee did not pursue the matter.
9. The Committee observed a long–standing convention that sensitive
intelligence matters are not aired during public hearings.
Matters before a board of inquiry
10. Questions were also asked about common
law implications that may derive from an accident under investigation by a
board of inquiry. The CDF advised the committee that:
Eventually the outcome of the board of inquiry will come through
the Chief of Navy to me. It will then be reported to government and,
presumably, to you in the fullness of time. May I suggest that once the report
is on the record is the time that we would come back to you and take questions
11. The matter was not pursued.
Matters that might come before the Cole
12. While taking evidence on the Iraqi Survey
Group, the Secretary of Defence declined to answer questions that may lead
'into the ground of the Cole commission into certain Australian companies in
relation to the oil for food program'. He referred to a government directive.
The minister then explained to the Committee that it was the government's policy to ensure that
the commission's inquiry 'takes place without having a parallel set of
inquiries' within estimates hearings'. He read into the record the government's
position on matters before the commission of inquiry being conducted by the Hon Terrence Cole:
While examination of officials by the committees might be
appropriate in the future, the government considers that Mr
Cole should be able to proceed with his
inquiry and present his findings without parallel public questioning that would
not assist consideration of complex issues.
13. The Minister explained further that it would be 'entirely
appropriate' for matters before the Cole Commission to be canvassed at length
once Mr Cole has completed his investigation. The chair advised that Senators
could ask questions which would be answered in a way that 'ultimately,
depending on any action you would take, resolves itself in the Senate'.
14. The Committee now turns to matters
examined during the hearings. They included:
Portfolio overview and major corporate issues:
Comprehensive operational overview by Air Chief Marshal Houston, of
foreign deployment of ADF personnel. The Committee was particularly interested
in the ADF operations in Al Muthanna.
Recruitment and retention of special forces personnel; Special Forces
Direct Recruiting Scheme; security preparation for the Commonwealth Games (pp. 14–16; 107).
Afghanistan: provincial reconstruction in Afghanistan; partnership with
the Netherlands; insurgency activity; International Stabilisation of
Afghanistan Force (ISAF) (pp. 17–19).
statements and remediation plans; project management (pp. 69–70).
destroyer project; strategic priorities; capabilities of the Australian shipbuilding
industry (pp. 70–73).
Defence Materiel Organisation
Seasprite helicopters certification testing; software load. Contract
liquidated damages provisions; contract time line and delays; prime contractor's difficulties (pp. 19–23, 30; 71).
DMO projects with
costs increases and decreases
trained in anticipation of the aircraft being introduced into service; number
of aircraft accepted to date; flying hours and limitations to availability;
maintenance regime; life expectancy of the aircraft ( pp. 22–27).
helicopter: reduced flight hours; unscheduled maintenance (pp. 27–28).
availability of qualified flying instructors (pp. 29–30).
suspension of flying; full audit and review; return to flying; air crew confidence
in the aircraft. Cost of having the fleet grounded; replacement aircraft in the
capability plan (pp. 30–33; 107).
Protective clothing and associated personal equipment: overview of
situation; reports of defective unit materiel and equipment (RODUMs); number of
reports made by equipment type (pp. 38–49).
Length of time
the RODUM system has been used; keeping statistics on RODUMs (pp. 62–63). Other reviews and feedback avenues (pp. 63–66). Replacement of equipment by ADF personnel (pp. 67–68).
Tender process for personal equipment; investigation of a complaint by
a tenderer; design deviations from tender specifications; safety issues (pp. 49–50, 56–59, 63). Administrative and disciplinary action against two
officers and the letting of a contract (pp. 53–59).
Investigation of the employment by a tenderer of a former DMO technical
adviser (pp. 51–56,
Probity of the tendering, commercial and contracting practices in DMO (p. 62).
Air combat capability; joint strike fighter (pp. 73–74, 83).
Flying suits issues to C130Hercules crews in the Middle East (pp. 75–80, 82–83). Ballistic goggles worn by ADF personnel in Iraq (pp. 80–81)
Defence Organisation's response to media coverage of issues relating to
ADF personal equipment and clothing. Directorate of Trials; evaluations. (pp. 81–82).
Capital facilities projects
Defence update in late 2005 (pp. 36–38).
Duefler report; role of the Iraq Survey Group (ISG) in Iraq; lines of
reporting; function of individuals (pp. 83–4; 86–88, 89).
officers and DIO; standing up and standing down of personnel in the ISQ; returning
DIO personnel (pp. 89–90). Australian elements in Iraq other than military
involvement (pp. 91–92).
coordination and dissemination of Defence material relevant to the Cole Inquiry
payments: ADF personnel killed aircraft accident in Indonesia; complaints by
families about lack of advice on entitlements or receiving various payments.
Economic dependence of claimants (pp 34–36)
Overview of recruitment and retention: skills shortage and a
competitive labour market; action to improve recruiting performance; total
package approach to retention; managing the separation rate (pp. 95–96).
Recruiting methodologies and percentage rates per year; recruitment and
retention at various levels; branding and marketing the ADF; research findings (pp. 97–99).
National marketing manager; term of employment of the director general;
companies retained to do research on recruitment and retention (pp. 100–101).
Sustainable recruitment capability: four key activities (pp. 101–102).
Response to critical comment on some practices in some parts of the ADF
ADF permanent force: increase retention within the Army (p. 103). Cadet recruitment (pp. 103–106).
ADF drug policy and employment of contractors and civilians working in
ADF establishments (pp. 106–107).
Department of Veterans’ Affairs
15. The Committee acknowledged the presence
at the hearings of Mr Mark Sullivan, Secretary, and officers of
the Department of Veterans’ Affairs.
16. Issues that were discussed included:
Sea King accident in Indonesia: progress of compensation claims for
families (pp. 108–110).
Water contamination on Navy ships during Vietnam War; amendment of
statements of principles (SOPs) relating to certain diseases; advice to veteran
community; renewed claims for compensation (pp. 116–119). Health study: exposure to
contaminated water (p. 121).
Vietnam veterans counselling service: access to service by members of a
veteran's family; rate of use and cost to use service (pp. 119–120; 122).
Atomic veterans health study: completion and release of findings (pp. 120–121).
Vietnam veterans mortality study and cancer incidence study (pp. 121–122).
Travel expenses for veterans: reinstatement of certain entitlements (pp. 122–123).
Repatriation pharmaceutical benefits scheme (RPBS): safety net
threshold; removal of calcium tablets from the PBS (pp. 123–124).
Anzac Cove: archaeological and historical survey; road works (pp. 110–111). Subsidence of carpark area and roadway; general
(pp. 114–115). Drainage and flooding issues (p. 125).
Recommendations of Senate report on Gallipoli Peninsula: erosion at
Anzac Cove; remedial planting of vegetation (pp. 111–112). Clearer guidelines for the
future management, recovery, reburial and storage of human remains at Gallipoli
(p. 112–113). Government's response to the report's recommendations,
such as, military historical
audit of the battlefield at Gallipoli; and, coordination of conservation
management planning (p. 113).
Director of the Office of Australian War Graves; progress on recruiting
a new director (pp. 124–125).
Foreign Affairs and Trade portfolio
Department of Foreign Affairs and
17. The Committee acknowledged the attendance
at the hearings, of Mr Doug Chester, and Ms Gillian Bird, and officers of the
Department of Foreign Affairs and Trade. It also acknowledged the presence of Mr Charles Tapp, AusAID and Mr Hamish McCormick, from Austrade, and
attending officers from each respective agency.
Matters of procedural significance
the hearing began, the committee had decided that the hearings would start with
a combined portfolio overview, bringing together officers from three separate
portfolios—Department of Foreign Affairs, Austrade and AusAID. The minister at
the table had been informed about the committee decision. There were no
Matters that might come before the Cole Commission
Minister at the table made an opening statement informing the committee of a
government directive to officials. She stated:
...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.
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 considers that Mr
Cole should be able to proceed with his
inquiry and present his findings without parallel public questioning that would
not assist consideration of complex issues.
elaborated further on her statement:
The government takes the view that there should not be parallel
public questioning during the currency of the inquiry. It is not meant to be
forever. Indeed, the statement comprehends that the kinds of questions you
might want to ask are, no doubt, questions that would be a proper line of
inquiry once the commission has concluded.
21. The minister explained that:
...the royal commission has been set up to deal with those issues
in a public way, in a transparent way, that enables all those matters to be
properly canvassed. The government has taken the view that it should run its
course at an appropriate time.
22. When asked whether evidence might be
given in camera, the minister replied:
Even parallel questioning in camera is not consistent with the
commission having an opportunity to pursue this inquiry the way they want and
to not subject potential witnesses to another line of inquiry at the same time.
23. Later during the hearing the minister
wanted to make clear the distinction between being able to put a question and
the response to it. She wanted to make plain that no–one was suggesting that
committee members were not entitled to put questions or that they should not be
asking questions. The minister went
further and added:
It is not that we are refusing to answer questions; we are not.
We are simply saying that there is another place, another process, a royal
commission set up to deal with these matters in an appropriate and transparent
way. There can be proper findings and then it is a matter for what proper
responses should be made. I want to repeat that for the record because it is
important. The government has taken this course not in any way to deny this
committee its core job. It is simply a matter of timing to allow the inquiry to
run its course. The statement itself says that it might be appropriate for us
to make responsive answers to all these questions once the inquiry has
Definition of matters
24. A committee member sought a definition of the terms 'matters'
contained in the minister's opening statement.
25. The minister explained that the term would be interpreted very
broadly and would go to any matters that relate to the oil for food program
that might go to the knowledge of the Commonwealth.
Status of officers of Austrade
26. A committee member sought clarification on whether officers
with the Australian Trade Commission would be subject to the cabinet directive.
27. The minister noted that there was some uncertainty about the
status of Austrade but stated that the government takes the view in relation to
Austrade that 'the directive applies to all officers in Austrade.' The minister was asked whether she had
legal advice to the effect that despite Austrade being a statutory authority it
officers were subject to the government directive. The minister took the
question on notice.
28. A committee member, however, drew
attention to the Senate Rural and Regional Affairs and Transport Legislation Committee that was able to establish that the Wheat Export
Authority, being a statutory body, was not subject to this particular
direction. The minister replied that:
Austrade has always been subject to the direction of the
government. That has certainly always been the policy and the practical effect
of how the government and Austrade relate. The government takes the view that
Austrade is subject to the direction I have referred to this morning.
29. She explained that although the directive
did not specifically mention Austrade officials they are included in the
directive. She noted further:
We have not exhaustively set out in the direction the officials
who would be in and who would be out. I am saying that it applies to those who
operate under the direction of the government, and that includes Austrade.
30. The committee then turned to the matter of the mode of
transmission of the directive to Austrade officials. A question was asked
whether the minister provided to Austrade, under the terms of section 10 of the
Australian Trade Commission Act, 'a directive in similar terms to that which
the minister announced at the beginning of the hearing.
31. The minister declined to answer the question stating that she
was being asked for a legal interpretation and would not give an opinion on
whether there had been compliance with a specific section of an act. At a later stage, she again stated
that she would not provide legal advice about what would comply with the act.
32. During the course of the hearing a number of questions were
asked that the minister deemed to come under the government's directive that
matters likely to become before the Cole Commission should not be the subject
Committee now takes up matters raised during the hearing. They included:
Combined portfolio overview
Austrade and the Australian Trade
Commission Act 1985 (16 February
2006, pp. 6–13).
Provisional Authority (CPA); Australians deployed with the CPA; reporting
obligations to AusAID and DFAT; contractual arrangements (pp. 14–19, 53–55).
in Iraq of individuals and goods and service providers; the tender process;
procurement guidelines; processes and procedures (pp. 18–22).
Discussion on specific
contracts between AusAID and individuals or organisations in 2003 (pp. 22–27).
in Iraq and suicide bombers (p. 28).
Iraq Task Force (pp. 28–31, 36–37, 46–47).
and notices to produce documents for the Cole Inquiry; search for documents (pp. 32–42).
proceedings at the Cole Royal Commission; media statements (pp. 42–45, 48, 51, 53).
Canada and the
Australian Wheat Board (pp. 52–55).
report (pp. 58,
ambassador to Washington (p. 61).
representing DFAT (pp. 67–68).
Appointment of a US ambassador to
Australia (pp. 91–92).
DFAT appointment to the United Nations post (pp. 92–93).
Van Nguyen case (pp. 93–96).
Australians on death row; prisoner transfer programs (pp. 97).
Ministerial travel to the Middle East (pp. 97).
Australia–US free trade agreement (pp. 98–100).
35. Matters raised by the Committee included:
Coalition Provisional Authority: staff engaged by AusAID; and,
contracts to provide goods and services; procurement guidelines (pp. 15–26).
AuAID's role in Iraq (pp. 17–21).
Iraq Task Force (pp. 29–31, 46).
Process of allocating funding to projects; government–to–government
programs; guidelines on risk assessment; financial regulations (pp. 69–72).
Asia Pacific Leadership Forum; HIV task force (pp. 73–74).
Illegal fishing on the north–west coast of Australia; Antara development
program (p. 75).
Role of Australian contractors in the aid program; types and size of
contracts; sub–contracting parts of projects (pp. 75–77).
Introduction of Aidworks (activity management system); ANAO report on
AusAID contract management; major contracts awarded (pp. 77–79).
Aid activity expenditure of other government departments; request to
AusAID to provide more detailed information of other government department aid expenditure
AusAID funding of NGOs; funding of certain projects (pp. 81–82).
Report of government's core group of experts; observations and
recommendations from the report; issues of aid effectiveness (pp. 82–85).
Australia's aid activities in Africa (pp. 85–86).
Development Assistance Committee (DAC) (pp. 86–87).
raised by the Committee included:
Communications from AWB; communications from Minister for Trade (p. 62–64).
Brief to the Minister for Trade (pp. 66).
Trade mission into the Middle East; Australian businesses achieving
export deals; promotion of trade with Iraq; security issues in general (pp. 87–88).
Austrade's role in providing assistance to exporters (pp. 89–90). Expanding Australia's trade relationship with Iraq (pp. 89–90).
Ministerial travel to the Middle East (pp. 90–91).
Austrade and Invest Australia in Europe (p. 90).
37. The Committee expresses its appreciation
of the assistance given during its hearings by Senator the Hon Ian Campbell, Senator the Hon Helen Coonan and Senator the Hon Sandy Macdonald. The Committee also acknowledges the
attendance and cooperation of the many departmental and agency officers and the
services of various parliamentary staff involved in the estimates process.