COMMONWEALTH OF AUSTRALIA Proof Committee Hansard€¦ · additional expenditure for 2012-13 for...

COMMONWEALTH OF AUSTRALIA

Proof Committee Hansard

SENATE

ENVIRONMENT AND COMMUNICATIONS LEGISLATION

COMMITTEE

Estimates

(Public)

MONDAY, 21 MAY 2012

CANBERRA

BY AUTHORITY OF THE SENATE

[PROOF COPY]

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SENATE

ENVIRONMENT AND COMMUNICATIONS LEGISLATION COMMITTEE

Monday, 21 May 2012

Members in attendance: Senators Bilyk, Birmingham, Boswell, Cameron, Fisher, Joyce, Macdonald, McKenzie,

Milne, Rhiannon, Singh and Waters.

Monday, 21 May 2012 Senate Page 1


CLIMATE CHANGE AND ENERGY EFFICIENCY PORTFOLIO

In Attendance Senator Wong, Minister for Finance and Deregulation

Department of Climate Change and Energy Efficiency

Executive

Mr Blair Comley, Secretary

Dr Subho Banerjee, Deputy Secretary

Dr Steven Kennedy, Deputy Secretary

Outcome 1

Mr Brad Archer, Acting Chief Advisor, Climate Strategy and Markets Division

Mr Andrew Bailey, First Assistant Secretary, Energy Efficiency Division

Mr Matt Cahill, First Assistant Secretary, Energy and Safety Programs Division

Ms Pamela Daniel, Acting Assistant Secretary, Energy Markets and Renewables Branch

Mr Greg Divall, First Assistant Secretary, Clean Energy Future Program Office

Mr Kieran Gleeson, First Assistant Secretary, Corporate Support Division

Mr David Higgins, Acting Assistant Secretary, Finance, Forests and Development Branch

Ms Anne Leo, Assistant Secretary, Energy and Safety Programs Compliance Branch

Ms Kerrie-Anne Luscombe, General Counsel, Legal Services Branch

Ms Joanne Mulder, Assistant Secretary, Policy Coordination and Governance Branch

Mr Robert Owen-Jones, Acting Chief Advisor, International Division

Mr Mark Painting, Assistant Secretary, Safety Programs Branch

Mr Trevor Power, Assistant Secretary, Analysis and Projections Branch

Prof Gary Richards, Assistant Secretary, Energy Branch

Ms Harinder Sidhu, First Assistant Secretary, Adaptation, Science and Communications Division

Prof Will Steffen, Climate Commissioner

Ms Shayleen Thompson, First Assistant Secretary, Land Division

Ms Kristin Tilley, Assistant Secretary, National Energy Savings Initiative Branch

Mr Robert Twomey, Chief Financial Officer

Mr David Walker, Assistant Secretary, Household and Community Programs Branch

Mr James White, Assistant Secretary, Strategy and Market Linkages Branch

Ms Jenny Wilkinson, First Assistant Secretary, Climate Strategy and Markets Division

Mr Peter Young, Assistant Secretary, Coverage and Legislation Branch

Clean Energy Regulator

Mr Bruce Andrews, General Manager, Clean Energy Regulator Delivery Program Office

Mr Ross Carter, Executive General Manager, Regulatory Division

Mr Andrew Livingston, Executive General Manager, Renewables and Carbon Farming Division

Ms Chloe Munro, Chief Executive Officer, Clean Energy Regulator

Mr Nico Padovan, Executive General Manager, Clean Energy Regulator Delivery Program

Mr Tas Sakellaris, General Manager, Regulatory Strategy and Intelligence

Ms Charlotte Tressler, Executive General Manager, Corporate Services Branch

Ms Mary-Anne Wilson, General Manager, Carbon Farming Branch

Low Carbon Australia Limited Ms Meg McDonald, Chief Executive Officer, Low Carbon Australia Limited

Committee met at 9:01

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

Communication Legislation Committee. The Senate has referred to the committee the particulars of proposed

additional expenditure for 2012-13 for the portfolios of Broadband, Communications and the Digital Economy,

Climate Change and Energy Efficiency, and Sustainability, Environment, Water, Population and Communities,

and other related documents. The committee must report to the Senate on 26 June 2012. The committee has set

Friday 20 July 2012 as the date by which answers to questions on notice are to be returned.

Under standing order 26, the committee must take all evidence in public session. This includes answers to

questions on notice. Officers and senators are familiar with the rules of the Senate governing estimates hearings.

If you need assistance, the secretariat has copies of the rules. I particularly draw the attention of witnesses to an

order of the Senate of 13 May 2009 specifying the process by which a claim of public interest immunity should be

raised, which I now incorporate in Hansard.

Senate Monday, 21 May 2012


The extract read as follows—

Public interest immunity claims

That the Senate—

(a) notes that ministers and officers have continued to refuse to provide information to Senate committees

without properly raising claims of public interest immunity as required by past resolutions of the Senate;

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

guidance as to the proper process for raising public interest immunity claims and to consolidate those past

resolutions of the Senate;

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

(1) If:

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

document from a Commonwealth department or agency; and

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

public interest to disclose the information or document to the committee, the officer shall state to the committee

the ground on which the officer believes that it may not be in the public interest to disclose the information or

document to the committee, and specify the harm to the public interest that could result from the disclosure of the

information or document.

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

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

shall refer that question to the minister.

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

interest to disclose the information or document to the committee, the minister shall provide to the committee a

statement of the ground for that conclusion, specifying the harm to the public interest that could result from the

disclosure of the information or document.

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

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

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

disclosure of the information or document to the committee as in camera evidence.

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

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

committee shall report the matter to the Senate.

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

senator from raising the matter in the Senate in accordance with other procedures of the Senate.

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

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

result from the disclosure of the information or document, is not a statement that meets the requirements of

paragraph (I) or (4).

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

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

inform the committee of that conclusion and the reason for that conclusion, and shall refer the matter to the head

of the agency, who shall then be required to provide a statement in accordance with paragraph (3).

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

CHAIR: The committee will begin proceedings with the examination of the Climate Change and Energy

Efficiency Portfolio, commencing with general questions of the department and will then follow the order as set

out in the circulated program. I welcome Senator the Hon. Penny Wong, Minister for Finance and Deregulation,

representing the Minister for Climate Change and Energy Efficiency; and portfolio officers.

Department of Climate Change and Energy Efficiency

[9:03]

CHAIR: Senator Wong or Mr Comley, would either of you like to make an opening statement?

Senator Wong: No, thank you.

Mr Comley: No, thank you.



CHAIR: I now invite general questions of the department.

Senator BIRMINGHAM: Mr Comley, are you able to advise of us of the separation of duties across the

portfolio between Mr Combet and Mr Dreyfus?

Mr Comley: Yes, I can. I do not have the documentation in front of me. Broadly, as is consistent with all

arrangements where there is a cabinet minister and a more junior minister, the cabinet minister obviously retains

the overall responsibility for the portfolio. Mr Dreyfus‟s primary duties, which are largely delegated, relate to the

energy efficiency matters and also for significant tasks in representing the minister in international arrangements

for climate change. They are the two principal things. The Carbon Farming Initiative is the other one that Mr

Dreyfus has particular carriage of.

Senator BIRMINGHAM: So those are the representational roles. The minister went to Durban, but other

than that does Mr Dreyfus attend most other international fora?

Mr Comley: In the case of international representation, a judgment is always made as to who else is attending

from other countries, and therefore the level of impact that is required. The minister has not made any final

decision on other matters. It is likely that the Conference of Parties is the most significant meeting each year. That

is something that Minister Combet would attend. In other matters it is likely to be Mr Dreyfus, but that is not

always the case. For example, recently Minister Combet attended the Major Economies Forum. Again, depending

on who the representatives are is the sort of principle that will drive attendance. The Major Economies Forum is

probably the most critical negotiating forum outside the straight UNFCCC process during the year.

Senator BIRMINGHAM: Has Mr Dreyfus increased his responsibilities in this portfolio since the reshuffle

where Minister Combet became the Minister for Industry and Innovation as well as the Minister Climate Change

and Energy Efficiency?

Mr Comley: That is correct. I think that it is also true in a very practical sense that while Mr Dreyfus also had

accountability for some of those matters beforehand, the relevant balance in terms of discharging those

obligations is probably more within Mr Dreyfus‟s purview rather than Mr Combet having a day-to-day interaction

with some of those matters.

Senator BIRMINGHAM: Some of those matters being the three areas you spoke about previously or more

broadly across the portfolio?

Mr Comley: No, those areas.

Senator BIRMINGHAM: In regard to the carbon pricing mechanism and so on, Mr Combet retains primary

oversight of that and day-to-day engagement in that regard?

Mr Comley: That is correct. He does retain responsibility. As a matter of fact, the relevant balance of work

has changed a little over the last year and a half, as you could imagine, because you go from a period of very

intense policy development, which obviously involves the minister, to a large part of it which is now

implementation. While the minister retains oversight, a lot of that work is effectively carried out by officials and

then regularly reporting back rather than having quite the same day-to-day involvement with, say, policy design.

Senator BIRMINGHAM: In regard to departmental engagement with the minister and the parliamentary

secretary, do you have regular meetings with each of them? How does your working relationship break down?

Mr Comley: Yes. Obviously members of the department have meetings on an ad hoc basis, depending on

what the issue is. But in terms of the overall oversight, I typically have a weekly meeting with Mr Combet and a

fortnightly meeting with Mr Dreyfus.

Senator BIRMINGHAM: And was that the case prior to the most recent reshuffle?

Mr Comley: Yes. We had established regular contact with Mr Dreyfus before the reshuffle. It is probably true

to say that I have had more contact in recent times with Mr Dreyfus than I did prior to the reshuffle, but it would

not be a sharp dividing line of when the reshuffle occurred.

Senator BIRMINGHAM: Can I go to question on notice No. 37, which was asked by my colleague Senator

Fisher? It was primarily about travel.

Mr Comley: Sorry, it has just been pointed out that I was confusing the Major Economies Forum from last

year. Mr Dreyfus went to the MEF that occurred last year. I had in mind the MEF that Minister Combet went to

last year.

Senator BIRMINGHAM: You have to watch those TLAs during the course of proceedings. Question No. 37

was primarily related to travel, but it did ask for the details of departmental officials accompanying the minister or

parliamentary secretary during travel. What struck me in that answer was that there were 13 or so occasions



where the department provided officials to travel with the minister or parliamentary secretary. All but one of those

occasions involved the parliamentary secretary. Just one of those, which was to attend the Conference of Parties

in Durban, involved travel with the minister. That struck me as an unusual balance, Mr Comley. Is there a reason

there is so much departmental travel with the parliamentary secretary compared with the minister?

Mr Comley: As is the case in my experience across many years, part of the reason is the preference of the

ministers involved. Parliamentary Secretary Dreyfus valued the support on the communication side and other

matters. Whilst the offer is available, Minister Combet does not necessarily take up that opportunity at all times.

That is all it is.

Senator BIRMINGHAM: So it is not a reflection of Mr Dreyfus perhaps having a more active role in either

explaining, selling or negotiating some of the key areas of the portfolio that cause him to undertake these events?

It is hard to discern too much from these answers, because much of them simply say, „To provide communication

support to the parliamentary secretary‟. It does not provide any explanation as to the context of what the travel

related to.

Mr Comley: It is true that Mr Dreyfus does quite a lot of public events and engagements with the community,

which involve talking about the policy direction. Whether a departmental officer accompanies him or not, I do not

think is the key determining factor there; it is really the nature of the events that they engage in.

Senator BIRMINGHAM: How does a decision occur as to whether it is appropriate to send departmental

officials on events with the minister or parliamentary secretary?

Mr Comley: Essentially if there is a request for a departmental officer to attend or if we make the offer, and

often we will make the offer. It is whether it supports the ministers to discharge their duties. To be honest, I

cannot recall a time where we ever thought, „No, that is not an appropriate support of the minister in the discharge

of their obligations.‟ It is really just a question of the preference of the minister in question as to what type of

support they feel is most useful.

Senator BIRMINGHAM: Specific to this answer and the communication support role to the parliamentary

secretary, was there a departmental official seconded to the parliamentary secretary for a period of time in

addition to the usual staffing arrangements in the parliamentary secretary‟s office?

Mr Comley: I will have to take the precise details. We have at times provided on secondment a departmental

official to backfill for a MOPS vacancy. I understand that is standard practice. If the MOPS vacancy is more than

three months, then you have to have a MOPS staffer replace them. If there is a temporary issue of up to three

months, then a departmental officer can be seconded to the office to backfill that position. That has occurred,

from my recollection, in Mr Dreyfus‟s office, and that, I understand, is a common practice across the Public

Service and across ministerial offices.

Senator BIRMINGHAM: Back to Mr Dreyfus‟s specific responsibilities. When he was initially the

parliamentary secretary to Minister Wong, his responsibilities, as I recall, were fairly specifically related to

energy efficiency. The roles in relation to international representation and, obviously, carbon farming are more

recent additions to those responsibilities—is that correct?

Mr Comley: That is right. But when ministers work together within a team and within a portfolio there are

times when one minister steps in on behalf of the other, even when it is not part of their narrowly circumscribed

responsibilities. I am not trying to be difficult, but thinking about this as a precise job description which divides

up exactly what the two ministers do is not really the way it works in practice here, or where I have seen it work

in practice elsewhere. Essentially, the portfolio minister retains the discretion to organise the resources of the

portfolio at the ministerial level and the delineation of the responsibilities is guidance as to where ministers

operate. Ultimately, the portfolio secretary determines what is the best use of resources.

Dr Kennedy: The parliamentary secretary has been involved in the Carbon Farming Initiative throughout

Minister Combet‟s arrangements. While everything Mr Comley said is correct, he has taken more and more of a

lead in that area. He has been the person leading most of the engagement on the development of that legislation

and its introduction.

Senator BIRMINGHAM: More broadly across the portfolio, in terms of the carbon pricing arrangements,

has Mr Dreyfus taken the lead in industry negotiations over compensation or any of those types of arrangements

as things have worked through?

Mr Comley: Not to my knowledge. I cannot rule out that Mr Dreyfus has had conversations in the way that

ministers get out in the community. But the carriage of any of those discussions would fall with Minister Combet,

with the potential exception of the Carbon Farming Initiative, where there has been significant engagement with

stakeholders.



Senator BIRMINGHAM: In the activity definition testing, for example, of activities for emissions-intensive

industries, are there instances of Mr Dreyfus meeting with industry groups and dealing with their technical

complaints and concerns about those things instead of Mr Combet?

Mr Comley: There would almost certainly be examples of where Mr Dreyfus has met with, I suspect, either

industry bodies or firms who have an interest in how the emissions-intensive trade-exposed definitions are

progressing. I would distinguish that from general representation roles rather than having carriage of that matter,

which rests with Minister Combet.

Dr Kennedy: An area of interaction between the carbon pricing mechanism and the Carbon Farming Initiative

is emissions from waste facilities, where they are liable under the mechanism for waste deposited after 1 July

2012 that can generate CFI credits. That is an area of industry engagement that crosses both. It is fair to say the

parliamentary secretary has had a number of meetings with industry on that.

Senator BIRMINGHAM: Okay. In regard to emissions-intensive trade-exposed industry, has Mr Dreyfus

conducted negotiations over how those activity definitions should be finalised or any of those areas of policy

detail?

Mr Comley: I am not sure that the word „negotiations‟ is the right way to think about it. With emissions-

intensive trade-exposed, there is a process that the department carries out to look at how something fits against a

principle based framework, then there is an expert advisory body and then advice goes to the minister. Has Mr

Dreyfus met with, at various times, people who may be involved in that process? Almost certainly, because that

involves a large number of companies and Mr Dreyfus is quite active in engaging across the community broadly.

Would it be a correct characterisation to say that Mr Dreyfus is accountable or directly responsible for the process

of whether to accept or change an activity definition, for example? I think the correct answer to that would be no.

That certainly rests with Minister Combet as the portfolio minister.

It is worth pointing out here that the process is quite relevant. The department engages intensively with

industry and there is a recommendation made as to what the activity definition should be. That recommendation is

put to an expert advisory panel, which is currently chaired by John Marlay. Then a recommendation is made to

the minister which recommends what the activity definition should be. Then, essentially, the minister chooses

whether to accept those. I am just distinguishing between the formal, which channels up through that, and any

representations that may be made to Minister Combet, Mr Dreyfus or, for that matter, any other minister in the

process. Ultimately, Minister Combet is the minister who has to decide whether to accept an activity definition.

Senator BIRMINGHAM: In addition to your formal weekly meetings with Mr Combet and fortnightly

meetings with Mr Dreyfus, in terms of the departmental interaction with the two of them, do you have a feel for

what extent senior officials would be engaged on a day-to-day basis with each of the ministers?

Mr Comley: That just depends a lot on what the stage of the cycle is. For example, if you were asking me this

question last year, I would say that there would be daily interaction with Mr Combet on key issues. That reflects

where we were in the policy process. These days—and, to be honest, I do not keep a record of whenever someone

from my department goes and talks in some way with the minister—I would say that two or three times a week

would probably be the norm in terms of the nature of the interaction. Whether that is a face-to-face meeting, a

phone call or other forms of formal engagement, that would be the sort of interaction that you would expect.

Senator BIRMINGHAM: With Mr Combet?

Mr Comley: With Mr Combet. With Mr Dreyfus it would be something similar.

Senator BIRMINGHAM: And about the same with Mr Dreyfus?

Mr Comley: That is right. Maybe a little bit more at times with Mr Dreyfus. It is hard to generalise because

what typically happens is that there is a fair bit of formal briefing that goes up to an office, and some of the reason

as to whether there is significant interaction is whether there is a need for follow up on that briefing—whether

there are questions remaining unanswered in a minister‟s mind. Those sorts of things will determine the nature of

the interaction. It really does depend on how significant particular issues that require ministerial intervention are,

and how much interaction from the department is required on the basis of supporting the other activities of a

minister.

Senator BIRMINGHAM: That time line you have put as to the changing level of interaction on a day-to-day

basis with Minister Combet—whilst coinciding with some changes of legislation passing the parliament and it

moving to an implementation stage—also corresponds and coincides with the changes to Minister Combet‟s

portfolio responsibilities too.



Mr Comley: I am not sure if it is inappropriate to answer this question, but my recollection is that some of the

change in the level of interaction would certainly have predated those ministerial accountability changes.

Senator FISHER: I want to just follow-up answer to question on notice No. 57 about social media. I asked

whether the social media guidelines for the department had been changed. The answer was that the department is

currently reviewing its social media guidelines for staff. Has the review been finished?

Ms Sidhu: No, the review has not yet been completed.

Senator FISHER: Thank you. In terms of the current guidelines for social media, have there been any

breaches by individuals in the department?

Ms Sidhu: As far as I know, no. That is essentially because the number of people who engage in social media

activity officially in the department are very small. There are clear escalation and clearance procedures in place.

Senator FISHER: And, of course, unofficially you would not know about it anyway?

Ms Sidhu: Precisely right.

Senator FISHER: In relation to the forecast reduced staff numbers as a result of the closing of administrative

programs and the shift to the Clean Energy Regulator, what is the total number of staff that will be cut due to the

reduction in administrative programs, as flagged in the budget papers?

Mr Comley: The average staffing level that we will end up with next year is 603, and the current average for

2011-12—I am looking at page 22 of the portfolio budget statement—was 947. They are not really like-for-like

comparisons because that does include the time that the regulator stayed within the department. If you want a

clearer estimate of what we think staffing numbers will change by, I have explained to the staff that our current

staffing level is around 900. That is on a headcount basis, so it is not quite the same basis as this. By June next

year, we expect that we will need to be in the range of 600-650 staff. Just to be clear, that is a like-for-like

comparison because that already has the regulator numbers having come out of the departmental base. So the staff

reduction overall will be in the order of 250 to 300 people.

Senator FISHER: Why aren‟t you able to itemise the number of staff being reduced due to the closure of

administrative programs?

Mr Comley: What do we do as a budgeting measure to work out what staff we can afford? There are actually

a number for variables. The most important variable is the ratio of our total budget that we spend on staff versus

other matters. That is what is called „employee expense‟ and „supplier expense‟. What we try to do, going

forward, is ensure that all of the supplier expense is efficient. In terms of our current thinking, we will have a

slight shift from supplier to employee expense. We start with what our overall budget is and then we work back

from that to work out what the total number of employees is. So it is not quite as simple as saying that there is one

amount going here and one amount going there. Again, when we have the programs that we currently have, we

are not required by any external rule to have that as a particular split between employee and supplier. We are

given a certain amount of departmental expenses and then that is a matter of judgment for us as to the best way in

which we discharge those obligations. We can go through what the change in the budget of the department is as a

result of lapsing programs, but then you come down to a decision about how you allocate that budget between

supplier and employee.

Senator FISHER: How many staff are transferring to the Clean Energy Regulator?

Mr Comley: I can give you that number. The point I am making, though, is the staff reduction from here does

not include that. So we just have a clean number.

Senator FISHER: Yes.

Mr Comley: Perhaps the easiest way to look at it is that we have a headcount here which was the headcount at

31 March. The Clean Energy Regulator was established on 2 April, so that was immediately before the Clean

Energy Regulator was established.

Senator FISHER: This is departmental headcount, is it?

Mr Comley: At the time it was the departmental headcount, because the department included the other

regulator. That headcount at 31 March was 1,162. The departmental headcount at 12 April, on a consistent basis,

was 920. Effectively, you had a 240 change in the headcount associated with the establishment of the Clean

Energy Regulator.

Senator FISHER: What about the classification levels of those approximately 240?

Mr Comley: In terms of APS staff, at 31 March there were 574 and that fell to 471—so that is a difference of

103. In terms of executive level staff, there were 527 at 31 March, and that fell to 400—a difference of 127. In



terms of the senior executive, there were 60 on a headcount basis, and that fell to 48 on 12 April. There was one

secretary, which stayed at one secretary—just in case someone was adding up the numbers and wondered what

the one difference was.

Senator FISHER: That adds up to 242, doesn‟t it?

Mr Comley: Yes, that is right.

Senator FISHER: Okay, I thought you said the reduction was 240.

Mr Comley: I may have rounded it to 240.

Senator FISHER: Thank you, Mr Comley.

Senator BIRMINGHAM: If I can take you to answer to question on notice No. 31, which was a response to

my query as to why the department had been able to provide far more detailed answers in relation to the couple of

million dollars spent on international travel by the department but was now unable to provide that detail. The

answer provided on notice is that due to changes in travel processes, including decentralisation of travel bookings,

introduction of credit cards for payment of travel expenses and change of travel management provider, the

department‟s ability to provide detailed travel information is limited. I am curious about those changes, and

particularly the fact you have undertaken changes to your travel arrangements that provide you with lesser ability

to detail travel. Isn‟t that a reduction in the types of checks and balances and accountability that you would hope

for in your systems?

Mr Comley: I will ask Mr Gleeson to comment on the precise changes. I do not think it is a reduction in

accountability. There are still approval procedures for all travel. It is just really a question of whether the function

is centralised or decentralised. We still have an audit trail for all international and other domestic travel approval.

It is just a question of how easy it is to extract information for these purposes. What we have done is set up a

system that has approval and requires that funding be allocated from the decentralised budget. That is all in order,

but it is just not done centrally because this is seen as administratively more efficient.

Mr Gleeson: As part of the whole of government move to drive more efficiency through the travel process,

we have moved to a credit card system for our travel arrangements. Also, for our domestic travel we have

decentralised that out to the executive assistants throughout the department. As the secretary said, we still have

very tight controls over who travels and how they travel. There needs to be very clear approval by a supervisor,

and upon their return the individuals have to do a reconciliation that actually justifies that the travel they

undertook and their expenses are reconciled accordingly. The difficulty we have in getting right down under the

nitty-gritty with the details that you are asking for is that we can give you total expenditure in different areas, but

we would actually have to go back through every credit card. And even going to the credit card does not give you

exactly the detail that you require. For argument's sake, it is not different to your private credit card in that if you

take a flight to Townsville your credit card will show whether it is Qantas or Virgin and a certain expenditure. So

while that is captured at the local level, it is quite a significant task to actually go through everyone‟s travels, add

it up, work out what they spent on each item, what they spent for meals, what they spend for accommodation et

cetera.

Senator BIRMINGHAM: If we wanted to know just how many times Mr Comley went overseas during the

financial year and the total cost of his expenditure, how hard would that be for you to extract from the system?

Just those two specific bits of data. Are you telling me you have to go through all of Mr Comley‟s credit card

statements to add those up? I do not want to spend too much time on credit card statements today; that is

happening elsewhere, I think.

Mr Gleeson: I will just refer to our CFO, Mr Robert Twomey.

Mr Twomey: In terms of the travel arrangements for the department, we have decentralised the domestic

travel arrangements where people use credit cards to book their own travel. For international travel, we still retain

that centrally. That is organised by a small team managing all international travel arrangements. We actually do

have that detailed records and we could actually track that.

Senator BIRMINGHAM: Nothing has changed in the way international travel bookings are handled?

Mr Twomey: No, not at this stage.

Senator BIRMINGHAM: In that case, I will come back to the point of this question No.31, or you can turn

over the page to question No. 32, which is a question specifically about international travel and question 2, which

states: „Please detail the total number of trips for each departmental position and their total travel expenses.‟ The

exact question that I just asked, using Mr Comley as the example, and the answer from the department says, „The

department does not record travel data in a way that would readily allow answers to be provided to these



questions‟. Are you telling me that you have a central team that does all of your international bookings, that has

all of the costs there and that has in previous estimates provided answers to exactly the question asked, but now

you are saying that in relation to international travel that that cannot be provided in the written answers to a

questions on notice? Yet in the answer you just gave me, when I gave the example of Mr Comley specifically,

you seemed to indicate that it is quite possible. Which is the case here?

Mr Twomey: Sorry, I was not aware of the response to this question on notice. This area is not actually my

area of responsibility, and I was talking generally in terms of the operations of the processes from my perspective.

I can find out and come back to you on that later today.

Senator BIRMINGHAM: Certainly if I could find out today why it is, if nothing has changed in the way that

international bookings are made and costs are recorded, that the capacity to answer questions put on notice

through this committee has somehow changed. Because that does not make any sense. In question No. 31 when I

challenged this in the February estimates, we were told that it is due to changes in processes. But you have now

told us this morning that those changes in processes only relate to domestic bookings. I do not know whether the

relevant officials are nearby and are able to give an explanation as to who actually in the corporate section—I am

assuming, given that is the program identified at the top of each of these answers—can explain why these answers

were given when it appears to contradict the evidence that you have just given us, Mr Twomey.

Mr Comley: If we can take that on notice. If we can find an answer to that relatively quickly and come back

to the table, we will.

Senator BIRMINGHAM: If you could try to bring it back to the table today, because obviously this is

something that has gone around in circles in terms of me challenging it in the February estimates and it being

taken on notice then.

Mr Comley: Yes.

Senator BIRMINGHAM: Having received those answers, I have challenged it again and I would really

rather not have it taken on notice and be back here in October doing the same thing yet again.

Mr Comley: No.

Senator BIRMINGHAM: If we can find the relevant officials and bring them to the table during the day.

Thank you.

CHAIR: Senator Birmingham, can I just indicate for programming this session that I have about 15 minutes

that I need with department, so you have another five minutes.

Senator BIRMINGHAM: That is fine. Can I then go to matters that flow on slightly from Senator Fisher‟s

questioning that go to matters of staff turnover. Mr Comley, questions Nos 6 and 7 dealt with recruitment and

departures from the department during the course of 2010-11 and were asked by Senate Fisher. They indicate that

during 2010-11 some 207 ongoing employees left the department and 156 non-ongoing employees separated from

the department—one of those ongoing employees being the secretary, but we know where he went so we can tick

that position off. But this seems to be, for a department with 900-odd staff, a very high rate of turnover to have

more than 200 positions vacated in the course of a financial year. Is there a particular reason or justification as to

why there is such significant turnover?

Mr Comley: It is very high turnover. In fact we are pleased—and I will come back to the mixed blessing of

this in the end—that the turnover has dropped quite substantially since those times. I think that there are probably

two major factors that contributed to the very high turnover in 2010-11. The first one was that, you may recall, the

machinery of government change brought energy efficiency to merge with the climate change department, which

occurred in March 2010. That changed the department from being around 550 staff at that point to around 1,100.

In fact, there are three factors; I will come back to them.

I do not have any data on this, but it is certainly not inconsistent with anecdotal evidence that when you have a

machinery of government change you often do get more turnover than you otherwise would. One of the reasons

for that is that people have joined and stayed in an organisation because that is the sort of organisation they want

to work within. When there is a machinery of government change, there is inevitably a bit of a changing of the

goalposts in terms of departmental objectives and culture, and so people make a decision about whether that is

really where they want to be. So that is a generic factor.

The second factor that was very significant was managing the Home Insulation Program at that time. There are

a couple of factors there. One is that because we knew that that was a time limited program, there was a desire to

keep the ratio of non-ongoing to ongoing staff higher than it otherwise would have been—significantly higher

than other departments. Certainly at the time that generated quite a lot of turnover in the non-ongoing staff



because they essentially, in the Canberra labour market, will grab an ongoing position when they see one

available. It also has implications for the work conditions of the ongoing staff. I recall at that time, for example,

that I attended an EL2 leadership workshop, and the EL2 person said that the one thing they would really like is to

have one substantive person who is not acting in the section. So the turnover that is bought about by non-ongoing

staff has an impact on the ease of doing the job for ongoing staff members. That was a very substantial

contributor to the turnover at that time.

The third contributor that was very significant was that in March 2010 the machinery of government change

occurred. In late April 2010 the government decided to defer the implementation of the Carbon Pollution

Reduction Scheme. Quite a large number of staff in the department at that time had been recruited to form what

was then the prototype of ACCRA, the Australian Climate Change Regulatory Authority. Once there was a

decision that that would be deferred, a number said: „Well, I came to be part of a blue-sky creation of a new

regulator. That is no longer on the cards. I will look for other opportunities elsewhere.‟

There were probably a range of other factors, but the circumstances that led into 2010-11 were quite unusual in

terms of things that were likely to drive turnover at that time. From that time, I think the peak annualised turnover

rate—and we monitor this on a quarterly basis—was in the order of 33 per cent. The last number I saw had an

annualised turnover rate down around 16 per cent. I think that part of that is getting through these one-off factors.

Part of it, too, is that we have probably spent a fair bit of time looking at corporate health and how we can make a

more attractive workplace for all involved.

Senator BIRMINGHAM: So you certainly accept that those 207 ongoing employee departures in 2010-11—

excepting factors of the non-ongoing employees—peaking at around 33 per cent of turnover as you said, was an

unusual and unacceptably high level?

Mr Comley: Yes, definitely.

Senator BIRMINGHAM: In relation specifically to those recruited for ACCRA, have any of those who left

since returned, that you are aware of, through the establishment of the Clean Energy Regulator?

Mr Comley: We can take on notice whether there would be any that have left and come back. There were a

number that redeployed within the department who have now ended up in the Clean Energy Regulator.

Senator BIRMINGHAM: Obviously there is a cost there. We now have several hundred people employed in

the Clean Energy Regulator, some of whom have been specifically recruited. You would accept that there is a

significant cost to government in that process that you went through of recruiting people who then left because of

a change of policy, but either new people or potentially some of the same have since been recruited again to

implement a similar policy.

Mr Comley: To my recollection, no-one from the ACCRA process was offered a voluntary redundancy or had

any other payment on separation. So at some level this is the normal movement of staff that occurs when one

program winds down and another one starts. So I am not sure that it is above and beyond any other cost associated

with gearing up for a program that ultimately does not occur. There is clearly a cost associated with doing work

that is subsequently not used. In the case of ACCRA, and now the Clean Energy Regulator, not all of that work

was lost because there was very substantial effort made on the cessation of ACCRA to time capsule or try to

capture the learning that had been built through the ACCRA process. And that was a resource available to the

team that then implemented the Clean Energy Regulator.

CHAIR: Thanks, Senator Birmingham. Mr Comley, I want to raise the issue of local councils and council

tips. My local council, the Blue Mountains City Council, have indicated that they are going to raise substantially

the cost of taking refuse. The local gazette ran a headline that this was due to the carbon price. I am advised by a

number of other MPs that there have been similar claims made around the country by councils about the effect of

the carbon price on council tips. Long story short, they had to put a clarification in because the largest amount of

the increase was a state government levy. Have you had similar instances around the state as we have had in the

Blue Mountains area?

Mr Comley: I will ask Ms Thompson or Dr Kennedy to comment on this.

Ms Thompson: With respect to local government and landfill from waste, this actually is an area that the

government has been putting quite a bit of effort into to work with councils to help them move towards dealing

with their carbon price obligations. We have done a lot of outreach and education, including holding roundtables

in most of the states and territories to which local government representatives have been invited. So the first point

to bear in mind is that in fact most local governments, or a very high proportion, will not be eligible for liabilities

under the carbon price. The threshold, as is with other liable parties, under the carbon price mechanism is 25,000



tonnes of emissions. As a general rule of thumb, councils that have local populations of, say, less than 20,000

people will not in fact generally have to take on carbon price obligations.

The other point to bear in mind is that the carbon price mechanism obligation only covers new waste. So that is

waste that is actually deposited in the landfill after 1 July 2012. As a result of the methodology and the rules for

reporting and working out your emissions from that new waste going into the landfill, in fact for the first year of

the carbon price, councils will not have to report or require permits because the methodology essentially pushes

those emissions over on to the following year.

The other point is that landfills that already have waste, and have been taking waste for a while, will have

opportunities under the Carbon Farming Initiative to actually generate carbon permits. Larger landfills that have

more waste and higher emissions may well also have the opportunity to put in technology to actually produce

power that can be sold into the grid. In those cases councils can get renewable energy certificates through the

Renewable Energy Target. For a number of councils this means they can actually take on board approaches that

will in fact generate sources of revenue, and indeed can in some cases drop them below the threshold for having a

carbon price liability at all. So in fact there are a lot of opportunities as well as the carbon price obligation for

those councils.

The department has done some work looking at what landfill operators could do in terms of the charges for

their landfill obligations. Based on a conservative set of assumptions, the department estimates that landfill

operators would need to charge no more than $26 per tonne for the carbon cost component of municipal solid

waste entering landfill in 2012-13—and that is a landfill with no gas capture ever. In line with my comments

earlier, this assumes that landfill has no income from the Carbon Farming Initiative or renewable energy

certificates.

In practice, of course, as I said, landfill gas capture occurs at many landfill sites across Australia, and the

carbon price will encourage operators to give serious consideration to installing flares or power combustion at

many more of these sites. In fact gas capture can reduce emissions and carbon costs very substantially. The

average capture rate for a flare is around 50 per cent. In that case that would reduce carbon costs to below $13 per

tonne for municipal solid waste. Sites operating at best practice can reduce emissions by 70 per cent or more,

which would reduce carbon costs further. This could be to below $8 per tonne.

CHAIR: And if you come under the threshold you will have no liabilities—is that correct?

Ms Thompson: That is exactly right. If I could just go on to talk a little about how this could impact on the

average household. Using the figures that I have just been talking through, the average household produces just

under one tonne of waste per year. The impact of the carbon price on waste for the average household is between

13c and 47c per week. That range depends on the extent of landfill capture at the local landfill. This, of course,

compares with the average household assistance for the carbon price of $10.10 per week. The above figures are

based on the current Treasury carbon price estimates for the government policy scenario, and assume that the

landfill emissions remain above the carbon price mechanism threshold for 40 years. As you alluded to, if in fact

the landfill decides to flare emissions, they could in fact find themselves dropping below the liability for the

carbon price mechanism altogether. The take-home message is that there are lots of opportunities for landfill

operators to reduce their costs. In addition to flaring or installing combustion equipment, there are also other

opportunities like composting and recycling, which can further reduce your emissions.

CHAIR: Thanks. Senator Waters has a couple of questions and I still have some that I would like to go

through, so I might ask you to take some of them on notice. We have set questions from Senate Fisher about the

numbers and reductions in numbers in the department. I understand that one of the most labour-intensive areas for

government departments to be involved in is the issuing and monitoring of grants—is that, as a general

proposition, correct?

Mr Comley: It is difficult to generalise. I certainly think that grants and programs more generally require

significant staff numbers. It is the case that in some areas that are not grants or programs based you can have quite

substantial outputs delivered by a small number of people. That is often the case in policy teams. It is difficult to

generalise though, Chair, because if you think about it there are as many different grants programs as there are

grants and they can be quite different. If you have large grants that are complex in nature, they can take a lot of

staff for a few grants. At the other end, if you think back to home insulation, the grants themselves were relatively

simple but there were 1.1 million households, so that leads to a lot of staff.

CHAIR: I will come back to this at the appropriate time. Senator Waters.

Senator WATERS: What is the estimated reduction in Australia‟s greenhouse pollution resulting in the

carbon price package in the year 2020, if you have those figures to hand?



Mr Comley: That is difficult. We cannot actually say that, because the first thing that the government would

have to do is set the target. Without the target being set, you cannot determine what the overall impact from the

carbon price package will be because that would feed into the total emissions.

Senator WATERS: You cannot help me on that one?

Senator Wong: Perhaps you could clarify the question a little.

Senator WATERS: It is as it is: what are the estimates of the reduction in the year 2020 flowing from the

carbon price package?

Senator Wong: For domestic emissions?

Senator WATERS: Yes.

Dr Kennedy: There are a number of scenarios modelled by the Treasury. For example, for what was called

the „core policy scenario‟ the reduction in net emissions to the minus five per cent bipartisan target, from

memory, was 160 mega tonnes.

Ms Wilkinson: And, of course, that is the net emission reduction that is made up of both domestic emissions

and the purchase of emission reductions form overseas. We can get those numbers for you too.

Senator WATERS: This is in a similar vein, so we might confront the same trouble. Can you tell me if we

know the total estimated reduction from the introduction of the scheme up until 2020 for that cumulative period?

Dr Kennedy: We can tell you that according to the scenario that I just outlined. I do not have the number in

front of me, but we can get back to you quickly within this sitting, if you like.

Senator WATERS: Could you also do from the introduction to 2050 on notice as well? That would be great.

Thank you.

Dr Kennedy: Absolutely.

Senator BIRMINGHAM: I was going to come to this later, but since you went on the landfill track before, I

thought I would bring this up. Apologies, Ms Thompson, I was just grabbing myself a caffeine fix and missed

your answer, where I think you gave Senator Cameron an estimate of what you believed landfill operators should

be charging as a result of the carbon tax or what I think you described as the maximum that you could foresee,

assuming they took advantage of no other opportunities available to them. What was that figure and the context of

it?

Ms Thompson: We should just clarify: the government are not telling anyone what they should be charging in

response to the carbon price. That is a matter for people who have those obligations. What we have done though,

based on, as I said, a conservative set of assumptions, is look at what we estimate landfill operators would need to

charge. Our view is that that would be no more than $26 per tonne for the carbon cost component of municipal

solid waste entering a landfill in 2012-13. That price is for a landfill with no gas capture. In fact, a lot of landfills

do capture gas. In those cases, assuming an average capture rate of 50 per cent, that would reduce the carbon cost

to below $13 per tonne for municipal solid waste. In fact, sites operating at best practice can reduce emissions by

70 per cent or more, so that would reduce the carbon cost to below $8 per tonne.

Senator BIRMINGHAM: Landfill waste is of course a unique product in a number of ways under the carbon

pricing mechanism. It is uniquely treated in terms of the legislation. Also, unlike industrial emissions, where they

are easily measured in one year, the challenge for landfill operators, and the reason for some degree of confusion

here, I am assuming, is that they receive the waste in one year but they have to work out what their future

liabilities for that waste are when they are charging the person doing the dumping. Those future liabilities are

impacted by the scope of the emissions and what the future carbon price is. Am I correct in that very rough

summary? Are there other variables aside from the scope of emissions and the future price that you see as

impacting on landfill operators?

Ms Thompson: Your analysis is broadly correct. One of the issues with landfill waste is that it does have what

we call a fairly long tail of emissions where emissions go into the atmosphere. In most cases, that is 40 years. In

other cases, it can be up to 60 years. So that element of the emissions is probably unique. That said, though, there

are a number of different business models and approaches that people with obligations under the carbon price

mechanism could use to deal with that liability. One option that is open to people is to acquire international

permits or permits under the carbon price scheme or indeed CFI permits—buy those, bank them and then use

them to meet your obligations. Under that kind of approach, it may well be possible for people to reduce their

prices even below the ranges that I have been given.

Senator BIRMINGHAM: So they could buy permits at today‟s prices and attempt to bank them or credit

them against emissions in future years; that is what you are suggesting is an option there?



Ms Thompson: That is one other possible option, yes.

Senator BIRMINGHAM: Your estimate—

Dr Kennedy: Excuse me, Senator. They actually do not have to purchase the permit today. They can contract

to purchase the permit in the future. There was an important change made on the generation of permits from the

CFI mechanism. In the fixed price period, landfill can use their CFI permits to meet their full carbon price

obligations, if you like, whereas for other liable entities, they can only meet up to five per cent of their obligations

through CFI permits. But, as Ms Thompson was saying, a number of these landfill operators will be able to

generate CFI permits especially in the early years probably beyond what their liability will actually be year to

year. But your analysis is absolutely correct; they need to plan for the liability for the full life of the waste that is

being deposited.

Senator BIRMINGHAM: Treasury devote a whole page in Budget Paper No. 1, essentially explaining why it

is incredibly difficult to assess what the carbon price might be in three or four years. Yet these landfill operators

are having to assess over a 40- to 60-year life period of the waste there, accepting what the emissions will be and

what the costs will be over that period. How are they meant to, and is it any wonder that they are suffering from

some confusion as to how to price that over that period when even the Treasury acknowledges that there is a great

degree of uncertainty just a few years into the future?

Dr Kennedy: One of the ways they might manage that uncertainty is by banking those CFI permits, for

example. If you hold a permit of equivalent value to what you are going to need to surrender for compliance in the

future regardless of the price—

Senator BIRMINGHAM: That works for the fixed price period.

Dr Kennedy: Beyond the fixed price period, if you hold a CFI permit that you intend to use in four or five

years, if the price is high or low, one tonne is a tonne and that will acquit your liability. You can manage the

future risk of a high or even of prices varying at least from what you anticipate by contracting now or banking

now permits that perhaps you generate through the CFI.

Senator BIRMINGHAM: The department and the government have acknowledged there is a problem here, I

am assuming, because I note that a new series of support sessions was set up with the Australian Local

Government Association. That was announced by Mr Dreyfus on 23 April this year. I assume that was in response

to concerns in the local government sector in particular about landfill waste and how they were to account for that

and manage that.

Ms Thompson: I think it is appropriate to acknowledge that many local governments have not in fact been

reporting under the NGERS previously, so this is a change. As I said earlier, the government has put quite a lot of

effort into assisting local governments with moving forward to work out how they can work out their emissions

and their liabilities. It is very much with that aim in mind that these outreach and education sessions have been

happening. The first of them was led by the department, and the Clean Energy Regulator has since taken up the

torch in terms of working very closely with local government to help them move towards taking on those

liabilities and obligations.

Office of the Renewable Energy Regulator

Senator BIRMINGHAM: Welcome, Ms Munro, and Clean Energy Regulator officials. This may be a

question better answered by you because this is meant to be a—

CHAIR: Before you do, Senator Birmingham, let me just do the formalities with the regulator. I welcome Ms

Munro to estimates. Would you like to make an opening statement?

Ms Munro: Yes, thank you.

CHAIR: Senator Birmingham, let us do the opening statement, if it is not too long. Are you happy with that?

Senator BIRMINGHAM: I am hoping that none of the opening statements over the next four days are too

long, Chair.

CHAIR: I know you are in a process, but I would like to get this out of the way, if you do not mind.

Senator BIRMINGHAM: No, this is Ms Munro‟s first appearance. I am sure we can.

Ms Munro: Thank you, Chair. As this is the first appearance of the Clean Energy Regulator at Senate

estimates, I did think it was appropriate to take the opportunity to make a brief opening statement to present a

short overview of the agency, our role and our work program. I am the chair and chief executive of the regulator. I

am accompanied today by the four executive general managers in my leadership team. The Clean Energy

Regulator came into being on 2 April this year as an independent statutory authority. The Clean Energy Regulator



Act 2011 unites in a single agency the administration of the carbon pricing mechanism together with the existing

National Greenhouse and Energy Reporting Scheme, the Carbon Farming Initiative, the Australian national

registry of emission units and the Renewable Energy Target. Our administrative responsibilities include providing

education on the carbon pricing mechanism; assessing emissions data to determine liability; managing carbon

units, including freely allocated units, fixed price units and auction units; accrediting authors for the schemes

which we administer; monitoring, facilitating and enforcing compliance; and working with other national law

enforcement and regulatory bodies to ensure the integrity of the schemes administered under the act.

Our first legislative milestone was the establishment of the Clean Energy Regulator on 2 April. The regulator,

comprising myself and two other members, met for the first time on that date and has held one subsequent

meeting. We have considered a range of operational and policy matters, including approval for publication of the

regulator‟s education, compliance and enforcement policy, which is now on our website, and settling the

delegation‟s framework. Two hundred and forty-one people from the department and 52 people from the former

Office of the Renewable Energy Regulator transferred to the Clean Energy Regulator on its establishment.

Targeted recruitment continues. At the beginning of May, we had 317 staff on our payroll, comprising 251

ongoing and 66 non-ongoing. As outlined in our portfolio budget statement, we are planning to reach an average

staffing level of 355 in the 2012-13 financial year.

On 2 April, we also launched an integrated contact centre and our website, which is a key source of

information for our clients—that is, both current and prospective participants in the schemes we administer. This

is backed up by a continuing program of seminars and workshops around the country, so far attended by nearly

1,000 people. Our website has already attracted over 36,000 visitors. Daily traffic peaked on 4 May when we

published the first phase of the liable entities public information database, or LEPID. We are required by law to

publish a list of entities that we have grounds to believe are likely to be liable under the carbon pricing

mechanism. The LEPID is being published through a staged schedule, and the first stage comprised 248 entities

identified through the emissions reporting system or as natural gas suppliers. These entities account for around 70

per cent of emissions covered by the carbon pricing mechanism. The Clean Energy Act provides entities with

some flexibility in assigning the points of liability. The regulations were made on 19 April to support the use of

obligation transfer numbers, liability transfer certificates and the allocation of liability and unincorporated joint

ventures. Following a series of technical workshops for our clients, we are in the process of publishing guidance

notes and the requisite application forms.

We have already commenced our role in providing transitional assistance to certain industries. Applications

closed on 2 May for the provision of free carbon units under the energy security fund to highly emissions-

intensive coal-fired generators. We are currently assessing these applications, which will be decided by the

regulator in June, well inside the statutory time frames. Our preparations are well advanced to receive applications

starting on 1 July for assistance to emissions-intensive trade-exposed industries through the jobs and

competitiveness program.

Over the next financial year, we will continue the program of work commenced by the department to build our

service capability according to legislated time frames. The core systems and processes for emissions reporting,

registration of emissions units and administration of the Renewable Energy Target were all in existence prior to

the passage of the clean energy future legislation. Our first priority is to maintain continuity of service to clients

under those schemes. On the foundations of these mature systems, we are building the liability management

system for the carbon pricing mechanism and other systems that will strengthen our client interface, process

control and data management. This includes a series of projects to update our existing systems in order to meet

the new requirements. For example, the Australian National Registry of Emissions Units, ANREU, is the secure

electronic system established in 2008 to accurately track the location and ownership of emissions units issued

under the Kyoto protocol. It was enhanced in December 2011 to allow for units created through the Carbon

Farming Initiative and will be updated on 1 July for the creation of carbon units under the Clean Energy Act and

then again in September for the buyback of units, relinquishment of units and account suspension. Similarly, the

Online System for Comprehensive Activity Reporting, OSCAR, was adopted as the national greenhouse and

energy reporting tool in 2007. The system is being enhanced for the 2011-12 reporting year and a new reporting

and disclosure system is being developed for the first carbon pricing period of 2012-13. This is scheduled for

release in early 2013.

In summary, our work program is focused on delivering reliable systems and processes that support sound

decision-making as required by legislation and a constructive relationship with our stakeholders. I thank you for

this opportunity to provide this information and I am happy to take questions.

CHAIR: Thanks, Ms Munro.



Senator BIRMINGHAM: Thanks, Ms Munro. Are we able to get copies of that statement circulated, please?

Ms Munro: Yes.

Senator BIRMINGHAM: It will be useful for the rest of the day, I am sure. I am sure we will come back to

some general issues regarding the establishment of the Clean Energy Regulator and so on, but we found ourselves

knee deep in waste as you came to the table, so that is where we will stay for a little longer.

CHAIR: I thought that is where we should go first up.

Senator BIRMINGHAM: Fitting for today, I think, Chair. I was just asking about the ALGA process that

Parliamentary Secretary Dreyfus announced in April to assist local councils and local government deal with some

of these issues regarding particular waste disposal services and costs. This announcement indicated that the

department, ALGA and the regulator would run a series of support sessions, including face-to-face forums and

webinars et cetera. Have those started yet?

Ms Munro: First of all, the seminar that took place on 23 and 24 April, to which I think you have already

referred, was an important forum with the Australian Local Government Association. Both the Clean Energy

Regulator and the department participated in that. That was an opportunity not only to discuss with councils how

the liabilities would arise and their reporting obligations but also, very usefully, to hear some case studies

presented by councils who were already reporting under the National Greenhouse and Energy Reporting System

and had taken some very proactive steps both to report, of course, and mitigate their emissions. I think that was a

very practical way of demonstrating to other councils how they could approach this topic. Since then, we have

established a small team in our outreach function which is focussing particularly on waste. In particular, we have

written to, I believe, just over 100 councils which, on the information that we have available to us, are likely to be

liable under the carbon pricing mechanism.

As Ms Thompson indicated earlier, as a rough rule of thumb, local government areas which have perhaps

20,000 people may well be operating a landfill which would emit in excess of 25,000 tonnes of carbon dioxide

equivalent in a year and would therefore be over the threshold for liability for the carbon pricing mechanism. As

Ms Thompson also pointed out, that liability will only accrue for emissions generated by new waste. Although the

liability is established by virtue of the total emissions, including emissions from legacy waste, the liability itself is

only accrued for new waste. We have calculators available and tools so that the landfill operator can, by

understanding the configuration of the landfill and broadly the composition of the waste deposited, estimate what

their emissions would be and, therefore, their liability. I might ask Mr Ross Carter, who is the executive general

manager for our regulatory division and who is responsible specifically for that area, if he wishes to add anything

else in terms of the future engagement that we are planning with local government.

Mr Carter: I will add a couple of areas of detail to that, Senator. We commenced engagement through March

with general information sessions around Australia, essentially to introduce the Clean Energy Regulator and how

we propose to engage and to work through some of the obligations and elements under the legislation. As part of

that, we had some 700 registrants attend those workshops. Quite a number were from local government, so we

divided a number of those sessions into a general session and a specific session for local government and landfill

operators. Since then we have, as has been discussed, had the ALGA conference, which is a very important

intersection with councils. In combination with that, we have also written out to a number of councils. We are

currently designing the next phase of our more detailed discussions with councils based on the responses to the

letters we have sent to them. We can tailor it by regions and try to get the best uptake we can.

In terms of the calculator, we have done further work on our calculator to ensure that it can not only help

councils with separating out legacy emissions as well as future emissions but also be used to test scenarios around

how they might manage waste. They can put in changes to their waste streams or put in other interventions, as I

think Ms Thompson has gone through, in terms of gas capture and flaring and see how they impact on their

emission profile over time. We are also, through ALGA, contacting the state local government and shires

associations to work with them on making sure that we are targeting our sessions in the best possible way.

Senator BIRMINGHAM: What prompted the department, or the regulator specifically, to initiate this very

specific process with councils and waste disposal services as against, of course, the general communications

activities around the carbon pricing mechanism and information out to the community?

Mr Comley: Just before you go to that, Ms Thompson will explain the policy rationale.

Ms Thompson: As I indicated earlier, the department has been mindful of the fact that local government has

not had to generally report under the NGERS legislation previously, which meant that for a number of local

governments, some, I gather, chose to report under NGERS anyway. But for the bulk of councils, this has been a

change that resulted from the carbon price itself. Because of that, the department has been mindful of the need to



explain to local government about the NGERS and, indeed, how to calculate their emissions from waste to help

them move towards taking on these carbon price mechanism obligations. It was that that led the government to

embark on this, I guess, you could say, outreach exercise.

Mr Comley: It is probably also worth adding—and Ms Thompson can correct me if I am wrong—that what

we have found in this area is that some of the management structures of local government are across the issues

and understand what is going on. What has actually happened, because of the publicity, for councillors who

engage in this fairly sporadically—and the nature of councils is often that they have other obligations and this is a

part-time role—is, I think, the flag went up for them that, „We need to do something. We are not sure if we

understand.‟ This helps provide some resources for those professional officers in local governments to engage

more directly with their councillors.

Ms Munro: I might make another comment on that. Certainly the approach that the regulator has taken since

its stand-up is that we have an orderly and progressive approach to engaging with the regulated community. As

Mr Carter indicated, we had some general information sessions, which were attended by people across different

industries. Out of the feedback from those sessions, we are now developing more specialised workshops. So it is

not just landfill operators that we would in the future imagine we would be doing some specialised interactions

with. Clearly, because of the history of reporting or not reporting, as the case may be, there is a different level of

awareness and understanding. We have found that it is best to tailor our interactions to those groups. For example,

I mentioned in my opening remarks the obligation transfer notices, which is an ability to determine the point of

liability between the natural gas supplier and its customers. Again, we have had specialised technical workshops

for that group of regulated parties. In that case, they are operating in the natural gas industry because they are

interested specifically in the obligation transfer notice. I should envisage over time we will develop more industry

or sectoral based engagements because the technical nature of the reporting and the obligations are different and I

think they would prefer to engage with us in that sectoral way.

Senator BIRMINGHAM: How many landfill facilities do you estimate fall under the provisions of the clean

energy future legislation and will have to comply with those provisions?

Ms Munro: Mr Carter might be able to find the number for the exact number of facilities. We have written to

just over 100 local councils which we consider may have facilities that are over the threshold based on the

information we have. There were perhaps half a dozen—again, Ross will find the exact number—that were

already published in the liability entities public information database because they had already chosen reporting.

In addition, there are facilities that are operated by commercial landfill operators. Some local governments have

chosen to outsource that activity. They would also have been captured because, by and large, they are large.

Again, there would be perhaps two or three entities, but I cannot say precisely the number of landfill facilities.

You can see we are talking in the order of hundreds—100 or 200—rather than a large number. Are you able to

give a more precise number?

Mr Carter: Yes. Currently, we have identified 30 entities under the National Greenhouse and Energy

Reporting Act. I do not have the breakdown of that to the number of facilities that those 30 entities operate, but

we have certainly been writing to those entities in particular. As Ms Munro mentioned, we have written to 104

local governments that are potentially liable. But we estimate that there will be around 70 of those councils that

are actually operating landfills that do meet the threshold.

Senator BIRMINGHAM: You have written to 104 local governments that are potential liable entities, of

whom you are estimating probably about 70 will end up falling above the cut-off and actually about 30 other

corporate entities that operate private waste disposal facilities that are utilised by local government?

Mr Carter: Yes.

Senator BIRMINGHAM: And you expect all 30 of those to probably fall over the threshold?

Mr Carter: Very much so. Those entities come out of the National Greenhouse and Energy Reporting Act

information, so we have very detailed information about their facilities.

Senator BIRMINGHAM: Most of those entities operate multiple sites?

Mr Carter: I think quite a number of them do.

Senator BIRMINGHAM: As Ms Munro indicated, we are looking at 100 to 200 facilities or sites overall—

comfortably more than 100. When will you know about those in the range above, Mr Carter?

Mr Carter: We are working through that process with local government at the moment. We have written to

those 104. We are very certain that quite a number of them are operating facilities that are large enough. But we

need to work through with quite a number of the others, on the basis of the waste calculator that we have



developed, to see exactly where they are sitting at the moment. Some of it is also influenced by some of the

actions that councils may take between now and 1 July. They are already in train, in terms of waste management,

to bring their emission levels below the threshold.

Senator BIRMINGHAM: How many of those 100 to 200 sites already operate gas flaring facilities or

capture their gas somehow?

Mr Carter: I do not have those numbers.

Senator BIRMINGHAM: Is there an estimate that was used as a key factor for them to potentially offset

their emissions? Does the department have an idea as to how many or what proportion of major facilities with

emissions over 25,000 tonnes already have gas flaring operations?

Ms Thompson: My recollection is that we do not have an estimate of that figure, but I can take it on notice.

Senator BIRMINGHAM: Thank you. Is there an estimate of how much it costs to install such gas flaring

facilities or operations?

Ms Thompson: I believe we do have an estimate, but I would prefer to take that on notice also because I

would not want to give you an imprecise figure.

Senator BIRMINGHAM: We are here for a long time today, so if you are able to provide any of those

figures during the course of the day that would certainly be helpful. In terms of the operation of the calculator, the

calculator will give councils or waste facility operators a tool and an estimate of the scope of their emissions this

year and in future years, depending on their waste profile. Is that a correct understanding of the calculator that has

been developed?

Mr Carter: Yes. It is essentially a complex spreadsheet that has algorithms built into it so that councils can

put in the expected waste and different waste streams that are deposited each year and look at the sorts of

interventions that they might put in place and at what time they might put those in. That then generates the sorts

of emission levels over time. So they can use the calculator to test scenarios on what actions they might undertake

in the future as well.

Senator BIRMINGHAM: Does the calculator extend to giving them an estimate of their cost liability?

Mr Carter: No, it stays strictly to looking at waste volumes and emissions resulting.

Senator BIRMINGHAM: So it tells them what the scope of their emissions is but leaves them to work out

what the cost impact of that may be?

Mr Carter: Yes.

Senator BIRMINGHAM: So if a local government calls the department or the regulator or turns up to one of

your workshops or simply responds, as one of the 104 local governments to have received letters, and says, „How

much am I to charge for these emissions out into the future?‟, what is the advice the department or the regulator

gives?

Dr Kennedy: From the department‟s perspective, we would be very careful about being in a position where

we look like we are offering financial advice to businesses or local councils. What we will try to do in those

circumstances is simply point out the range of opportunities that people have to reduce their liabilities, as Ms

Thompson was talking about earlier. We would refer them to the calculator that the regulator, Mr Carter, was

talking about so they have a very clear picture of their likely emissions liability. But it would not be a usual

practice for a government department to tell a business or a local council or another government how it should

manage its liabilities. We would certainly take them through the opportunities that are available to them, such as

credits they might generate through the CFI scheme and any information we could point them to, but I do not

think we would go as far as telling them what price they would charge. In fact, I am certain we would not.

Ms Thompson: I will add to Dr Kennedy‟s answer. What we have done is produce a facts sheet for local

government to use which takes people through the steps that they would need to go through to work out how they

can do this pricing. As Dr Kennedy says, we do not tell anyone what price they should be charging, but we have

provided some guidance as to how you can go about working out what the price you should charge might be,

noting that, of course, we also encourage councils to seek independent financial advice on those issues as well.

Senator BIRMINGHAM: For the regulator, do you have an approach to handling these matters? Obviously

to calculate emissions you tell them to refer to the emissions profile. But, noting that they are having to price

waste dumped over the next year for its emissions liability for 40 to 60 years in terms of who they are actually

charging for that waste, how does the regulator advise a local government to deal with that uncertainty?



Ms Munro: Advice on pricing and, mind you, financial advice generally are not within our remit as the

regulator, so we do not provide that advice. Obviously the interactions between us and the department and local

government give them a footing on which to understand the basis on which their liabilities arise.

Senator BIRMINGHAM: I am sure that, if you rang the tax office and asked what your tax rate was, they

could give you an answer. They are not going to give you financial advice as to how to minimise that tax, but they

are going to give you a clear answer that, if you earn this much income, your tax rate is this or, if you are a

company, your company tax is this in terms of the actual amount—

CHAIR: Not quite.

Senator BIRMINGHAM: or per cent or actual tax.

Mr Comley: But the tax office may not provide advice on what the tax regime is in 10 years. If you make a

range of investment decisions, that might be a very relevant consideration for people. So people form estimates of

those things. I think, as Dr Kennedy has said, an entity can try and form an estimate of prices to build into their

thing or the option that is available is to purchase permits that match the liability estimated from the emissions

calculator. If they are risk averse in terms of pricing that as an option available to them, they have a known permit

price at that time. So I think that, as we have been trying to get to, there are a range of management strategies that

they could adopt. One of them, if they are risk averse on prices, would be to purchase permits against the

emissions liability, which comes from the calculator.

Senator BIRMINGHAM: But obviously these councils face the challenge of how they are meant to estimate

the cost liability for their emissions over a very long period of time.

Mr Comley: And what I am trying to put is one option to them, which involves no estimation of costs because

they simply purchase permits that can be offset against that liability. The permits then change in value with

whatever the price of permits is in the future. So, if they are not prepared to take on that price risk and they think

it is advantageous, that is a risk management strategy available to them.

Senator BIRMINGHAM: So you can give them ways to, in a sense, try to give themselves certainty of

offsetting into the future, but there is no mechanism by which the regulator or the department can advise these

local councils as to what, if they do not find offset provisions, their liability may actually be into the future?

Ms Munro: That is not a role that is given to us in legislation. The other point I might make, as I think Ms

Thompson was saying earlier, is that in the early days the liability will be relatively small because of the profile of

emissions from the new waste. Councils also have the opportunity to adjust their prices over time. Indeed, many

councils recover these costs through their rating base, so they do have an opportunity to adjust. That does mean

that the price for the particular tonne of waste might not exactly match the emissions in the future that arrive from

that waste. But nevertheless the council would be able to manage its liabilities over time and take into account, as

I think has already been said, the various different ways in which they will act to mitigate the emissions from their

waste over time, which again is part of the intent of the pricing mechanism: it is to provide an economic incentive

for them to make those investments.

Senator BIRMINGHAM: So, Ms Munro, are you suggesting that, if they undershoot on the price for waste

they receive over the next year or two, they can simply rectify that by charging more for waste they receive in

future years down the track?

Ms Munro: They may undershoot or overshoot, so it will be an estimate at the point of time they do their

pricing in. I merely make the point that they do have over the period of time through which the emissions are

emerging to make those corrections, if you like, to their price path. That would be no different from many other

pricing instruments, particularly where people are entering into long-term contracts to do with other things where

the cost base changes over time.

Senator BIRMINGHAM: But they do not have the capacity to correct for the waste they have already

received, so if they are receiving waste, especially from another local government area, into their landfill facility

then they are presumably charging that local government area a per-tonne rate for them to dump it. They have

dumped it on that given day. They have paid their fee. They forget about it. But the council operating the waste

disposal facility has to worry about the emissions profile for another 40 to 60 years. If they have got it wrong the

day they have charged the person dumping it, they have no capacity to go back and charge that person for the

right amount into the future.

Ms Munro: That is correct. But my point is merely that they are managing the entire facility and they have an

opportunity to price across the entire facility over time year by year. So these are long-term pieces of

infrastructure which are being priced for over the long term. That was merely the point I was making.



Senator BIRMINGHAM: Mr Dreyfus has expressed concerns about what he believes are higher prices being

suggested than are reasonable. He was quoted as encouraging councils to question whether the assumptions

around pricing are reasonable. Given that the parliamentary secretary is questioning those pricing assumptions

and whether or not they are reasonable, is it not unreasonable to expect that councils would contact the regulator

or the department and say, „The minister is claiming our pricing assumptions are unreasonable. How do you

propose we come up with better pricing assumptions?‟ How do you respond to those questions?

Mr Comley: Ms Thompson and Dr Kennedy might want to comment. As I am sure you would appreciate, in a

lot of these pricing comparisons, there are numbers that are just clearly out of the realms of possibility. For

example, pluck a number out of the air. If you looked at the current permit liability that someone had that they

could purchase now to cover their thing and someone is quoting a price estimate that is 10 times that, you do not

have to have a sophisticated discussion around the margins to say, „That seems clearly unreasonable.‟ I think the

others may comment. Some of the prices that have been commented on might fall in those sorts of categories. So,

whilst we can have a debate about what is the precise cost of managing something either by buying permits now

or by some expected price path that might give you a variation in the price in the order of 20 or 30 per cent when

you are massively outside that, I think that is when it is demonstrably clear that is unreasonable. Ms Thompson?

CHAIR: Just before we go to that, I want to venture something that I have been concerned about in relation to

this. The Blue Mountains council engaged some experts to give them advice on this. There was an expert

providing that longer term analysis who said, „This is what you are going to have in terms of your liabilities into

the future.‟ You have this program going with the councils, but are there registered advisers in this area or people

who are providing advice to councils about their liability and projections? Are they using the same econometric

model with the logarithms that you are using? If they are not then obviously you will get a difference. How do we

deal with that?

Mr Comley: This may be too much detail. The model that has been talked about before is not an econometric

model, in a sense, or nothing to do with price. It is a physical model. It comes out of, effectively, the chemistry of

decomposition. It essentially says, „If I bring in a lump of waste of this type then the science just tells you that it

decomposes over 50 years. As it decomposes, it creates a certain amount of methane.‟ So that gives you the

stream of liabilities. That is—

CHAIR: The physics and the science are not challenged?

Mr Comley: As with all these things, people refine estimation methodologies over time. But largely this is not

new material. The information that feeds into that sort of calculator has been used for many, many years in, for

example, calculating our national emissions inventory and has been reported to the United Nations Framework

Convention on Climate Change for over a decade. These things have been subject to scrutiny both domestically

and internationally as our national communication is reviewed on a period of time. All the calculator does is take

that methodology and bring it back to the local level so that someone can say, „Well, for this tonne of waste, what

do I get up?‟ I think it is fair to say that is not controversial. An adviser is not going to dispute that. Even if they

wanted to dispute it, that methodology then effectively gets turned into the legislation, which determines what the

liability is.

The issue we are debating here is not the physical emissions but what the price associated with meeting those

liabilities is. What we have been trying to explain a number of times is that if people are risk averse in terms of

the price—that is, they do not want to deal with that—one option available to them is to buy a permit because the

permit is in the same unit, the same measurement, as that methodology determination for tonnes of emissions. So

by purchasing it now you know precisely what the price is. Its value moves with the change in price. You can just

surrender it at what point you have that liability.

In terms of this issue of unreasonableness, I will come to Ms Thompson. Again, someone could take a

management strategy that is not to buy permits and they could form an estimate of the prices. But if that estimate

ended up at 10 to 20 times the cost of buying the permits now then you would have to ask the question of whether

that is a reasonable strategy that has been undertaken or a reasonable estimate of the price. Ultimately that is not a

matter for the department or the regulator. Ultimately that may be a matter for the ACCC if there is a

representation made that the cost of carbon is feeding into the price.

CHAIR: That might be an appropriate time for us to break. We will reconvene at 11 o‟clock.

Proceedings suspended from 10:44 to 11:01

CHAIR: We have given the waste products a really good run. We have Senator Birmingham with some

further questions on it and Senator Macdonald with some questions. We may come back to it, but I think that will

be the bulk. I have one last question before we come back to Senator Birmingham and then Senator Macdonald.



Then we will move to Senator Boswell on other issues. Ms Munro, we have dealt with waste and how the

chemistry determines the liability to a great extent. What about other areas? I do not want to go into too much

detail. Is it all about assessment, or is there equipment that is being brought in to actually measure?

Ms Munro: Senator, the approach is generally by estimation. It is based on an understanding of the industrial

process or manufacturing or whatever the particular industry is which is giving rise to the emissions. The

requirements under the National Greenhouse and Energy Reporting System include applying the methodologies

for estimation. We have a large number of accredited auditors who can assist businesses in developing their

assessments. I might ask Mr Carter about the matter of measurement and where in some industries that might be

available.

Mr Carter: Senator, the methodologies that are set up under the National Greenhouse and Energy Reporting

Act are generally in four levels of methodology. What we call method 1, or the default methodology, is generally

done on methods that are based on national average estimates. Method 2 is facility specific, using industry

practices for sampling and Australian standards for analysis. Method 3 is the same as method 2 but based on

Australian standards for both sampling and analysis. Method 4 is continuous or periodic facility specific

measurement. That is the general schema of methods that are under the determination. That plays out differently

in different sectors.

Clearly, in a sector like landfills, you are looking at more estimation techniques as opposed to an industrial

facility, where you have actual measurement facilities that are in place. We have seen some movement of landfills

looking at method 2. So that is looking at a combination of industry standards and being more site specific in the

way they estimate. Certainly in areas like fugitive emissions from open-cut coalmining, for example, for quite a

while we have seen mainly the default used. In more recent times, we have seen quite a lot of work from bodies

like the Australian Coal Association going into guidance around how method 2 might apply in their circumstance

to get it to that next level of accuracy.

CHAIR: If we move to measurement, is the equipment that is measuring subject to Australian standards?

Mr Carter: It depends very much on the actual sector itself, Senator. But usually we look to industry practices

for sampling and Australian standards for the analysis of that through, for example, NATA registered

laboratories; that is an example of how those standards—

CHAIR: I might come back to this later.

Senator BIRMINGHAM: I have a few quick questions to wrap it up. Firstly, $36 per tonne is the estimate of

a potential fee for landfill waste entering a waste facility in 2012-13. What price estimates for the future price of

the carbon is that based on?

Ms Thompson: Senator, it was actually $26 a tonne that we were suggesting.

Senator BIRMINGHAM: I am sorry.

Ms Thompson: That price was derived from the Treasury modelling using the medium growth scenario.

Senator BIRMINGHAM: So that is based on the trajectory the Treasury had forecast. Excellent. In terms of

the actual volume of waste and volume of emissions, does the department or the regulator have a handle or an

estimate of the amount of waste going to landfill annually, particularly in these facilities covered by the up to 104

local government entities and 30 corporate entities?

Ms Munro: Senator, as far as I am aware, we have not done that calculation.

Mr Carter: Senator, in terms of facilities that have been reporting under the National Greenhouse and Energy

Reporting Act, we have detailed reporting from those facilities on their annual emissions. I am not sure if we

actually have the waste numbers that sit behind those emission numbers, though.

Mr Comley: Senator, there would be an estimate. I do not have it in front of me. Treasury would have needed

to estimate that to form an estimate of the amount of emissions that will be subject to the fixed price during the

three-year period for revenue. We also have estimates of waste in general on the national inventory and as part of

the projections going forward. I do not have those numbers in front of me, but there must be an estimate.

Senator BIRMINGHAM: I note that the national inventory is something the department might be able to talk

about. If we are able to get some estimates either of waste tonnage or emissions projections for the period out to

2020, that would be much appreciated. Ms Thompson or Dr Kennedy, you are looking enthusiastic.

Ms Thompson: Senator, the waste sector produces around 15 million tonnes of carbon pollution each year,

which is equivalent to three per cent of Australia‟s emissions. As I mentioned earlier, the average household

produces just under 1 tonne of waste, which translates to just over 1 tonne of emissions over the lifetime of the

emissions release of the waste.



Senator BIRMINGHAM: Sorry, the average household produces under 1 tonne of waste per annum, which

translates to?

Ms Thompson: Just over 1 tonne of CO2 equivalent of emissions. Of course, the emissions from waste are

methane, which is a very potent greenhouse gas.

Senator BIRMINGHAM: Okay. So roughly every household in Australia. Do we have an estimate of

households as a result of the inventory or otherwise, because sometimes this varies depending on which agency

you ask? I have been through this with Communications a few times when it comes to broadband coverage and so

on. How many households do you define across the country, Ms Thompson?

Ms Thompson: Senator, I am afraid I do not have that figure in front of me, so we would need to take that on

notice.

Senator BIRMINGHAM: If anybody is able to lay their hand to that, it would be appreciated.

Mr Comley: From memory, the number of households used to be 8.8 million. I think it rises to about 10

million by 2020.

Senator BIRMINGHAM: Excellent. Thank you. So approximately 1 tonne of CO2 equivalent over a lifetime

going into waste per household per annum is the department‟s rough estimate based on the inventory and the

work you have done?

Ms Thompson: That is correct. I will clarify. That is household waste, referred to as municipal solid waste.

That is the waste that goes into your bin with the green lid as opposed to waste that is recycled and commercial

and industrial waste and other sources.

Senator BIRMINGHAM: Obviously that lifetime for that 1 tonne of lifetime emissions is the 40- to 60-year

period that we spoke about earlier. Just on the household front, there are 9 to 10 million tonnes of emissions over

a lifetime going to landfill per annum that these facilities will be managing. Is it the case that the overwhelming

majority of the nation‟s waste will be covered by either these 30 corporate entities or 104 councils?

Ms Thompson: Senator, I would not like to answer that definitively. But certainly, from memory, a very high

proportion of the nation‟s domestic waste goes to landfills that take over 250,000 tonnes of waste a year. So the

bulk of the waste goes to these very big landfills in metro and large regional centres.

Senator BIRMINGHAM: And outside of that household waste we spoke of, does the national inventory

cover or have estimates of other waste that is going to landfill?

Ms Thompson: Yes, Senator. Again, though, I do not have the detail of those figures with me.

Mr Comley: I will come back to Ms Thompson‟s earlier comment. The overall inventory has 15 million

tonnes of waste. If the number for households is 9 to 10 million, then the residual, which is 5 to 6 million tonnes a

year, is the other waste emissions associated with non-household municipal waste.

Senator BIRMINGHAM: So, just to be clear, the national inventory has 15 million tonnes per annum of

waste going to landfill per year or—

Mr Comley: Emissions from waste.

Senator BIRMINGHAM: emissions from waste per annum, which, of course, includes legacy waste and so

on. So in trying to get a fresh starting point, the household figures are useful because they provide a potential

fresh starting point there. Trying to get a fresh starting point for non-household waste, are there some backwards

calculations, such as you just suggested there, Mr Comley, that we can do?

Mr Comley: Well, unless there has been a change in the ratio of household to non-household, I would have

thought you would say roughly 50 per cent again would be from the commercial side. The difficulty, of course, is

if we have substantially changed our practices either at the household or the commercial side compared with the

legacy going forward. But we are happy to take on notice where we have a more precise estimate going forward.

Senator BIRMINGHAM: So 1 million tonnes per annum of waste with lifetime CO2 equivalent emissions of

about 1 million tonnes from households, and potentially 1½ million once non-household waste is included in that

scenario, based on rough historical averages. But you will take on notice to provide something more specific. That

would be obviously, then, sort of around 15 million tonnes in the period up to 2020 or slightly less than that, I

guess, now. It would be more like 17 million tonnes or thereabouts?

Dr Kennedy: Senator, these are emissions per year. So it is 15 million tonnes of emissions per year coming

from waste.

Senator BIRMINGHAM: But that is including legacy, is it not?

Dr Kennedy: Yes.



Senator BIRMINGHAM: Which is not, of course, subject to the carbon price?

Dr Kennedy: So there is a stock of waste there from which emissions flow each year. That flow is about 15

million tonnes.

Senator BIRMINGHAM: Indeed. By 2020, what volume of emissions would you expect to be covered under

the carbon price?

Ms Thompson: Senator, I think we might be moving from the inventory figures, which are the recent past,

into the projections. I am not sure if one of my colleagues wants to respond to that.

Dr Kennedy: We have the number of projections, Senator, which we can answer, which is around 16 million

tonnes in 2020 from waste. That is the number without a carbon price?

Mr Comley: With the hope of being helpful, I think what the senator might be getting at is what proportion of

waste in 2020 would be considered non-legacy waste for the purposes of the scheme. Is that the question you are

actually trying to get at, Senator?

Senator BIRMINGHAM: I am trying to get at what proportion is indeed covered by the scheme for paying

the carbon price in 2020.

Mr Comley: I think we will take that on notice. The person who would probably know the answer to that off

the top of their head is not here. Why don‟t we see if we can track that down for you. When you look at the

formula that determines the time profile of emissions, it is not that complicated. I just do not have the number in

my head.

Senator BIRMINGHAM: Sure. Mr Comley, if you are able to come back to us with that, that would be

fantastic. I will happily defer to Senator Macdonald.

Senator IAN MACDONALD: I want to follow on from Senator Birmingham‟s earlier questions about how

you assess things. Perhaps I can give you a specific example and seek assistance from either Ms Munro or Ms

Thompson. The Cassowary Coast Regional Council in North Queensland normally collects 17,000 cubic metres

of waste at their Innisfail tip and 3,000 or 4,000 at their Tully tip, well under the allocation or the allowance of

25,000 cubic metres. Because of Cyclone Yasi a year ago, they have already put 240,000 cubic metres into

council landfills. They have filled up their council landfills. They are having to create additional cells in their land

tip. They find that they have had to store 100,000 cubic metres of cyclone debris in temporary storages, which

they will not be able to put to a landfill until after 1 July. After 1 July, they are going to be putting in 60,000

tonnes, they hope, which will bring them into the carbon tax situation. That is something that neither the council

nor anyone else anticipated or planned for. It is not a big council. It has 30,000 people and a $2 million estimated

carbon tax bill that was not anticipated. How do they deal with that? How does that fit into your calculations?

How does it also impact upon areas in my state of Queensland, which I am particularly interested in? I am sure

there would be similar examples in other states. I note the Ipswich regional council near Brisbane is suffering the

same problem, with waste from the floods last year. I understand that the LGAQ has been attempting to talk to the

department to get some exemption for councils in that situation. So far, it has been to no avail, I understand. It is a

difficult situation because none of us know when the next cyclone is going to hit anywhere along the Queensland

coast, resulting in a huge amount of debris that then goes to a landfill. I notice the relevant minister had said that

the cost of landfill emissions has been taken into account in the compensation being paid to ordinary citizens, but

I am sure the ordinary citizens of the Cassowary Coast are only getting the same „compensation‟ as those who

live in the leafy suburbs of Melbourne, Sydney and Canberra. I just wonder how you are going to assess that. Is

that going to be the situation, or can there be some thought to giving exemptions to councils or other authorities

who have huge amounts of waste through natural calamities, nothing they can plan for and where there is nothing

they can do? I am after some good news from someone.

Mr Comley: We will start with Ms Thompson because she was either aware of, or had communication on,

this issue.

Ms Thompson: The situation with the Cassowary Coast council is, as you say, an interesting one. So our

initial assessment is that whether or not in fact the council finds itself over the threshold is something that we are

working with them to discuss. My understanding is that, as you say, there is an amount of waste from Cyclone

Yasi that is in a bit of a holding storage at the moment. The proposal is that that waste be split across, in fact, two

new sites. Our assessment is that although you could not rule it out, if you are assuming that you have about

110,000 tonnes of waste, and that is actually being split across two sites, it is hard to see how that would reach the

25,000-tonne threshold of emissions. So I think there is a bit of a question mark there initially.

The next issue, as you point out, is actually what the composition of the waste is. Our understanding is that it is

not only a combination of trees and other organic debris but also quite a bit of what you might otherwise call



construction waste—that is, things like corrugated iron from roofs and other construction type debris. So that

inorganic waste will not be generating the sorts of methane emissions that, say, municipal solid waste would. So

that is another thing to work through.

Another point I would make is that the council would have options to look at things like composting the

organic waste, again to ensure that they do not find themselves over the threshold. So I think that clearly, for the

department and the regulator, it would be useful for us to have some further conversations with the council. But I

think there is at least the prospect that they would find themselves not reaching the threshold.

Senator IAN MACDONALD: Well, I hope that is right, because they would be delighted to hear that if that

is the case. Currently they are looking at a $2 million bill; they have been given that figure on their own best

advice. It is not their own calculation, but I assume it has come from the government.

Ms Thompson: No, Senator. I am pretty sure that figure has not come from government.

Senator IAN MACDONALD: I want to clarify two things. What is the threshold?

Ms Thompson: It is 25,000 tonnes.

Senator IAN MACDONALD: Of emissions?

Ms Thompson: That is it.

Senator IAN MACDONALD: If it goes to different landfills run by the same authority, are they separated?

The 25,000 is per landfill, not per authority that runs them—that is, the Cassowary Coast council?

Ms Thompson: My understanding, Senator, is that if the waste is split across the two landfills, then in fact

they would be treated as different entities. But perhaps the regulator can clarify that.

Mr Carter: Senator, in terms of the facility definition itself, they would be considered separate facilities. I

have only just become aware of the Cassowary Council‟s circumstance. I understand they are currently

constructing new cells on a landfill. I am not clear whether the material is actually stored on the same physical

site, but to go into those—

Senator IAN MACDONALD: Well, at the moment it is somewhere in a temporary site, nowhere near the

landfill, as I understand it.

Mr Comley: I think there is an important matter of principle here. We are moving into a new phase where we

have legislation that is passed and a regulator that is responsible for administering that legislation. When I think

about this, it is analogous to estimates hearings that deal with tax matters. The general approach there is that

officers both of the department or the ATO typically do not comment on the precise details of a potential

individual taxpayer or a potential individual liable party, partly because there are a range of factual circumstances

that have to be looked at in detail and there is also potentially the privacy implications of that. Not being difficult,

I think—

Senator IAN MACDONALD: Well, yes, you are.

Mr Comley: I might be being difficult at one level, but I think there is an important point of principle here

which we may traverse in a range of places. Certainly the precedent in those sorts of areas is that officers talk

about the way in which the legislation operates and how it would be administered in a general sense, but they

typically refrain from commenting on the precise circumstances of an individual taxpayer or an individual liable

party. I think Ms Thompson has tried to be very helpful, as Mr Carter has. But I think that is an important point to

make about how certainly the department—I do not speak for the regulator—would typically address these

questions in estimates.

Senator IAN MACDONALD: Mr Comley, I have been doing estimates for 22 years. That is the first time it

has ever been suggested to me that you cannot go into individual cases when you are trying to help someone—in

this case, the 30,000 people who pay rates in the Cassowary Coast. I am not asking for a definitive answer.

Perhaps I should have said, „In a hypothetical case of council by the name of Y, if this were the situation, what

would be the case?‟ The minister would then quite rightly say, „We do not deal with hypotheticals.‟ So I am not

dealing with a hypothetical. I am dealing with an actual. I want to know how the regulator or your department will

deal with a situation like this. I have had some good advice from Ms Thompson, saying she is working with the

council to discuss it. I think that was a slip of the tongue. But you are working with the council. Great, if that is

true. That has not been my understanding, but I am pleased to hear it. If it is not the case, then please could you do

it. I am interested in some of the information. I was under the impression that if a council had 10 different tips,

they were all added together. It would seem to me that every council perhaps should make sure they have 10

different tips so they never get to the 25,000-tonne threshold. That will be good news for councils, so I will

suggest that to the ALGA.



Ms Munro: Senator, it might be appropriate to comment on that suggestion. There is a provision for the

prescribed distance between landfills, which is currently set at zero. In other words, at the moment, landfills

which are geographically separate are counted separately. However, if councils or any other landfill operator, for

that matter, were to start undertaking artificial splitting, where they were creating new facilities very nearby

merely to come under the threshold, I should imagine that that provision in the regulations would be amended and

a prescribed distance would be set which prevents that artificial avoidance.

Senator IAN MACDONALD: Thank you for that.

Ms Thompson: Can I just add to Ms Munro‟s answer on that point, Senator. In fact, when the government

was consulting on the coverage of landfill for the carbon price mechanism and looking at these sorts of issues, one

of the things that came very strongly to the fore was the fact that, in fact, in very many cases either local or state

governments have placed land use restrictions on creating new landfill sites. So I think that would make it

difficult for a number of councils to actually go ahead and create new landfills. With respect to the prescribed

distance rule, what the government has said is that that rule will be in place for three years, at which point the

climate change authority would have a look at it. What the government has also said is that they would be

interested in actual evidence of councils diverting waste to avoid the liability.

Senator IAN MACDONALD: Thank you for the advice. That is not the advice I or the Cassowary Coast

wanted, but thank you for giving it. To clarify, is it a 25,000-tonne threshold of emissions or of waste put to the

dump?

Ms Thompson: It is emissions.

Senator IAN MACDONALD: I know you were talking to Senator Birmingham about that. How do you

actually calculate the emissions coming from this dump? I tell you most of it is organic waste, but there will be a

few sheets of iron and a bit of timber in it.

CHAIR: We have just had that question and not too long ago, Senator, but I am happy for it to be repeated.

Mr Carter: Senator, I might answer that question. In terms of the way in which we do the estimates or assist

landfill operators with estimates, the calculator looks at a range of different waste types that are going into the

landfill. There are categories that have different quantities of different organic matter in them, and then the

estimates are based on what waste streams are going into that particular landfill.

Senator IAN MACDONALD: For a tonne of organic waste, what is the regulated assessment of the

emission?

Mr Carter: I do not have that number on me, Senator. As Ms Thompson indicated earlier, about a tonne of

household waste, which contains quite a lot of putrescent organic material, puts out a little over a tonne in terms

of carbon dioxide equivalent.

Senator IAN MACDONALD: So it is a tonne for a tonne with household waste?

Ms Thompson: Almost.

Mr Carter: But, as I mentioned, any landfill will have a range of different waste streams.

Senator IAN MACDONALD: Can you on notice give me what it is for organic landfill—that is, trees that

are knocked down and bush shrubs that are knocked down, which is most of what the waste is in cyclone areas?

Mr Comley: Senator, from that tonne—

Senator IAN MACDONALD: My point in raising this is not particularly the Cassowary Coast—

CHAIR: Can you let the witness answer?

Senator IAN MACDONALD: Well, I was talking and he interrupted, Mr Chairman.

CHAIR: But I think he is trying to help you at this point.

Mr Comley: I am going back over this because you were out of the room when we previously covered it. A

tonne for a tonne, which we did cover in the evidence with Senator Birmingham, is over the life cycle of the

waste—over the 40 to 60 years.

Senator IAN MACDONALD: I am well aware of that, and this is going to go on and on for the Cassowary

Coast council. But my point is that the Cassowary Coast example is a case in point that I can give you. Tomorrow

it could be my home council of Burdekin shire. It is, I think, the Ipswich shire council near Brisbane. It could be

anywhere. My question to you, Mr Comley, or to the minister, perhaps, is: was this thought about in the design of

the scheme? If it was not, as it appears it was not, would the government give some thought to perhaps an

exemption where the emissions from a landfill are caused by a natural calamity beyond the control of any human

being?



Mr Comley: In the design of the scheme, the paramount issue that was brought into account is that, wherever

possible, emissions should be recorded for what the atmosphere sees—decomposing waste and other things where

the atmosphere sees it. The point that I think has been made about the general circumstances here is that where

you have a large amount of waste, and particularly if you are establishing a new landfill facility, you would need

an enormous amount of waste before the annual emissions reach the 25,000 tonnes because of the time it takes to

decompose et cetera. So in terms of the general design of the scheme, if that is emissions going to the atmosphere,

the design was to capture those within the coverage and to provide opportunities for abatement through offsets, if

you took actions to mitigate those emissions. That was considered in the design of the scheme.

Senator IAN MACDONALD: So for places that are susceptible to the creation of organic waste by cyclones

or, in Ipswich‟s case, by floods there is no consideration? Their 25,000-tonne tip threshold is the same as it is for

Canberra, for example, and more fortunate areas of our country?

Mr Comley: There are variations in circumstances with respect to waste and there are variations in

circumstances with respect to heating needs, for example, in different parts of the country. There are lots of

variations in terms of what tends to give the carbon dioxide footprint in different places. Analysis was done of

where the atmosphere saw the emissions. The scheme was designed recognising that there are variations across

the country.

Senator IAN MACDONALD: So for people of the Queensland east coast it is, 'Bad luck; you just happen to

be in a cyclone area'?

Senator Wong: I will respond to that. This government has put an enormous amount of resources into

rebuilding Queensland, including through the levy, which you opposed. There was billions of dollars through the

natural disaster relief arrangements and moneys to local council. So, if you are trying to play politics with natural

disasters, I would refute that most firmly. The second point I would make is we have had a long discussion about

the prospects of liability. I do not think you have established, if I may say so, the factual basis for your assertion,

which is the extent of the liability of the relevant council. You have had evidence from officials about how

generally this would be assessed and the regulator. Obviously that is still something that the council will need to

explore. I assume that there will be the possibility of engagement with them—I assume that would be most

appropriately done through Ms Munro‟s entity—to explore whether or not there is liability and the extent of any

liability. But I would most firmly refute the proposition that the government has not very substantially, as is

appropriate, sought to support Queenslanders as a result of the natural disasters.

Senator IAN MACDONALD: Mr Chairman, I will not be drawn into a debate with the minister on politics or

anything else. I am here to ask questions, as I have been doing. I note, of course, that the natural disaster

assistance has been there since time immemorial.

CHAIR: You are being drawn in, Senator Macdonald.

Senator IAN MACDONALD: Well, I am just noting that in passing, Mr Chairman. I should not be drawn in.

The carbon tax is a new tax on councils. Ms Thompson, do I take from what you are saying that you are currently

in contact with the Cassowary Coast council and the LGAQ?

Ms Thompson: We had a meeting with a representative. I think, to be clear, the discussion was actually with a

member of the Local Government Association, who was raising issues to do with the council with us. I would

have to check back, but I believe that discussion took place a couple of months ago. So we have been made aware

of these issues with the Cassowary Coast and have been endeavouring to assist.

Senator IAN MACDONALD: Thank you for that. I am delighted to hear that. That is not in accordance with

the information I am being given. My information is that it was raised but there was no response and no

assistance. But people say these things, so perhaps that is not right. But it is an issue. You are suggesting to me

that there is a way to work through it by having different landfills. I am not asking for a specific council in this

case, but, in the case of Ipswich and the Cassowary Coast and any other council that is in this situation in the

future, the department will work with the particular authorities to try to ameliorate and say they do not pay any—

Ms Thompson: What the department has been willing to do is talk to representatives from local government

about the sorts of things that they could do to reduce or, in some cases, avoid their carbon price liability. That

includes things like looking at composting organic waste and other measures that councils can take to mitigate

their emissions.

Senator IAN MACDONALD: Finally, in the case of the Cassowary Coast council, if they move 60,000

tonnes into an extended landfill next year—it depends on what the answer is on the emissions—you expect that

they would not be up for the carbon tax?



Ms Thompson: The secretary just indicated that he thinks it is not appropriate for us to comment on individual

cases. I think, that being the case, I am unable to answer any further questions.

Senator IAN MACDONALD: The secretary was very helpful to you in raising that; thank you. You were

going pretty well before the secretary intervened, but that is fine. I understand how things work. Just confirm for

me now that the two landfills in the Cassowary Coast are not joined together for their joint emissions targets. I

think perhaps Ms Munro confirmed that. Can you speak, because the Hansard does not recognise head nods.

Ms Munro: Sorry, I took that as a rhetorical question. Indeed, they would be assessed separately. I should say

we would certainly be happy to meet with the Cassowary Coast council ourselves to take them through the

methodology, as in fact we would with any of those other councils that we contacted.

Senator IAN MACDONALD: Just to confirm, how is an entirely new landfill treated in the assessment

process?

Ms Munro: That would be assessed in its own right.

Senator IAN MACDONALD: So there would be a 25,000-tonne exemption for that new landfill if the

Cassowary Coast were to, for example—

Ms Munro: Yes. Its emissions would have to reach 25,000 tonnes to reach the threshold.

Senator IAN MACDONALD: From that individual landfill for that new landfill?

Ms Munro: For that landfill.

CHAIR: I think that point has been made several times now.

Senator IAN MACDONALD: I think Mr Carter might have another view.

Mr Carter: I just want to—

CHAIR: I would be surprised.

Mr Comley: We are trying to be helpful. We are explaining that if it is a separate facility it gets a separate

threshold and there is no dispute about that. The question of whether something is a separate facility is a matter of

fact which the regulator would have to determine. That question of whether the plans that the council have for

separate facilities would meet the test of being separate facilities under the act is what I do not think we can be

definitive on here. The regulator can talk with the council about it, but that is where we get into the difficult area

of providing the equivalent of a ruling on the individual facts and circumstances.

Senator IAN MACDONALD: But the Cassowary Coast covers Innisfail. Sixty kilometres to the south is

Tully. They are the two existing ones. Another 60 kilometres or so to the south is the town of Cardwell, which

was badly hit. So 60 kilometres away would seem to be a new facility; that is not a tricky question. But there is no

way in the world that could be considered the same facility as the Tully or Innisfail tips?

Mr Carter: The point I was going to make is that facilities are defined under the legislation and we would be

more than happy to work with council to look at how that definition applied in their circumstance. One of the

criteria under the legislation is that it forms a single site in a geographical sense.

Senator IAN MACDONALD: In a geographical sense.

Mr Carter: But we would examine how that best applied in their particular circumstances.

Senator IAN MACDONALD: That is what I wanted to raise. I make the point that this is a real issue. I

suspect, although the minister denies it, that it was not perhaps thought through when the 18 bills were rushed

through parliament. Having raised it, I hope that the department can seriously and sympathetically look at that

issue and the issue of Ipswich and others that will happen in the years ahead.

Senator Wong: I am going to respond. I do not respond on this unless Senator Macdonald chooses to make a

political statement, and he has. In reference to the so-called 18 bills rushed through parliament, I do not think

anybody in this country could be under any illusion that there has been a rushing of the carbon price legislation.

This has been discussed for years. It was in discussion in the context of Prime Minister Howard‟s government.

When we were first elected, we went through a green paper and a white paper process as well as—

Senator IAN MACDONALD: No. You promised not to have a carbon tax.

Senator Wong: As well as—

Senator IAN MACDONALD: You promised not to have a carbon tax.

Senator Wong: I listened to you in silence, Senator Macdonald. I know that you find it impossible when I am

speaking not to interrupt, but I did actually listen to you in silence.

CHAIR: Do not engage with him.



Senator Wong: We went through an extensive consultation process. These bills have been the subject of more

policy debate and more policy analysis than almost any other public policy reform that I can think of in recent

history. So I would like to place that on the record, given the intervention by Senator Macdonald.

CHAIR: That is fine. Mr Comley, you might find this surprising, but I am more inclined to agree with Senator

Macdonald on this issue of being able to question individual councils. I raised the Blue Mountains council this

morning before Senator Macdonald was here. I just find the analogy between taxation issues and polluters to be a

problem for me to come to grips with. Would you like to give some further consideration to what your capacity is

to respond to specific questions about an individual council that raises policy issues that this parliament has to

deal with?

Mr Comley: I will give it further consideration. There is an issue upon which I am trying to, in my mind,

strike a balance. On the one hand, clearly the committee needs to interrogate the policy and the foundation of the

policy and have sufficient specific information that has substance to it rather than just have a general

philosophical discussion. On the other hand, there is concern about the nature of some of these situations. How

the law will be applied in practice by the regulator and then ultimately, if that is challenged, through the courts is

a matter that rests on fact situations, many of which are not at the time in front of this committee. So I think that

this is an area where we can have a discussion about the general issues without putting the regulator in a position

of providing a determination or a ruling when there may be other facts that are relevant and when the relationship

the regulator will have to particular confidentiality issues with any particular liable party which will be governed

by the act is a distinction we do have to be careful to observe.

CHAIR: I have asked questions, and I know Senator Macdonald has asked questions, of other bodies that go

to individual cases that do raise policy issues. I just do not think that we can be constrained to the extent that you

are asking us to consider a constraint.

Mr Comley: I understand that there are a range of bodies that deal with this in different ways. I am also

aware, though, that this is an area where the liable parties will have direct financial liabilities and may or may not

make representations both publicly and in private about the nature of those liabilities. I think the act is clear on the

questions of what the regulator can and cannot disclose. I think that is a relevant consideration when we come to a

question of a specific fact situation. So, in the example we have just done, I think explaining how the facility

legislation works is fine. It looks, and it probably is in this case, relatively straightforward that, if I have sites 50

kilometres apart, they are not a contiguous activity. Someone may come and say, „I actually have site A and site

B. I have partitioned them by a fence. Is that a case where you have a facility?‟ I was not so much concerned

about the specific instance, but I think it is worth at least raising it with the committee—and the committee may

want to discuss how they want to handle it in the future—recognising that we are now in a world where we have

legislation that is passed and a range of liable parties that will have a relationship with the regulator and the

regulator is governed by the act.

CHAIR: I am sure the committee will take that advice. I also ask you to take our advice that we think you

should be more open than closed in terms of being able to deal with these issues.

Senator IAN MACDONALD: Mr Comley, you do have experienced officers who were doing fine.

Senator Wong: I want to respond. This is something the committee can have further discussions about. I do

think that, whilst it is quite legitimate to explore a range of policy matters, even in the context of a particular

liable party, there is a line that needs to be considered about the extent to which an estimates committee is in fact

discussing whether or not a particular party is liable under legislation. It is analogous to tax laws or any other

matter. We do not talk about the individual liability of a taxpayer, a citizen or an entity in any great detail in

estimates. The reasons for that would be pretty clear.

CHAIR: I just think this thing has some way to run.

Senator Wong: Sure.

CHAIR: It is a new area of public policy.

Senator Wong: I agree with that. There is a line behind which I think officials can be most helpful. I would

ask the committee to consider the point that Mr Comley is making. I do not put it any higher than that, Chair.

Senator BIRMINGHAM: Ms Munro or one of your officials, are you able to give us either now or during the

course of the morning a breakdown state by state of the 104 local government entities that you have written to,

please?

Mr Carter: I will have to take that on notice and see if we can get that for you today. I do not have that

breakdown with me.



Senator IAN MACDONALD: Is the Cassowary Coast one of them?

Mr Carter: I cannot answer that either.

Senator BIRMINGHAM: Can you do that state by state? If somebody back in the department or the

regulator is able to quickly look at that database and get that to us promptly, that would be very helpful.

Ms Munro: I dare say we can produce the list. I would just like to emphasise, though, that that is a list of local

governments that we have written to because we consider they might have facilities that take them over the

threshold. It does not mean that we have enough information to say that they actually are. That would be a further

step that we have to take. So in the final list that will be published in the Liable Entities Public Information

Database we would expect to have a smaller number than that.

Senator BIRMINGHAM: Sure. I will come to some other questions on that a bit later.

Senator BOSWELL: I have some questions on renewable energy and MRETs and some calculators. The

Productivity Commission estimates the cost of renewable energy to be $4 billion stand-alone by 2020. What

proportion of renewable electricity are we using in 2012? How much will that be ramped up in 2013, 2014, 2015,

2016 and 2020? What is the percentage?

Mr Livingston: I have not got the exact numbers with me now, but we can provide those numbers.

Senator BOSWELL: There is no-one here who can get those?

Mr Livingston: I can tell you what the targets are. The target for the LRET this year is 10.4 million megawatt

hours of renewable energy.

Senator BOSWELL: What is that?

Mr Livingston: It is 10.4 million megawatt hours, or 10,400 gigawatt hours.

Senator BOSWELL: Megawatt hours?

Mr Livingston: It is 10.4 million megawatt hours.

Senator BOSWELL: That is 2012?

CHAIR: Now I am confused.

Senator BOSWELL: It is 10.4 million megawatt hours.

Mr Livingston: That is for the LRET. For the SRES, which is the small scale, the target this year is some 44

million certificates. Each certificate is equivalent to a megawatt hour of displaced electricity. Of that, some are

multiplied up by the solar multiplier, so that is why I cannot give it to you today. I would have to do the

calculation to work out the actual electricity.

Senator BOSWELL: So it is 10.4 million megawatts by the LRETs and 44 million by the SRES. That is for

2012.

Mr Livingston: That is right.

Senator BOSWELL: Where does it go in 2013?

Mr Livingston: The target to 2011 was 10.4 million megawatt hours, or 10.4 thousand gigawatt hours.

Senator BOSWELL: That is 2011?

Mr Livingston: Yes. For 2012, what they surrender for this year they surrender in 2013. Whilst the target is

for 2012, the surrender date is 14 February 2013, so there is a bit of an offset. So it will be 16.7 million gigawatt

hours on the LRET.

Senator BOSWELL: That is 16 million megawatt hours?

Mr Livingston: It is 16.7 million gigawatt hours. Then it rises to—

Senator BOSWELL: What about the small level?

Mr Livingston: The small level falls. The small level is probably peaking this year, and the small level does

fall. So the percentage for the small this year is about 24 per cent. From memory, that will decline to about the

nine per cent level next year and decline again in the following year as the multipliers fall off.

Senator BOSWELL: This is all very good, but I suppose I wanted it in a—

Mr Comley: Senator, I think you were after the 2020 number. The relevant number, I think—

Senator BOSWELL: No. I want all the numbers. I want to know how much it ratchets up each year. Now we

are at seven per cent at the moment.

Mr Livingston: We have the numbers here.



Senator BOSWELL: So what levels are we at at the moment?

Mr Livingston: Again, the numbers this year—

Senator BOSWELL: In a percentage of electricity.

Mr Livingston: I am giving you the actual certificates, not as percentages of electricity. To do the percentage,

I have to estimate the Australian electricity demand, and I do not have that with me right now.

Senator BOSWELL: So what have you given me? You have given me 2012.

Mr Livingston: And 2013 I was about to give you for the LRET target. So the LRET target in 2013 is 19

million megawatt hours. This will rise to 41 million by 2020, which will be, on the basis of the current planning,

20 per cent. It will be 20 per cent by 2020.

Senator BOSWELL: Nineteen million megawatt hours?

Mr Livingston: That is right, for 2013. This rises through a profile to 41 million by 2020 and stays there, and

41 million is currently estimated to be 20 per cent renewable by 2020. By 2020, the estimate is that there will be

some 300,000 megawatt hours of liable electricity in Australia, but that is only a forward estimate.

Senator BOSWELL: How much?

Mr Livingston: If we do it in terawatt hours, it gets easier. So we are assuming that it will be 300 terawatt

hours by 2020. And 20 per cent of that—

Senator BOSWELL: What is a terawatt hour?

Mr Livingston: A terawatt hour is 1,000 gigawatt hours.

Senator BOSWELL: How much is that? Three thousand?

Mr Comley: Maybe if we stay in the same units. The 41 million that Mr Livingston talked about is equivalent

to 300 million megawatt hours.

Senator BOSWELL: 300 megawatt hours?

Mr Comley: That is right, so 41 and 300. There is also an estimate of what small-scale certificates will be

used. Because they are not capped, they have got an estimate. My recollection is that the estimate out at 2020 was

done in the order of six million megawatt hours. In total, that goes to slightly more than the 45 million megawatt

hours. The 45 is from the RET. The tricky bit is there were 15 megawatt hours of pre-existing renewable energy

before the RET came into existence. So, in total, the 15 million megawatt hours of pre-existing electricity from

renewables plus the roughly 45 million from the small and the large scale means that you have 60 million

megawatt hours out of 300 million megawatt hours, which is around 20 per cent.

Senator BOSWELL: What is the RET value on 60 million megawatt hours?

Mr Livingston: It depends on what price.

Senator BOSWELL: Say $60.

Mr Livingston: You would multiply 60 by that number.

Mr Comley: Except you do not do that, because, again, there were the 15 million megawatt hours of pre-

existing outside the scheme. So you take the number for the large scale, which would be 41 million, multiplied by

the certificate price at the time, plus, if the small-scale certificates are still at $40, $40 times the projected amount

for the small-scale certificates. This has all been produced in previous modelling reports. Mr Archer might want

to comment on the nature of the report. We are certainly happy to, again, table that report that has the estimates.

Senator BOSWELL: Could you table that report now?

Mr Comley: It is available on the web and we have tabled it before, but we are happy to provide it again.

Senator BOSWELL: What I am trying to calculate is the millions of megawatt hours to find out what the

final cost would be. Have you got the final costs of the renewable energy by 2020? The Productivity Commission

puts it at $4 billion a year.

Mr Comley: We have previously put in the public domain the estimates from that modelling, and we are

happy to provide that again.

Senator BOSWELL: Do your figures fit in with the $4 billion?

Mr Comley: I would have to take that on notice. My looking at the numbers does not equate with 41 million

times the certificate price, unless you add a certificate price that was higher than the current price cap.

Senator BOSWELL: Obviously it will be. It will be around $60 per renewable.



Mr Comley: I am not sure. We have a modelled estimate of that. I do not have the number in front of me of

what the modelled estimate was.

Dr Kennedy: Which Productivity Commission estimate is it? We could track that down at the same time.

Senator BOSWELL: I do not know. I just have some notes here where it was given.

Mr Comley: The reason I am baulking a little is that, if you do a calculation of 40 million multiplied even by

that number that you were using, you do not get to $4 billion; you get less than that. It is just a straight matter of

arithmetic if you were assuming that price. I am saying that we have done this in an internally consistent way in

the modelling so we are happy to provide the modelling with those estimates.

Senator BOSWELL: So to get the extra costs you would multiply the big RETs by $60 and the small RETs

by $40, you said?

Mr Comley: If you were using a price estimate of $60, you would. But I would have to go back to see what

the price estimate was on that modelling. My recollection was that it was lower than $60 at 2020.

Senator BOSWELL: The LRET or the larger RETs have been stalled at the moment. They are stalled. You

cannot buy them at the moment—or can you?

Mr Comley: No. They are traded at the moment. They are trading around $40 a megawatt hour.

Senator BOSWELL: In your carbon calculations, it is assumed that it is going to put the electricity prices up

10 per cent.

Mr Comley: The estimated impact of the carbon price on introduction is around 10 per cent; that is right.

Senator BOSWELL: Have you seen the Institute of Public Affairs calculator?

Senator Wong: That is a very unbiased institution! You would definitely want to go IPAA over Treasury,

wouldn't you!

Mr Comley: I have not read that particular report. Someone in the department would have. What I have seen

are the reports by the pricing regulators in New South Wales and Queensland. My recollection—in fact, I am sure

of this—is that they estimate pretty well exactly what the Treasury modelling estimate of the increase in prices

was as a result of the carbon price.

Senator BOSWELL: So you are saying they will be 10 per cent?

Mr Comley: The 10 per cent is an Australia-wide number, so there is a little bit of variation in that. From

memory, the New South Wales number is a little bit lower than that; it is around nine per cent. The Queensland

number, I think, is a little bit higher than that: 11 per cent. Dr Kennedy has the numbers in front of him.

Dr Kennedy: They are the last determinations by those bodies for those states where they have regulated price

increases. Mr Comley is right; New South Wales was nine per cent and Queensland was 11 per cent.

Senator BOSWELL: And this applies to industrial users too? The 10 per cent is industrial?

Dr Kennedy: No. These are the regulated prices for households.

Senator BOSWELL: No, I am not asking about households. I am asking about industrial users. What are

your assumptions there? Is it 10 per cent? How much is the carbon price going to add on to electricity in industrial

use?

Dr Kennedy: From memory—and I will confirm this—the Treasury estimate of the increase in electricity

prices was an economy-wide estimate. But I will confirm that for you.

Senator BOSWELL: I am asking again—

Dr Kennedy: In other words, price increases across the entire economy—households and everybody else.

Senator BOSWELL: Is 10 per cent?

Dr Kennedy: That is right.

Senator BOSWELL: There is a huge discrepancy. I have used this calculator on a number of places and I

found that if it is a facility that has huge cold rooms, it can get up to 26 per cent. But it comes in for industry at

about 20 or 21 per cent. So do you deny that is the price? You do not accept that the price on industry could go up

a lot more than 10 per cent?

Senator Wong: Are you asking me?

Senator BOSWELL: No. I am asking Mr Comley.



Mr Comley: I am saying that the Treasury estimate, as I understand it, was economy-wide. Where household

regulated prices have been determined or there are draft determinations for regulators, it has been exactly the

same.

Senator BOSWELL: I am not interested in households. I accept that that is 10 per cent. Where I have the

difference is that for industrial users the carbon tax is well and truly above 10 per cent. The worst I have ever

found it was 26 per cent, where there were huge cold rooms in a facility.

Senator Wong: Coal use, was it?

Senator BOSWELL: Cold rooms. Refrigeration.

Mr Comley: The question of the percentage price impact feeding through is not so much a question of what

the facility is using the electricity for. It is really a question of the way in which the energy distributor prices

between different customers. So, in the Treasury modelling, my understanding was an economy-wide price fed

through. In practice, if you have an unregulated sector, that will depend on where the electricity retailer or

wholesaler, if they are large enough, chooses to change the prices. But overall the cost that needs to be passed

through is in the order of 10 per cent of the electricity bill.

Senator BOSWELL: If someone passes through at 21 per cent or 22 or 25 per cent, because that is the

increase that they are paying, you would find that unacceptable or not correct?

Dr Kennedy: Senator, I might just make some clarifications because I have found the Treasury modelling, or

a summary of it, at least. That 10 per cent increase in electricity prices is recorded in the Treasury modelling as

the increase in household electricity prices. So we will—

Senator BOSWELL: But Mr Comley has said that it was 10 per cent—or you said.

Dr Kennedy: Actually, I did. Mr Comley had the same view. So we will go back to Treasury for you on

notice and confirm what the broad economy-wide increase is. If you like, the increases sit behind the 0.7 per cent

increase in overall prices. In other words, how the increase in electricity prices flows through industry to

consumer prices will be consistent with any increase in electricity prices passed through to business. So there is

no inconsistency here. What we cannot identify for you is what the percentage increases are for different

industries. We can confirm for you for households it is 10 per cent.

Senator BOSWELL: I accept that there is a 10 per cent increase for households. But most people think that

the carbon tax is going to add 10 per cent to their bill, and it is not. If the facility uses a lot of electricity or it uses

a lot of cold rooms, a lot of refrigeration, it goes up well and truly above the 10 per cent. It goes up as high as 26

per cent. That is the worst I have seen. But it is around 22 or 23 per cent.

Mr Comley: Senator, Dr Kennedy is right; we can provide further information on notice. But the point, I

think, that you are alluding to, which I think is correct, is if a customer is currently paying very low prices for

electricity compared to a household—so if they were, for example, paying only half the price that a householder

would pay for electricity—the same carbon impost would have a higher proportionate increase in the electricity

price, provided the retailer chooses to pass it on fully and does not seek to further discount, bearing in mind that

they were discounting because of their volume use in the first instance. What Dr Kennedy is trying to make clear

is that in terms of the estimates that have been made of the overall impact on households and through the

economy, that is not inconsistent in cases where people with a discounted electricity price may face a higher

proportionate increase. Another thing I would add is that it may be true that very large users who are paying lower

power prices may face a higher proportionate increase. Most small businesses would be not in that category and

would be very similar to households in terms of the impact that they are likely to face, just by the nature of retail

pricing.

Senator BOSWELL: Well, I have calculated it for some small businesses, and they are in between 20 per

cent and 10 per cent, so there is a bigger increase. Anyhow, you have confirmed that 10 per cent is going to be the

cost for householders. For bigger instrumentalities and bigger facilities like meatworks, fish processors and

vegetable processors, the cost is going to go up well over 10 per cent?

Mr Comley: Well, it depends on the nature of the pricing they have with the suppliers at the moment.

Senator BOSWELL: I am saying it will go over 10 per cent whichever way—

Senator Wong: Well, he is not accepting that, Senator. He has given you a different answer. Can I also say on

this—others may have more to add—that for more detailed analysis of the Treasury modelling, I suggest we allow

Treasury to answer that. The gentlemen are being very helpful to you, but actually Treasury is responsible for

modelling. We generally in the macroeconomic part of the agenda in Treasury do a section on low pollution

modelling.



Senator BOSWELL: In the $10 billion clean energy fund, how much renewable infrastructure will that fund?

Are you going to lend $10 billion? How does that get distributed?

Mr Comley: Senator, that is actually a matter that is handled within the Treasury portfolio. The Clean Energy

Finance Corporation is a Treasury portfolio agency.

Senator BOSWELL: When does that come on?

Mr Comley: I do not know when the Treasury estimates are.

Senator Wong: Next week.

CHAIR: I will be there. You can join me.

Senator BOSWELL: Can you give us an explanation of 2012 and 2013 and the extra amounts? I have not

been able to copy it down.

Mr Livingston: We can send you the targets for the RET, which go to 2020. And for the SRES we have the

binding target for this year, which we can give you, and the non-binding estimate, which is on our website, for

2013 and 2014. Because of the way the act works, we do not go beyond 2014 with the SRES. So I can only go to

2014 with the SRES because the act does not require us to estimate beyond 2014.

Senator BOSWELL: So all those SRETs, the small RETs, the millions or whatever number, get distributed

to the users?

Mr Livingston: That is correct. If they are created, they get exhausted by the parties. It is an uncapped

scheme.

Senator BOSWELL: Thank you.

CHAIR: On this issue, we have heard the figure of 10 per cent, but you have to take that 10 per cent in the

context of the overall cost of electricity to an individual establishment, do you not?

Mr Comley: This is where it can be confusing between percentages and absolute amounts. I recognise the

minister‟s point and would want to leave this discussion of the detail of how it was done to the Treasury

modelling. The point we were discussing there with Senator Boswell is that the same absolute increase in price,

say, per megawatt hour will show up as a smaller percentage for households if they start with a higher electricity

price itself. That is all the point that has been made. So it is not an argument about whether householders or

businesses necessarily have different absolute increases in prices per megawatt hour. It is a question of what that

translates into in percentage terms once you take different price starting points. The complication, just to expand,

is that whilst you may model precisely what people are paying, obviously in a competitive wholesale electricity

market you will have variation among different customers depending on a whole range of things, including like

how long they take electricity, how reliable and predictable it is and the nature of the relationship. But the same

cost impact—the cost of electricity—is going to feed through roughly to the input to the wholesalers for both

household and residential consumers.

CHAIR: This is an issue for your department trying to get the message out here on the need for climate

change and the costs to individual companies and consumers. The 10 per cent figure is only a part of the operating

costs of an individual company. Are you with me?

Mr Comley: Yes.

CHAIR: When you say 10 per cent, it gives the impression that there is 10 per cent on the operating costs of a

company.

Mr Comley: No.

CHAIR: When in reality the electricity cost of a company may vary if they have got big fridges or if they

have not. But you just cannot say it is a 10 per cent increase to industry or to enterprises, can you?

Mr Comley: No. I was not aware that some people were taking that interpretation.

Senator BOSWELL: I certainly was not.

Mr Comley: For example, if electricity was five per cent of your costs, and in fact for most businesses that

would be a very high proportion, if there is a 10 per cent increase, that obviously translates into a half a per cent

change in your operating costs.

Senator BOSWELL: I ask for indulgence. What would be the cost for renewable energy?

CHAIR: Before you come to that, let Mr Comley finish the point he was making to me, please.

Senator BOSWELL: Sorry. I thought he had.



Mr Comley: Electricity is actually a relatively small proportion of costs for most businesses. Then, depending

on the tariff they are paying, it would be something like 10 per cent of that relatively small proportion.

CHAIR: Is it still correct that the impact on an economy-wide basis is still about a quarter of the impact of the

GST?

Mr Comley: That is right. So, in CPI terms, the estimate would be 0.7 per cent whereas the first year of the

impact of the goods and services tax package was around 2½ per cent.

CHAIR: And there is a range of policy initiatives to assist industry to make the transition to a carbon price?

Mr Comley: Yes. Think about it this way. There are probably three categories of businesses. The first

category are those that are emissions intensive and trade exposed. Broadly speaking, at the starting carbon price,

you only qualify for emissions intensive trade exposed treatment if the cost impact on you overall for both direct

emissions and electricity emissions will be above 2.3 per cent. If you are below 2.3 per cent, then you are not

considered emissions intensive trade exposed. If you are at that emissions intensity threshold that is equivalent to

a 2.3 per cent cost impact, you are entitled to a 66 per cent rate of assistance. So the net cost to you is less than

one per cent of your cost base. If you are particularly emissions intensive—and that cuts in when the impact

would be around 4.6 per cent without assistance—then you get an assistance rate that is based on 94½ per cent,

which means that your effective liability is less than about 0.3 per cent of your operating costs if you are at that

threshold. So that is one category of businesses, if you are particularly emissions intensive.

If you are less than the 2.3 per cent impact, which is the businesses not emissions intensive and trade exposed,

many businesses will have opportunities to pass on costs if they are not in the trade exposed sector. On top of that,

there are a number of programs the government has set up—the clean technology investment program and energy

efficiency grants. The key ones are about $1.2 billion worth of assistance for those sectors. The third category of

businesses which are not trade exposed but are certainly emissions intensive are the electricity generators. For the

particularly emissions intensive electricity generators, there is a transitional adjustment package through the

energy security fund. They are really the three categories. But it is worth just bearing in mind those orders of

magnitude, which is the really emissions intensive ones are the ones with an impact above a little over two per

cent and all other businesses are below that impact, taking both electricity and direct emissions into account.

Senator MILNE: I just want to ask a few questions on fugitive emissions from coal seam gas in particular. At

the last estimates I asked a series of questions about this. Some of them were taken on notice, and I have received

some of the answers. I want to get your response to whether my assessment is an accurate current summation of

the situation. As I understand it, you do not have any field measurements of fugitive emissions from coal seam

gas. Secondly, your estimates rely on self-reporting by industry. Thirdly, the only publicly available information

for scope 3 emission factors for gaseous fuels smears together conventional gas extraction and coal seam gas

extraction and just publishes a single figure for each state. Is that basically a fair summation of where we are up to

on fugitive emissions from coal seam gas?

Ms Thompson: Senator, I got your first question about the fuel studies. I am sorry I missed the second one.

Senator MILNE: Basically, what I am saying is: is it true that you still do not have any specific field

measurements for coal seam gas fugitive emissions? Secondly, the estimates still rely on self-reporting by

industry. Thirdly, is the publicly available information still only the scope 3 emission factors? Does that smear

together, if you like, two very different industries, as in conventional gas and coal seam gas?

Ms Thompson: With respect to the fuel studies, yes, that is correct. With respect to the self-reporting by

industry, my colleague from the regulator, Mr Carter, might want to say something on this. Of course, the issue

that we are talking about is the NGERS reporting system, which does rely on entities, individual firms, reporting

their data. With respect to the scope 3 issue, yes, your analysis is correct. But what we are doing is looking at this

in terms of the consultation we are doing on the current version of the NGERS determination. In fact, the

department has plans to make our scope 3 reporting more specific going forward into the future. We are planning,

though, that at least in the short term that would be using current approaches and data for that. I will add that this

is an issue that we have put some focus on in the consultations we are doing in the current version of the NGERS

determination. It is something that we are looking to apply our continuous improvement practices on for future

versions of the determination and reporting under the NGERS system.

Senator MILNE: Yes. I did see overnight that the G8 communiqué specifically goes to this area. In fact, the

communiqué argues that the signatories are committed to establishing and sharing best practices on energy

production, including exploration in frontier areas and the use of technologies such as deep water drilling and

hydraulic fracturing et cetera. It also goes on to talk about the G8 joining the Climate and Clean Air Coalition to

Reduce Short-Lived Climate Pollutants and calls for a lot of transparency in relation to that. So I ask: does the



government or Wilkenfeld and Associates have any data so that you can at least disaggregate an emission factor

for conventional gas extraction and coal seam gas? I know you do not have to do it under the UNFCCC rules, but

I am just asking: do you have the data to be able to disaggregate those?

Ms Thompson: What we are also doing at the moment is that we have led a consultancy that we have asked to

review current approaches that countries are adopting to these issues, including in the US. We are assessing

whether or not they are suitable for application in Australia. One of the issues to bear in mind is that countries‟

circumstances around coal seam methane do vary quite considerably. One of the issues in the US is that a lot of

the emissions come from shale whereas that is not the case so much in Australia. So it is going to be quite

important for us to have a good look at these developing international processes and assess whether or not they

are suitable for introduction into Australia.

Senator MILNE: Would we not be better to get the CSIRO to actually go out and undertake the work in field

studies in various places in Australia, given what you are saying, and it seems to be the case, that some areas are

going to have higher fugitive emissions than others for all sorts of reasons? Why would we not have undertaken

some specific field work with CSIRO rather than wait for something out of the States?

Ms Thompson: What we have done is contracted with an independent expert to do this review work for us. It

is someone who has done a lot of work for us on the inventory in the past and has helped us with the NGERS

determination on issues. So we are confident that this report will be a very important input into what we do next

as part of continuous improvement for the inventory.

Senator MILNE: So who is that?

Ms Thompson: That is Hugh Saddler.

Senator MILNE: Is he doing the American assessment?

Ms Thompson: Well, looking at developments internationally across the board.

Senator MILNE: Including there?

Ms Thompson: Yes.

Senator MILNE: It does not tell me why we still do not have any data in Australia and whether we can

disaggregate the data we have got so that people currently campaigning on coal seam gas can actually understand

what the fugitive emissions are.

Ms Thompson: In fact, the NGERS requirements at the moment do require people to capture and report on

their fugitive emissions. That is part of the process that is required. What you are asking about is whether we have

gone to the level of looking at data from individual sites. We have not done that at this stage. But we are wanting

to approach this in a stepwise way.

Senator MILNE: I guess what I am asking is: can you separate out conventional gas extraction and CSG

fugitive emissions as separate data? Even if you cannot go to individual sites, can we at least get volumes on our

current assessments, because it is all smeared together as one figure at the moment, which is meaningless, in

terms of trying to assess what is going on with coal seam gas?

Ms Thompson: So that is one of the things that we are looking at through the consultation that is going on at

the moment on the proposed changes to the NGERS determination. We are asking for feedback on the approaches

that we are looking to use. So that is something that the department could consider in the future.

Senator MILNE: And what is the time frame on that?

Ms Thompson: The NGERS determination consultation runs from 30 April to 25 May.

Senator MILNE: So at the end of that, you will assess that and determine whether there needs to be any

changes to NGERS, and increased transparency around this could be one of the things that may be considered?

Ms Thompson: We will certainly look at the facts that we are receiving on the determination and consider

what we should do from there.

Senator MILNE: Well, I draw your attention to the G8 communiqué and particularly the Climate and Clean

Air Coalition to Reduce Short-Lived Climate Pollutants, because their whole thing is about improving scientific

understanding of the pollutant impacts and mitigation, particularly on short-lived climate pollutants, so it is really

important.

Ms Thompson: We would be very happy to have a look at that, Senator. I would note, though, that our

approach to coal seam methane is in line with the IPCC best practice inventory rules. In fact, the approach that we

do take is very much in line with that. So we are certainly abiding by, and consistent with the rules for, the

UNFCCC and the IPCC.



Senator MILNE: I am not suggesting you are not. I acknowledge that what you are doing is in line with the

inventory requirements. What I am saying, though, is that it is meaningless in terms of actually trying to

understand in Australia the fugitive emission out of coal seam gas compared with conventional extraction. That is

what we want to get a handle on. I will move on. I want to particularly ask about the alternative on the table

known as the direct action plan. It seems that it is predominantly a competitive tendering process. I want to ask

some questions about any departmental advice that has been given in relation to this. I wonder if I could get some

answers. In particular, in a competitive tendering process can a multinational, for example, successfully tender by

committing to reduce production in Australia and, hence, emissions in Australia but increase their emissions

overseas so that globally you would have no difference or a worse outcome?

Mr Comley: I suspect that my answer to these questions will all be roughly the same. There was departmental

advice on the direct action plan, which has actually been provided publicly. I believe it was on this committee‟s

website at one point because we tabled it—it is about a 40-page document—in 2010. It provided the department‟s

analysis of the direct action plan. We have not done any further work, to my knowledge, on any direct action plan

except to the extent that that advice was drawn on in preparing the incoming government briefs, which have not

been released. What I am prepared to say is there was no new analysis done at the time of the preparation of that

incoming government brief. I believe that in previous estimates I have commented that without significant further

information about the precise design parameters of any particular scheme it would be difficult to comment

further.

I think the only other thing I have said previously in estimates when I have been asked questions of the relative

staffing requirements that might be associated with the direct action plan is that all people who have experience

with offset programs or tendering processes would be of the view that for an equivalent reduction in emissions,

you would probably need a higher staff staffing complement to administer such a scheme. They are all the things

that are on the record to date. I am not sure that I can add anything new. I am happy to hear other questions. I

suspect that I am going to keep going back to the answer that we as a department put in 40 pages on the record.

We have been asked a number of times subsequently about the direct action plan and we have not done any

further work that would allow new information to be put on the table on those issues.

Senator MILNE: I do have a couple of others that you might be able to say a „yes‟ or „no‟ to in that context

because they are matters that are raised in the public reasonably often. In relation to a competitive tender, a

company that has been operating inefficiently and polluting a lot has much more scope to put in a tender than a

responsible firm that has already taken action to minimise its emissions. Therefore, such a scheme penalises past

good behaviour and rewards bad behaviour. Is that in principle how a competitive tender would operate in the

carbon space?

Mr Comley: Again, I think you need to see the design parameters. In a sense, the CFI package, which you are

familiar with, is not a competitive tender process, but it does have a sense of what would have otherwise occurred.

What the CFI tries to do is rule out cases like that by asking questions of what is accepted industry practice. There

is a negative list that tries to deal with that. Until you went to the scheme design of a competitive tender, would

you not know whether you ruled out those sorts of activities on the way through.

Senator MILNE: I have a final question in relation to renewable energy.

CHAIR: Senator Milne, before you do that, I have a follow-up question on direct action. I notice that the issue

of soil carbon continues to be raised. I know you have not done any further analysis, as you have outlined, but is

there anything in the public arena in terms of the science or the economics of soil carbon that would make you

change your view in relation to that specific area of analysis that you did?

Mr Comley: No, I have not seen anything that would change the nature of the analysis that we did in 2010,

and that analysis indicated that we did not see a prima facie case for assuming that soil carbon was necessarily a

more inexpensive form of abatement than other forms of abatement. That rested on not only the technical issues

but also the economic incentives to take things up. So we have not revised our view on that.

CHAIR: Thanks. Senator Milne.

Senator MILNE: I wanted to come back to renewable energy targets—and I am sorry that Senator Boswell is

not here to hear this. I wanted to ask you about Mr John Pierce, Chairman of the Australian Energy Market

Commission, who was recently reported as saying that the RET scheme was reducing wholesale power prices.

Would you like to elaborate on that for a moment?

Mr Comley: That is a well-established feature of the modelling because, through the REC mechanism, you

bring online other sources of power generation that would not otherwise have been there. In particular, because



you bring on renewable energy that has high fixed costs but very low variable costs, you tend to get some

reduction in the wholesale price of electricity.

One thing that is worth mentioning, though, is that the cost to the ultimate user is a combination of the

wholesale price and the renewable energy certificate price, and I think all modelling indicates that the

combination of the two does lead to higher prices. But, certainly, the suppression of wholesale prices is a partial

offset to the imposition of the renewable energy certificate price.

Senator MILNE: But over time, as your renewable energy scheme winds down, isn't it true that all the

infrastructure you have brought on—which holds down the wholesale price—is the desirable outcome that you

are trying to get to, especially since it is going to shave off the peaks, which are the most costly aspect for the

consumer?

Mr Comley: It reduces the wholesale price compared with what otherwise would have been the case, but you

still have a higher electricity price than you would have if you had not deployed those renewables—bearing in

mind of course that that does not take into account the environmental costs associated with the existing facilities.

Senator MILNE: Exactly—over time.

Mr Comley: Over time.

Senator MILNE: Thank you.

CHAIR: Senator Birmingham, you have the call. I just indicate that I need 10 minutes before we break for

lunch to ask some questions.

Senator BIRMINGHAM: Sure. Ms Monroe, can we go back to some of the info you canvassed in your

opening statement about the general establishment of the regulator and some of those costs, if you can, please.

What has the regulator spent on recruitment to date?

Ms Munro: Most of our recruitment has in fact been done by transfer under machinery-of-government

changes. I think I indicated in my opening remarks the number of staff who have come from the departments. I

am not able to read back in time, as it were, the recruitment that has been undertaken. I am just sorting through

my brief. I think last time you discussed the recruitment that was associated with my own appointment and the

appointment of other members, so I do not propose to go into that one.

Senator BIRMINGHAM: While you are looking that up: there are still two vacant positions—is that correct?

Ms Munro: There are. The services provided by Watermark have been concluded with respect to the complete

suite of appointments, but there are two vacancies that are yet to be filled.

Senator BIRMINGHAM: Is that process still live? Are there recommendations for the filling of those

vacancies or are they expected to remain vacant at present?

Ms Munro: No recommendations have gone forward with respect to filling those two vacancies.

Senator BIRMINGHAM: Okay. So they were covered by the Watermark process?

Ms Munro: They were.

Senator BIRMINGHAM: Was there a final cost, then, for that Watermark process? I know you are trying to

find a total figure for me, which I asked for.

Ms Munro: Yes, there is. The contract that was entered into by the department had a value of up to half a

million dollars. The total expenditure was $275,000, of which the final $64,000 was expensed by us—

representing the final invoice—but the rest of it was incurred by the department. I do not know if Mr Comley

wants to comment further on that.

We had another engagement, for recruiting general counsel, with Gillian Beaumont recruitment, and that

search had a final value of $27,500. Again, that recruitment is underway. There is a preferred candidate, and we

are just moving to close that appointment, but obviously that is a very significant role to fill in my executive team.

I am not aware of any other recruitment costs of that nature.

Senator BIRMINGHAM: AusTender seems to indicate that four separate tenders from the regulator have

gone to Hudson Global Resources—at least, that I can see on AusTender.

Ms Munro: That is correct—the Hudson placement services. Just to explain the composition of our workforce

at present, in addition to the public servants to whom I referred in my opening remarks we have a number of

contractors, largely employed in the IT build. Those particular placements that you are talking about, like the

Hudson one, are for placing specific project staff who have the IT skills that we require, so there are a number of

those in train. We use a number of different entities for that; some of them, as with Hudson, are placement

services and some of them are directly provided by organisations who are on the government panels for providing



IT contractors so they provide those individuals directly. Doubtless you will see some of those in the AusTender

lists as well.

Senator BIRMINGHAM: So these are for non-ongoing, specific work?

Ms Munro: They are for non-ongoing, specific project staff with very specific skills to contribute to our

project management and the IT build that is going on underneath that.

Senator BIRMINGHAM: And is that the same for the three separate tenders, each with a value of $132,000,

awarded to Peoplebank?

Ms Munro: That is right. Those figures actually relate to the cost of providing the staff. Those figures relate

to the cost of those staff, and they are all business analysts—the people who do the analysis that allows you to

design requirements for particular pieces of build. So those sums are not the recruitment fees but actually the fees

we are paying for those contractors to be provided to us.

Senator BIRMINGHAM: Okay. And what are those contractors building?

Ms Munro: As I outlined in my opening statement, we are not starting with a blank sheet of paper, because

we have existing systems. Nevertheless, to develop the robust systems for delivering the carbon pricing

mechanism, we are building around those. So we have a series of projects which are enhancing the systems and

also the business processes to deliver the various aspects of the carbon pricing mechanism and the industry

assistance, which we are administering. I can go into a bit more detail, if you like, about what those specific

projects are; but, primarily, they are about emissions. We have the upgrade to OSCAR, which I mentioned earlier,

and the build of what is called the emissions energy reporting system—EERS is the new acronym—which will be

ready for the 2012-13 reporting period. We have the additional capability being built into ANREU, again to allow

for the management of carbon units under the carbon pricing mechanism. We have already put in place our

customer interface but we are also enhancing that so that there will be a portal that enhances the ability of our

clients to provide information to us, through the reporting mechanisms and so forth. We are also building a

capability for the liability assessments. That means taking the information out of the Greenhouse and Energy

Reporting System and estimating the liability; and then it is on the basis of that that units are created in the

registry system. So that is a broad outline of the nature of the projects that we are building.

Senator BIRMINGHAM: Thank you. In regard to those specific Peoplebank tenders, as I said, there are

three that I can identify in AusTender, each with an identical value of $132,000 and each running for—give or

take a day or two—a two-month period, ending before the end of this financial year. Are they each for the

employment of just one person for that two-month period at $132,000, or are you employing a team to do a

specific job?

Ms Munro: I think I will have to take that on notice in terms of whether each of those is for a separate

individual or whether more than one individual is covered by those contracts. Basically, they would be arranged

around a day rate. If I could take that on notice, I will get you the answer to that.

Senator BIRMINGHAM: If you could. Can I also ask about Cinden Lester Communications: what exactly

have they been contracted to undertake for the regulator, please?

Ms Munro: Ms Lester is a contractor who has been assisting our communications team in a broad sense. As

you can imagine, we have had to prepare quite an extensive range of materials for presentation on our website—it

is important that we have consistency feel on that—and developing our style guide and so forth. A lot of work is

going on to make sure that we have material that is both technically accurate and easy to understand for the range

of clients who are going to our website for information. In addition, we have been preparing public engagement

speaking notes for me and my senior colleagues.

While we do not anticipate attracting a great deal of media attention, obviously there are cases—for example,

in the wake of the publication of the Liable Entities Public Information Database—where, as you can imagine,

there were a lot of questions from the media. So, again, it is about having somebody on board who prepares the

material to make sure that it is factually accurate and that we can give ready answers. That is the kind of work in

which Ms Lester is engaged. We also of course have certain internal communications needs on our intranet.

Senator BIRMINGHAM: Okay. And Ms Lester's work is in addition to the work by ZOO branding that was

canvassed previously?

Ms Munro: They are of a different order. The work that was commissioned from ZOO branding, related to

the establishment of the regulator, was to create a corporate identity, the look and feel, and that has been carried

through a lot of our collateral. Essentially, it created an asset which we will use over a long period of time. It is

used for our publications, for our website and for the banners that we take to events so that people can see who we



are. That is the broad work that ZOO Advertising did. Branding is a higher powered word than what it really was.

It was about the look and feel broadly, whereas Ms Lester's role is really focused on the words we use and on

creating technically and legally correct material which reflects what we do and is accessible to our audiences.

Some 99 per cent of the audience to whom we are addressing ourselves are our clients—the entities who are

participants in the range of schemes we administer. So her work goes to that—it is a standard communications

function in the really basic sense.

Senator BIRMINGHAM: We established previously that ZOO was a $200,000 contract. Is that all that ended

up being paid to ZOO?

Ms Munro: No, that was the upper limit. The total that was actually spent under that contract was, in the end,

close to $156,000. There is a further $1,000 we expect to pay under that contract for some minor alterations to our

website and for simple banners for each of the four schemes administered. Those are the banners I was referring

to—the ones we would take to events to identify our presence at those events.

Senator BIRMINGHAM: Is Ms Lester still employed or engaged on an ongoing sense through a contract

with the regulator?

Ms Munro: Her engagement is continuing. We have engaged her until the end of June.

Senator BIRMINGHAM: The AusTender page which came up for me was for a period from 19 October

2011 to 28 February 2012, a period, I know, which was prior to your actual establishment. That was for a value of

$68,000. Could you take me through the total engagement with Ms Lester?

Ms Munro: I do not believe I have that additional information in front of me, but we can take that on notice. I

believe some of our contracts are yet to be published on AusTender. I have Ms Tressler, who is the executive

general manager of corporate services, with me and I am just confirming that with her. Yes, we have a number

which are still to be posted on AusTender. We can get the specific details on the contract to which you referred—

for the period from 28 February to 30 June.

Senator BIRMINGHAM: For that contract, are you able to tell me how much was finally paid out? Was that

contract varied or extended?

Ms Munro: We do not have that information in front of us but we will certainly get the detail for you.

Senator BIRMINGHAM: You do not have any details of payments to Ms Lester?

Ms Munro: No, not in front of us. But we will be able to confirm how much was paid under that contract and

what has been contracted for in the extension until 30 June—or in the recontracting to 30 June.

Senator BIRMINGHAM: Has the regulator engaged any other communications consultants, branding

experts or the like?

Ms Munro: We certainly have not had the requirement for further engagements in the branding space. As I

said, I think the work which has been done has provided us with an enduring asset which we will be able to use

over a considerable period of time. We do not have any further requirements for that. As a general remark, I

would say that our entire effort is concentrated on that process of communication with our clients. That includes

supporting the program of technical workshops and seminars we are holding with our client groups and the

information we are providing through our website and other channels. I will ask Ms Tressler to confirm if there is

anything additional in the nature of communications contracting.

Ms Tressler: There have been no further contracts specifically in relation to communications or branding

activities. There have been no further procurements. We have contracted other consultants in the area of

stakeholder engagement—this was prior to stand-up in some of the previous consultancies. But there have been

no other contracts specifically for communications or branding.

Senator BIRMINGHAM: I will just stick with tenders for a second, although this may be more for Mr

Livingston. There appear to be a significant range of NGERS audit services engaged. Almost every one of

Australia's major accounting companies, and some of the mid-tier ones, appear to have contracts, all of them

running for periods of around April to June. Are you able to tell me why what seem to be dozens of contracts

have been released to a range of different companies in that space?

Ms Munro: I might just step in there. That question is not properly directed to Mr Livingston. As you have

identified, those contracts all relate to our audit program under the National Greenhouse and Energy Reporting

System. We have indeed undertaken quite an extensive program of audit and the accredited auditors under that

scheme are spread widely across the major accounting and management consulting firms—although there are a

number of others as well. The reason why you see a large number of contracts is because there have been a



number of audits and we are trying to create a market of competent and capable people in that space. This is

certainly helping to promote a wide base of entities—

Senator BIRMINGHAM: Is this work to audit your records or is it work to go out and audit data provided by

the entities who have reported under the NGERS framework?

Ms Munro: The audits are specifically of the reports from the entities. They are not audits of our system; they

are auditing the information we are receiving. It is done on a sampling basis and is by way of QA. A fundamental

of the Greenhouse and Energy Reporting System is that it is a self-reporting system. Therefore the undertaking of

audits on a periodic basis is obviously an important part of our compliance program. Mr Carter, who is

responsible for that area can, I think, give you an indication of the numbers and of the approach we have taken to

that audit program and he can tell you where things stand for the current financial year.

Mr Carter: The National Greenhouse and Energy Reporting Act provides for an auditing framework for

National Greenhouse and Energy Reporting. We have established the methodology and the registration process

for auditors. Last year we went through the process of undertaking a pilot audit program, which involved some 22

audits. On the basis of the evaluation of that pilot demonstrating that the audit methodology was sound, we then

moved into a broader audit program. Currently we are aiming to complete 65 audits by the end of June this year.

Those audits are targeted in a number of ways. We have substantial information across our reporters to help us

identify where there might be issues or concerns about variations in reporting data or where, for example, some

sectors might be struggling with particular parts of the methodology. We have targeted our audits to achieve both

a confirmation of the veracity of the reports themselves and to help flush out any areas where we might need to

provide further guidance or assistance to reporters.

We are running our audits in two stages—as I mentioned, a total of 65 audits. We are doing that using a panel

of auditors which was established last year—hence the number of contracts. These are for individual audits and

go across all the providers on the panel.

Senator BIRMINGHAM: Have any of the 65 audits been completed yet?

Mr Carter: We have 10 which are 'final completed' and 13 'draft completed' as at 1 May. We have some 28

currently in progress. There are a further 14 for which we have engagement plans—we are still in the process of

completing the engagements for those.

Senator BIRMINGHAM: From those which have been finalised, what issues have been identified? Have

they all identified issues or have some come back giving the reporter a clean bill of health?

Mr Carter: I have not gone through the detail of what the 10 finalised reports have revealed, but I think a

couple of key messages have come out of both the pilot and our continuing audits. The first of those is the

importance for reporting companies of making sure that they look to engage auditors early in the reporting year

rather than after the end of the year. The second relates to record keeping—in some instances, while there has not

been an ultimate problem preventing the audit from providing a clear statement, there have been some issues

about the retrievability of records and data within some entities.

Senator BIRMINGHAM: So there are two issues standing out for you—record keeping and earlier

engagement of auditors. Have the early audits targeted any particular industries or sectors?

Mr Carter: We have tried to get a mix of sectors, so the audits go across most sector groupings.

Senator BIRMINGHAM: So even those early ones would be a spread, in a sense. But, as far as you can say

anything at such an early stage, you are coming across a consistent trend that people are not getting professional

help early enough or they are not keeping records relevant to maintaining an emissions database in an easily

accessible way.

Mr Carter: Those are the key issues arising out of the audit process. We have certainly been looking to

provide that advice back out to reporters. We have been doing that through a range of forums—just to emphasise

the importance of getting records in place and of engaging auditors early in the process. For example, in

discussions with the Australian Coal Association on looking at using method 2 to measure fugitive emissions

from open-cut coalmines, one of our concerns about that process was that a particular corporation might invest

quite heavily in the sampling assessment and modelling regime that sat behind that method 2. However, if they

did not engage an auditor early in the process to help them design their information capture and record-keeping

process, the circumstance might arise where, at the end of it, the auditor had trouble actually seeing where the

entity had made key decisions on, for example, sufficiency of sampling or bias in sampling—so affecting the

acceptance of the report. We would not want to see that circumstance arise.



Senator BIRMINGHAM: When you talk about engagement of auditors by these entities, we are talking

about essentially the same companies you have engaged to undertake audits? That would be where the skills mix

would be if you were going out to find yourself a carbon emissions auditor to help your company through the

maze of ensuring you are compliant, would it not?

Mr Carter: There are of the order of 150 auditors on the register of auditors . Some auditors within that 150

are registered under multiple categories, so the total number is a little less than that. To get the reasonable

assurance financial audit standard, the top end of the skill sets, there are, I think, 58 auditors registered at that

level. However, we have been trying to undertake a mix of audit types—reasonable assurance, limited assurance

and verification audits. We try to get a mix of those audit types as well as a mix of sector types. While we are in

the first stages of rolling out the audit program, we wanted to get a very good sense of how that methodology

played out within different sectors—whether there was learning and information we needed to provide back both

to auditors and to reporting companies on how to improve those processes.

Senator BIRMINGHAM: When NGERS crosses over into people having to report their liability under the

carbon pricing mechanism, do they require, at that stage, the highest level of auditor—the reasonable assurance

auditors? Is that what the expectation would be for the 300 or 400—however many it ends up being—liable

entities?

Mr Carter: I think the threshold level for entities which have to provide mandatory audit under the carbon

pricing mechanism is 125 kilotonnes. We have estimated that there are up to 160 entities which will be of that

scale and which will be required to provide that audit—and, yes, it is to a reasonable assurance standard.


CHAIR: We will resume questioning. Senator Birmingham.

Senator BIRMINGHAM: Mr Carter might help us here or otherwise we can jump around if need be. I want

to go to the number of entities that have been identified on the Liable Entities Public Information Database,

otherwise known as LEPID, and the first phase being 248 identified entities. Ms Munro, your opening statement

states that they account for around 70 per cent of emissions covered by the carbon pricing mechanism. Firstly, I

would assume with those 248, given they are the first tranche, that there is supreme confidence from the regulator

that they will all basically be covered and required to redeem permits and pay the carbon price?

Ms Munro: The legislative requirement on us is that we publish information about liable entities that we have

reasonable grounds to believe are likely to be liable in the coming year. To step through the process that we

followed, we have the benefit of three years of reports under the National Greenhouse and Energy Reporting

system, which covers some 10,000 facilities. We do have an extensive database of information on emissions

reports from right across the country. From that information, we identified some 328 entities that had facilities

that we had reasonable grounds to believe would emit beyond the threshold of 25,000 tonnes of carbon dioxide

equivalent in 2012-13, based on their history.

We wrote to those entities and a number of them responded to us stating that they intended to take advantage of

the arrangements which allow them to determine the point of liability. For example, they might transfer it within

their corporate group according to where they wanted the financial liability to rest within their group or between

parties which are not in the same corporate group; they can make that determination according to operational

control or financial control. A number of entities responded to us saying they intended to do that and for that

reason we did not publish at the time in that first phase. They will have to make those applications before we can

say that we have reasonable grounds that the entity in question was the one liable.

That group of 328 were largely entities from the National Greenhouse and Energy Reporting system, but there

were also natural gas suppliers who we identified, and it is pretty much a matter of public record who has a

licence to supply gas. Of the 328, there were 248 who did not demur. They agreed that they were likely to be

liable and they were the ones that we published. However, of the ones that we have not published at this time,

none of them disagreed about the likelihood of liability. As I said, they are going through that process of

determining the point of liability according to their corporate arrangements. The 328 represented some 95 per cent

of emissions covered under the carbon pricing mechanism. The 248 represent—obviously these are estimates—

some 70 per cent of emissions covered by the carbon pricing mechanism.

Senator BIRMINGHAM: There is a difference of 80. You wrote out to 328, but you have publicly named on

LEPID 248 entities. With the difference of 80, they all contacted the regulator in reply to that letter and indicated

some concern, whether it was a concern that they thought there was a difference in the point of liability that had

been assumed there or just expected to be a smaller operation with lower emissions in the forward year or

whatever. Are they outlined?



Ms Munro: I will just confirm with Mr Carter. My understanding is that none of them disagreed that they

were likely to be liable, nor is it that they expressed concern about the point of liability. The point is that they

wished to take up the opportunity which was presented in the legislation to make the commercial decision about

where the point of liability should lie by using the obligation transfer mechanisms that are available to them in the

act. I will just confirm with Mr Carter that there were no actual objections.

Mr Carter: We are still working through the 80 replies and my understanding is that there may be a couple

that have indicated that their circumstances may have changed and they would not feel that they would be liable.

The 2010-11 National Greenhouse and Energy Reporting Act report was the basis of writing out to those entities,

so clearly the emissions in 2011-12, the year that we are in, will be more up to date and, indeed, in subsequent

years the reportings obviously are accurate to that particular financial year. There may be a couple of entities in

that 80, but we are still working through the detail with them. The majority were really looking at point of liability

change.

Senator BIRMINGHAM: For those it is simply a case of which corporate entity, essentially, will be the one

footing the bill?

Ms Munro: Yes. It is which entity within a corporate group. Indeed, you will see in the list that there are cases

where more than one entity in the group has been published as liable entities. They would have had the

opportunity to roll that up, say to a holding company level, so there is that kind of arrangement that companies

might contemplate.

Senator BIRMINGHAM: 328 gives you 95 per cent. Are you expecting to be releasing in the coming days,

weeks or months, an update of those 248 or will you simply update that list as the 80 come back to you and say,

„We nominate this corporate structure or that corporate entity as the liable entity‟? How will you update that on

the database?

Ms Munro: Our intention is to update the database in a staged manner. We would not be adding new entities

in ones and twos necessarily. As we discussed before the break, we have been in contact with local government,

so the next phase would be those landfill operators who were not previously reporting. We would envisage being

able to identify at least a majority of those before the end of June. That would be the second phase of publication.

Then we will have a further phase as those obligation transfer numbers, liability transfer certificates and joint

venture arrangements come to hand. Certainly our intention is to update as information becomes available, but

probably a little bit of batch processing will go forward. Certainly by 30 June we would envisage having

information on the vast majority of emissions that are covered by the carbon pricing mechanism.

Parenthetically, if it is agreeable to the committee, I have a response to a couple of the questions and I might

just talk about the breakdown by state of the local authorities that we have written to. There are 17 in Queensland,

10 in Western Australia, seven in Tasmania, one in South Australia, two in the Northern Territory, 46 in New

South Wales and 21 in Victoria.

Senator BIRMINGHAM: Thank you for that prompt information. Related to that, are those 104 local

government entities included in the 328 entities that you wrote to initially as potentially liable entities, or are most

of them or all of them additional to that?

Ms Munro: No. The 104 to which I was referring were the ones that we have written to that are not already

reporting under the National Greenhouse and Energy Reporting system and so are additional. As you would be

aware, there was a small number of councils who were already reporting and, therefore, were identified in that

phase one of the Liable Entities Public Information Database that we published on 4 May. I can identify those for

you if you wish. Most of them were landfill. Brisbane City Council has the Brisbane Waste Innovations Alliance

Joint Venture, so they have a corporatised landfill operator; the council of the City of Shellharbour; Gladstone

Regional Council; Mindarie Regional Council, Wagga Wagga City Council; the City of Armidale and the City of

Kalgoorlie-Boulder. There is also a waste authority which is a regional subsidiary established by a number of city

councils—Onkaparinga, Marian and Holdfast Bay. That is the Southern Region Waste Resource Authority, so

again, that is obviously quite a substantial waste operator and they have been reporting. Additionally, there were

two councils on the Liable Entities Public Information Database because they are licensed natural gas suppliers—

Maranoa Regional Council and Western Downs Regional Council. That is a cross-section. The numbers that I

have just given you reflect the diversity of arrangements that exist in local government, including size and scale,

and also the way that they organise their operations.

Senator BIRMINGHAM: Those eight are obviously in the 248 named entities?

Ms Munro: They are included in the 248.



Senator BIRMINGHAM: The 104 other local governments are additional to those eight, but are separate

from the 80 other potentially liable entities whom you initially wrote to but have not been publicly named?

Ms Munro: That is exactly right.

Senator BIRMINGHAM: There are potentially the 104 local government entities, 30 corporate landfill

entities that we discussed, and the 80 entities whom you have written to previously, so there are potentially

another 200 entities in that mix.

Ms Munro: Yes, that is probably the upper limit. We imagine that it will settle down to somewhere around

400. That does depend on to what extent corporate entities wish to consolidate their liabilities, so it could be more

or less depending on the arrangements that they put in place.

Senator JOYCE: I am very interested, also, in this local government thing. I will try to be brief. I notice that

Macquarie Generation comes the Maranoa Regional Council. I am always surprised that Sydney City Council is

not being taxed, but in this ludicrous tax the Maranoa Regional Council is. I am wondering what a town of

probably less than 6,000 people is doing that a city of 4½ million are not. You have talked about their gas wells.

How many of those do they have?

Ms Munro: I can enumerate. It is because they are a natural gas supplier.

Senator JOYCE: How much?

Ms Munro: I do not have that number in front of me, but under the legislation all natural gas suppliers are

liable. The intention of the act is to capture all suppliers of natural gas.

Senator JOYCE: SO how much natural gas do they supply?

Ms Munro: I do not have an answer to that question.

Senator JOYCE: Does anybody in the room know?

Ms Munro: Clearly those two councils which are natural gas suppliers have different arrangements and are

offering a different cross-section of services than local governments normally would. They are substituting—I

assume if they are supplying gas to their residents—for gas which would otherwise be supplied by one of the

major corporate entities, which would be captured.

Senator JOYCE: Does anybody in the room know how much gas the Maranoa Regional Council supplies? Is

there anybody here that would know that answer?

Mr Comley: No. As Ms Munroe said, the policy here is that all natural gas suppliers are covered so there is

competitive neutrality between all suppliers.

Senator JOYCE: I do not know how many wells they have, but if they had one well they would be in?

Ms Munro: Again, we would have to check the information in that; because they have gas wells they are

suppliers. They are operating a retail function.

Senator JOYCE: You seem to know a little bit about them. Tell me the extent of their retail function that they

supplied you with.

Ms Munro: As I have already explained, there is no threshold for this activity; that is why they are captured.

We wrote to them because they have a licence to be a natural gas supplier, not because they had previously been

reporting under the National Greenhouse and Energy Reporting system. We do not have that data to hand.

Senator JOYCE: When you wrote to them and they wrote back to your department, how much did they say

they were supplying?

Ms Munro: Again, I do not believe we asked them that question because it was not a question of threshold for

the coverage under this particular source of liability.

Senator JOYCE: So they are going to be hit with a carbon tax, as absurd as that whole proposition is. They

are carbon taxable, but you are not quite sure why.

Senator Wong: That was said in the answer that was given.

Senator JOYCE: Minister, how much do they supply? They are fascinated.

CHAIR: Allow the minister to finish what she was saying.

Senator Wong: I am not responding directly to the question. I am intervening because I do not think your

formulation of what Ms Munro said was accurate. She has answered the question.

Senator JOYCE: What is the answer?

Senator Wong: She can answer the question again.



Senator JOYCE: What was it?

Ms Munro: With respect to natural gas supplies, there is no threshold for liability, so any entity which is a

natural gas supplier is liable for the carbon price on the gas which they supply unless they have an obligation

transfer number, which transfers the liability to their customer. In this case, if the customers of Maranoa Regional

Council buy gas from the regional council, the price of that gas would include the carbon price, just as it would if

they were buying gas or any alternative from one of the other corporate gas suppliers.

Senator JOYCE: Who are they actually supplying gas to?

Ms Munro: Again, I am not in possession of that information. We have written to them. Again, understanding

the terms on which we publish names on the Liable Entities Public Information Database, we have grounds to

believe that they will be liable and in this case our grounds are because they are a natural gas supplier. That is all

the information that we are required to have in order to determine that they are likely to be liable. In the course of

2012-13, they will report and we will then have that information to hand.

Senator JOYCE: Have they been in contact with you saying, with all due respect, that your position on their

liability might be somewhat confused?

Ms Munro: I will ask Mr Carter.

Mr Carter: I am unaware of any response from the council at this point.

Senator JOYCE: Are you saying that the Maranoa Regional Council has not contacted you?

Mr Carter: I am not aware of a response at this point.

Senator JOYCE: You are unaware of whether they have contacted you?

Mr Carter: That is right.

Senator JOYCE: They have contacted me, so I am fascinated from the information that they have given me

as to what information they have given you and how they have ended up with a liability. Did it ever occur to you

that it is a tad surprising that a regional council in western Queensland would strike a feature as a carbon tax, but

the city of Sydney would not?

Ms Munro: As I was commenting earlier, local government is quite diverse in the range of services it supplies

and, particularly through the energy reforms that have taken place through the 1990s, on the whole local

government has divested itself of energy supply responsibilities, so it is not particularly surprising to us that there

might be one or two councils that still retain that function. They are licensed as gas suppliers. They confirm on

their website that they are the gas suppliers. The Queensland Licensing Authority‟s website also confirms that

they are gas suppliers. It does not surprise us that there might be one or two local governments who are

configured differently from others.

Senator JOYCE: Did it occur to you to think that this is a bit unusual and that maybe someone should jump

on the phone to the Maranoa Regional Council and say, „Before we publish we might just give you a phone call

because it seems a little bit unusual that a city of 4½ million people is exempt, but a little shire out in western

Queensland seems to have struck a feature?' We had better just give them a call just to find out because we would

not want to make a mistake, because that would be terribly embarrassing.

Ms Munro: The process that we followed was a perfectly robust one, which was that in April we wrote to all

entities that we identified, either from the existing Greenhouse and Energy Reporting system or because they

were licensed natural gas suppliers. We wrote to them specifically to say we believed that we had reasonable

grounds that they were likely to be liable under the carbon pricing mechanism. We gave them an opportunity to

respond to us. If they had not responded to us by 4 May—

Senator JOYCE: How long did you give them to respond?

Mr Carter: Two weeks.

Ms Munro: They had ample opportunity.

Senator JOYCE: Two weeks is ample opportunity?

Ms Munro: I believe it is. They are a natural gas supplier.

Senator JOYCE: So if I put these questions on notice to you will you be able to get back to me in two weeks?

CHAIR: Could you allow Ms Munro to finish, please?

Ms Munro: In this case the question is whether or not they are a natural gas supplier. They are a natural gas

supplier. It says so on their website.

Senator JOYCE: There has not been any displacement of that asset, has there?



Senator Wong: Chair, would it be possible for there to be question and answer and question and answer,

rather than the senator consistently interrupting the witness?

CHAIR: I have tried to make the point a couple of times. I think we might be improving slightly.

Senator Wong: Perhaps the interruptions have become slightly less often; that is true.

CHAIR: Ms Munro.

Ms Munro: As I said, both the council‟s own website and the Queensland Licensing Authority‟s website

confirms the status as natural gas suppliers. I might say that the publication of the name in the public information

database which says that we have reasonable grounds to believe that they may be liable for the 2012-13 year does

not, in itself, establish the actual liability. That liability will be established by their reporting. Nevertheless, I think

that the process that we went through to write to all the entities to say that we intended to publish them did give

them an opportunity to raise with us, if they had concerns, that that was inappropriate.

Senator JOYCE: My wife has a heavy vehicle licence, but we do not actually have a heavy vehicle in the

garage, we use somebody else‟s.

Ms Munro: Indeed, and if they are licensed gas suppliers and they do not, as it happens, actually supply gas in

the course of the 2012-13 year then they will not be liable, but if they do supply gas in that year, like any other

natural gas supplier, then they will attract liability for the sale of that gas, as is required under the legislation.

Senator JOYCE: What is the liability, in this current position, that is put on to the ratepayers of the Maranoa

Regional Council?

Ms Munro: It is a matter for the Maranoa Regional Council as to how they arrange their affairs. I would

imagine that if they are a natural gas supplier selling gas to customers, like any other gas retailer, then the carbon

price, which is $23 per tonne of carbon dioxide equivalent, will be passed through to their customers in exactly

the same way as it would be for any natural gas supplier.

Senator JOYCE: Even if it is less than 25,000 tonnes?

Ms Munro: The 25,000 tonne threshold does not apply to natural gas supply.

Senator JOYCE: Why does it apply to tips, but not apply to natural gas? Is it a different type of gas with a

different effect on the atmosphere?

Mr Comley: That was a policy decision that was made. In fact, my recollection of the consultation process

with the gas industry is that they wanted there to be no threshold to ensure that there was competitive neutrality

within the industry. This consultation goes back quite a long time and there was a strong preference for

mandatory coverage from the industry.

Senator JOYCE: So natural gas wanted the tax?

Mr Comley: As is the case with many industries, they may or may not have a view about whether a tax should

exist, but once it exists they are very keen that it applies to all competitors equally.

Senator JOYCE: If you got the gas from extraction of methane from tips, would it apply to that?

Mr Comley: It is a question of whether they have a natural gas retail licence. It goes to the legislation of issue

of whether there is a retail licence.

Senator JOYCE: So if you harvested methane gas from a tip, would the carbon tax apply?

Ms Munro: I believe it would if it was being sold, but I might point out that they have a number of

opportunities to offset that.

Senator JOYCE: I am just curious; so it would?

Ms Munro: They would have a number of opportunities to offset that.

Senator JOYCE: What is the answer?

Senator Wong: A little courtesy would be good.

Ms Munro: For example, the capture of that gas might then be available for certificates under the Renewable

Energy Target. Perhaps Mr Livingston could amplify on that particular point.

Mr Livingston: I missed the question.

Senator JOYCE: We were talking about the gas birthday cake, and trying to work out when the gas applies

and when it does not apply, when it is carbon taxable and when it is not. We have determined that apparently if it

comes out of the ground it is taxable, but if it comes out of a tip there is all sorts of confusion about whether it is

in or whether it is out.



CHAIR: I do not think that is quite the position that is being put.

Senator Wong: I think you were asked to come to the table to explain what opportunities there might be in

relation to methane emissions from landfill.

Mr Livingston: If the methane comes from a tip—

CHAIR: Senator Joyce, I think it would be helpful, if witnesses are coming to the table, if you have asked a

question that you actually ask the same question again, because it is confusing for the witness and unfair.

Senator JOYCE: Okay. Do you want me to ask the question—

CHAIR: Mr Livingston, you were about to—

Senator JOYCE: Do you know the question?

Mr Livingston: My understanding was, as Senator Wong put the question, if methane comes from the tip, and

is not of fossil origin, can you burn that to get renewal energy certificates? LNG is of fossil origin; you cannot.

Senator JOYCE: Let us say we burn the gas from the tip to create heat and steam to turn a turbine and create

power. What is the difference between taking gas out of the ground to turn a turbine to create power? One is taxed

and one is not.

Mr Livingston: They are different. One is of fossil origin and one is defined in the act as renewable. That is

the difference. The act defines the methane from a tip as a renewable source, whereas a fossil origin is not. That is

the way the act is defined.

Senator JOYCE: So, one is good and one is bad?

Mr Carter: If methane is captured on a landfill and is burnt, the carbon dioxide given off through burning that

methane is still counted in the liability of the facility, but it is a lot less than the global warming potential of the

methane. If natural gas is supplied through a reticulated system to households and burnt, the carbon dioxide

equivalent that is given off in that burning is also subject to the carbon price. One is based on the facility. With a

landfill the facility over a certain threshold pays the price. The other is fixed at the point of supply, and so the

supplier pays the equivalent carbon price to the carbon dioxide equivalent value that is given off in then burning

that gas downstream by the users of it.

Senator JOYCE: If we cover the tip with dirt and then we harvest the gas out of that land and it goes off and

turns a turbine, we are not getting taxed?

Mr Carter: No. The carbon dioxide equivalent from that is still attracting the carbon price, but because

methane has such a higher level of carbon dioxide equivalency—21 times carbon dioxide—there is a distinct

advantage to a landfill in burning it.

Senator JOYCE: What if I have a big landfill dump in my council and everyone is dumping their rubbish

there? Do I have to pay a carbon tax on that, if I go over 25,000 tonnes?

Mr Carter: Yes.

Senator JOYCE: Then I do get charged a tax?

Mr Carter: Yes.

Senator JOYCE: What if I cover it up with earth and then use that? Am I out of the tax or in the tax?

Mr Comley: I think we are mixing up two issues here, and this is what Mr Carter is trying to explain. There

are two types of liabilities here. One is when methane is released into the atmosphere. That would be the case if

you put this waste in the tip and you do not do anything with it; you just let the methane go into the atmosphere.

Senator JOYCE: That is bad?

Mr Comley: That is bad in the sense that it is bad for the atmosphere and it is bad in the sense that the global

warming potential of methane is 21 times the global warming potential of carbon dioxide.

Senator JOYCE: All methane or mineral methane?

Mr Comley: All methane.

Senator JOYCE: All methane is the same?

Mr Comley: It is just a question of the chemistry. Once you have a CH4 molecule, you put it into the

atmosphere—

Senator JOYCE: There is a study from the University of Sydney that said differently, but go on.

Senator Wong: Mr Comley is trying to explain something, and I think he should be allowed to finalise his

answer.



Mr Comley: So, methane into the atmosphere has a global warming potential of 21 times that of CO2. The

other thing you can do is take the methane and burn it. When you burn methane, you get carbon dioxide released

as part of that water in carbon dioxide. You are liable for the carbon dioxide that is emitted if you are a landfill

that is subject above the threshold; if you have burnt that you are liable for the CO2. However, for legacy waste

emissions you have the benefit of being able to get a credit for the difference between what the methane would

have done to the atmosphere and what the CO2 does to the atmosphere. So, roughly the difference between that

21 and the one. However, if in your other fact scenario someone takes the gas and then supplies it through a

reticulated system to a householder, required to be licensed as a gas distributor, they will be liable but they will be

liable effectively for the CO2 that is emitted when the gas is burnt in the household, which is symmetrical with a

case if the CO2 had been born in the landfill except for the fact that they would not get access to Carbon Farming

Initiative credits.

Finally, Mr Livingston made reference to what you would potentially get under the renewable energy target.

Under the renewable energy target if you have power generated from renewable sources you would also be able to

generate renewable energy certificates on the basis that the biomass that you have used to produce those

certificates can be regrown, and so the net impact on the atmosphere is not the same as if you burnt a fossil fuel

from under the ground.

Senator JOYCE: So, if I put the rubbish in the tip and cover it up and use the gas I can get renewable energy

credits from them?

Mr Comley: It depends what the source of the rubbish is. With biomass you can potentially get renewable

energy certificates.

Senator JOYCE: I can get renewable energy credits from them. What if I just get them from, I do not know, a

forest?

Mr Comley: Again, there are some restrictions on which forests can be used, because of restrictions on using

native wood waste.

Senator JOYCE: So, which forests are in and which forests are out? I do not want to get it wrong.

Mr Livingston: There are is a range of rulings on native forest wood waste. There is quite a detailed section

in the act as to whether you can or cannot get RECs for burning native forest. It is quite a detailed list, which I do

not have with me right now. Basically it has to come from forest planted after a certain date and it cannot come

from native forest wood waste.

Senator Wong: The definition being contested has been in place for some time, I think originally under the

Hill legislation. I do not know whether we have amended it, but certainly there is a longstanding approach to

defining it, which pre-existed the introduction of a carbon price.

Senator JOYCE: So, how long do I have to keep the waste buried before I cannot get renewable energy

credits?

Mr Livingston: Your question does not arise.

Senator JOYCE: So, it does not matter? If I just bury it, it is fine and I can still get renewable energy credits?

Mr Livingston: If it is an approved fuel source under the renewable energy target act and if you burn it and

produce energy, you can get certificates for it. If you dump it in a landfill it becomes classified as municipal waste

and then you can get it that way. There are several different ways you can do it.

Senator JOYCE: So, if it is buried for a year it is all right? I can claim the renewable energy credits?

Mr Livingston: You have to generate electricity. You can bury it, but just the act of burying it itself does not

do it. You have to bury it. It has to rot down and turn into methane. The methane must be burnt through an engine

and you have to generate electricity. It is quite a process.

Senator JOYCE: Can it stay there for 10 years and I will be okay?

Mr Livingston: There is no limit.

Senator JOYCE: There is no limit? Good. Can I keep it there for 120 million years?

Mr Comley: You could, but unless you capped it the physical processes would intervene. In the evidence we

gave earlier, municipal waste tends to decompose over 40 to 60 years. Once it is decomposed, any methane that

would have come into existence has been released.

Senator JOYCE: Thank you. That is enough. It is completely and utterly insane, but anyway.

CHAIR: Are you finished?



Senator JOYCE: Yes.

CHAIR: Mr Comley, does the coalition Direct Action policy make any comment on waste gas?

Mr Comley: I do not recall. As I said earlier for Senator Milne, we put out our analysis of that two years ago,

which is available in the public domain. I would have to refer back to that to see whether there was any comment

on methane capture.

CHAIR: On page 14 of that analysis it states:

Coalition estimates of abatement potential are broadly consistent with data on abatement from existing technologies used

in DCC projections.

I would assume, even if Senator Joyce thinks it is madness, that the coalition is heading down this path as well.

Mr Comley: A colleague handed me a document earlier. Certainly on the page before that our reporting of

what was in the coalition policy document was that they were expecting six to nine megatonnes to come from

landfills in terms of abatement.

CHAIR: So, it is part of the coalition policy?

Mr Comley: As I said earlier, the policy announced in the coalition policy is quite high level. We have done

analysis two years ago and we do not really have anything to add to that analysis. Certainly landfills did seem to

be contemplated there as a source of abatement.

CHAIR: So, if Senator Joyce is supreme in the policy development on climate change in the coalition then

they would have to discount their estimates of their CO2 savings, would they not?

Mr Comley: I do not think it is appropriate for me to comment on that beyond what we have already put on

the public realm.

CHAIR: Just let me ask you outside the policy. If there were no inclusion of waste from tips, you would have

to discount the savings, would you not, just in general terms?

Mr Comley: In general terms, I think when most people have estimated this, abatement from landfill is

actually a relatively low-cost form of abatement. That was actually a very key consideration in the government

including landfills and I think it is evidence that is consistent with experience around the world that at the very

least flaring of methane, and then if you want to convert that to electricity, is actually typically relatively low-cost

abatement compared with a range of other forms of abatement.

CHAIR: Senator Birmingham.

Senator BIRMINGHAM: Can I just come back to liable entities? Obviously, Ms Munro, a lot of work has

gone into identifying your 328 entities, plus the 104 councils, plus the 30 corporate entities. However, do you

have to be someone the regulator has identified under this current process to ultimately have to pay a bill at the

end of the year or could there be companies you have not been able to identify that will end up having to pay a

bill?

Ms Munro: It is unlikely, given the amount of information we have, that many entities will be liable that we

have not identified. However, it is possible that there may be some new businesses, either because of a new

configuration or because it has had a spurt of growth in the 2012-13 year, that would bring it over the threshold in

terms of its emissions. However, I should point out that under the National Greenhouse and Energy Reporting

System there is a much larger pool of entities that have been reporting which will not be coming over the

threshold. Given the extensive attention that has been paid to the introduction of the carbon pricing mechanism, I

should imagine that any business that is close to the threshold and undertaking the types of operations that entail

direct emissions of greenhouse gases covered by the carbon pricing mechanism—any business who is in such a

position—is seeking advice and considering whether they might cross that threshold and will be taking steps at

least to be in a position to report if that is the case.

Senator BIRMINGHAM: Is there any difference in treatment in terms of timing of payments, the audit

process or anything else for entities identified and publicly named or written to by the regulator at the start of the

process versus anybody who may happen to cross the threshold and find themselves liable when it comes to the

time to pay up?

Ms Munro: Yes, there is a sequential process in terms of interim reporting and then a wash-up after the final

report for the year, which does mean that new entities may enter the liability system on a different phasing. I

might ask Mr Carter to go through the detail of how that process actually works.

Mr Carter: Facilities that have been reporting under the National Greenhouse and Energy Reporting scheme

that are above threshold will be required to report an interim emissions number in June 2013, whereas entities that



have not been reporting under the National Greenhouse and Energy Reporting scheme are not required to provide

that number. They report in the normal sequence of greenhouse and energy reporting—by 31 October 2013.

Ms Munro: I might just explain the liability. The interim number represents 75 per cent of your estimated

emissions for the year. So, for 2012-13 year, by that date in June the entity estimates that it would have produced

a particular number of emissions. The interim number is 75 per cent of that. They will then acquire emissions

units to cover that interim number. They will pay for those and those will then be surrendered, and then they will

report, as Mr Carter was saying, in October the final number for the year. By February the following year they

will pay the full emissions for that year. So, the new entities that have not already been reporting would be in that

second part of the cycle, but they would not be required to report an interim number or pay the 75 per cent by

June.

Senator BIRMINGHAM: Looking at the list that you have released to date, can I just touch on and perhaps

get a better understanding on the record as to how some companies make it on the list and others do not. How do

major food processors—for example, Bega Cheese, Tatura Milk and Mackay Sugar—come to trip the threshold?

Ms Munro: If I can generalise again—and Mr Carter might add a bit more information—generally it will be a

matter of what their energy production is. For example, they might operate a cogeneration plant that burns coal,

and that would then attract liability to them. Alternatively, for a similar facility that is not on the list, because it

might be just buying their electricity from the grid, the liability for the carbon emissions that are embedded in that

electricity generation would fall on to the generation in question. So, that is why you would see some entities and

maybe not their competitors in the same sort of business on the list, because it really does depend on their own

processes. Again, food processors often are using large quantities of natural gas, for example. In that case liability

can fall on the supplier—that would be the normal case—or they can choose to have that obligation process I was

talking about earlier of an obligation transfer number, which would put the obligation on the customer who is

using the gas. Certainly in a lot of the cases where you would see manufacturers on that list it is because they are

actually generating their own energy and their own electricity by burning coal, for example.

Senator JOYCE: I have one question on that. Is that all right?

CHAIR: Yes.

Senator JOYCE: At the Casino Abattoir they do not know whether they are going to get over 25,000 tonnes

or under 25,000 tonnes. Could it be a case where they get to a point where the best way to avoid tripping that limit

is just to not buy any more cattle and process them?

Ms Munro: That would be, if I might say so, a commercial decision for them, but I think it is very unlikely. I

think we had this conversation earlier in the hearing. Every business has a number of costs contributing to their

cost structure. The costs that specifically attract the carbon price are only one proportion of their costs, and so if

they are adding more business it does not seem to be evident, if that business is intrinsically profitable at one

threshold, that it would not be profitable at another.

Senator JOYCE: Perhaps the finance minister might be able to correct my mathematics here, but 25,000

tonnes at $23 a tonne would be about $575,000. That would be right, would it not? Anyway, you would kill a

beast—

Senator Wong: I am happy to accept your arithmetic. I am sure you have been very careful to get it right.

Senator JOYCE: The cost of killing that beast would be around about $575,000?

CHAIR: I am not sure that the minister is an expert in beast killing.

Senator JOYCE: No, but Mr Comley might be.

CHAIR: Or Mr Comley.

Mr Comley: I have no expertise directly. I am a downstream consumer of those products.

Senator Wong: We have established that.

Mr Comley: The point the senator is making that wherever you have a threshold there may be some

incentives around that margin of the threshold to stay below it is completely valid. In the case of meat processing

it is the one industry we are aware of where a number of facilities are close to that threshold. In fact, in most other

cases industries are either well above the threshold or well below the threshold. We have had a number of

conversations with them. In fact, I think we have probably spoken to almost every large meat processor. We are

aware that many of them are considering the strategies. In fact, many of them are looking at strategies not to

change their production levels but to look at whether they can do some methane capture or destruction to come

under the threshold. So, it is theoretically possible that they decide to change their slaughtering practices.



Senator JOYCE: It is a very expensive beast to kill, that one.

Mr Comley: But the conversation we have had with many of them is that they are also looking at how they

can reduce emissions in ways that would be consistent with higher production but lower emissions, which in a

sense is exactly the incentive that the scheme is trying to send.

Senator JOYCE: Get the consumer to absorb that $575,000 in the price of steaks.

Senator Wong: That is one of the sillier statements you have made.

Senator JOYCE: No, that is a very sensible statement.

Senator Wong: You are suggesting that is the price transmitted to a steak?

Senator JOYCE: If you had been following the conversation, your department has just acknowledged that

you do get to a tripping point, in which case you do have to pay the extra amount. Technically there will be the

beast that you kill that trips you over that level, which means that you will have an exceptional cost attached to

the processing of that beast.

Senator Wong: I can recall you making comments before about the effect on the price of roasts, which were

incorrect. I am simply saying to suggest that sort of price impact—because you were conflating two things

there—was incorrect again.

Senator JOYCE: No, it was not. Which part of what your department says do you not agree with?

Senator Wong: It is very hard to discern what you are suggesting, actually.

Senator JOYCE: I can make it clearer for you, if it assists you.

Senator Wong: I think what you are suggesting is that that entire price impost is translated through the steaks

drawn from a single animal.

Senator JOYCE: Do you agree or disagree that you get to a triggering point where you tip over 25,000

tonnes? Do you agree with it or not?

Senator Wong: Do you want me to answer the question?

Senator JOYCE: Are you able to answer the question?

Senator Wong: Probably about as well as you have answered a few—

Senator JOYCE: Are you able to answer the question? Generally not, not in question time. Would you like to

repeat what you said offline to me before on the Hansard now that you are such a tough guy? Do you want to

repeat what you said to me quietly before?

Senator JOYCE: What is that?

Senator Wong: You will not do it.

Senator JOYCE: You are getting very upset. You are having a bad day at the office.

Senator Wong: No, I am having a very good day. I am getting a lot of work done, actually.

Senator JOYCE: You are having a very bad day in the office.

Senator Wong: Finished?

Senator JOYCE: I am waiting for you.

Senator Wong: Mr Comley has made the appropriate observation that wherever you have a threshold there is

obviously the point at which you tip over the threshold. That is the nature of wherever you might put in place a

legislative limit, but I think to take it any further is inaccurate. Of course, the government has made a decision

about there being a threshold. There are reasonable policy grounds for that and we have explained them.

Senator JOYCE: By the way, I have absolutely no idea what you are referring to as to what was said.

Senator Wong: I think you do.

Senator JOYCE: What, the word „incompetent‟?

Senator Wong: No, before that. We can have a discussion. I am just making the point that you are very good

at sledging people when it is not on the Hansard.

Senator JOYCE: You are under the pump. I can understand—

Senator Wong: I am just making the point that it is a pretty cowardly approach.

Senator JOYCE: You are wasting people‟s time. Let other people—

Senator Wong: It is a pretty cowardly approach.



CHAIR: Who wants the call?

Senator BIRMINGHAM: Can I just duck back to an issue we were covering, and that was the councils. Are

we able to get a list of those 104?

Ms Munro: I believe we would be able to supply those.

Mr Carter: We will take that on notice. We do not have the list available now.

Senator BIRMINGHAM: I am assuming somebody has obviously dug them out to do the state-by-state

breakdown that you kindly provided, so if it is able to be tabled during the session that would be really helpful.

Ms Munro: I think we can arrange for that to be done, unless it is a complicated extraction from some

database.

Senator BIRMINGHAM: Thank you, Ms Munro. I appreciate it. I am sure your officials are diligently

listening and working out whether it can be done as we speak.

Ms Munro: Yes, I am sure they are. If I could just reiterate, the fact that we are writing to those councils does

not mean that they are necessarily liable. We are writing to them precisely to give them the opportunity to discuss

with us how they can apply the estimation methodology and determine whether they are likely to be there, and so

we do not expect that that full list of 104 councils would ultimately be liable under the carbon pricing mechanism.

Senator BIRMINGHAM: I think you said your best estimate at present was probably about 70.

Ms Munro: That is right.

Senator BIRMINGHAM: You explained before the theory behind food processors and that essentially it may

be how they choose to procure their electricity; that if they generate it themselves they could be a liable entity and

if they buy it from somebody else they are simply paying the cost of that person‟s liability indirectly. What about

a major service provider such as La Trobe University? Is that a similar instance? How do they—

Mr Carter: If I might just intervene. Under the National Greenhouse and Energy Reporting Act we have a

very disaggregated and detailed set of data reported to us by entities at the facility level, but we are also under

quite strict requirements under the legislation to protect that level of detail of disaggregated information for

commercial-in-confidence reasons. I will just answer that generally. It is along the lines that Ms Munro has

already indicated. Quite often with facilities we find that the actual facility, and then the corporate entity, do not

necessarily gel with what you might think that that entity would operate. The commercial relationships and

structures are quite interesting. Quite often we find that there are cogeneration plants, large boilers or something

of that nature that underpins it.

The list was derived from looking at all of the facilities that are currently reporting under the National

Greenhouse and Energy Reporting Act. That is around 430 facilities that actually are over the 25,000 kilotonnes

for Scope 1 covered emissions. Then we have details on the corporate structures that sit above that. We start at the

controlling corporation level under the National Greenhouse and Energy Reporting Act, and that is at around the

840 to 850 controlling corporations. Underneath that is a layer of in the vicinity of about 5,000 subsidiary

companies and then in the vicinity of 9,000 or 10,000 individual facilities. So, we go in at the facility level, look

at the data that is provided against the Scope 1 covered emissions, determine that that is the point of liability and

then look at the corporate structure. In some of the list there have been entities in there that I, from reading

publicly available information, would not assume operated such a facility, but they have been reporting under the

National Greenhouse and Energy Reporting Act.

Senator BIRMINGHAM: From that analysis and breakdown are you able to put an estimate on the number

of sites that these 328 entities may have that trip the 25,000 tonne liability threshold?

Mr Carter: It is around 430 facilities.

Senator BIRMINGHAM: So, 430 facilities from those 328 entities. I got an answer to question on notice 77

regarding permits that may be provided to EITEs under the Jobs and Competiveness Program. At that stage there

was an expectation that there may be around 137 businesses or entities undertaking 38 activities that will be

eligible for EITE assistance or may apply for EITE assistance. That of course was taken at a time when we were

talking about 500 potential liable entities. Now that we are talking more in the range of 400 to 450 is there any

variation to the expected number of entities potentially able to seek assistance?

Ms Munro: Applications under the Jobs and Competitiveness Program do not open until 1 July. We are

anticipating perhaps around 160 applicants at this point in time. I cannot answer the question about whether the

variation from the numbers that you spoke of before is because we have a more concentrated view of the number

of liable entities themselves or whether it is because of other information, but I think the orders of magnitude we



are talking about are still the same. We will be able to give definitive information when we have received those

applications for the year.

Senator BIRMINGHAM: Do you go through a similar process of writing to those whom you think will be

eligible; or, given that this is an assistance program rather than the taxing part of the program, is there an

assumption that people will be fairly quick to work that out for themselves?

Ms Munro: We are undertaking this month some consultation with industry on the application process and we

are providing information on the internet, so we are certainly doing some information awareness raising, but the

department may—

Mr Comley: The other very relevant thing, and Ms Wilkinson may want to expand further, is we have been in

contact if not with all of these potential recipients then close to it, because the process of EITE assistance has

required contact with as many members of the industry as possible and, in many cases, the whole industry. There

was a request to them for data, because that data has fed into the industry assistance baselines. There might be one

or two exceptions, but generally, through the policy and regulation development process, we have contacted all

the firms that are conducting these activities in Australia.

Ms Wilkinson: That is correct. I would be very surprised if the many entities who are conducting these

activities came forward. You have to have quite comprehensive coverage in order to actually set a baseline in a

particular industry, anyway. It does not require eligibility for assistance under the Jobs and Competitiveness

Package. It does not require entities to be liable under the scheme, so there are probably quite a few entities who

may not be directly liable under the scheme but who will be facing cost increases through electricity and gas

prices. They are still eligible for assistance under the Jobs and Competitiveness Package. There is not a direct

relationship between the number of entities who would be liable under the scheme and the number of entities who

we expect to be conducting activities for which assistance will be provided under the Jobs and Competitiveness

Package.

Senator BIRMINGHAM: I think 137 have been identified as potentially able to access assistance. Do you

have a rough estimate as to how that is split between those who are liable entities under the carbon price and those

who are not?

Ms Wilkinson: I will have to take that on notice. My suspicion is that most would be liable, but it depends. In

some industries, where the main source of their exposure is, if you like, from electricity related emissions, those

people will not be liable. We could certainly come up with a rough estimate as to what proportion will be directly

liable under the scheme. I should also add that there can be industries where, in a given activity, some people will

be liable and others will not, and the policy in the Jobs and Competitiveness Package is quite clear that the

baseline for allocation within those industries takes into account whether you have direct liability for some of

those emissions or not.

Senator BIRMINGHAM: If you are not a liable entity but you are able to access easy assistance, I assume it

is then just paid to you in the form of cash, as against free permits?

Ms Wilkinson: No, it is still issued to you in the form of free permits, but then it is up to you as to what you

want to do with those free permits. You can sell them, for example, to your electricity generator or you could sell

them through the secondary market to anyone else who wants to buy them. There is no particular obligation.

During the fixed price period you can actually physically sell them back to the government, if you wish to do that.

You can, in that period, turn them into cash.

Senator BIRMINGHAM: It makes sense. Beyond the fixed price period it is up to you—

Ms Wilkinson: Beyond the fixed price period it is entirely up to you. It is your business decision as to what

you want to do with those permits.

Senator BIRMINGHAM: Perhaps you could provide to me on notice how, in those instances, the number of

permits entities receive are calculated. That would be beneficial. For EITEs who are directly liable, I understand

the percentage arrangement that exists for getting 90 per cent of their permits for free or whatever; but, if they are

not actually liable, how do you calculate the number of permits they get provided with?

Ms Wilkinson: There is not necessarily a difference here. Across the whole scheme, the way the permit

allocations are calculated is there is a baseline, which is in the regulations, that says that you will get a certain

number of permits per tonne of production of whatever the product is that you are actually producing. That

number is fixed, so, whether you are a liable party or not, that is the way you calculate the number of free permits

you will receive. Where there is a nuance, which is what I was mentioning, is where, for example, you sit below

the threshold and you produce a small quantity of, say, industrial process emissions. Those emissions will not

attract a liability, whereas they would attract a liability if you were above the threshold. There is an adjustment,



which is within the regulations, for a subthreshold entity that is still conducting a given activity; there is just a

slightly different baseline which is used to calculate their free permit allocation. That is all incorporated in the

regulations.

Senator BIRMINGHAM: You managed to make it sound very simple. Can I move on?

Mr Comley: Just to be clear, to save future work—

Senator BIRMINGHAM: I think Ms Wilkinson has answered the question.

Mr Comley: It is just that occasionally we do that, so do we have to take it on notice again?

Senator BIRMINGHAM: I am happy to flag that it is not an on-notice question.

Mr Comley: Excellent.

Senator BIRMINGHAM: I will turn to refrigerants. Has the regulator or the department had discussions with

the refrigerant industry? I gather there is a degree of concern there, especially from small cold-storage businesses

and so on, as to how the regulations are going to apply to them and how this is going to work.

Mr Comley: We have, but the Department of Sustainability, Environment, Water, Population and

Communities, SEWPaC, actually have carriage of this because they have accountability for the ozone depleting

substance measures, and so they have carriage over the equivalent carbon pricing for that.

Dr Kennedy: We can confirm that we have been in some of those discussions, but questions on those matters

should be put to them.

Ms Munro: This might be an opportunity to answer your question about the Cinden Lester contract, which

was for communications consultants. I will give you the answer to that question. The expenditure approved under

the contract published on 10 November 2011 was up to $68,000. There have been a series of stages which we

have contracted with Cinden Lester under that contract. That extends through to 30 June. The total under those

specific engagements is $62,744—so, under the upper limit of $68,000—and, as of the end of April, we had

expended $40,964 under that contract.

Dr Kennedy: We have some other answers to earlier questions. Would you like us to do those in a group

now?

Senator BIRMINGHAM: Let us do that now.

Dr Kennedy: In response to Senator Waters‟s question on modelling, we have some answers.

Ms Wilkinson: Senator Waters asked what the impact of the carbon pricing mechanism would be on

emissions in Australia in 2020. The impact is that it will reduce emissions by between 159 and 270 megatonnes in

2020 and by 919 megatonnes in 2050. The range in 2020 reflects the government‟s five to 25 per cent target range

at 2020. She also asked about the cumulative reduction in emissions between now and 2020; that would be a

reduction in emissions of between 693 megatonnes and 1,171 megatonnes, again reflecting the two ends of the

target rage.


Senator BIRMINGHAM: While we are on this topic, the department was looking for likely liable emissions

from landfill in 2020, if that was possible, for me too, and were to come back to me with some answers on the

changing processes or non-changing processes for the handling of international travel. They were two questions

that I think we were trying to get answers to today—just to flag that, as the day keeps ticking on by.

Mr Comley: Still plenty of time to go, Senator.

Senator Wong: I am doing my bit; I am speaking very little.

Senator BIRMINGHAM: Duly noted.

Senator Wong: Other than when provoked by your colleagues.

Senator BIRMINGHAM: Can we go to advertising expenditure. I want to try to get a bit of clarity on the

total that is applicable here across advertising related to the carbon tax and associated campaigns. Firstly, the

ANAO report on the CEF campaign, at paragraph 8.10, stated:

The allocation of $31.5 million for the CEF campaign was in addition to the $13.7 million already allocated for the

communications and public engagement strategy. Combined resourcing for the proposed communications and public

engagement strategy and its component CEF campaign therefore totalled $42.5 million.

Is that a fact, at that stage of the Auditor-General‟s report, that the department disputes in terms of those figures?

Ms Sidhu: No, those figures are accurate and have in fact been reported in various budget documents.



Senator BIRMINGHAM: The budget for the public information campaign, as on page 23 of the PBS, shows

$21.63 million as the revised figure for the budget for 2011-12 and a carryover of $2 million into 2012-13. That is

all correct, but that is all within that total that the Auditor-General had discussed previously.

Ms Sidhu: Would you like me to walk you through the numbers?

Senator BIRMINGHAM: Sure.

Ms Sidhu: There are two tranches of funding in question. One was the $13.7 million under the Climate

Change Foundation Campaign. In the 2010-11 budget—which you will not see reported at page 23 because it

predates that—that funding was split into $5.5 million for 2010-11 and $8.2 million for 2011-12; you see the $8.2

million figure there. Subsequently, the government provided $31.5 million for a public information campaign on

climate change for the Clean Energy Future program. Not all of those funds have been expended as part of the

campaign, so what you see in the $21.63 million in 2011-12 is the combination of what has been or what is likely

to be spent by the end of the financial year, which is essentially a little over $20 million on the Clean Energy

Future campaign plus $1.63 million in some supporting activities. The sum of $2 million has been rolled over into

the following financial year, 2012-13, and there is a net return to budget of about $7.07 million from that fund of

unexpended funds, which is how you end up with the $21.63 million amount.

Senator BIRMINGHAM: That helps to answer why I could not quite get the sums to all add up in my mind.

There is the new $14 million being spent by FaHCSIA, but that is a FaHCSIA budget line. Can I just go to the

interaction between the two. DCCEE have undertaken a range of monitoring activities with regard to the

advertising campaign; did you share any information with FaHCSIA to inform their campaign?

Ms Sidhu: At the time that FaHCSIA was asked to start a campaign, we did share some of our information

with FaHCSIA, yes.

Senator BIRMINGHAM: When was that?

Ms Sidhu: I cannot recall precisely. I think it would have been in about March or so of this year.

Senator BIRMINGHAM: What did you share with FaHCSIA to assist them in getting their campaign

underway?

Ms Sidhu: We shared with them, essentially, the thinking we had been doing about what more could be done

in terms of communicating with the public on what we were currently doing, some of the background work that

we had done in finalising the Clean Energy Future campaign and some of research that had been done around

that, including some thinking we had done about what a forward agenda might look like.

Senator BIRMINGHAM: So you have continued to use the services of Hall & Partners Open Mind research

to monitor community sentiment in reaction to carbon pricing and associated issues?

Ms Sidhu: Correct; I believe we have reported that in responses to questions on notice.

Senator BIRMINGHAM: You have in FOIs and questions. The last piece of research I am aware of from

them was published in February of this year.

Ms Sidhu: I think that is correct; I will just have to check. I believe there was in February, and we have done a

little bit since then.

Senator BIRMINGHAM: So you have received a subsequent report from them?

Ms Sidhu: Yes, but not on the broad based community issues—on very specific issues.

Senator BIRMINGHAM: Can you refresh my memory as to what that February report was in regards to?

Ms Sidhu: I believe we reported it in response to a question on notice.

Senator BIRMINGHAM: It would help you if I had the number in front of me, but I do not.

Ms Sidhu: In our response to question No. 81, which was asked by you, we reported that the report was called

Australia’s Clean Energy Future: creative refinement phase 2, February 2012.

Senator BIRMINGHAM: „Creative refinement‟ are the words that I could not quite recall. Creative

refinement for phase 2 of the Clean Energy Future campaign—is that a phase that is yet to go ahead, is it a phase

that has now been changed and adapted to something else, or is it a phase that in fact reflects the work that

FaHCSIA is now doing?

Ms Sidhu: It is actually none of those things. As I said, we had done some preliminary thinking about what

the government could do next. It was just some testing of some ideas that we had had with the decision for

FaHCSIA to undertake a campaign. We are not proceeding with any further development or thinking or work on

that.



Senator BIRMINGHAM: What did Hall & Partners say about the creatives for phase 2? Did they not test

well?

Ms Sidhu: I do not have that in front of me, so I could take that on notice. Hall & Partners have been a bit

cautious about releasing some of their material, as you may be aware.

Senator BIRMINGHAM: I am definitely aware of that, which is why I figure asking a broad question here is

certainly less likely to risk exposing their IP to the world.

Mr Comley: We have a question on notice. So we have been to-ing and fro-ing with Hall & Partners to follow

the process that we have done previously here, which is to provide a summary report in a way that does not

compromise IP. We have not finalised that report yet; as I said, there has been a fair bit of to-ing and fro-ing. Our

intention, as soon as we have concluded that discussion with the agency, is to forward the report to the committee,

but we have not completed that yet.

Senator BIRMINGHAM: I would like to go to the decision to not proceed with phase 2 of DCCEE‟s public

information campaign. Instead, from about March this year, there was to be a FaHCSIA campaign. Were DCCEE

consulted on that decision or were you simply informed that this was to be the changed approach?

Mr Comley: Senator—

Senator Wong: He is having trouble following all of the acronyms. Yes, the department was consulted is the

answer.

Senator BIRMINGHAM: I have not managed to trip you up on acronyms, surely?

Mr Comley: You have used abbreviations that we do not use internally, and I thought was there a new

consultant that I am unaware of. Yes, we were consulted during that process.

Senator BIRMINGHAM: When were you first consulted about the option of FaHCSIA undertaking a

campaign instead of you?

Mr Comley: Ms Sidhu might want to elaborate on the precise date—although I am not sure there would be a

precise date because there was an ongoing discussion within government about the best method of undertaking

the public information campaign, and that would have been an ongoing conversation that ran for quite some time.

Certainly, it is not the case that we were working up to March, then there was a break and then there was

reconsideration; there was always contemplation that there were different elements of a public information

campaign. I think that conversation about the exact timing and sequencing and who should conduct it probably

started in the middle of last year, as long ago as the launch of the Clean Energy Future package.

Senator BIRMINGHAM: Do you want to add to that, Ms Sidhu?

Ms Sidhu: No.

Senator BIRMINGHAM: Had your department shared the creatives and the potential template or plans for

phase 2 with ministers or other government officials or agencies?

Mr Comley: Much of that was shared through the cabinet process, as it has been throughout this whole

communication process.

Ms Sidhu: But, with respect to the materials that were the subject of that market research, they were very

much preliminary, so it did not go very far.

Senator BIRMINGHAM: Was the market research itself shared as part of the cabinet process?

Mr Comley: No. Sorry, I was talking more generally about the process, not that specific piece of work.

Senator Wong: We are not talking about what cabinet did or did not consider either.

CHAIR: Senator Birmingham, you know you will not get any response from any of the people at the table

about cabinet processes; you have been around long enough to know that.

Senator BIRMINGHAM: It is not unusual to find out whether something went to cabinet and, if so, when it

went to cabinet. Obviously, exactly what is given to cabinet is something that is not shared, and the discussions of

cabinet are not shared. I am asking if a topic or briefing went to cabinet, so perhaps I will structure the question in

a different way. In regards to the public information campaign, when was the last time your department provided

a briefing to either your minister or to cabinet on phase 2 of the public information campaign?

Ms Sidhu: I do not have the precise date. The last time we would have briefed cabinet would have been about

the time that cabinet took a decision on the advertising campaign in the first place, and the only reference would

have been to a prospect that there might be a second phase, but there was nothing specific. I cannot recall offhand

whether we—



Senator Wong: We will take the question on notice.

Ms Sidhu: Yes, we will have to take it on notice.

Senator BIRMINGHAM: Was the decision to return the $7 million to budget made subsequent to the

decision by government that FaHCSIA was undertaking its public awareness campaign?

Senator Wong: I can probably assist a little here, because there is sort of a cart-and-horse issue. You would

be aware we in government have made a significant effort to reduce the amount that we spend on advertising—I

am sorry to make a political point—to substantially below that which was spent by the Howard government in its

last year. The coordinated cabinet process, apart from making sure we go through the proper process with

advertising, also ensures that government keep a handle on the spend in different portfolios. Some of your

questions go to issues which Ms Sidhu would not necessarily be apprised of because there is a whole-of-

government approach to try to ensure we stay well below the 150. We are bit under $100 million—under your top

spend for the last four years, from memory. I will correct the record if I am wrong.

Senator BIRMINGHAM: Perhaps you are able to save Ms Sidhu from my questions by simply saying,

„Well, the case was the government decided in March or thereabouts to undertake the $14 million FaHCSIA

campaign and therefore said to DCCEE, “How much can you slice off of your campaign?”‟

Senator Wong: No, I am trying to make the point not so much about the detail of this but that decisions made

on returning certain amounts to budget because they were not spent would be less in the context of a decision to

shift advertising from one portfolio to the other and more in the context of looking at the global advertising

budget for the government. That is the only point I am making.

Senator BIRMINGHAM: In that case, was that decision to return $7 million of the public information

campaign to the government for climate change taken in the context of the overall management of government

advertising?

Senator Wong: I cannot recall, and I do not have the officials of the table who would be able to assist me with

that. That would be in Finance, which is Wednesday and Thursday.

Senator BIRMINGHAM: I am assuming Mr Comley recalls the circumstances about the—

Senator Wong: Unless Ms Sidhu knows. I intervene because I thought, both from her expression and from

my recollection, that she probably would not be able to answer your question, for the reasons I have outlined. She

would not be part of that.

Senator BIRMINGHAM: If it is a matter for Finance, then presumably it is the case that it was a decision

taken on that overall management of advertising—

Senator Wong: That is my recollection.

Senator BIRMINGHAM: not a decision of this department to say there was no further merit in advertising.

Senator Wong: That is my recollection, but I do not want to give you the wrong evidence.

Senator BIRMINGHAM: While I understand from your finance minister‟s hat that your recollection is on

the whole-of-government perspective, I am sure that Mr Comley or Ms Sidhu have some recollections of their

own about whether—

Senator Wong: If they have something else they want to add, they can add something. Feel free to do so.

Mr Comley: I will not go into the nature of our advice to the government on the merits of different types of

advertising campaigns. My recollection is that, at least formally, that funding decision was in the budget context.

There may or may not have been an interim decision that we were not proceeding with a campaign. In fact, there

was not an interim decision that we were not doing a campaign out of DCCEE. But, formally, the movement of

funds happens in the budget context.

Senator BIRMINGHAM: Does the research undertaken by the department suggest that the advertising you

have undertaken to date has shifted perceptions or provided any benefit?

Mr Comley: That goes to summaries we have provided to the committee. From my recollection of those

summaries, the information campaign had a significant impact on some parts of the community.

Senator BIRMINGHAM: The summaries that I have to date probably predate much of the bulk of the

spending on this campaign. It has been a while since we got those. Is it the department‟s belief, based on the

market research that you undertook, that the campaigns had a beneficial impact on community understanding or

perceptions?

Mr Comley: Yes, there was a beneficial impact.



Senator BIRMINGHAM: I will leave advertising and perhaps jump into the foundation. Firstly, can you tell

me the differences between the Climate Change Grant program and the Climate Change Foundation campaign?

Ms Sidhu: The Climate Change Grant program is a subset of the Climate Change Foundation campaign. The

funds in the Climate Change Foundation campaign were predominantly allocated towards what we call

community and public engagement activities—that is, non-advertising activities, or other communication

activities that do not comprise advertising. One of those non-advertising activities was the grant program. There

was, of course, a separate set of discretionary grants that we also provided under the Climate Change Foundation

campaign. There are two sets of grants in play.

Senator BIRMINGHAM: I will go through some of these, and perhaps I will be jumping a little between

each. We canvassed last time the dirtgirlworld productions grant of $150,000. You provided in answer to question

on notice No. 80 the milestones or deliverables for these grants. This one was to launch an online information

campaign and so on. There were six boxes there to be ticked—evaluation plans, final reports and so on. Have all

of those been met by dirtgirlworld productions?

Ms Sidhu: Not all of those. I think most of them have been met. There are activities going on to the end of

June 2012. There are still some activities in train.

Senator BIRMINGHAM: In terms of the online information campaign, has that been delivered?

Ms Sidhu: Yes. Three online campaigns have been developed. One is called Little things: small actions you

can take at home. The second is called Switch, which is about switching the way we use energy. The third is

called Save: how to save resources at home.

Senator BIRMINGHAM: Has the dirtgirlworld eco-factor live show been developed?

Ms Sidhu: I understand that there was a live show and a range of interactive activities that were developed by

dirtgirlworld which were played out at the Sustainable Living Festival in Melbourne. I understand that about

7,000 children and their families participated in that event.

Senator BIRMINGHAM: 7,000 children and their families?

Ms Sidhu: 7,000 people all-up, not 7,000 children and their families.

Senator BIRMINGHAM: 7,000 people participated in the Sustainable Living Festival?

Ms Sidhu: Yes, that is my understanding.

Senator BIRMINGHAM: Within that 7,000 some number presumably attended the live show?

Ms Sidhu: That is my understanding, although the live show was part of the festival. They attended with a

stay of about 30 minutes or so on average at the live show. I think they have statistics around that.

Senator BIRMINGHAM: I did not quite hear you.

Ms Sidhu: They attended the live show as part of the Sustainable Living Festival.

Senator BIRMINGHAM: Is that the only live show conducted?

Ms Sidhu: As far as I know, they have also developed the Kids Big Day Out in Sydney. I think that was

another one of their deliverables.

Senator BIRMINGHAM: Do you have any indication as to the number of participants there?

Ms Sidhu: There was an attendance of over 47,000 children and their families, from the report that we

received.

Senator BIRMINGHAM: That is at the Kids Big Day Out. I am assuming that they have not yet presented a

final report, if you are saying that?

Ms Sidhu: That is correct. As I said earlier, there are still some activities to run, and the final report will come

as part of the final wrap-up and evaluation.

Senator BIRMINGHAM: In terms of that evaluation, is it simply a case of the campaign exposing them to

47,000 people or there were 47,000 people at a festival they performed at? What are you evaluating in terms of

messaging around carbon pricing?

Ms Sidhu: Just to be clear, it is not necessarily the messaging about carbon pricing. The grants under the

grants programs have a range of objectives. Those objectives range from demonstrating the benefits of a clean

energy future, helping people to understand how to move to a clean energy future, helping people understand the

dynamics behind that; helping people understand and being able to access some of the programs that the

government has in place. I do not have before me the specific objectives against which this particular project will



need to be evaluated, but every project has a range of objectives they are intended to meet, and the evaluation is

intended to address the objectives of that project.

Senator BIRMINGHAM: For something like this $150,000 grant that is obviously targeted at very young

children, what is the department‟s objective in terms of raising climate change awareness?

Ms Sidhu: It is not young children really that we are targeting. The department has a range of groups in the

community that it is trying to reach. One of the groups we are trying to reach are households with small children,

generally because those households tend to have a series of particular issues around energy use, energy efficiency

and saving. The dirtgirlworld process is not so much about the children; it is actually about reaching the families

of those children.

Senator BIRMINGHAM: Are there any metrics as to how you measure whether you have been successful in

reaching those families?

Ms Sidhu: As I said earlier, the evaluation will come about as part of the evaluation of the project. We will be

looking to whether that project has in fact achieved its objectives.

Senator BIRMINGHAM: I would like to go to the grant of $72,121 to the Auburn Community Development

Network. Is this the Auburn Community Markets in Sydney‟s west?

Ms Sidhu: Yes, that is right.

Senator BIRMINGHAM: The KPIs or the deliverables that we were told about in the answer to the question

on notice for this were a little vague. There was project planning and recruitment, progress report 1 and evaluation

plan, progress report 2, completion of all materials, production and distribution, and all other project activities,

and final report and financial report, which hopefully means something to you, but obviously I cannot tell what it

is that they are doing out of those deliverables aside from the fact that they are providing at least three different

reports to the department.

Ms Sidhu: The question that we provided a response to provided a list of the contract milestones—I believe

that was the question that had been asked—against which payments would be made. Read on their own,

obviously they do not mean a great deal, as you have just outlined. However, the contract milestones relate to

particular activities and milestones that are in the project plan itself. In this case, the Auburn Community

Development Network was engaged to allow us to reach our communications into culturally and linguistically

diverse communities, particularly communities in the Western Sydney region. We provided a grant to help

develop the community development network‟s education program to include specific climate change, carbon

pollution and clean energy issues, and also to support their activities in developing the skills and capacities of

project participants in relation to the issue of energy and climate change. They have gone about doing that by

having a series of outdoor events where they invite various community groups together. Four out of six of the

proposed events have now been delivered. They bring people of particular linguistic communities together where

they can discuss environmental and clean energy issues in their own language and in a comfortable environment.

They have also developed information material, which has been translated into various target languages. They

have undertaken some digital storytelling workshops that allow some audio visual material to be posted on

websites that reach these communities. That is essentially what they have been asked to do. The project or

contract milestones relate to the points at which the various activities had to be delivered and progress reports

against those. They would do a certain number of those activities, deliver to us a progress report and we would

pay an additional milestone payment against the activities that have been delivered.

Senator BIRMINGHAM: I would like to quote from your own website, which talks about the Auburn

Community Development Network as the recipient of the $72,000 grant. It states that it is part of their Living

Green project, which brings community members together to share a free cup of tea and chat about environmental

issues; that this Saturday participants can take part in a weaving workshop; that it is the fourth enviro tea salon,

and they are proving to be a great way of engaging the public in talking about complex environmental issues. I am

sure they are worthy events for the participants, but is this really a worthy way of spending $70,000 of taxpayers‟

money?

Ms Sidhu: In my view, it is. If you will allow me to elaborate. There is no single way to reach various

communities. What we have done through these grant programs is to reach out to community organisations who

know best how to reach into their communities. My understanding is that the response rates are reasonably good,

and so these activities are in fact running well and are being well received. In that respect, if we can provide

communication in a way that is easy for the community to access and in a way that they find non-threatening and

easy to reach and to understand, that is obviously the benefit that we are after.



Senator BIRMINGHAM: What is the information that is being provided here? Are these specifically focused

on energy efficiency or something that will actually provide tangible take-up benefits and so on to the community

participants, or is this general chatter about the importance of environmental awareness?

CHAIR: „General chatter‟?

Senator BIRMINGHAM: It is a cup of tea and basket weaving. „General chatter‟ sounds like something that

occurs with a cup of tea and basket weaving.

Ms Sidhu: It is a variety of material. As I said earlier, these tea salon events are just a way for people to get

together and discuss the issues. These are not the only activities that are being conducted under this project. They

are being conducted in conjunction with the development of information material, some of which explains the

government policies, climate change more generally, energy efficiency and how households can access those.

People are brought together at an event where they are provided with information and ask questions, and have

those answered by people who understand the issues. That is essentially what we are trying to do here.

Senator BIRMINGHAM: What about the $211,000, which is a much more significant grant, to the Nature

Conservation Council of New South Wales? There is a series of these. There is $319,000 to the Conservation

Council of WA, $291,000 to Greening Australia, South Australia, and I can come back to the ACTU. There is a

number that appear to be to activist groups who obviously are engaged in no doubt actively supporting the

government‟s carbon pricing policies and initiatives. What exactly are these grants to the conservation councils in

Western Australia and New South Wales, and Greening Australia in South Australia delivering that is not simply

preaching to no doubt their already converted membership?

Ms Sidhu: When we went about selecting recipients for the grants programs, which was a very competitive

process, we were very conscious of tapping into a few things. One was the expertise of the organisation that was

delivering the material. The second was whether we were capturing a balanced range of regions and audiences in

Australia. The third was the value for money that we were receiving from the project, as opposed to the reach that

they would be likely to gain.

You asked about the Nature Conservation Council of New South Wales. We have provided them with the

funds to deliver integrated communications around a campaign, which includes a dedicated website, a road show,

other information support and also sourcing stories about real people taking action on climate change, and

securing some coverage of real climate action stories. It is not just providing information to householders, which

is the target audience for this particular activity; it is also providing information and stories about what is actually

happening on the ground so that it is not seen as something that is kind of out there in the ether but something that

is delivered in a practical way. That is the work that they have been doing. They have got a proven behavioural

change program in the Illawarra region.

CHAIR: There seems to be more in the response that you wish to give. We will take a break and you can

respond after that.

Ms Sidhu: Thank you.


CHAIR: Senator McKenzie, you have been extremely patient. You have the call.

Senator McKENZIE: My question goes to the Energy Security Fund. I am sorry if we have dealt with that

earlier. It is in 1.1. I am just hoping we are all at the right place.

Senator Wong: Mr Comley raised an issue he wants to clarify.

CHAIR: Mr Comley.

Mr Comley: In the evidence we had with Senator Joyce, I want to be absolutely clear. I think I said this is one

way, but may have said it slightly differently another way. Landfill gas is not natural gas for the purposes of the

legislation. Landfill gas is biogas. As I said in my evidence, where you have biogas that is burnt you do not have a

liability under the scheme, because the assumption is that if it is gas from biomass it can rejuvenate and you can

have a regrowth. That is true whether you burn it on the landfill premise or if it is put through a gas pipeline to

anyone else. Just to be clear, if gas is put through a pipeline to an end user, there is no liability. If the only activity

you are involved in is landfill, taking the gas, selling it to other people, even if they burn it off-site there is still no

liability. So, just to be clear about that, I think we had a bit of a confused conversation between reticulated natural

gas and biogas. Natural gas is treated as taxed everywhere. Biogas is not subject to the carbon price wherever it is.

CHAIR: Senator McKenzie.

Senator McKENZIE: Again, I am trying to work out how the Energy Security Fund interacts with the

Regional Structural Adjustment package. Can you outline that?



Dr Kennedy: The Energy Security Fund is a separate fund from the Regional Structural Adjustment package.

The Energy Security Fund is in two parts. There is $1 billion of cash assistance to be paid in this financial year

and we are some way down that process. In fact, we have made public, from memory, the nine generation

complexes who are eligible to have the funds distributed to them and the distribution of that billion dollars. Those

complexes are also able to apply for free permits costed at a value of $4.5 billion. That is the $5.5 billion Energy

Security Fund.

Off the top of my head with respect to the $200 million Regional Structural Adjustment Fund—I cannot quite

remember its full name—that is a policy administered by the regional department but in consultation with

ourselves and has a different set of objectives. In a sense, if you wanted to go into detail on that fund I would

suggest you put those questions to the regional department.

Senator McKENZIE: My question goes to one of the companies that is in negotiations around the Energy

Security Fund, Energy Bricks in the Latrobe Valley, Victoria. Could you outline what is in place for the workers

impacted by business closures in the Latrobe Valley, particularly around the 200 employed by Energy Bricks and

not the company themselves. I refer to a quote from the CFMEU organiser in the Latrobe Valley that the company

has advised workers that they will be shutting, and if that happens there is not a single thing in place to help these

workers in the Latrobe Valley. I am wondering what your response is to that.

CHAIR: I should have asked that question. That is a good question.

Senator McKENZIE: Maybe we could have a unity ticket on this.

CHAIR: I think so. That is a good question.

Dr Kennedy: Just one quick step back—I did fail to mention contract for closure, which was also a part of the

Energy Security Fund and is outside of the $5.5 billion.

On the matter around Energy Bricks, HRL, it is one of the generation complexes that is eligible for the Energy

Security Fund money. I do not think it would be appropriate for me to comment on whether they will or will not

close. That is a matter for them. In terms of the implications for the electricity supply, that would be dealt with

through the processes around the Energy Security Fund itself. For example, AEMO is asked to comment on the

energy security implications of any closure of these complexes. That would be a matter administered by DRET.

In terms of the implications for other industries from, for example, their production of briquettes, which is a

fuel source used widely particularly in regional Victoria, it would not only be a matter for the regional department

and regional adjustment to consider as well as ourselves but also a matter for the Department of Industry,

Innovation, Science, Research and Tertiary Education, because they administer funds for people who are trying to

improve their clean-tech investment program, for example, and so they would be another stakeholder in this

matter. That is the set of processes or parties that would be dealing with such an issue.

Mr Comley: There is one other thing that Dr Kennedy did not mention, which was that there have been

conversations between the Commonwealth government, the Victorian government and local government within

the Latrobe Valley to talk about a consultation process for any regional impact. The issue of what will happen if

there are changes in output in the sector has been on the radar screen probably from the commencement of the

Clean Energy Future package, and there has been a heads of agreement signed between all of those parties.

Senator McKENZIE: My question goes to how that is playing out on the ground.

Mr Comley: As you can probably judge from Dr Kennedy‟s answer, there is quite intense conversation

happening between all of those parties at the moment about any transitional issues, if that event occurred. It has

certainly been a significant subject of discussion both within the Commonwealth government and within those

parties.

Senator McKENZIE: Dr Kennedy, could you outline how the contract to close process is proceeding,

particularly in respect of those organisations within the Latrobe Valley?

Dr Kennedy: Questions on contract for closure should go to the Department of Resources, Energy and

Tourism. As that is a sensitive set of commercial negotiations, I do not think it would be appropriate for me to

comment on that at all. I think they should go to DRET.

Senator McKENZIE: Thank you.


Senator BIRMINGHAM: I want to come back to some of the foundation stuff, but as we have deviated a bit

I might go back just to the advertising. Can you confirm that the $21.63 million for the public information

campaign in the revised budget for 2011-12 has been spent on campaign activities to date?



Ms Sidhu: The $21.6 million has not all been spent. The majority has been spent on the campaign activity, but

not all of it.

Senator BIRMINGHAM: How much remains to be spent?

Ms Sidhu: Expenditure to date from the $21.6 million or expenditure on the campaign? I am just trying to

clarify your question. Are you asking me how much has been spent on the campaign to date?

Senator BIRMINGHAM: How much has been spent on the public information campaign of the $21.6

million in the 2011-12 budget?

Ms Sidhu: On the advertising campaign? There is a small proportion of those funds that has not been spent on

the advertising campaign as such.

Senator BIRMINGHAM: How much has been spent in total? You can give that to me broken down, if that

will help to provide clarity.

Ms Sidhu: Out of the two funds in total for this financial year we have spent about $29 million. That is the

$26 million-plus out of the $8.2 million. I do not have a breakdown of what has been spent out of each bucket.

Senator BIRMINGHAM: Can we tackle it a different way, as to how much remains to be spent this year on

the public information campaign? Will that be easier?

Ms Sidhu: We have about $1.1 million to be spent this year out of the public information campaign funds.

Senator BIRMINGHAM: So, as to the remaining $1.1 million and the $2 million that has been carried

forward to next year, what are they earmarked for?

Ms Sidhu: We have not made final decisions, as you can appreciate, on the $2 million. We were only

informed about that in the budget, and so we are in the process of planning how we might spend those funds.

With respect to the $1.1 million, that will be spent on what we call „below the line activities‟ that were prepared

to support the campaign in any case. Those involve information activities to reach to Indigenous communities and

non-English speaking background communities. The bulk of the funds will be spent on that.

Senator BIRMINGHAM: So, those activities relate to the public information on the carbon pricing

mechanism?

Ms Sidhu: Exactly. It is around the Clean Energy Future package, more generally. We did some advertising

outreach at the time of the advertising campaign pitched at Indigenous communities and non-English speaking

background communities. This is essentially a further wave. Obviously not all of the $1.1 million but a substantial

proportion of it will be to provide materials in local languages or in local media around the Clean Energy Future

package and particularly around elements of the package that are relevant to those communities where they

cannot access that information elsewhere.

Senator BIRMINGHAM: How will that differ from the information that FaHCSIA is doing?

Ms Sidhu: It is broader than the Household Assistance package. The Household Assistance package is the

focus of the FaHCSIA campaign, but the work that we would be doing would cover energy efficiency elements of

the Clean Energy Future package. It would cover the carbon price elements. It would cover the carbon farming

initiative, which many Indigenous groups have expressed an interest in because there are a couple of Indigenous

specific elements of that initiative. It will cover some of the other measures around the campaign, but those are

the predominant ones.

Senator BIRMINGHAM: So, your activities would mention the word „carbon‟?

Ms Sidhu: Of course.

Senator BIRMINGHAM: It is not something that can be taken for granted. Did the department ask for the $2

million to be carried over or did that just come as a pleasant budgetary surprise?

Ms Sidhu: It was a budget decision.

Senator BIRMINGHAM: I appreciate that it was a budget decision, but when I asked what the campaign was

for you made it sound like it was a budget surprise and you were now working out what to do with the money.

Mr Comley: We were aware of the possibility before the budget. Very rarely does the Minister for Finance

deliver a budget surprise that you know nothing about.

Senator BIRMINGHAM: That is what I would have thought from any finance minister.

Senator Wong: A positive surprise.

Mr Comley: I am not saying „office of the Finance Minister‟.



Senator BIRMINGHAM: So, you must have some aim for that $2 million, as to who it is meant to

communicate to and whether it is a late-in-the-year activity to mop up issues that have emerged during the year or

what your plans are?

Ms Sidhu: It will be a range of what we call „below the line‟ activities. You can appreciate that $2 million is

not going to buy a great deal of intense activity, but we are still in the process of determining how we might focus

that activity. We have been thinking through a broad range of below the line activities at various price points, so

to speak; say, if we had so many million we might do this and if we had so much we could do that. We are now

trying to work out what would be the best use of those funds.

Senator BIRMINGHAM: Will these below the line activities for the $3.1 million all-up to take the form of

more grants to organisations such as the climate change grants and the Climate Change Foundation campaign?

Ms Sidhu: No decision has been taken. I cannot really speculate on what the government might decide.

Senator BIRMINGHAM: That would be consistent with a below the line strategy?

Senator Wong: That is the same question.

Senator BIRMINGHAM: What else might be undertaken in a below the line strategy?

Senator Wong: That is a hypothetical question.

CHAIR: You are asking the officer to speculate.

Senator BIRMINGHAM: No. I am trying to get a definition of this below the line campaign strategy. I

understand that it is not paid advertising.

Ms Sidhu: It would be any communication activity short of paid advertising, and there is a wide range of

those, as we have already discussed today.

Senator BIRMINGHAM: We canvassed whether you had shared some of your information with FaHCSIA

earlier, and the indication was that they had been briefed to some extent on some of the research that your

department had undertaken. Were you briefed in return on FaHCSIA‟s campaign?

Ms Sidhu: In the process of its development we were made aware, at regular intervals, of how things were

going, but there were varying levels of detail depending on where they were at and the stage of development. We

just received some information, and that was the extent of it.

Senator BIRMINGHAM: Did you receive draft creatives at some stage or anything of that nature?

Ms Sidhu: I do not think we did see draft creatives.

Mr Comley: I think we should take that on notice. The reason is that there are two parts of the department that

deal with this issue. One is Ms Sidhu‟s part, which deals with our communications area. Also within the

department we have the Clean Energy Future Program Office, which has an implementation responsibility. It

monitors the implementation of the whole Clean Energy Future Plan. I will take it on notice, but my

understanding is that they were across the way in which the program was implemented and saw materials as they

went forward from that perspective of being the program office that looks at the whole-of-government delivery of

the Clean Energy Future package.

Dr Kennedy: I can confirm the secretary‟s understanding that this is not an office that specialises in

communications or the sorts of work undertaken in Ms Sidhu‟s area, but there was consultation across

government about the development of these products.

Senator BIRMINGHAM: If you could take it on notice and let us know, that would be appreciated. Has there

been work undertaken within the department about including information on electricity bills when the carbon tax

first takes effect?

Mr Comley: Yes, there has been work in the department on that issue. I will get Mr Archer to follow up on

any more detailed issues.

Senator BIRMINGHAM: Perhaps Mr Archer could tell us the nature of that work, when it was started and

where it is at?

Dr Kennedy: Do you have a question about work on electricity bills?

Senator BIRMINGHAM: About providing government information on carbon pricing in the electricity bills.

Mr Archer: The department has been working with electricity retailers on a proposal to include some advice

to electricity consumers/households about the impact of the carbon price on their electricity bills. The proposal

that is under examination is in a sense the inclusion of a small insert with the physical bill as it is delivered by the



retailers to their customers or, alternatively, it could be provided as an electronic document to those customers

who receive an electronic bill.

Senator BIRMINGHAM: When did work on that option commence?

Mr Archer: The option was first considered and proposed last year. With the passage of the carbon pricing

mechanism legislation the implementation of the proposal gathered pace towards the end of last year, and we have

been continuing to work on it through this year.

Dr Kennedy: I am happy to take on notice the precise timing of when the work started, if that is helpful.

Senator BIRMINGHAM: I do not necessarily need precise timing, but I did try to pursue some of these areas

of public communications during the February estimates. I asked what was under consideration and what

activities were being undertaken. I did not get any of this information at that stage. It sounds like this was at least

an option being advanced at that point in time.

Dr Kennedy: In February?

Senator BIRMINGHAM: In February.

Dr Kennedy: Yes, that would be correct.

Senator BIRMINGHAM: So, how advanced is it? Is this something that will definitely happen?

Dr Kennedy: That will be a matter for government, but as Mr Archer said there have been ongoing

conversations with electricity retailers about the prospect of including that information. I should be clear that it is

not information that is envisaged to be tailored to every individual circumstance as X on your bill. It is the sort of

information that is publicly available at the moment that we spoke about earlier regarding the 10 per cent increase

in household electricity prices that is envisaged by the Treasury modelling. There has been work done in Ms

Sidhu‟s area about how to best communicate that information, but it will be a matter for government about

exactly how things progress, and it will depend on the discussions with the electricity retailers.

Senator BIRMINGHAM: So, you do not have a budget to deliver this, aside from Ms Sidhu‟s $3.1 million

for below the radar activities?

Mr Archer: The department did not receive any appropriation for this exercise. It is basically absorbing the

cost.

Senator BIRMINGHAM: Is it absorbed into departmental costs?

Mr Archer: That is right.

Senator BIRMINGHAM: Have discussions with electricity retailers gone to the matter of who is footing the

bill in terms of printing, inserts and all of those sorts of things?

Mr Archer: Assuming the proposal proceeds, our department will be meeting all the costs of the production

of the insert and delivering that to the retailers. It will then be a matter of the retailers inserting the insert into the

envelopes with the bills that will be sent out.

Dr Kennedy: This is still a matter before government. It is a matter for government to take these decisions.

Senator BIRMINGHAM: Have retailers been provided with a copy of what the brochure may be?

Mr Archer: We have been consulting with the retailers quite closely since towards the end of last year, and

that has included draft versions of the insert. This exercise very much relies upon the goodwill of the retailers to

agree to include the insert with their bills, and so it is important that we consult with them and that they are

comfortable with the content of the insert.

Senator BIRMINGHAM: Have any retailers at this stage refused to participate?

Mr Archer: I might take that one on notice, if I may, because it is a little bit of a moving feast in terms of

communications that are taking place backwards and forwards between ourselves and the retailers.

Dr Kennedy: In a sense, we will not be able to answer your question in full until the process comes to an end.

We are in a middle of a process that we are happy to describe to you. The final question has not been put to

retailers, but we are happy to take that on notice.

Senator BIRMINGHAM: Have retailers suggested changes to the information?

Mr Archer: As I indicated, we are consulting with the retailers on the content of the insert. They have made

some suggestions about the content of the insert and we have been considering those suggestions.

Senator BIRMINGHAM: In terms of timing, I am assuming you would be wanting the first electricity bills

after 1 July to be the target?



Mr Archer: Retailers have a range of different billing cycles. If it is to be provided, we would like to have the

insert provided at a time that coincides with a bill that contains the carbon price impact for the bulk of the period

to which the bill relates. So that could see the distribution of the insert through the second half of this calendar

year, depending on the billing arrangements of particular retailers.

Senator BIRMINGHAM: Have retailers given an indication as to how much advance time they need in terms

of when government would have to make a final decision to meet those deadlines?

Mr Archer: In terms of logistical issues such as the timing of the delivery of the insert, yes, we have been in

consultation with the retailers on those matters.

Senator BIRMINGHAM: I imagine it must be getting fairly close to government having to make a decision

on this.

Mr Archer: Yes, certainly. I think that is evident just in the sense that the carbon price will start on 1 July and

electricity bills are provided through the second half of the year. So that is right.

Senator BIRMINGHAM: Have any submissions gone to the minister or to cabinet recommending action on

this?

Dr Kennedy: We are going to the policy process. In fact, I think we have been quite open about a policy

process that the government is yet to make a final decision on, but we cannot go directly to advice provided to

government on whether or not to proceed and when. That is a matter for government, but we are happy to explain

that we are in this consultation phase where we are consulting, having meetings with the industry and discussing

this proposition. But as to matters of advice to the government, it is difficult for us to go into the details of that.

Senator BIRMINGHAM: Have you had any market testing done on draft flyers?

Dr Kennedy: Ms Sidhu?

Ms Sidhu: Yes, we have.

Senator BIRMINGHAM: When was that undertaken?

Ms Sidhu: I cannot recall exactly. It is since February this year, so just recently. It would have been in the last

two months.

Mr Archer: Within the last few weeks.

Senator BIRMINGHAM: So, weeks? Presumably you would be at pretty close to the final stage if you are

going out and getting market testing on your flyers. You would obviously contemplate changes subsequent to that

market testing, but I am assuming they have been shown to retailers before that market testing was undertaken—

or not until after?

Dr Kennedy: The content of the inserts has been discussed all along the way. This is effectively public

information in which we are trying to explain to people how the carbon price affects the electricity price—in fact,

a lot of the information is in the public domain—but trying to explain that in an effective way with people‟s bills.

So, the content in a sense is known and that has been discussed. I should just be clear that we are not trying to

identify the exact price increase, because that would be a highly complex exercise in each person‟s case. We are

identifying the sorts of numbers we spoke about earlier in the Treasury numbers and then explaining what that

means in the context of the government‟s package.

Senator BIRMINGHAM: How were the draft flyers market tested—focus groups? What was the approach?

Ms Sidhu: Yes, we put them through some focus groups and it was essentially to test whether people

understood the messages.

Senator BIRMINGHAM: Were those focus groups conducted by all the parties?

Ms Sidhu: That is correct.

Senator BIRMINGHAM: Is that part of your ongoing contract? Are you able to put a cost on that process or

is that part of—

Ms Sidhu: It is part of the ongoing contract.

Senator BIRMINGHAM: Part of the bigger overall cost. How much will it cost to print these flyers?

Dr Kennedy: We cannot put final costs on a policy that has not yet been decided, and we do not yet have full

agreement about exactly where the flyers go out, so we cannot give you that cost until the policy is settled.

Senator BIRMINGHAM: There is no budget for it as yet and you cannot tell me the cost, but it will be met

from within the department‟s resources?

Dr Kennedy: As Mr Archer said, there is no separate appropriation for this activity.



Senator BIRMINGHAM: Will there be separate flyers for businesses or small businesses as well as for

households, or will this purely be done for households?

Dr Kennedy: Again, the government has not made a final decision on the distribution of this, and it is

dependent on a number of the factors that we talked about. As I said, we can continue to talk about the

consultation process, but what the government‟s policy will be in this matter is yet to be determined. It is a matter

of public record that we have spoken to these entities—they would be able to tell you that—and so we are happy

to speak about that, but final decisions are yet to be taken by government.

Senator BIRMINGHAM: In terms of the drafts you have shown them, do they just relate to households or

have you worked through drafts with the entities that would relate to business costs as well?

Dr Kennedy: My understanding is the focus has been on households.

Senator BIRMINGHAM: We shall watch that space with interest. If I can go back to the grant programs

then, please?

CHAIR: Just before you do that, we have a document for which tabling is sought. It is the 104 councils. Will

someone move that we accept that as a tabled document? It is resolved that we accept it.

Senator BIRMINGHAM: Thank you, Chair.

Ms Munro: Just on that document, I will make one final comment. The letters to those councils have only just

been sent, so it is possible that, at the time you receive the list of councils to whom we have written, they will not

yet have received these letters. They were sent at the end of last week. I just wanted senators to be aware that that

communication is in progress.

Senator BIRMINGHAM: Thank you very much for your strict attention to that, Ms Munro. I appreciate it.

Back to the Climate Change Grant program, I turn to the ACTU grant of $93,000. Can I have a breakdown of how

many seminars were conducted, where they were conducted, whether the same officials went and presented at

those seminars and so on, please?

Ms Sidhu: The organisations completed the development of seminar information materials, including

handouts and a PowerPoint presentation. They have delivered five out of 10 seminars to date, held at Granville,

Wollongong, Perth, Latrobe Valley—Morwell to be exact—and Geelong. The remaining five seminars are

scheduled to be delivered in Adelaide, Whyalla, Brisbane, Rockhampton and Newcastle. They have also recruited

specialist speakers who can provide information at the seminars.

Senator BIRMINGHAM: Who presents the seminars? You mentioned specialist speakers, but I am assuming

there are core presenters. Are they ACTU employees?

Ms Sidhu: The seminars involve a combination of ACTU trainers and specialist speakers. The specialist

speakers include people from organisations such as the Climate Institute.

Senator BIRMINGHAM: So, there is a mixture there. Does the grant cover the cost of the ACTU speakers

travelling from Moree to Perth and everywhere else in between?

Ms Sidhu: I could not say with respect to this specific grant. I just would note that of the grants we have

provided, I think this is one of the smallest grants. The guidelines for the grant funding in general allow for travel

costs to be covered. Of course, all travel costs have to be acquitted as part of the financial acquittal, but I could

not say with respect to this specific grant.

Senator BIRMINGHAM: How many are people who have attended the five seminars held to date out of the

10 to be held?

Ms Sidhu: I do not have that information. I could take that on notice.

Senator BIRMINGHAM: I assume they have provided progress report 1. Have they provided progress report

2 as well?

Ms Sidhu: Yes, my understanding is that they are coming to the end of the process. They are about two-thirds

of the way through.

Senator BIRMINGHAM: So, looking at the deliverables I got in that answer, in fairness, progress report 2

appears to be provided after the completion of all the seminars, but have they provided progress report 1?

Ms Sidhu: I do not have that before me, but I could check and get back to you.

Senator BIRMINGHAM: Could you provide us with some details as to the number of attendees at these

seminars?

Senator FISHER: Who attends the ACTU seminars?



Ms Sidhu: The purpose of the seminars was to provide ACTU members and workplace delegates with

information about the Clean Energy Future and the opportunities under the package.

Senator FISHER: The ACTU members are unions, not individuals, so what does that mean?

Ms Sidhu: The point of the grant was to train these people so they could go out and provide the information to

people at workplaces.

Senator FISHER: To train who?

Ms Sidhu: The workplace delegates and members—and union members, sorry. Union workplace delegates

and members.

CHAIR: Just on that point, there has been a lot of misinformation in relation to the impact of the carbon price

on industry and to the extent that there will be regions closing down—Whyalla, for instance. Was that a

consideration in terms of getting some facts to workers instead of the political rhetoric that is out there?

Ms Sidhu: Certainly. I think that is the purpose of all these grants—to be able to provide the information that

people need to access to understand the Clean Energy Future package.

CHAIR: Within the modelling that has been done, there are no regions closing down as a result of the carbon

price, are there, Mr Comley?

Mr Comley: Obviously Treasury will expand in great detail, but my understanding of that modelling is all

regions and sectors grow over the period of the modelling.

CHAIR: I suppose if workers are being told that their job is in jeopardy, it is a legitimate position to get out

and place the facts before these workers, would it not?

Mr Comley: I will just go back to a comment that Ms Sidhu made earlier—that there is no single way into the

community and the purpose of these grants is to take a multiple channel approach on the basis that some forms of

information provision work for some people and not for others. I think there is fairly broad experience that

information provided by people that you already have a relationship with in some way tends to be more effective

rather than the equivalent of cold calling. So these grants attempt to be avenues into the community through a

range of areas. For some people that is community groups; for some people that is workplace representatives

through the union movement.

CHAIR: Business groups are receiving grants to take the facts to the business as well, are they not?

Mr Comley: Yes. Just looking at this set of grants here, but I am also thinking about the other grants program

we have in terms of—I am just trying to think of the title—the Energy Efficiency Grants Program.

Senator FISHER: Which business groups have received grants?

CHAIR: Just let Mr Comley finish, and then you can ask a question.

Mr Comley: Those grants are actually under our energy efficiency output 1.2, so we are happy to go through

where that process is up to. My recollection, though, is that that is actually a significantly larger grant program

than this one. That is around a $40 million program, whereas this program is allocated around $4 million.

Ms Sidhu: The Climate Change Grant Program was capped at $2.5 million.

CHAIR: We can deal with this after 7 pm.

Mr Comley: After 7 pm we can cover output 1.2, the Energy Efficiency Grants Program.

CHAIR: That is good.

Senator FISHER: Which business groups have received grants under this program, Mr Comley?

Senator Wong: Was the evidence not that they were under the other program?

Senator FISHER: So, the answer is none under 1.1? Despite the ACTU getting grants under 1.1, there are no

grants under this program for business groups. Is that right?

Senator Wong: Why do you not just put your hand up when you have finished berating people and then we

will answer a question? Have you finished the question?

CHAIR: Would you like to just ask the question and we will try and get the answers.

Senator FISHER: I have.

Senator Wong: What is the question?

Senator FISHER: Did any business groups receive a grant under program 1.1? If so, who?

Ms Sidhu: The Planning Institute of Australia received a grant of $123,000 under this grants program.



Senator FISHER: They are not a workplace based business group. Did any workplace based business

group—

Senator Wong: You are the deputy chair of this committee. Why do you not behave?

CHAIR: Order! If you just let Ms Sidhu finish her answer, you can ask another question, but do not keep

interrupting the witnesses. Ms Sidhu.

Mr Comley: It may be that because the different organisations have both chosen to apply for different grants

and then it goes through a merit based process it is worth foreshadowing output 1.2.

Senator FISHER: The question is not about 1.2, Chair.

CHAIR: Mr Comley will—

Senator FISHER: We will get to 1.2 later. I am asking about 1.1.

CHAIR: Senator Fisher, you are not chairing this. Mr Comley, continue.

Senator Wong: He is entitled to answer the question.

Senator FISHER: What, an answer about 1.2, not 1.1. You would pull me up if I did that.

CHAIR: Senator Fisher! Order! Mr Comley, continue.

Mr Comley: The point I was going to make is that, under the output structure, one is 1.1 and one is 1.2, but

essentially the programs are about energy efficiency and the impact of the Clean Energy Future. For example,

under the programs we will discuss in 1.2 are: the Hunter Business Chamber, receiving $1.2 million; the Plastics

and Chemicals Industry Association, $424,000; the Australian Meat Industry Council, the Australian Meat

Processor Corporation and the National Meat Industry Training Advisory Council, $528,000; the South

Australian Wine Industry Association, $208,000; the Australian Industry Group, $1 million; the Australian

Tourism Export Council, $612,000; Dairy Australia, $1 million; and the Textile, Clothing, Footwear Resource

Centre, $599,000. There are other examples here: Master Grocers; Australian Liquor Retailers, $990,000; and the

Victorian Employers‟ Chamber of Commerce and Industry, $1.873 million. They were the grants announced last

week under the—

Senator FISHER: Under 1.2? Were they under 1.2?

Mr Comley: They were under 1.2 output, but they cover energy efficiency and the impact of the Clean Energy

Future program.

Senator FISHER: Were there any workplace based business organisations provided a grant under 1.1? I ask

again. I think the answer is no.

CHAIR: What is a workplace based business organisation?

Senator FISHER: Mr Comley has just recited a whole list of them that apparently got grants under 1.2. He

knows full well who I am asking about.

Mr Comley: What I am doing is talking about bodies that have received funding to provide information about

the Clean Energy Future package under 1.2 and 1.1. As I have pointed out, the magnitude of the grants under 1.2,

which are broadly similar activities, is actually significantly larger than that under 1.1.

Senator BIRMINGHAM: You will come back to us, Ms Sidhu, on the ACTU. Can I ask about Green Cross

Australia, then—a $200,000 grant to raise awareness of activity that is reducing carbon pollution and helping to

build a clean energy future via a clean energy future show-and-tell competition for all Australian primary schools.

When is that competition being staged or has it been staged?

Ms Sidhu: The competition was launched on 13 February. It was launched together with a dedicated website,

and the website also has a range of information on clean energy. The awards ceremony, as a conclusion of that

competition, will be held at Questacon during National Science Week, which I think is in the third quarter of this

year. So far our information is that more than 150 schools have registered to participate in the competition.

Senator BIRMINGHAM: Again, what is the purpose of this in the Clean Energy Future perspective? That is

obviously what the show-and-tell competition is billed as. How is this meant to raise appreciation and

understanding of the government‟s policies around the carbon tax and the Clean Energy Future package?

Ms Sidhu: It might help if I just outline for you the main purpose of the grants. When we put the grants out

we actually had a series of four objectives. We asked people to bid where they might be able to create innovative

and positive ways of reaching audiences with messages on the elements of a Clean Energy Future and what it

might mean for Australia. The second objective was to raise awareness of activity that is reducing carbon

pollution, particularly in the areas of energy efficiency, renewable energy, carbon pricing and land or agriculture.



The third was to demonstrate activity helping to build a Clean Energy Future. The fourth was to profile

opportunities created by a Clean Energy Future. One of the objectives of the grants program was to reach those

audiences that are a little bit harder to reach from broadcast advertising, and in this case the target audience were

primary school students and their families. One of the things we understand is that when school students engage

in a competition such as this it becomes part of their teaching environment in the school, but it also becomes a

matter for discussion in households, and we know that to be a very effective way of reaching audiences.

Senator BIRMINGHAM: So this program, the dirtgirlworld program, and, presumably—although at a

slightly different age demographic—the Power Shift conferences are essentially all about getting children to act

as conduits for the information through to their parents and families?

Ms Sidhu: Not always, but that is one of the ways we can reach families. The AYCC program is actually

about reaching young adults themselves, so it is a different demographic and a different group of people. We try

to engage families and households in the ways that are easiest for them to engage with, and this is one of those

ways.

Senator BIRMINGHAM: What checks and balances does the department have in terms of the veracity of

information and accuracy of information that is imparted through these processes? It is one thing to know what is

said and done at a government sponsored seminar. It is a different thing once you are dealing with hundreds of

primary school teachers across the country.

Ms Sidhu: Clearly, one of the principles behind the Commonwealth grant guidelines—and all these grants

have been provided under the Commonwealth grant guidelines—is that you are providing a grant to an

organisation to undertake an activity that is one of the activities that that organisation would deliver. So, in a

sense, you lose a bit of control over that. However, in the case of these programs we have provided the baseline

information that has been available publicly in any case around the Clean Energy Future package. So, for the most

part we encourage the organisations to develop their information along the lines of the Clean Energy Future

information that has been provided publicly. We also engage with the organisations to provide a bit of feedback,

and there have been good relationships with all of these organisations where they have sought our feedback to

ensure that the material is accurate and the information is correct.

Senator BIRMINGHAM: Within the time that is available can I just turn to some of the future operations of

the carbon price briefly, in particular the operation of the floor price beyond the fixed price period? Is it correct to

say that that floor price still has to be enacted through regulation?

Mr Comley: That is correct.

Senator BIRMINGHAM: So, at present it is government policy that the floor price be $15 per tonne. What is

the default if there is nothing put through in those regulations by the end of the fixed price period?

Mr Comley: I think you are getting into a bit of a hypothetical in terms of government policy not being

enacted. The government policy is that there be a $15 floor price by 2015. As I am sure you are aware—I think

we have talked about it previously—there has been an extensive consultation process about the best way to put in

place that floor price, and that is currently what we are undertaking.

Senator BIRMINGHAM: It is not a hypothetical to ask what the default in the legislation is. What happens if

that policy does not get passed through the parliament?

Mr Comley: I am just trying to think of it in terms of whether in a way it is a hypothetical. If there are no

regulations, what is the impact? The impact of that is that the floor price does not apply.

Senator BIRMINGHAM: So, we just move to a floating price period with no floor price?

Mr Comley: If there are no regulations made, if they are disallowed by both houses or whatever, then there

would be no floor price in operation in 2015.

Senator BIRMINGHAM: I ask that genuinely, because there are obviously current debates other than just the

one about the floor price. There are other aspects of the legislation where there is a default mechanism that kicks

in if something is not approved.

Mr Comley: You would appreciate that we do not typically tender legal advice. The reason I have answered

that question is I think the answer to that is sufficiently clear-cut. If it were a matter of contest, we would

probably defer to the fact that it is a matter of legal advice.

Senator BIRMINGHAM: Perhaps this is more a question for the minister, but, given that the stated floor

price has been government policy since the moment the package was released in its entirety, why has it not been

put through in regulation yet? The question is more for you, Mr Comley. It may be that there are technical reasons

as to the development of those regulations that are holding it up.



Mr Comley: There are technical issues that have been quite complex and we have had very substantial

discussions with members of industry about how the floor price should be given effect. Without going into the

full details, I think you would be aware there was a discussion paper put out by the department at the end of last

year and that alludes to some of the significant technical issues. The essential issue which has been raised through

consultation with industry is that giving effect to a floor price is relatively straightforward if you are happy to

have the floor price applied at the point of surrender of a permit—you just take what the market price is at that

time and apply a top-up fee so the floor price is delivered.

The issue that has been raised by industry is that many would like to know what the surrender charge—the top-

up fee—is now rather than waiting until the time of surrender, because they see that as an additional risk they

need to hedge against. The question that has been consulted on really is: are there ways in which the facility to

lock in the surrender charge can be made that do not expose the government to unreasonable risks or is there a

balance that can be struck between the two? That consultation process has been ongoing. It is not true to say that

there is a uniform view within all members of industry about the best way to achieve that outcome. It is also true

that some of the proposals put forward involve transferring some risks to the Commonwealth, so there has to be

an internal process to decide whether those risks are acceptable to the Commonwealth.

CHAIR: We have four minutes left. I have been extremely generous in terms of your time. I have some

questions for Ms Munro that I want to ask now.

Senator Wong: Four minutes for this outcome?

CHAIR: Yes. Ms Munro, on page 4 of your tabled six-page statement, you indicate that you have started to

provide provisional assistance to certain industries. You go on to indicate that applications closed on 2 May for

the provision of free carbon units under the Energy Security Fund to highly emissions-intensive coal-fired

generators and that you are assessing those applications. How many applications have you had?

Ms Munro: We have received 10 applications. Just for the information of the committee, a joint application

form was agreed for the two forms of assistance under the Energy Security Fund, so those businesses that applied

for the cash payments submitted information in a form that was available to both the Department of Climate

Change and Energy Efficiency for their assessment and then to us for our assessment.

CHAIR: Are these applications under any set formula, or is it simply that people are putting in applications

based on what they see as their circumstances?

Ms Munro: The application is based on the nature of the generation complex. The legislation provides for

$41.7-odd million free carbon units to be issued in each of the four financial years commencing 2013-14, so the

nature of the assessment is to firstly confirm that the applicant is eligible and then to allocate that $41.7 million

permits according to a formula.

CHAIR: You then go on to say that starting on 1 July you will be looking at the applications for assistance

under the Jobs and Competitiveness Program.

Ms Munro: That is correct. We are just in the process of readying ourselves for that. That is the program

which provides free carbon units to eligible emissions-intensive, trade-exposed organisations. That will be for

each of the next four financial years and will be based on their production levels and emissions for the previous

year, so the allocation to be identified for September 2012 will be based on their 2011-12 production data.

CHAIR: So next time we come back we should be able to get a report on who has received the emissions-

intensive, coal-fired grants for the coal-fired generators and you will be able to give us a progress report on the

trade-exposed area?

Ms Munro: That is correct. As I said in my opening remarks, we anticipate making the decision on the coal-

fired generators assistance at the June meeting of the regulator. The applications from the emissions-intensive,

trade-exposed organisations are likely to come in over a period of time, but we would certainly be able to give

you an update at that point.

CHAIR: That concludes this part of estimates. Thank you, Ms Munro, for your contribution. I now call

officers from Low Carbon Australia.

[17:00]

Low Carbon Australia Ltd

CHAIR: Ms McDonald, welcome to this estimates hearing. Do you have an opening statement?

Ms McDonald: No, I do not.



Senator BIRMINGHAM: Welcome, again. We have a little bit more time with you today than we had last

time. Can you explain to us how Low Carbon Australia is going to function under the new framework of climate

change organisations established as a result of the Clean Energy Future package? Does it impact on your future

operation?

Ms McDonald: Obviously the coming into being of the Clean Energy Finance Corporation clearly has quite

an impact on the outlook for Low Carbon Australia. We, in fact, put in quite a detailed submission to the expert

review of the Clean Energy Finance Corporation setting out the work that we had been doing over the past two

years in providing finance for energy efficiency into the marketplace and developing new forms of that finance.

We outlined in that submission the areas in which we felt that there was an overlap with some of the mandate of

the CEFC and put forward in that submission a proposal that the CEFC look at the work that we had done, see it

in essence as a pilot for that activity, and recommended that consideration be given to either using us as a delivery

arm of the CEFC or some other form of integrated operation so that there would not be two competing arms of

government in the same marketplace and for us to be able to operate in ways which would be complementary.

Senator BIRMINGHAM: Your role to date, as I recall, has been perhaps more focused on the energy

efficiency side of the ledger and in helping companies to reduce their emissions profiles and those types of

activities, whereas the big picture approach that people have described for CEFC is more in the realm of

renewable energy activities. Nonetheless, you think there is sufficient potential for overlap there that a stronger

linkage is necessary, either by you being a partner or subset of CEFC or in fact potentially being subsumed by

CEFC.

Ms McDonald: As we understood it from the announcement by the government and our discussions with the

CEFC expert review panel some $5 billion of the CEFC was to be directed at renewables, but there was up to a

further $5 billion which would potentially be directed at some of the areas in which we had already been

operating. In our submission to the CEFC we made very clear what the parameters of our current operations were,

where we felt that we had developed quite a sophisticated understanding of the market and the market needs for

finance in that space, and where we felt that we could play a role in being part of the delivery, exactly what that

form would be and over what time frames, were not so much matters for us but really matters for negotiation

between the board of the CEFC, once established, the government and, of course, our own board.

Certainly in our submission we pointed out the complementarities and the areas in which we could bring to

bear some existing market knowledge, existing relationships and some early opportunities for the CEFC. We also

set out in our submission the fact that under the terms of our current funding our loan fund will be exhausted; that

is, it will all be out and available to the marketplace by the end of the financial year 2012-13, as required under

our own funding conditions with the Commonwealth. Therefore, the availability of funding from the CEFC for us

to continue to operate as a deployment vehicle for some of that funding seemed to solve the issues for us that we

face in terms of our own future, as well as being an opportunity to minimise any potential conflict in the eyes of

the market, that we would be two government owned bodies offering finance at less than commercial rates, but

certainly lending into the marketplace, and it would not make sense for us to be trying to lend into the same areas

of the marketplace.

Senator BIRMINGHAM: In the context of this year‟s budget preparation, you do not have an allocation out

of this year‟s budget because all of your money was bequeathed to your organisation a little while ago, but

obviously Clean Energy Finance Corporation is expected to be established over the course of this year and

operational for the next financial year. Have you been given any indication as to how the response to the future of

Low Carbon Australia has been heard by government? Has a decision been made as to what your future entails

there, or are you awaiting the legislation for CEFC or other such steps?

Ms McDonald: The board of management of Low Carbon has actually put forward this submission. The

expert review panel of the CEFC made a recommendation for that to be a matter of discussion once the CEFC

was established between the board of the CEFC and the government. The government announced its acceptance

of the CEFC review panel‟s recommendations in full, so at the moment, in essence, we are getting on with our

own current program and, in fact, intensifying that as we move into full swing ourselves and await the outcome of

those discussions.

Senator BIRMINGHAM: Are all positions on your board filled at present?

Ms McDonald: Under our constitution we have the ability for a board up to 11. Professor Robert Hill, our

inaugural chairman, finished his term in January. We have an interim chairman at the moment who is Martijn

Wilder, one of the original four directors, which makes a total of five on our board at present.



Senator BIRMINGHAM: Was Professor Hill not looking to continue in his term or was there a reason for his

stepping down and you having an acting chair now for a period of some months?

Ms McDonald: You would have to direct that question to Professor Hill. We certainly enjoyed a very great

benefit from having Professor Hill as the inaugural chairman of Low Carbon Australia. He certainly brought an

enormous breadth, history and knowledge to that role. The rest of the board of Low Carbon have been very

grateful for that. As to any further discussion around the reasons or the future, that is really a matter for the

government rather than the board of Low Carbon itself.

Senator BIRMINGHAM: So you currently have five directors; is that correct?

Ms McDonald: We are in the process of looking at the appointment of another director. That is actually in

process, but the matter for appointment of any director to Low Carbon actually rests with the Minister for Climate

Change and Energy Efficiency. At the moment all I can say is that is a process which is underway.

Senator BIRMINGHAM: I can take from that that you have provided some advice or recommendations to

the minister and the ball is in his court. Is Professor Hill the only one of the initial directors to have had his term

expire?

Ms McDonald: In fact all four of the original directors‟ terms expired on 14 January this year. The remaining

three directors‟ appointments were extended for a further three years and Professor Hill discontinued his term as

chairman.

Senator BIRMINGHAM: Minister, I know you were the one who appointed Professor Hill, but you are not

the responsible minister any more.

Senator Wong: I was.

Senator BIRMINGHAM: Are you aware as to whether that was an agreed end to his term by Professor Hill

or otherwise?

Senator Wong: I do not have any knowledge of that, I am afraid.

Senator BIRMINGHAM: It is always worth asking.

Senator WONG: If I did I probably would not talk to you about it. I have not talked to Robert about that.

Senator BIRMINGHAM: I am sure we can all talk to Robert about it separately.

Senator Wong: He is the Chancellor of Adelaide University.

Senator BIRMINGHAM: Yes, he is. Although I think that is one of three university appointments that he has

around the traps.

Senator Wong: I will tell him that you think he is too busy!

Senator BIRMINGHAM: Ms McDonald, what impact in terms of your loans and business activities, if any,

has the change in decision in regard to the tax breaks for green buildings had?

Ms McDonald: Just before I answer that question, I am reminded that, in fact, I gave a wrong date to you as

to the date of the ending of the term of Professor Hill; it was 13 January, not 14 January. I would just like to

correct that on the record. The discontinuation, or the non-advancement, of the tax breaks for green buildings

policy really has had little impact on the operations of Low Carbon Australia. About 50 per cent of our funding is

directed at financing upgrades of commercial buildings. To our knowledge, none of the proponents of the various

types of finance that we have been putting into the marketplace and none of the candidates for that financing

were, in fact, relying on the eventual coming into being of the tax breaks for green buildings for the financing of

the buildings that we currently have underway. It is business as usual for us.

Senator BIRMINGHAM: Obviously it would have a financial impact on those projects; I think that

presumably for the type of projects you are talking about there would obviously have been a financial impact. So,

you are saying it does not affect the viability of those projects?

Ms McDonald: The time frames for the types of projects that we are financing are lengthy in terms of the

usual build-up to them. A lot of them are driven by the changeover of leasing of major tenants of buildings and

therefore a lot of the programming of these upgrades is through a very lengthy decision-making process, and so

for most of the current crop of buildings that we are negotiating finance for, the fact of a future program, which

was not yet in place, was not really something which was factored in detail into their financing. Obviously, it

would have been of benefit to them had they met the criteria, but it was not something that was built into the

business case.



Senator BIRMINGHAM: Can I go to your particular loans then. You have two types of loans, as I

understand: the indirect and the direct loans, as we have discussed previously. You have provided some

information there. In terms of the direct loans, is it still the case you have completed four projects?

Ms McDonald: I will have to take on notice the actual number. I can give you the total funds we have

contracted and the total that we have got under negotiation, but I do not have a breakdown of the two.

Senator BIRMINGHAM: Give me those and that will provide some comparison with previous information.

Ms McDonald: I certainly will take that on notice.

Senator BIRMINGHAM: Are you able to give me the total funds contracted now?

Ms McDonald: Yes, the total contracted funds that we have at present is $35 million. That is matched by

partner recipient finance of $80 million, which means that there is a total of $115 million mobilised into the

marketplace of available finance, and we have presently under offer or under negotiation with potential partners

$22 million in Low Carbon Australia funds. That is to be matched by $51 million by recipient partner finance.

That would mean a further $73 million being mobilised into the marketplace.

Senator BIRMINGHAM: Is that across both of your different types of loan products?

Ms McDonald: That is across both of our different types of loan products.

Senator BIRMINGHAM: Are any of those loan products yet at a stage of repayment commencing?

Ms McDonald: Yes. In fact, since we were last here we had the good fortune to have one of our loans be

totally repaid. The property was one in O‟Connell‟s House in Brisbane. The development company, Harvest,

acquired the property in 2010 for $7.95 million. They did one upgrade to it at the turnover of tenants and came to

us for some additional financing to do an upgrade to the energy efficiency of that building, to put in a new chiller.

That work went ahead and they then were able to renew all the tenancies and then could sell the property for

$12.25 million in April this year, at which time they repaid us the loan in total. They were able to do so at a

considerable profit to themselves, with a 17 per cent internal rate of return on that transaction. We have been able

to work with the Harvest Property group to promote that not only to a number of other building owners across

Brisbane but, in fact, through organisations such as the Property Funds of Australia as part of the rationale for

actually undertaking this upgrade of a building from a zero to 4-plus stars.

CHAIR: I really do not know whether to congratulate or say you are contributing to the property bubble.

Ms McDonald: I do not think anybody in Brisbane would say there was a property bubble.

Senator BIRMINGHAM: Was that a repayment earlier than planned?

Ms McDonald: Yes. That was a five-year loan, but because the property was sold it was able to repay the

investment.

Senator BIRMINGHAM: Have any of your other loans reached that point of repayment yet, or not at this

stage?

Ms McDonald: Not at this stage, no.

Senator BIRMINGHAM: So this was a fortunate one-off in that sense?

Ms McDonald: Yes. But I would say it is part of a model that at least some of the property owners that we are

working with are looking to do. It is a way of really replenishing building stock. We have undertaken another

upgrade of a building in Ipswich that we were able to open and present a plaque to earlier last week. That is one in

which the property owners have bought, sold and upgraded three buildings throughout Ipswich, so really being

able to upgrade the energy efficiency of more than one building in a region. We are looking to work with more of

those sorts of property owners and help them accelerate the type of activity that they are doing to act as a

demonstration effect in the marketplace. The effect of the Harvest example is one which we hope will stimulate

some others who have got these low-performing properties to do the same sort of thing, to upgrade the building

stock.

Senator BIRMINGHAM: You indicated that you expected all of your loan funds to be out-the-door by the

time the CEFC commences operation. That is the business plan you are working towards?

Ms McDonald: It is indeed; it is part of our funding deed with the Commonwealth, with the Department of

Climate Change and Energy Efficiency, that our total loan fund pool of $84.6 million will be applied—that is,

will be contractually committed—to particular providers to be available into the marketplace. It was always

envisaged, given the nature of the market, that it does take some time for those providers to actually find the

projects that will then be subject to that funding. But certainly our objective and all of our work is directed at

actually getting it out there available to the marketplace. That is what we intend to have by 30 June 2013.



Senator BIRMINGHAM: So, that gives you about another 13 months to finalise your current $22 million of

negotiations that are currently live, that you talked about before, plus complete about another $20 million on top

of that?

Ms McDonald: That is correct.

Senator BIRMINGHAM: You are confident that can be achieved in that time line, given the scope of

projects that are coming on and the slowing down in some quarters of the property market that you alluded to

earlier?

Ms McDonald: We have quite a strong pipeline of projects and what I would say is that when we first went to

the market with our request for expressions of interest in July 2010 we got a strong set of projects in terms of

expressions of interest. A number of those, once we had investigated them, we did not proceed with, either

because the projects either did not go ahead or there was a different perception in the marketplace of what was the

type of finance that we could provide and we were in a position to provide. We went to the market again with a

request for proposals in September last year and again got quite a strong set of expressions of interest. That began

a number of negotiations with different financial partners, different energy companies around the sorts of ways in

which we could collaborate, where we could enter into different financial arrangements and, in fact, a number of

the discussions that we have underway for this $22 million have arisen from that.

As the institutions we are dealing with have understood the type of finance that we are able to provide, we are

getting new proposals all the time from financial institutions and other companies looking for ways of using our

finance in, I would say, quite an innovative fashion. The other area of our pipeline which is very strong is in the

industrial area, because we have a number of manufacturers who are looking to undertake energy efficiency

upgrades. We are looking at financing projects in that space as well as providing complementary finance to

manufacturers who are seeking grants under the Clean Technology Grants program, because we, after all, are just

another financier in the marketplace, with very specialised, tailored finance for those particular purposes. So, for

instance, a manufacturer looking to lease a particular type of energy efficiency equipment could be taking that

lease through our financial partners and using that as the finance to make up the difference between that and the

grant that they are seeking from the Commonwealth.

CHAIR: I understand that you got a mention at the World Economic Forum; is that correct?

Ms McDonald: Not quite in that way. The World Economic Forum property group conducted an expert study

over 12 months looking at what they called hot spots of retrofitting around the world, trying to analyse what the

reasons were for some markets having a stronger trend towards retrofitting than elsewhere. They identified

Australia as one of those markets and they identified some of the financial products that we are providing, in

particular our on-bill finance product with Origin Energy and the environmental upgrade finance which we have

developed with National Australia Bank and Eureka Funds Management as cutting edge financial interventions

that they believed were contributing to the increase in interest in retrofits in the Australian market.

CHAIR: There are no further questions, so what we are going to do, by agreement, is have an early dinner and

we will reconvene at 7pm.


CHAIR: I now call officers from the department in relation to program 1.2, 'Improving Australia's energy

efficiency', and invite questions.

Mr Comley: Just before we start that, we have a clarification on the international travel reconciliation issue. If

the officers could address that quickly then we could move on.

CHAIR: No problem.

Mr Gleeson: This morning Senator Birmingham asked about the travel. I just want to try and clarify where we

are. I should have stated earlier that it is not our intention to try and hold anything back. Our systems at the

moment are in a state of flux before we move to the whole-of-government travel card process. If you could bear

with me, in August 2011 DCCEE moved to a new travel provider. That was in the first part of the whole-of-

government travel process. This was undertaken as part of the whole-of-government approach to streamline and

improve travel efficiency. The provider was chosen as a result of a competitive process.

Then in March 2012 we changed our travel policy to introduce credit cards for travel. That was part of

preparing for a move to the whole-of-government approach to travel. Staff can now pay for accommodation on

the credit card, and the benefit to the organisation is that we can clearly track the GST, which we were not getting

before. Previously people would be advanced their whole travel allowance, their allowance for incidentals plus

the amount for accommodation, and there was no way for us to disaggregate that for reporting purposes. So, when



we previously reported to the Senate on that, we were giving you a lump sum for TA, travel, accommodation,

meals et cetera plus the airfares. We have this afternoon run off a complete list of all the air travel from 1 July to

30 April 2012, and I am very happy to table that. We have deleted the names from that for privacy purposes.

Until we go to the whole-of-government system, we currently do not have a back-of-house system that enables

the quick capture of individual expenditure for accommodation and the TA portion. Staff can charge meals to

their card but they are also entitled to draw down their travel allowance as cash, and they can also pay for meals

by cash. There is bit of a combination of both. When the Department of Finance and Deregulation go to the

second stage of the whole-of-government travel, they will be requesting organisations that tender to provide what

they call an expense management system, which is really a back-of-house system, which will be available to

departments. We would be very keen to pick that up. That would then give us the facility to be able to diagnose

our expenditure in a whole range of ways, and we should be able to give you a whole lot more information at that

stage. But, at the moment, one of the risks we have in trying to separate meals from accommodation, rather than

giving you a total figure, is that we may inadvertently mislead the Senate.

CHAIR: Thanks. I do not intend revisiting this, because we are on program 1.2.

Senator BIRMINGHAM: Sure. I just wanted to thank Mr Gleeson for that information and his answer. We

will save the argument for another occasion.

CHAIR: That is good.

Senator BOSWELL: I wanted to ask about the Solar Dawn program.

Dr Kennedy: Is that Solar Flagships?

Senator BOSWELL: Solar Flagships.

Mr Comley: That is the resources, energy and tourism portfolio.

Senator Wong: You asked us last time and—

Senator BOSWELL: Someone said it was at seven o'clock.

Senator Wong: I think we were at cross-purposes. We were thinking you were thinking about energy

efficiency. The Solar Flagships Program is a Resources, Energy and Tourism program.

Senator BOSWELL: When is that on?

Senator Wong: I am not sure. I do not deal with them.

Senator BIRMINGHAM: Economics committee next week.

CHAIR: Okay. Senator Birmingham.

Senator BIRMINGHAM: I am going to go to the Energy Efficiency Information Grants, which were briefly

the subject of some discussion earlier. I understand that $20 million of the total $40 million in funding for the

Energy Efficiency Information Grants was announced on Thursday, 17 May. Is that correct?

Mr Cahill: That is correct.

Senator BIRMINGHAM: How many recipients were there of those grants?

Mr Cahill: Twenty-eight.

Senator BIRMINGHAM: This was a competitive grants process?

Mr Cahill: Yes, it was.

Senator BIRMINGHAM: How many applications were there?

Mr Cahill: Two hundred and five.

Senator BIRMINGHAM: And assessments were undertaken internally by the department of all of those

applications? What was the process?

Mr Cahill: We had a process where we engaged an independent program advisory committee, who then made

merit assessments and provided independent advice to department. The department then made a recommendation

to the minister.

Senator BIRMINGHAM: Who was on the independent program advisory committee?

Mr Cahill: The committee was chaired by Professor Howard Bamsey, who is Adjunct Professor in Climate

Change and Energy Security at the University of Sydney. It also had Professor Suzanne Benn, Professor of

Sustainable Enterprise, UTS, a former director of the Australian Research Institute for Environment and

Sustainability. The third member was Professor Alan Pears, an adjunct professor at RMIT University and

Associate Director of the RMIT Centre for Design.



Senator BIRMINGHAM: So those three people formed the advisory committee and they assessed all 205

applications?

Mr Cahill: Yes.

Senator BIRMINGHAM: And they provided a recommendation for the 28 successful ones?

Mr Cahill: Yes, they provided a recommendation of the 28 most meritorious applications, and the department

accepted that advice and made that exact same recommendation to the minister, who also accepted that advice.

Senator BIRMINGHAM: So the final determination of the minister reflected the advice of the department,

which reflected the advice of the advisory group?

Mr Cahill: Yes.

Senator BIRMINGHAM: I note there has been some coverage today of the matter. Can we take it as little

more than coincidence that two of the beneficiaries are in Minister Combet's electorate and that they are receiving

grants of up to $1.8 million out of the $20 million allocated?

Mr Cahill: The two mentioned in the newspaper article are not technically in the electorate of the minister.

Obviously we make sure we report all our electoral obligations under a grants process. Where there is a grant or a

recipient of a grant within the electorate of a decision-making minister, we arrange for the process to have the

minister write to the minister for finance. This was not the case for those two bodies.

Senator BIRMINGHAM: So those two are based outside the minister's electorate. I can see how confusion

may exist. The Hunter Business Chamber and the Lake Macquarie Business Growth Centre would probably both

undertake operations within the ministers electorate, one would imagine—but I guess that is a bit like saying the

New South Wales Chamber of Commerce undertakes operations in the minister's electorate. Many do. The

guidelines as they exist are specific to the physical locality of such organisations.

Mr Cahill: There are a number of recipients. I can get Professor Richards to expand on that. Nearly half are

national; therefore, they will obviously operate in industries which might dominate in certain electorates. Then

there are a number that are more local.

Senator BIRMINGHAM: What is the organisation Do Something!?

Mr Cahill: From what I understand, Do Something! is a not-for-profit organisation. I can expand on the basis

that the Do Something! project won a grant on, if you like, Senator.

Senator BIRMINGHAM: If you could, Mr Cahill.

Mr Cahill: Its focus is to disseminate practical advice and energy efficiency information to SMEs and

community groups. It is focusing on an energy efficiency web portal focused on time-poor SME owners and

community groups and targeted YouTube videos. It will have a portal and a calculator that will enable SMEs and

community groups to calculate how much they spend on electricity and gas, fuel, compared to the previous year's

benchmarks and then to measure their progress on savings in terms of energy efficient measures. There will also

be a series of PowerPoint packages put together for presentations to small businesses and they will also liaise with

organisers of state and national conferences to target SMEs. The campaign would use Do Something!'s local

community network, which was developed for dosomethingnearyou.com.au.

Senator BIRMINGHAM: How long has Do Something! existed? Is there a history to this organisation?

Mr Cahill: Under the guidelines it has to be under 12 months with a connection to a constituency or ability to

be able to connect to the target audience, in this regard the SME. I would have to take on notice the length of time

that organisation has been operational. Obviously, I do not have the applications in front of me.

Senator BIRMINGHAM: Overall these grants obviously are intended to provide information about energy

efficiency options for a whole suite of businesses. Will there be any assessment of what the take-up of these

options and ideas put out through the various grants—in some cases $1 million plus grants—has actually

delivered?

Mr Cahill: Yes, two levels. We are in the process of finalising what we call a monitoring and evaluation

framework, which enables us to identify key performance indicators as to the progress or the success of this

program. We will then embed that information that we need to assess that within the funding agreements which

we are obviously in the process of finalising and then working through with the grant recipients to ensure that we

can measure the outcomes of the program.

Senator BIRMINGHAM: In terms of the programs rolled out by these 28 organisations, aside from the

standard reporting processes back to government and so on, does the advisory committee have some input or say



on overlooking the materials that are developed? How would the Commonwealth be verifying that it is getting not

just materials of suitable quality but also effective information to provide energy efficiency in these quarters?

Mr Cahill: I will answer that in two parts. I will ask Professor Richards to expand on the second part. Part of

the assessment of the proposal was the proponents putting forward their own technical experts as to how they

could quality assure the program and the quality of the material that is being presented. That was obviously taken

into consideration in identifying the successful grant recipients. In terms of the next phase, the funding

agreements will, on a risk basis, identify and ensure that the program is delivered as articulated in their proposals.

Prof. Richards: Just to add to that, in addition we will also have a panel of external providers with expertise

in particular areas of energy efficiency that will be able to review any information coming forward for us.

Senator BIRMINGHAM: Thank you. I will move on. Page 26 of the 2011-12 PBS for program 1.2 of the

department stated that one of the key performance indicators was to develop legislation on tax breaks for green

buildings. Did the department meet that key performance indicator and develop that legislation?

Mr Comley: Senator, I think you are aware that government policy changed for tax breaks for green

buildings. As such, I think the KPI note was no longer relevant.

Senator BIRMINGHAM: As far as I am aware, government policy changed in the May budget, which is

effectively ten-twelfths of the way through the calendar year—10 months in which the KPI may well have been

met before that policy change occurred. It may not have seen the light of day, but did the department develop

legislation on the tax breaks for green buildings?

Mr Comley: How far advanced it is I do not think is a yes or no answer. Obviously we considered a whole

range of policy options and the government decided they would not proceed with that.

Senator BIRMINGHAM: I am aware the government decided that it would not proceed with it, but there was

an expectation that this would be legislated. There was clearly an expectation that the department would develop

the legislation. Did it proceed to the stage of discussion with parliamentary counsel or the like?

Mr McGlynn: There was considerable process made on drafting legislation but there was also in April 2011

an announcement that the government would look at potentially other options for delivering this mechanism, so at

that stage the focus came to be on looking at those potential other delivery mechanisms rather than the specific

legislation involved. The short answer is: yes, there was progress on developing the legislation but there was also

quite a bit of work on alternatives to that.

Senator BIRMINGHAM: Thank you. I appreciate your candour in telling us that there was that degree of

progress. Has the department received representations since the decision of the government to opt for a different

policy?

Dr Kennedy: I have not received any representations. I would have to consult with my colleagues or take that

on notice.

Mr McGlynn: Can I just clarify the question? Is it what time and what sort of representations you are asking

about? Do you mean since the budget announcement?

Senator BIRMINGHAM: Since the policy change became clear.

Mr McGlynn: That announcement was made in the budget. Since then I have not seen any representations. I

understand that there are likely to be a few.

Dr Kennedy: We will take it on notice and consult with our colleagues. You can be sure that neither Gene nor

I have had representations.

Senator BIRMINGHAM: So the department obviously did prepare advice on alternative options for the

government when the government flagged it was considering those alternatives to the tax breaks program.

Dr Kennedy: As you know, on any of these types of policy matters we are advising the government all the

time. That is the usual practice.

Senator BIRMINGHAM: Was there a review being conducted into the operation potentially of the tax

breaks for green buildings program by the former Victorian Labor minister, Mr Roper?

Mr McGlynn: There was a tax breaks for green buildings roundtable set up following the announcement in

April which was to look at possible alternative designs. That was chaired by Tom Roper as the chair of the

Australian Sustainable Built Environment Council and contained a number of other key industry players and

people from non-profit organisations. That committee put together a report on possible redesign options that

might be considered which was presented to the government in December.

Senator BIRMINGHAM: Has the report been made public?



Mr McGlynn: Not that I am aware of.

Senator BIRMINGHAM: Can the report can be provided to the committee? I expect the answer will be

either a flat no or taken on notice.

Mr Comley: We will take it on notice.

Senator BIRMINGHAM: Thank you, Mr Comley. We will see where that goes. Have any estimates been

made as to the potential energy efficiency measures or emission reduction volumes that could have been achieved

under the proposed scheme?

Dr Kennedy: Just to clarify, are you talking about abatement or cost savings or all of those sorts of things?

Senator BIRMINGHAM: I am happy to be flexible on the answer depending on whether any of those sorts

of things have been measured or assessed.

Dr Kennedy: Consideration of the policy and its alternatives are the types of issues people would have been

working through, but no final positions were settled on the various options.

Senator BIRMINGHAM: So some assessments of cost savings or abatement potential had been made to

correspond with different options as to how the scheme might operate; is that what you are saying?

Dr Kennedy: I cannot go into the specifics of advice to government but, yes, we can be clear that that would

be the type of work we would be doing in providing advice.

Senator FISHER: I want to ask about the Home Insulation Program, in particular following up on a couple of

answers to questions on notice 87 and 89. They relate to Golden Boss Pty Ltd, the company that was unlicensed

but undertook some installations in South Australia. You indicate in your answer to question 87 that the

department has assisted Consumer and Business Services South Australia with the investigation into installations

undertaken by a Golden Boss under the HIP. How has the department assisted the South Australian department?

Mr Cahill: My understanding is that we have provided some information about the overall compliance profile

of Golden Boss, but I would have to check that. I can take that on notice. Obviously, when Consumer and

Business Services South Australia has undertaken some investigation it has asked us what information we are able

to give that will assist with their investigation.

Senator FISHER: By compliance profile you mean the extent to which Golden Boss ticked the boxes under

the federal scheme.

Mr Cahill: If Transfield had undertaken any inspections of any of the installations that Golden Boss had been

involved with and they were non-compliant we would have advised Consumer and Business Services South

Australia of the outcomes of those inspections.

Senator FISHER: I note that you want to take it on notice, but you have already indicated in answer to a

question on notice that you have assisted. Isn't there anyone here who can tell me how? Someone would have

compiled that answer. They must have based it on some knowledge.

Mr Cahill: What I am saying is that the information we would have provided to Consumer and Business

Services South Australia would have been the results of inspections, undertaken under our inspection program,

where there was non-compliance.

Senator FISHER: When did the department become aware that four of the 10 publicly identified installations

by Golden Boss were non-compliant?

Mr Cahill: We will have to take that one on notice.

Senator FISHER: In your answer to question 87, you said:

The Department is aware that Golden Boss Pty Ltd admitted during recent legal proceedings that four installations … were

not carried out in accordance with appropriate standards.

Is that when you first became aware?

Senator Wong: Senator, I understand your frustration, but if the witness cannot recall or is not the officer who

has all the detail, can I first say that that is not unusual: there are obviously a number of people in any department.

Inevitably, you are going to get more senior levels of officer here who may not have every piece of detail, but he

is also entitled as a public servant to take the question on notice, and that is what he has done.

Senator FISHER: I appreciate the latter point, Minister. Is there any officer here who can answer those

questions in the couple of hours we have for this outcome?

Mr Cahill: No.

Senator FISHER: In answer to question 89, you indicate:



The Department has engaged with Golden Boss Pty Ltd in relation to non-compliant installations. The appropriate actions

have been taken in relation to these instances of non-compliance …

What actions, when, by whom, how?

Mr Cahill: I will have to take that on notice. I need to highlight with you that reticence about being able to

discuss the specific actions taken on an individual case is not my preference in terms of all the privacy matters

and the other areas that come to bear in that regard.

Senator FISHER: I take that at face value, except it comes a little late in the piece. If that were the main

reason, I would have thought it would be proffered upfront rather than after about four questions.

Senator Wong: You have it now.

Senator FISHER: If you are taking that on notice, can you indicate how many South Australian homes, if

any, have had the appropriate actions taken in respect of the installations?

Mr Cahill: I do not have that specific information with me.

Senator FISHER: I expect you to take that on notice.

Mr Cahill: Yes. Again, I am conscious that we have obviously thousands of cases. I am conscious that as we

take compliance action and work through, I need to take into consideration the privacy of the actions we are

taking.

Senator FISHER: This one has actually been to court.

Mr Cahill: Yes, I understand that.

Senator Wong: But you are not asking about that; you are asking more generally.

Mr Cahill: That might be different from the information we hold.

Senator FISHER: Of the companies unlicensed to perform work in South Australia, how many of those are

being investigated by the South Australian department and assisted in that respect by your department?

Mr Cahill: I do not have a comprehensive view of the work undertaken by the South Australian department. I

am of the view that I may have information as to what other cases or what other advice we have given to the

South Australian department. But the number of cases and what they are working on, I do not have any visibility

over.

Senator FISHER: Of the recoveries, if you like, at last estimates, Ms Leo, you indicated that $2.6 million was

owed as part of the insulation program to the Commonwealth from companies in administration. During the

questioning, I think Mr Cahill, it is fair to say, indicated that some of the moneys owing would be written off as

uneconomic to recover. How much, if any, of the $2.6 million owing by companies in administration has been

written off, if any? How much has been recovered?

Ms Leo: As of 31 March, we still had $9,200 written off. None of that related to companies that are under

administration.

Senator FISHER: That is $9,200?

Ms Leo: Yes.

Senator FISHER: That is out of the $18.1 million, as you advised back then that was owing?

Ms Leo: Yes. There has been no change in what has been written off since the last estimates.

Senator FISHER: So how much has been recovered?

Ms Leo: As of 31 March, in relation to the home insulation program, $920,348.

Senator FISHER: That is $920,000?

Ms Leo: Yes.

Senator FISHER: How much had you recovered this time in February?

Ms Leo: It was $844,000, I believe.

Senator FISHER: So you have recovered about another $80,000 in the interim?

Ms Leo: Yes, in that period.

Senator FISHER: How much does that leave outstanding, then, just to check we are doing our maths?

Ms Leo: In relation to the home insulation program, there is $21,787,000 outstanding or thereabouts.

Senator FISHER: We have issued more debt since?

Ms Leo: Yes. That is right.



Senator BIRMINGHAM: Was it last time that you had sent reminder letters out, or was that in fact back in

October last year? I cannot quite—

Ms Leo: We would have done both, so more will have gone out since the last estimates.

Senator FISHER: How many extra debt notices have you issued since last estimates? What is the amount of

the additional debt notices you have issued since last estimates?

Ms Leo: I believe we have issued around 4.2 million in additional debt since the last estimates.

Senator FISHER: That is 4.2 million?

Ms Leo: Yes. That is right.

Senator FISHER: It sounded like you said billion. From where have they materialised?

Ms Leo: As we work our way through compliance cases, we work through a process of gathering evidence

from the installer business and notifying of the noncompliance and then work through a process to issue debts if

we find that installations are not compliant.

Senator FISHER: At this stage, you would have to say the dollars of noncompliance are increasing more

rapidly than the dollars recovered?

Ms Leo: Yes, they are.

Senator FISHER: That is a tad depressing. Are you still planning to publish a summary or report of the data

gathered from the inspections under the HISP and the FISP?

Mr Cahill: As I said at the last hearing, as with any government program, when it closes out, you look to be

able to summarise the outcomes and outputs, and obviously report them back.

Senator BIRMINGHAM: Before you go too far down the report path, when were the first invoices for these

debts issued?

Ms Leo: In March 2011.

Senator BIRMINGHAM: And the bulk of them were issued when?

Ms Leo: In March 2011.

Senator BIRMINGHAM: That is what I thought. So they are now 14 months—

Senator FISHER: Long in the tooth.

Senator BIRMINGHAM: At what point does the department decide that recovery options are so slight as to

give up? Before I get to that point, again, testing my memory, with some of them, were you looking at the option

of selling them off to a debt collector or the like?

Mr Cahill: Our strategy at the moment is obviously we are within a couple of weeks of signing contracts with

a mercantile agent. To underpin that, obviously we would look to improve that debt recovery rate but also make

judgment calls about what debts are collectible. At the same time I mention that we have just finalised some work

by a specialist that we got from the Australian Taxation Office, as you would appreciate, the Department of

Climate Change and Energy Efficiency‟s core business is not debt collection. We have brought in some expertise.

What they have done is work through to profile that debt and look at what is collectible. That can go through

characteristics such as what organisations are in receivership and what the characteristics are. That will inform

what pathways will go with the mercantile agent. Some will go to the mercantile agent. Again, the mercantile

agent is paid to do a series of activities. We do not sell the debt. We still control the debt and are the decision-

maker. I will put it in a couple of categories. There will be debt we just review and decide that, look, the

collectability is negligible. There will be debts where we can re-engage and where we use different methods to re-

engage them. There are ones where we just reinforce. There are other actions where we think we will have better

collection rates. So we have positioned it well. I would have been hopeful that we would have had that contract

signed and executing, but we are conscious that we get the processes right given the sensitivity of this program

and making sure that we understand the debts and the nature of what we are referring to a mercantile agent.

Senator BIRMINGHAM: What will the mercantile agent do that the department has not already done?

Mr Cahill: There is a number of things a mercantile agent would do. Obviously they have what they call debt

scoring systems and they have a broader data set. In some instances, they have what I call improved traceability.

In terms of our ability to identify, find, communicate and gauge with someone, obviously large-scale debt

collection agencies have the ability to be able to target those and put in place the processes to do the

correspondence and collect that debt at a level where the scale of our operation and the expertise is not in the

same sphere as ours.



Senator BIRMINGHAM: And you said you are still finalising the contract negotiations with the mercantile

agent?

Mr Cahill: Yes. We are at various stages of putting ink to the paper. But there are a couple of areas where we

are working through on specific clauses to make sure we protect the interests of the Commonwealth and make

sure that we have, for example, the right workplace health and safety obligations that we need when we engage a

subcontractor for the people delivering those services.

Senator BIRMINGHAM: Is there a duration for how long you expect this contract to run?

Mr Cahill: No, not at this stage. The contract, I imagine—and I have not got it with me—would have a clause

for a period, maybe a year, with options to extend. But at this stage I do not imagine it is any longer than that.

That contract is looking at its ability to support any debt operations for the department as a whole going forward.

Senator BIRMINGHAM: Any debt operations?

Mr Cahill: Well, if we have debts under programs. Now, we do have some small debts from other programs.

We do have some small debts from the green loans program. But if we set up a very efficient and cost effective

arrangement that will not have many fixed costs for us to maintain, then obviously that would be a very good

platform for the Commonwealth going forward.

Senator BIRMINGHAM: I will let Senator Fisher resume.

Senator FISHER: So you are still planning to do a report or a summary of what you find in your inspections

under the HISP and FISP. Will it be a summary or a full-on report? What sort of data will it capture?

Mr Cahill: I do not have any clear picture on that at this stage. My focus is obviously ensuring that we

successfully close this program.

Senator FISHER: Likewise. But we would like to see the results.

Mr Cahill: Yes. Again, for the program, I would think, at earliest in August. So the program is obviously still

operational this financial year. And I will get in the reports from Transfield. I will not be getting the final reports

from Transfield, in terms of what they have done as the major deliverer, until late July or early August. And then

obviously the department needs to review that in the context of the objectives of the program.

Senator FISHER: What is the total cost of the Transfield contract?

Mr Cahill: I do have that.

Senator FISHER: For the HISP?

Mr Cahill: Yes. I will get Mark Painting to answer the specifics of that.

Mr Painting: The contract with Transfield services is still active and still has some time to go. But up to the

end of April, the value of that contract has been to the tune of $58 million.

Senator FISHER: And how many homes have been inspected?

Mr Painting: Only for the Transfield component, I am sorry, I cannot tell you because it has been

consolidated as we go and added to the previous work as well. I would have to take that on notice and give you

the total.

Mr Cahill: I can tell you the number of inspections to date under the program regardless of the contractors, if

you would like. Obviously, if you remember the first phase of the Home Insulation Safety Program, I think PwC

was the lead contractor. Then when we put it out to market, Transfield took over that. We are happy to expand on

the specifics of all inspections to date.

Senator FISHER: Yes, please. But also how many inspections have been performed to expend the $58

million that has gone to Transfield?

Mr Painting: The amount specifically for Transfield, we will take on notice. They will be a component of the

total to the end of March of 198,000 or thereabouts total inspections.

Senator FISHER: Okay. Will you confirm that?

Mr Cahill: Yes. That is non-foil inspections.

Mr Painting: Just to clarify, for the program to date, non-foil inspections at the end of March was 198,670.

But what you are asking is how many of those are specific to Transfield.

Senator FISHER: Yes.

Mr Painting: That is the part we will take on notice.

Mr Cahill: There have been inspections of foils. Under foil, we have also done 47,267 inspections.



Senator FISHER: How much has the taxpayer paid for the foil inspections?

Mr Painting: Just to clarify, did you ask specifically only for foil inspections?

Senator FISHER: Just then I did.

Mr Painting: Initially these arrangements were under separate contract arrangements. There was a separate

contract for the foil program specifically. It was valued at $78 million. But because you asked for foil inspections,

there have been some inspections since Transfield have been on where it has been consolidated. Their value will

include some foil inspections as well. It was $78 million when it was a specific foil contract, but there have been

additional foil inspections since we consolidated the contract. Again, I can provide the specifics of that on notice.

Senator FISHER: Can you provide a consolidated cost that shows apples with apples—the number of houses

inspected, whether they are FISP or HISP, and the contract value?

Mr Painting: Yes, I can.

Senator FISHER: On a time basis?

Mr Painting: I can tell you now that for the life of the program of all of the inspections done, which is the

198,000 non-foil and the 47,000 foil inspections since the start of the safety programs, that has totalled, again,

over the life of the program and all the contracts that make it up, $273 million, or $272.9 million, to be precise.

Senator FISHER: I am just trying to work out, but I am getting my zeros confused, what that means per

house.

Mr Comley: It is a bit over $1,000.

Senator FISHER: Yes. It is a grand a house, is it not, or a bit over? It is 273 divided by 250. How many calls

have been made to the home insulation hotline, say, month by month over the last 12 months?

Mr Painting: Month by month, we would obviously take on notice.

Senator FISHER: What data do you have there?

Mr Painting: I can tell you that for the life of the program there have been 105,839 calls to the hotline to the

end of April.

Senator FISHER: When an inspection is done, what data is collected?

Mr Painting: Generally, an inspection report will detail obviously the location and the nature of the work

undertaken. I should just clarify. Again, for foil inspections, the options for the householder are removing foil,

installing safety switches or just having an inspection done. For non-foil inspections, if there is nothing to be done

then it is simply recorded as safe with no action required. Otherwise it is safe with work undertaken, which

usually means some minor rectifications done on the spot, and any other qualitative information about the nature

of the installation is gathered as well and summarised in a report. So we have a detailed report for every

individual inspection.

Senator FISHER: You said that was foil.

Mr Painting: No. It is for both.

Senator FISHER: I would have thought so. So you have a detailed report for every inspection, you just said?

Mr Painting: That is right.

Senator FISHER: Why would you not simply publish that and be damned in respect of the report that I asked

you about earlier, Mr Cahill, so then you do not have to—

CHAIR: I do not think the officers want to be damned.

Senator FISHER: That bit was tongue in cheek, of course. Why would you not simply publish what you have

instead of contemplating recreating the wheel? Have we spent enough on this program?

Mr Cahill: I think it is important that we have had three major contracts. It is ensuring that when we analyse

that information, we can present the best information available. Obviously looking at that sort of material is

important to be able to give what we have learnt from that safety inspection program. But I want to make sure that

when we put that down, it can make sense with the information coming from the other contracts as well.

Senator FISHER: What do you mean by the best information available?

Mr Cahill: As in I have three major contracts to deliver inspections and I need to make sure that I can

categorise all the inspection data and report it accordingly.

Senator FISHER: So, what lowest common denominator across the three? The data is the data, Mr Cahill.



Senator Wong: That is not what he said, so do not verbal a witness. That is not what he said. If you want to

put to him whether it is the lowest common denominator, I am sure he will say no and explain why.

Mr Comley: I think what Mr Cahill is saying is that there will be privacy issues. You could put out a 245,000-

page, or probably more than that, document with all the inspection reports, but it would not be very useful. A

report that is useful would need to draw out of that data the common themes in a meaningful way. I think that is

what Mr Cahill is meaning in terms of—

Senator FISHER: By „best‟, do you mean useful, Mr Cahill?

Mr Cahill: Yes. I do.

Senator FISHER: Thank you.

Mr Painting: It is worth just mentioning, that probably the main reason is simply that the program is still

running. Until such time as it is finished, we would be continually updating it. When it is complete and

inspections are complete, we will have a consolidated report.

Senator FISHER: I appreciate that. Thank you. I will move to the Compensation for Detriment Caused by

Defective Administration scheme. How many businesses have lodged claims for compensation under this

scheme? There was a story on PM on 2 April which said that 39 businesses had lodged claims.

Mr Cahill: As it relates to the green star insulation program, I understand it is in that vicinity, but I would

have to check. I am not sure if it is 38 or 39, but that number sounds broadly right to me.

Senator FISHER: My questions are in respect of home insulation. Can you confirm that on notice?

Mr Cahill: Yes.

Senator FISHER: How many claims have been resolved and how many have been successful in whole or in

part?

Mr Cahill: What I can say is that in nearly all those cases we have issued what we call a preliminary decision.

So what we have put to the claimants is the preliminary position of the department where they have an

opportunity to respond before a recommendation is put to the decision-maker.

Senator FISHER: You just said nearly all of those approximately 39. The PM program alleged that there

were seven cases of those 39 a couple of months ago that had had preliminary findings. You are saying now

nearly all of the 39 have had preliminary findings issued, have you?

Mr Cahill: My understanding is the vast majority have.

Senator FISHER: Who signs off on them?

Mr Cahill: At this stage, I think it is whoever is holding a deputy secretary position within the department.

Senator FISHER: A couple of businesses were interviewed on the PM program. Are you familiar with the

particular story?

Mr Cahill: Slightly more than vaguely, but, yes, I am aware.

Senator FISHER: There was Mr Peter Sinclair and Mr Peter Stewart. They both allege that they were not

going to be successful in getting any compensation. One of them in particular alleges that his business was going

to go bankrupt as a result of the scheme and his involvement with the scheme. Another businessman, Peter

Stewart, has had to wind up his business. He too has had no luck with his defective administration claim. Mr

Stewart said:

I had a business that I could have sold when I decided to retire. And that business was worth a substantial amount of money.

It‟s now worth nothing because the market that it used to service no longer exists. End of story.

Do you accept that businesses went bankrupt or were wound up due to the way that the home insulation program

was handled?

Mr Cahill: It is probably inappropriate for me to discuss the CDA claims because they are still in a

preliminary phase. You would appreciate that until those decisions are finalised, we are still seeking input from

those claimants.

Senator FISHER: If those claims are not paid in whole or in part and it is alleged that a business has gone

bankrupt because of the home insulation program, can you indicate on notice on what basis you would say that

the business did go bankrupt or was wound up if it was not due to its involvement in the home insulation

program?

Mr Cahill: Subject to the advice of the department‟s experts in this area, I will take on notice the ability to

give you the outcomes of those defective administrations once the final decision has been made, obviously



recognising the boundaries of privacy. But I will make sure the information we can give you is correct and is

available.

Senator FISHER: Mr Peter Stewart alleged on the PM program that:

The Government solicitor said, „We‟re not going to negotiate. We suggest to you that you go through the CDDA

(Compensation for Detriment Caused by Defective Administration) process...

Are you aware of that allegation and whether or not that in fact happened? My real question is: was the

department consulted by the Government Solicitor before the Government Solicitor advised, apparently, Mr

Stewart to go through the compensation scheme?

Mr Cahill: We are aware of the conversation and the characterisation of that conversation. Our understanding

of that is the Government Solicitor, as they would always do, outlined the options that were available to those

people. That is not to say they advised that they had particular prospects of success. They just did as is common

practice—say: „This is a process you are now going through. An alternative you could do is CDDA.‟

Senator FISHER: Thanks.

Senator SINGH: I want to ask some questions regarding the thermal performance of residential homes

following from questions I asked Mr Bailey at last estimates. At that time, Mr Bailey referred to the NaTHERS

used for residential houses. I understand the Construction and Property Service Industries Skills Council has been

commissioned to develop that new NABERS qualification on behalf of the National Framework for Energy

Efficiency Residential Building Implementation Committee. Where is that at? How many software tools are now

available?

Mr McGlynn: Under the NABERS there are currently three tools that are accredited. There is FirstRate,

which is currently owned by the Victorian government; BERS Pro, which is owned by a private sector

organisation; and the NaTHERS owned by the CSIRO. The work that CPSISC is doing is not on the NaTHERS

itself, which is administered by the Department of Climate Change and Energy Efficiency on behalf of all

jurisdictions in Australia. What they are developing is a new training package and set of competencies to become

an NaTHERS assessor. We have been working with them to do that. The plan at this stage—I can get an update if

anything has changed—would be to have those new competencies developed and in place by the end of the year

so that a new course for NaTHERS assessors can be developed. That would provide training for assessors to be

able to use any NaTHERS accredited tool to assess a home‟s energy performance.

Senator SINGH: At the moment, someone as part of their builder‟s apprenticeship could get such a software

package?

Mr McGlynn: There is an existing training scheme for NaTHERS assessors. This is an update of that to bring

it up to date and improve the system.

Senator SINGH: Of the existing NaTHERS accredited tools available, there are still three?

Mr McGlynn: That is correct. In some cases, there are different versions available over some periods of time.

As the tools are improved, sometimes an improved version of a tool might come on to the marketplace and then

there is a transition from the old version of the tool to the new version of the tool.

Senator SINGH: Are they all online courses that are done?

Mr McGlynn: No. They are not online courses.

Senator SINGH: So they are a proper course?

Mr McGlynn: Yes.

Senator SINGH: Are they offered in Tasmania?

Mr McGlynn: I would have to take that on notice. I would be surprised if they were not, but I cannot actually

guarantee at this stage who is offering it in Tasmania.

Senator SINGH: Obviously this is a COAG commitment to be rolled out across all jurisdictions.

Mr McGlynn: That is right.

Senator SINGH: Therefore, the courses need to be available in all jurisdictions.

Mr McGlynn: Yes.

Senator SINGH: I would be interested to know whether or not and to what extent they are available in

Tasmania. Have there been any problems determining the star bands across Australia?

Mr McGlynn: „Problems‟ is a funny word. When the new suite of NaTHERS tools came out—I cannot

remember the exact date; I think it was around 2004 or 2005—it was important to make sure that the new system



was aligned with the old system that was in place before that. So there was a lot of work looking at aligning the

star bands to make sure that as we moved from one generation of tools to the second generation, they were

aligned. There was a considerable amount of work going into testing the new and the old generation of the tools.

There was also an expansion at that time from eight climate zones to 69 climate zones to give a lot more detail.

Again, there was some work done to make sure that they were aligned. That work was completed at the time.

There are now clearly published star bands for each of those 69 climate zones and that is well understood and is

automatically handled within the tools.

Senator SINGH: So we are still operating on 69 climate zones?

Mr McGlynn: That is right.

Senator SINGH: I notice that there was one distributor of one of the accredited software programs that were

available—the AccuRate software. One of the distributors withdrew sale support for that at the beginning of this

month. Are you aware of that and what that is about?

Mr McGlynn: I am not aware of that. I would have to take that on notice as well.

Senator SINGH: I understand it is the Hearne Scientific Software Pty Limited.

Mr McGlynn: Yes. They have been the main distributor for the AccuRate tool, which is a CSIRO developed

tool. I would have to take that on notice. I am not aware of that.

Senator SINGH: But obviously that would not impact on the accreditation‟s status, would it? Either

AccuRate Sustainability or AccuRate are still accredited? That is still one of the three that you referred to that is

still available?

Mr McGlynn: Yes.

Senator SINGH: Just in terms of the software used to calculate the star rating of the thermal performance of a

home, townhouse, major renovation or what have you, what cost is involved with the purchase of that kind of

software?

Mr McGlynn: The fees for the licensing and the use of the software vary for the different tools and are not

subject to government regulation. That is a transaction that takes place between the owners and the users.

Senator SINGH: So NaTHERS is obviously about complying with a six-star housing standard. Is there any

move to go beyond six stars?

Mr McGlynn: At this stage, the six stars is still being rolled out across the country. It has been implemented

by most jurisdictions but not all at this stage. There is not any current move to upgrade the six stars to anything

else. However, just in the last week or so, the consultation documents, something called the national building

rating assessment framework, were released. One of the issues that will be discussed in that context is the

question of where future standards might go. So the intention there is to consider possible future frameworks for

how standards might be set in ways that could give a bit more predictability and consistency in terms of how that

system works. That is another current process. That consultation process will now go on for the next six or eight

weeks. Then, depending on the feedback from that, governments will need to consider how they want to do that in

the future.

Senator SINGH: Obviously this is a changing space with a lot of new innovative products and things coming

online that are making seven and eight stars and beyond seem quite affordable in some senses, depending on the

products that are used and so forth. I just asked about that because of the changes that are taking place in the

building and construction industry at least.

CHAIR: Just on this issue, Mr McGlynn, I have a report that the cost of double glazing, which is obviously a

significant benefit in terms of greenhouse gas emissions and use of energy, is much cheaper in the south-east of

Australia than it is in the northern areas. I am just wondering, given that you have the heat in the north and in

Sydney as well, why there is this difference, if that is true. Have you heard this?

Mr McGlynn: I have not heard that. Again, the price of product varies. I think there is often an amalgamation

of issues of the cost of the product and cost of the installation. And the cost of the installation can vary quite a lot,

depending on location and remoteness and what is available and if people have experience installing particular

products. So, no, I do not have specific information about that.

CHAIR: I think the argument was a volume issue. There is more being—

Mr McGlynn: It could be. Increasingly, glazing is a pretty national industry and an increasingly global

industry, in fact. So that may be part of it. But I think it probably is tied as much to local and regional distribution

and skills factors as much as anything else.



CHAIR: I table the DCCEE international airfares document.

Senator IAN MACDONALD: If this area has been dealt with during my absence, please let me know. I have

been looking at a brochure put out by the government a year or so ago about tax breaks for green buildings. I have

seen a brochure that the government had published and distributed lauding all of the positive aspects of that

program. If I read the budget papers correctly, that program has gone in this budget. Is that correct?

Dr Kennedy: The government has discontinued the program in this budget.

Senator IAN MACDONALD: It was, according to the brochure that the government had put out previously,

announced as part of the 2010 government election commitment. Is that correct? Is that how it came in?

Senator Wong: We are very happy to continue answering questions, but we did cover this while you were out

of the room.

Senator IAN MACDONALD: Can someone just humour me by confirming that that was a 2010 government

election commitment?

Mr Comley: It was.

Senator IAN MACDONALD: Why is it no longer relevant in 2012? Perhaps that is a question the minister or

Mr Comley might be able to answer.

Senator Wong: The government made a decision in the budget to not proceed with that. Mr Comley might

explain some of the reasons for that.

Senator IAN MACDONALD: That would be good. Thank you.

Mr Comley: As was discussed earlier, there have actually been two phases to this. The tax breaks for green

buildings was first proposed. When it was first proposed, there was actually significant consultation with industry

about the delivery of that program. A large number of people in industry thought that a tax concession was not

actually the most effective way to deliver a program. The principal issue at the time raised by industry was that

many real estate investment trusts felt that they would not be able to utilise the tax concession because of the way

they were taxed. They did not value the flow-through benefit to their ultimate beneficiaries as they felt that they

had to make a benefit at the trust level. That stimulated further consultations. As has been canvassed earlier, the

government asked a consultative committee, chaired by Mr Tom Roper, to look at the potential redesign of the

scheme. In that process, a number of designs were considered. Ultimately the government decided that it was not

cost effective in terms of abatement outcomes to proceed in the context of the broader budget.

Senator IAN MACDONALD: I am reading from a newspaper article which says Mr Roper, who you just

mentioned, penned a scathing letter to Mr Combet warning that the backflip would cost jobs and imperil

Australia‟s reputation as a green leader. Did he say that in the consultation process that he led that you are talking

about?

Mr Comley: I was not attending those meetings; Mr McGlynn was. I suspect that the language may have been

slightly less colourful than is indicated in that press report.

Senator IAN MACDONALD: I am more interested in whether what he said will happen, not the fact that he

said it. Will the change of policy—I will not say 'backflip'—cost jobs and imperil Australia‟s reputation as a green

leader?

Mr Comley: I do not think it will cost jobs. We are working in the context of a potentially full employment

economy.

Senator IAN MACDONALD: So you disagree with Mr Roper. What was Mr Roper‟s position that you just

mentioned?

Mr Comley: He chaired effectively a consultative group to look at the issue. Mr McGlynn could give you the

full membership. It included industry associations that dealt with the issue and major firms that dealt with the

issues. It also had departmental representation on the committee. I am sure that, if we have not got it before us, we

can certainly provide you with the membership of that committee.

Senator IAN MACDONALD: So when did the committee report, Mr Comley?

Mr Comley: December last year.

Senator IAN MACDONALD: Clearly, from Mr Roper‟s comments post budget, the committee obviously did

not recommend that this be axed?

Mr Comley: I think you will find that the nature of the committee recommendation was along the lines of, if

the government were to invest a certain amount, this is the way you would design a scheme. The question of



whether the government was going to invest a certain amount in the scheme was really a matter for government to

weigh against its other budget priorities.

Senator IAN MACDONALD: So Mr Roper‟s committee, if I could call it that, report and the

recommendations are on a website somewhere, did you say?

Mr Comley: Earlier today, Senator Birmingham asked for a copy of the report. We said we would take that on

notice.

Senator IAN MACDONALD: Does that mean we will get it or just that you will think about producing it?

Mr Comley: We will take it on notice.

Senator IAN MACDONALD: That you will think about whether or not you will produce it?

Mr Comley: I will take it on notice in the same way other questions of this kind are taken on notice.

CHAIR: Just before you move on from that, Senator Macdonald, in relation to the trusts, I have an interest in

trusts these days. It is not a financial interest but a political interest. Could you provide some more details about

the disadvantage that the industry was arguing in relation to the trusts? I would be interested in that.

Mr Comley: We can take that on notice, yes.

Senator IAN MACDONALD: Are there other programs in place or that are planned that would assist small

and medium sized businesses with the transition that was hoped, as I understand, to be encouraged by the green

building tax proposal? What replaces it?

Senator Wong: Low Carbon Australia, the Clean Energy Finance Corporation and the carbon price.

Senator IAN MACDONALD: I am sorry, Minister?

Senator Wong: I said things like Low Carbon Australia, the Clean Energy Finance Corporation and the

carbon price plus whatever the energy efficiency components of the clean energy package are. I am sure others at

the table can give you more detail on them.

Mr Cahill: One of the key barriers to small business is information, so the Energy Efficiency Information

Grants Program is targeted at helping small to medium enterprises and community groups better understand how

they can make energy efficiency improvements.

Mr McGlynn: Another thing that has happened quite significantly is the full implementation of the

Commercial Building Disclosure program. So now when large office spaces are sold or leased, they need to

disclose a full energy efficiency and lighting assessment. As Mr Cahill was saying, that provides a bit of

information to the market which previously was not available. Combined with the fact that we have seen quite a

few studies now coming out showing the potential financial benefits of more environmentally advanced buildings,

this means that the market is better informed and better able to respond to those sorts of issues than had been the

case previously.

Senator IAN MACDONALD: So you are saying they do not need tax breaks to do it? They have found that it

works anyhow?

Mr McGlynn: There are a significant number of other measures in the marketplace that are driving in the

same direction.

Senator IAN MACDONALD: Can you just go through a couple of those with me?

Mr McGlynn: The carbon price is one. That obviously provides a financial incentive to improve performance.

The $10 billion from the Clean Energy Finance Corporation will also potentially provide support for investments

in low energy efficient technologies and buildings. Low Carbon Australia, as we heard earlier today, is already

operating in the marketplace to provide assistance for that. The Clean Technology Innovation Program could

provide some assistance to this and the Commercial Building Disclosure program, as I say, provides an

information base for improvements in these areas.

Senator IAN MACDONALD: As I see again from newspaper reports, Mr Combet has said that there was a

more cost effective way of achieving the same goals. Is that the intention of the axing and relying on other

programs?

Mr Comley: I think it was a question of this against the broader budget context. So there are all the

instruments that have just been mentioned, some of which have evolved over the last two years from an initial

announcement. On top of that was the broader budget context of returning the budget to surplus.

Senator IAN MACDONALD: I appreciate the returning-the-budget-to-surplus aspect of the broader picture.

But in so far as building to reduce carbon emissions—



Mr Comley: These programs can be quite challenging to design. I recall the Property Council of Australia put

out a report some years ago that predates this commitment which tried to address the issue of how much of the

investment would be additional. So part of this question that people always consider in the design of these things

is how much you are subsidising activities that already would have occurred and how much you are subsidising

things that would not have occurred in the absence of the program. Whenever you design these schemes, it can be

quite difficult to get the targeting right. That has to be assessed against the cost effectiveness of other forms of

abatement, most notably through the carbon price.

Senator IAN MACDONALD: Mr Roper is obviously much more aware than I am on these things. Do you

know if the committee that he chaired had his view? Obviously they are keen supporters of the green buildings

tax breaks.

Mr Comley: It goes to what the content of the report is, which we have taken on notice. I would say, like in

many other areas, there is a variety of views on these issues about what the best way of proceeding on such a

measure would be.

Senator IAN MACDONALD: This is a committee that the government set up to give advice, I assume.

Mr McGlynn: As Mr Comley said, the role of that committee was not to give advice on whether it was a good

idea or not. The role of it was to say, „Are there other ways that it might be designed to address particularly this

issue of how trusts might participate in the process?‟

Senator IAN MACDONALD: So the committee was asked about the design and, clearly from his comments,

Mr Roper thought it was pretty well designed?

Senator Wong: I do not know if my making this statement will be of assistance. If you are seeking a

recognition from the government that a number of people in a number of sectors within industry were

disappointed by the budget announcement, of course we recognise that. But we had to make decisions in the

budget context across all of government. For the policy reasons that Mr Comley has outlined, it was felt that there

were a range of other policy mechanisms which would achieve a similar outcome and at lower cost. The

government did make a range of decisions in this budget across all of government to bring the budget back to

surplus at a time when there were substantial revenue downgrades. So I do not think anyone at the table is

suggesting to you that it was without disappointment amongst some of the industry players that the decision was

taken.

Senator IAN MACDONALD: I was not suggesting it was without disappointment to industry players. I am

talking about the clear concern of someone that your government set up to advise on how to implement it, not

industry players. I assume Mr Roper is not an industry player. I assume he was appointed by the government to

chair a committee because he had some qualifications and expertise in this, apart from being a former Labor

politician.

Senator Wong: I had no doubt that you were going to say that at some point.

Senator IAN MACDONALD: It did not need me to say it, Minister.

Senator Wong: Mr Comley has taken on notice the question of the report.

Senator IAN MACDONALD: I am very grateful for that. My only question to you, Minister, or to Mr

Comley, is that the government set up this committee to advise on how best to do this. Clearly from Mr Roper‟s

reported comments, he thought the green buildings tax thing was the right way to do it.

Senator Wong: And then the government made a decision in this budget on this issue and on many issues

where I am sure people would have a different view. But that is what happens when you have a budget where you

have to make the sorts of savings decisions to find $34 billion that we did.

Senator IAN MACDONALD: Sure. I appreciate that, Minister. My question is: why set up these groups to

advise if the government then is going to, apparently, take no notice of what they advise? What is the purpose of

setting them up?

CHAIR: I can remember some committees I was on where they did not take much notice, so it is not a new

thing.

Senator IAN MACDONALD: I guess from the folding of the arms I am not going to get an answer to that.

Senator Wong: I can take the question on notice. I am sure we will seek to give a response. I do not have any

particular knowledge of this committee.

Senator IAN MACDONALD: That is fair enough.



Senator Wong: Broadly, the point I was trying to make is the broader budget point. I am sure in any

committee over the next two weeks there will be senators asking questions about a particular budget decision

where there is a particular constituency that does not like a decision. I accept that. That is the nature of the

discipline we had to impose and engage in.

Senator IAN MACDONALD: But this is not a constituency, Minister. This is a committee that your

government set up to give advice on the best way to implement or to get to the outcome. So it is not a constituent.

It is not an industry player. It is not someone who, I assume, would personally benefit out of this.

Senator Wong: I thought he was the head of the sustainable business council.

Mr McGlynn: Tom Roper is the head of the Australian Sustainable Built Environment Council, which is

itself an organisation which is a peak body of peak bodies within the building industry. ASBEC itself is, I believe,

a non-profit organisation, but certainly it is heavily represented by organisations which work in this industry. I

think, more importantly, the terms of reference for this group were not to ask, „Is this the most effective way of

achieving some broad outcome?‟ It was asking, „Is there a way to redesign a fairly specific program to address the

issues that were identified by industry, particularly in relation to the ability of real estate investment trusts to

participate?‟ And so it was a fairly narrow mandate in that sense.

Senator IAN MACDONALD: I thank you for that. I will finish on this note. Mr Roper was the president of

the Australian Sustainable Built Environment Council.

Mr McGlynn: That is correct.

Senator IAN MACDONALD: You were on a committee with him, though, Mr McGlynn. Are you on that

council?

Mr McGlynn: We are observers to ASBEC but we are not a member of it, no.

Senator IAN MACDONALD: You are an observer to the Australian Sustainable Built Environment Council.

On notice if need be—or perhaps you can answer it—did the government fund that council? Did the government

ask it to do anything? If so, could you perhaps on notice give me some details of what funding, if any, the

government put into the Australian Sustainable Built Environment Council or any program that they are involved

in in advising government? I am just interested in the government‟s investment in the advice that they gave. Is

that possible to do?

Mr McGlynn: I would have to take that on notice, but, yes.

Senator IAN MACDONALD: Was there some government support in some way or other? Clearly your

attendance was a bit of government support.

Mr McGlynn: I suppose.

Senator IAN MACDONALD: I am sure it would have been very highly valued.

Mr McGlynn: I am not sure it is always seen that way. I would have to take that on notice. I believe back at

the creation of ASBEC there may have been some government involvement, but I will need to go back and find

out.

Senator IAN MACDONALD: I will ask you to do that on notice. Thank you very much.

Senator BIRMINGHAM: I want to go to the solar hot water rebate. On 28 February, the government

announced the abrupt end to the rebate program. I want to go through some of the figures there because the

perception was given at that stage that all the funds were still going to be expended on this program. What has

been the actual upshot? Have all funds been expended as expected?

Mr Cahill: At this stage we have forecast in the current budget that there is a reduction of some $20 million

for this year against what was forecast a number of months ago. Why is that? That is the nature of demand driven

programs. That is the inherent nature of them. And there is the ability to predict the take-up. Earlier in the year it

was the opinion of the department that in the main we were tracking against the appropriation for 2011-12. We

have seen some reduction in the expectation since then. Again, what has unfolded since then has still got some

inherent predictability.

Senator BIRMINGHAM: So there was for 2011-12 a budget line of $63.5 million. That is now $42.8

million. Am I correct on those figures?

Mr Cahill: That is correct. Yes.

Senator BIRMINGHAM: So $20 million was shaved off this year. And there was for 2012-13 a budget line

of $24.5 million. That is now $500,000. So $24 million was taken off the forward year?

Mr Cahill: Correct.



Senator BIRMINGHAM: So, all up, there is $44 million across the two years that has been simply returned

to budget?

Mr Cahill: Correct. Yes, I understand at this stage—

Senator Wong: The terminology used has a particular meaning. That is why we were not wanting to mislead

you. But the PBS figures are the ones you have outlined.

Senator BIRMINGHAM: Thanks, Minister. Mr Dreyfus wrote to Senator Milne on 21 March this year about

this matter, when there was some discussion as to whether in fact this was a cut or not. Mr Dreyfus‟s letter stated,

and I will quote it:

As discussed with you, the Government never intended to make any savings from the closure of this program and remains

committed to support the transition to a clean energy future, which includes the solar hot water industry. The funding

allocated for this program remains in the forward estimates.

This happened to coincide with when an opposition bill regarding this program was going through the parliament.

This letter was tabled by Senator Milne as comfort from the Greens that in fact all of the funding that had been

budgeted for the solar hot water industry would be spent on the solar hot water industry. Now, I am perplexed as

to why Senator Milne is not here asking this question herself. But, in her absence, what has happened to this

commitment from Mr Dreyfus to Senator Milne about the expenditure of these funds?

Senator Wong: We will take that on notice.

Senator BIRMINGHAM: Mr Dreyfus went on in his letter to Senator Milne:

I am happy to continue to work closely with you to look at potential ways the available funding continues to support

Australia‟s solar and heat pump hot water industry, maintain jobs and competitiveness in the short term, and particularly this

year ahead of the strong support that will flow from the carbon price and other measures identified above. I am very happy

that I can work constructively and in good faith with the Greens on these issues.

Were there continued discussions, meetings or otherwise when it became apparent that the demand was not as had

been forecast by the department?

Senator Wong: Sorry, what was that last question?

Senator BIRMINGHAM: Were there meetings or discussions between the government and the Greens?

Senator Wong: I thought you said 'department', so that is why I spoke.

Senator BIRMINGHAM: It could have been the departmental officials. I may have said that.

Senator Wong: Look, I am going to take these matters pertaining to the discussions between one of the

ministers I represent and the crossbenchers on notice, Senator. We can play out the theatre and you can ask

questions and I can keep taking them on notice, but I am flagging with you that is the approach that I am taking as

the minister at the table.

Senator BIRMINGHAM: Before a single official at the table has had the opportunity to even say whether

they are aware of the conversation?

Senator Wong: Because you are reading from a letter from a minister to the crossbenchers and you are asking

people at the table to respond to questions about what is in the letter, I am choosing to take it on notice. I do not

think it is something that the officials are appropriately engaged on. The letter is obviously in relation to a

consultation between Senator Milne and Mr Dreyfus.

Senator BIRMINGHAM: The letter, I take it, is a policy commitment of the government. I am asking the

officials about the implementation of that policy commitment.

Senator Wong: I have taken the question on notice. You have referenced a letter which talks about this

process of engagement with the crossbenchers and I think it is not unreasonable for me to take it on notice.

CHAIR: See what you have done, Senator Birmingham? Senator Milne has miraculously appeared.

Senator BIRMINGHAM: I have lured Senator Milne to the committee. I go back to the miscalculation, then,

that saw the department decide to bring this program to an end earlier than was scheduled, which has resulted in a

$44 million saving to the budget or a reduction in support for the solar hot water industry, whichever side of the

ledger you look at it. Has the department looked at how it got those estimates wrong and what happened in that

regard? Was there a dramatic plunge in applications? I cannot say that, because essentially you reminded me of

the cut-off process. Essentially it was cut off almost instantly. You should have had a fair idea as to what work

was in the pipeline, shouldn't you, Mr Cahill?

Mr Cahill: I would not characterise it as a misestimate. What occurred over that period is that the application

rate did slow quite considerably over the last couple of months of the program. It dropped off quite substantially.



There is always a balance in these things as to when you curtail a program to ensure that there is not an

overspend. You can err on one side or you can err on the other. The intent there was to ensure the program was

closed consistent with the fact that it was always meant to be a time limited program. But there was quite a

significant deceleration in applications in the last few months leading into that announcement date.

Senator BIRMINGHAM: Mr Comley, in fairness, the program was budgeted over 2011-12 and 2012-13 to

cost around $88 million. You have made a saving of $44 million, so exactly 50 per cent. You were not within

cooee of overspending. You actually underspent by 50 per cent over the two financial years. So it is transparent

that, if the intent was to wind up the program as close as possible to the budgeted allocation, you were 50 per cent

out.

Mr Comley: There was quite a significant deceleration in applications towards the end of the program. That is

what happened.

Senator BIRMINGHAM: When were applications received up until?

Mr Cahill: They are still being received right to 30 June this year because people have four months to apply

from 28 February. So it is installed as of 5 pm or an order put in place and a contract signed by 28 February. Then

you have four months to apply. So we are still receiving applications and we still have to make assessments as to

the eligibility and other matters with those applications.

Senator BIRMINGHAM: You must have signed the contract by the date of the announcement, but there is a

flow-through from this?

Mr Cahill: Yes. In some senses, there is a four-month lag in the ability to predict levels of demand as the

information comes through. As you would appreciate, there is a bit of volatility over the Christmas period as

people in the building industry take leave and we try to take those factors into consideration in making an

estimate for the remainder of the year.

Senator BIRMINGHAM: Had there been a drop-off leading up to 28 February?

Mr Cahill: There had been some slight drops in December and January, some reductions, but we also take

into consideration the strength of what was happening in the first quarter of the financial year and try to make a

judgment. We take into consideration the amount of applications on hand at any one point in time and a range of

other factors.

Senator BIRMINGHAM: How many rebates would $44 million have provided?

Mr Cahill: I am sorry. I do not have a calculator with me, but a number.

Senator BIRMINGHAM: What was the maximum value of the rebate?

Mr Cahill: It could either be $1,000 or $600, depending on whether it was a solar hot water heater or a solar

hot water pump.

Senator BIRMINGHAM: Thank you. Let's jump to low carbon communities, please. There is $28 million in

this year‟s budget for low carbon communities. Has that been allocated yet?

Mr Cahill: That predominantly relates to the Community Energy Efficiency Program, about which we are in

the process of finalising the assessments and recommendations to the minister.

Senator BIRMINGHAM: How many applications have you received for that?

Mr Cahill: I think it was 295 applications.

Senator BIRMINGHAM: And what is the maximum grant available under that $200 million program?

Mr Cahill: It is $5 million unless an exceptional case is put forward.

Senator BIRMINGHAM: So you expect recommendations to go to the minister obviously very soon because

this is money to be pushed out the door before 30 June?

Mr Cahill: Yes.

Senator BIRMINGHAM: What analysis or evaluations of those applications occurred? We went through

them earlier. Was there an independent group assessing those 295 applications?

Mr Cahill: An independent probity advisory committee has finalised a report and provided it to the

department. The department is in the process of making a recommendation to the minister.

Senator BIRMINGHAM: And who is that independent evaluation committee?

Mr Cahill: There are a number of members on there. I think there about eight or nine. I might get Professor

Richards to expand on the members of that committee.



Prof. Richards: The committee is chaired by Barbara Norman, who is the foundation chair of the Urban and

Regional Planning Discipline of the Faculty of Business and Government at the University of Canberra. There is

Mr John Mitchell, who is the former chief executive of Gippsland Water and now the managing director of John

Mitchell and Associates consulting services. He has experience in local government in the Gippsland region.

Chris Giles is executive services from Surf Life Saving Australia. Alex Gooding is an honorary associate at the

Australian Centre of Excellence for Local Government. Dr Greg Picker is associate director of climate change at

AECOM, a consulting firm. Colin Steele is a director of Section 51 who has previous experience in local, state

and federal government in planning areas. Mr Chris Dunstan is from the Australian Centre of Excellence for

Local Government at UTS Sydney.

Senator BIRMINGHAM: Thank you. Will that same panel be assessing grants under the program into the

future, including the Low Income Energy Efficiency Program and the Home Energy Saver Scheme?

Mr Cahill: No.

Prof. Richards: There will be a separate committee for that.

Senator BIRMINGHAM: Is the deductible gift recipient fund the same as the Charities Maritime and

Aviation Support Program, or are they two different programs?

Mr Cahill: With the Charities Maritime and Aviation Support Program, one of the eligibilities goes to

whether you are a deductible gift recipient.

Senator BIRMINGHAM: But they are not the same?

Mr Cahill: No.

Prof. Richards: They are the same program, but to be eligible for the Charities Maritime and Aviation

Support Program you need to be a deductible gift recipient, which is an ATO classification.

Senator BIRMINGHAM: So that is a subset?

Mr Cahill: Sorry, I can see the reference you are seeing on page 26 of the PBS. Yes, that is the Charities

Maritime and Aviation Support Program.

Senator BIRMINGHAM: That is it in its entirety, or the Charities Maritime and Aviation Support Program is

just a subset of that?

Prof. Richards: To be eligible for payments under that program, you need to be a deductible gift recipient.

Mr Cahill: So the items appearing at that line on carbon price deductible gift recipient fund are the charity

maritime and aviation support funding. I want to get the language right.

Senator BIRMINGHAM: Excellent. I love it when the PBS has a different name for the fund than the

website and the commonly accepted fund. It helps create all manner of confusion. When will those entities be able

to apply for offsets for the fuels and the other costs that they will incur?

Prof. Richards: We hope to be in a position to do early assessments of eligibility through June and to start the

scheme proper on 1 July.

Senator BIRMINGHAM: And what will the process be? Will they have to incur a bill and then seek a rebate

from the department, or will they be able to estimate their costs ahead and seek those payments upfront? How will

that work for groups like the RFDS and others?

Mr Cahill: I will get Professor Richards to expand. The minister will be shortly releasing in coming weeks the

final guidelines under this program. We had a consultation paper. The key design parameters were about making

sure we support the cash flow of the participants in the program. So there are prepayments involved and we are

minimising red tape. I will get Professor Richards to expand.

Prof. Richards: We use estimates from the previous year‟s usage of fuels as the basis for calculation of the

forward annual estimate, which is paid on a pro rata basis. Then, at the end of either the second or third quarter,

there is a review, a true-up of that payment and a recalculation if there is a significant variation.

Senator BIRMINGHAM: So there is quarterly reporting by the charities involved?

Prof. Richards: Quarterly payments. We limit the amount of upfront payments so that a true-up can be

implemented. Charities could inform us of a different usage at any one of those quarters, but a review would be

triggered in the second or third quarter.

Senator BIRMINGHAM: Have you identified those charities that you believe will be eligible, or will they be

simply expected to realise they have this cost and get in touch and seek engagement from the department or make

an application to the department?



Prof. Richards: Because of the deductible gift recipient status, we have direct contact with those entities. So

we inform them directly of the program and have communicated through the Commonwealth mailing list. We

also work with the Treasury and the newsletters that are run for those groups as well. So we have a direct reach to

them.

Senator BIRMINGHAM: How many eligible organisations do you believe there will be?

Prof. Richards: Of the actual eligible DGRs and in this business, we think in the order of 200.

Senator BIRMINGHAM: Are they all just aviation and maritime related, or are there others with potentially

some sort of off-road fuel costs or other things that they might be able to claim?

Prof. Richards: The program covers aviation and maritime fuels as a class of fuels.

Senator BIRMINGHAM: Thank you.

Senator MILNE: I want to ask a few questions about commercial buildings and energy efficiency. When was

the decision made to drop the tax breaks for green buildings?

Mr Comley: We are happy to answer the questions, but this is the third set of questions on this. We were

asked by Senator Birmingham and then Senator Macdonald and now you.

Senator MILNE: Then I will not pursue that, but I will pursue a couple of others in relation to the same

thing. I will get the Hansard and check it out to save time. According to the green building sector, they came to

the government having asked that it be deferred one year. Then they came to the government with a proposal not

for a tax break scheme, actually, but for a grant scheme. They were of the view that their discussions with the

bureaucracy had reached a reasonable level of consensus that a grant scheme was a better prospect than a tax

break scheme. Can you confirm that that is the case?

Mr Comley: Mr McGlynn might want to add to the answer. There was concern from the sector that a tax

break would not be well utilised by the real estate investment trust sector. Therefore, discussions were had on how

you would put a grant scheme together. There were a lot of conversations about what the nature of the design

would be. I think I would characterise those discussions like this. If you had a program and the program was of a

certain quantum, what design elements would be desirable? It is not true to say there was unanimity between

everyone as to exactly how you would do that, but I think there was a shared understanding of the trade-offs that

would be involved with a particular design feature.

The difficult issue here is always the question of how ruthlessly you seek to target additionality or how much

you broaden the eligibility criteria to make it easier for administration and applications from the parties seeking

the assistance but have less confidence in the additionality. So I think it is fair to say that there was a good

conversation about the design parameters that never led to a sense that „we are all of one mind‟ on a particular

design but a common understanding of the trade-offs involved. Unless Mr McGlynn wants to add to that, that is

my understanding of the discussions.

Senator MILNE: Having made a decision not to pursue it, can you indicate whether the department has given

any further conversation to the efficient building scheme proposal that I introduced several years ago on building

an energy efficiency cap-and-trade proposal?

Mr McGlynn: At this stage, no. We have not been asked to look at that scheme. Again, some of the

discussion we had earlier was around the context for the decision where there is a carbon price and there are a

number of other mechanisms in the space. There is further information available in the sector showing the private

sector benefits of investment in green buildings. In that context, we have not been asked to look at it.

Senator MILNE: Have you looked at the Tokyo cap-and-trade program, which was the world‟s first cap-and-

trade program covering approximately 1,300 large commercial and public buildings? Have you actually looked at

that and done any work on that?

Mr McGlynn: We did some work on that some time ago, I think in the context of when that bill was first

introduced—the one you mentioned.

Senator MILNE: That would be interesting, because the Tokyo cap-and-trade program happened after that

bill.

Mr McGlynn: Well, it was some time ago. I am not quite sure when.

Senator MILNE: The issue for me is that the carbon price is unlikely to drive the kind of energy efficiency

development of commercial buildings that we would like to see. Commercial buildings are a big opportunity. It is

low-hanging fruit in the context of energy efficiency. Is it still your contention that a white certificate scheme will

promote energy efficiency in commercial buildings?



Mr McGlynn: Again, we talk about a number of measures that are in place to support energy efficiency in

commercial buildings. The possibility of a national white certificate scheme as an energy savings initiative is

something that has been developed as well. It is being considered. Without clear indications as to exactly what the

design of such a scheme might be, it is hard to say. But certainly that is one of the issues that will be considered in

designing any such scheme.

Senator MILNE: The evidence around the world is that white certificate schemes do not prove effective in

promoting improvements in energy efficiency in major building upgrades. That has been the experience wherever

they have been. I am interested in why we have not proceeded with this, given that the carbon price is not going to

drive it. The industry says it will not have any impact at all on retrofitting commercial buildings. So what is your

evidence that the carbon price will lead to energy efficiency in commercial buildings, given that we know there is

a split incentive? The owner of the building has no incentive at all to retrofit the building, as it is the tenant that

pays the energy bills. So what evidence do you have that the carbon price, as it is designed, is going to drive

energy efficiency investment in commercial buildings?

Mr Comley: If it sounded like we said the carbon price solely, we actually have said before that it is the

carbon price, the operation of the CEFC, Low Carbon Australia‟s continued operation in whatever form that that

would take and the development of commercial building disclosure legislation that will send a stronger signal, all

in concert. They are the factors that will have an impact on the commercial sector. The other comment we made

earlier is that the decision was also made in the broader context of the budget, which was a question of

prioritisation across the whole of the budget. So all those factors together led to the government‟s decision.

Senator MILNE: But, as I understand it, the savings in the first two years as proposed were pretty minimal.

Mr Comley: Across the forward estimates, I think it was around $400 million and it was $1 billion over the

full life of the program. That is a reasonably significant amount of money.

Senator MILNE: But in the first two years it was only a very small amount—something like $18 million,

wasn't it?

Mr Comley: It was a slow ramp up, but it was still $400 million over the forward estimates.

Dr Kennedy: It was $405 million over the forward estimates.

Senator MILNE: Yes. It was $4 million in the first year and $14 million or something in the second.

Senator Wong: But you cannot have a tax break.

Senator MILNE: No. But in the context of people having abandoned the tax break anyway in favour of more

support around a grant scheme, perhaps. So what assessment or monitoring are you going to do of whether all

these things that you have just discussed actually drive any kind of investment in energy efficiency in commercial

buildings such that alternatives may be looked at in the future?

Mr Comley: I think in the first instance, the number that we pay a lot of attention to is the inventory as it rolls

out in every sector. That also feeds into our view of the projections going forward. The second thing we have

generically is our general industry consultation as to how behaviour is changing on the ground. What we are

observing in some of these sectors is that high energy star ratings et cetera are becoming significant marketing

marketing opportunities. There is differentiation among building owners. So we will continue to liaise with the

sector. Unless Mr McGlynn wants to add anything, they are the two major things.

Mr McGlynn: Another thing that will happen is that as the Commercial Building Disclosure program rolls

out, one of the things we are doing is evaluating that program. We hope to have a preliminary evaluation later this

year, which at this stage will be somewhat preliminary and somewhat anecdotal because that is the evidence we

have. But over time we will be collecting data on that as well try to demonstrate more comprehensively what is

happening in the sector.

Senator MILNE: But all you are going to be monitoring is the level of disclosure. You are not actually going

to be looking at the level of emissions that have been brought down in the commercial building sector, are you?

Mr McGlynn: As we go on, one of the things the commercial building program will do is develop a database

that shows how buildings have changed over time. We are also looking at ways that we can go in and find out

much more clearly the rationale for decision making where buildings have been upgraded or downgraded, I

suppose, to see what affected that decision and, therefore, how the different support mechanisms and information

programs in the market are affecting that behaviour.

Senator MILNE: Isn't it true, though, that effectively it has been a budget decision that will see us not take

the low-hanging fruit in terms of energy efficiency in commercial buildings? Isn't it just the fact of the matter?



Mr Comley: It is a matter for government in terms of particular prioritisation. But I think it is true that

designing these programs in a cost-effective way is challenging. I do not think anything in the consultation

process detracted from that fact—that designing these things in a way that genuinely leads to additional abatement

is challenging.

Senator MILNE: I want to ask a couple of questions on NABERS. I am rather concerned that the algorithms

which underpin the NABERS energy rating tool are not publicly and freely available, especially since the tool is

mandated under the CBD program of mandatory disclosure. Can you explain to me why those algorithms are not

publicly and freely available?

Mr McGlynn: The NABERS algorithms are used by some companies for commercial purposes to set up their

portfolios and evaluate them. The owner of the NABERS tool, which is the New South Wales government, feels

that it is not appropriate to just provide that tool, which can then be used for commercial purposes. So they license

the algorithms to anyone who asks. There is a fee for that. I sit on, and in fact chair, the NABERS national

steering committee. We recently discussed the issue of the NABERS algorithms. At that committee there has been

an agreement that we will seek to make those algorithms publicly available for those who want to use them for

research purposes or just to evaluate the effectiveness of the tool. But, in doing that, we want to preserve the right

to sell the algorithms to people who are using them for commercial purposes. At the moment we are basically

sorting out the legal arrangements which would allow that to happen and allow us to monitor compliance with

those legal arrangements.

Senator MILNE: That is my issue at the moment. The fee is $15,000 plus GST for access to those algorithms

and equations. It is charged by the New South Wales Office of Environment and Heritage. That seems to me to be

not the best way of trying to upgrade our capacity to do this work well, especially as in the United States the

energy star program provides free access via its website to technical details on the energy star performance ratings

for commercial buildings, including specifics. So the sooner you can do that the better. What is your time frame

for sorting this out and getting some publicly available data out there?

Mr McGlynn: I cannot give you a specific time frame because the legal issues are not ones that I can resolve.

But the in-principle decision has been made and so I would expect that to happen fairly quickly. As we say, the

result of that situation would be that, for those interested in research purposes or just evaluating the validity of the

algorithms that are used, they would be freely available.

Senator MILNE: Thank you.

Proceedings suspended from 8.58 to 9.15 pm

CHAIR: I now call officers from the department in relation to program 1.3, Adapting to climate change, and

invite questions.

Senator IAN MACDONALD: Hello all, and Dr Steffen. I am just reading the department‟s mapping sea

level rise website and looking at the second page. It talks about the low scenario, B1, which considers sea level

rises in the context of a global agreement that brings about dramatic reductions in global emissions and represents

the upper end of the range for sea level rise by 2100, which is likely to be unavoidable. I am just looking at some

of the maps. Those maps are done not by your department. Is that right?

Ms Sidhu: Geoscience Australia.

Senator IAN MACDONALD: But using your material. Is that correct?

Ms Sidhu: Senator, I will explain. There are a series of sea level rise scenarios that we have produced that

have used IPCC data and other observed data. They are, in a sense, three sets of model scenarios against a low,

medium and high scenario. The model is actually run by Geoscience Australia and the Cooperative Research

Centre for Spatial Information. So the data that is out there is essentially model data.

Mr Comley: So crudely, I think, in answer to your question, Geoscience Australia has information on, if you

like, the contours of the bathtub and we are providing an input of how much we are filling up the bathtub. They

map that across the land to see what that would mean in terms of inundation in terms of horizontal distances once

you have a particular shock—in crude terms.

Senator IAN MACDONALD: I have had to look on the site. I have had to accept that the government

accepts no liability for these things. I cannot look into the site unless I accept that the government has no liability.

From the department, not from Geoscience Australia, where do you think we are going? Is your advice that the

low-level scenario would be a good guide? Or, if I were thinking of building a house somewhere, should I be

looking more at the medium-level scenario or the high-end scenario? These are the questions which constituents



sometimes ask me. Of course, I am not in a position to give that advice, but I am just interested in what the

department‟s view might be.

Mr Comley: Well, Ms Sidhu or Dr Banerjee might want to expand on this. Part of the answer is that it

depends on how risk averse you are, as with a whole range of risk management decisions. So what happens in

terms of those scenarios depends a lot on the extent of global action over time and whether there will be

significant agreement. In many risk management decisions in public policy, people tend to take quite risk averse

judgments. If you think about safety regulation in a whole range of areas, if you think about how a number of

safety regulators look at things, they would tend to take a very risk averse approach.

Senator IAN MACDONALD: Perhaps I have used the wrong example I now want to build. Really, you hit

the nail on the head: it depends on the extent of global agreement. To that end, I was wondering about the

department‟s view, bearing in mind the low scenario, B1, considers sea level rise in the context of global

agreement. Do you think there is going to be global agreement? Should the nation, I or anyone be working on the

basis that there is going to be global agreement that will make a difference?

Ms Sidhu: Senator, perhaps I could explain the context for those maps and then perhaps Professor Steffen

could explain the science around sea level rise projections, if that would help. The maps as such were

developed—they are actually called a visualisation tool—to help people visualise what the sea level rise impact

might be under differing scenarios. They are not intended, and we say that very clearly, to be a decision-making

tool, because it is a simple bathtub model. Essentially it looks at every part of the coastline as if it were pretty

much the same and you were just filling up the bathtub and that is where it would go. We are doing further work

to refine that model to take into account different types of typography—soft coastlines versus hard coastlines, for

example. That would differ in how the water would operate in a sea level rise scenario. But it really is intended to

be just a tool to help people visualise what might happen and to get people to start thinking about these sorts of

issues. But on the science I might refer to Professor Steffen.

Prof. Steffen: When you look at the projections of sea level after 2100 and you get roughly a range of half a

metre to a metre, most of them lower—

Senator IAN MACDONALD: Sorry, half a metre to a metre?

Prof. Steffen: To about a metre is where most of the projections lie. One of the two major uncertainties is

indeed what Mr Comley has just said: we do not know how policy is going to play out in the rest of the century.

That is why we have various scenarios of global agreement and then less optimistic scenarios. The other part is

that, even if we knew exactly what emissions were going to be, there is still uncertainty in how fast and how

much the climate will warm and, hence, how much the ocean will expand and, particularly, how much we will

loosen the big ice sheets—that is, in Greenland and Antarctica. The stability or not of those large ice sheets is the

biggest single scientific uncertainty surrounding where sea level rise is going to go.

Senator IAN MACDONALD: So, Professor, did I hear you say that we do not really know?

Prof. Steffen: We know for sure what direction sea level is going—that is, it is going up and it will go up for

some centuries, given the inertia in the system. What we do not know is a good upper limit on that. I cannot tell

you whether it is 80 centimetres or one metre or 1.5 metres by 2100, because it depends on how those ice sheets

behave. Now we know that even with the modest warming we have seen to date there is a significant loss of mass

from the Greenland ice sheet. It is somewhere around 200 cubic kilometres a year at present. Antarctica is less

certain. We do see some loss of ice now from west Antarctica. East Antarctica we are not sure about. If you look

at Greenland from a longer term perspective—I am talking now many centuries—there is enough ice there to

raise the sea level about seven metres. So the worst case scenario with strong warming would be destabilisation of

that ice sheet, and then our descendants some centuries in the future would see a very high level of sea level rise.

But, coming back to 2100, the uncertainty around that upper bound is primarily due to those big ice sheets.

Senator IAN MACDONALD: Professor, again, I am not very well versed in this, but I do see the old maps

where Queensland was joined to New Guinea and Victoria was joined to Tasmania, so clearly there have been sea

level rises in the past.

Prof. Steffen: Indeed.

Senator IAN MACDONALD: I am just interested—and a lot of constituents ask me this, in view of

comments that have been made by government spokesmen—in what the reality is. Can you tell me off the top of

your head—I would not even bother to get you to take this on notice—how much the sea level has risen over the

last 100 years?

Prof. Steffen: Over the last 100 years it has risen about 20 centimetres.



Senator IAN MACDONALD: I appreciate everything you say; it depends on a lot of factors. The low-level

scenario is on the basis of global agreement. This is not a scientific question but it is a „read the newspaper‟

question. Global agreement does not seem to be imminent. Would you think that we should be looking more at

the medium scenario, the upper end of the IPCC‟s fourth assessment report?

Mr Comley: Just before Professor Steffen answers, on the question of global agreement, we can take it here or

take it up at 1.4. I think it is just worth noting that there already is a global agreement. The question is whether the

agreement is ambitious enough to meet certain temperature targets. In fact, there has been a global agreement

since—

Senator IAN MACDONALD: There is a global agreement to meet again in the future, is there not? You are

not classing that as a global agreement that allows me to look at sea level rises.

Mr Comley: There has been global agreement on a range of things to do with climate change going back as

far as 1992. There was a global agreement that ratcheted it up for some developed countries in 1997. There were a

number of pledges by countries in a line from Copenhagen through Cancun to Durban which are for emissions

outcomes that are significantly below what would be the completely unconstrained case. So, there are different

people who put estimates on this, but on the top end of the IPCC scenarios, if there was no mitigation action, you

could have parts per million as high as 1,100 by 2100. Different people put different estimates on it, but

something in the range, let us say, of 550 to 650 is probably where many estimates are of the concentration

outcome on the basis of pledges that have been made and actions that are taken domestically. So I think the

question of whether it is efficient—and Professor Steffen can elaborate—that at those sorts of concentration levels

you have significant temperature increases is the broader context of where the international negotiations are

starting from.

Senator IAN MACDONALD: Just before we go to Professor Steffen, let me say that pledges are made. A lot

of people made pledges for the Kyoto round. Apart from Australia, did anyone meet those pledges?

Mr Comley: Actually, you put questions on notice about this. Essentially I turned it around.

Senator IAN MACDONALD: Did I get an answer?

Mr Comley: Yes, you did. The basic answer to that is to turn it around. So, apart from Canada, everyone who

has made commitments under the Kyoto protocol is either on track to meet them or has access to mechanisms that

could allow them to meet them. So it is actually the case that Canada is the outlier and other people have met their

Kyoto commitments.

Senator IAN MACDONALD: So the USA, China and Switzerland?

Mr Comley: The US did not ratify the Kyoto protocol. The European Union did. Under their bubble

arrangements, they will meet their target. Australia will, and Japan intends to meet their Kyoto commitments.

China, because it was sitting in the developed world, did not have a quantitative commitment for reduction. But

those that took on a Kyoto commitment, with the exception of Canada, are on track to meet their commitments.

Senator IAN MACDONALD: And Switzerland?

Senator BIRMINGHAM: Although a large number of them are happy to meet their commitment by

purchasing permits.

Mr Comley: Well, that was part of the Kyoto agreement. So it is not true to say that people are not meeting

their Kyoto commitments—with the exception of Canada, which chose to withdraw from the Kyoto protocol.

Those still within the protocol intend to meet their commitments, and most are on track to do it without the

purchase of permits. Some will purchase permits, which was always envisaged as part of the Kyoto architecture.

Senator IAN MACDONALD: I have asked this before: Switzerland is not meeting its?

Mr Comley: Switzerland has access to the Kyoto flexibility mechanisms. It has made no statement to the

effect that it does not intend to meet its Kyoto commitments.

Senator IAN MACDONALD: No, but it is nowhere near it. On the basis that you think there will be a global

agreement, we could be looking at the low scenario, B1?

Mr Comley: What I am saying is that there is a degree of global agreement at the moment. There is also a

large amount of global action, some of which is not captured in agreements. The sum of that, on the analysis that

is done by most independent bodies, is that that is not sufficient to meet the two degrees goal at the moment but is

significantly in advance of where you would be if you had no mitigation action taken across the world.

Senator IAN MACDONALD: Mr Comley, is your department, rather than looking at how we might stop

increasing sea levels—which, as Professor Steffen rightly points out, have been occurring since time



immemorial—doing anything to mitigate against what is obviously going to be continuing climate change, as

climate has been changing for millions of years and as sea levels have been rising for millions of years? Does

your department just look at how to try and stop this climate change or mitigate it, or is there any part of your

department which actually looks at coping with recognised climate change which is going to happen, whether it is

by carbon dioxide emissions, nature, volcanos or the magician? Without attributing a cause to the climate change,

is there any section in your department that is looking at mitigating what is obviously going to be continuing

climate change for whatever reason?

CHAIR: So do you have magician analysers?

Senator IAN MACDONALD: No, no. I am saying: are you advising people to build sea walls or—

Mr Comley: The government has three pillars of its climate change policy. There is mitigation. In fact, the

language that is used in this area is not mitigating the effects of climate change but adaptation policy—how you

adapt to the impact of climate change. We do have an area—Ms Sidhu heads up the division—that deals with

adaptation policy. The third pillar is international engagement, which has both a mitigation and an adaptation

dimension in terms of outside Australia and global agreement. So there is a significant work stream within the

department on adaptation. It is a significant work stream that also complements work in other parts of the Public

Service, including the work that the Productivity Commission is doing on adaptation to climate change.

Senator IAN MACDONALD: So Ms Sidhu is in charge of coping with climate change. We are in the right

place. Yes, we are adapting to climate change. What does your department or section consist of, Ms Sidhu?

Ms Sidhu: I head a division that covers adaptation science and communications on climate change. The

adaptation part of that division has over the last few years undertaken a great deal of research to understand what

the impacts of climate change are. In 2010, the government put out a policy position paper which outlined the

main areas. This is on the basis of the studies that we have done and work we have done with local governments

on issues such as coastal sea level rise that you have had concerns expressed to you on, Senator. We put out a

position paper in 2010 that outlined six key areas for government focus on areas where we think the climate

impacts will be greatest and where we have to pay most attention. Those areas are in water, agriculture, disaster

preparedness, coastal sea level rise, settlements and infrastructure—in other words, urban environments where

climate change will hit in terms of heat—and, finally, in terms of natural ecosystems of natural significance,

which is things such as the Great Barrier Reef.

Senator IAN MACDONALD: I am conscious of the time. How many people are in your section?

Ms Sidhu: In my division, all up there are 80.

Senator IAN MACDONALD: Eighty people.

Ms Sidhu: About one-quarter to one-third work on adaptation alone.

Senator IAN MACDONALD: Did you lose some in the recent slashing of your department?

Ms Sidhu: There is a generalised reduction of staff going on around the department, and my area is affected as

well, yes.

Senator IAN MACDONALD: Perhaps Mr Comley could answer this. There were three divisions, I think you

said—international, adaptation and—

Mr Comley: There are three pillars of climate change policy.

Senator IAN MACDONALD: Can you just tell me—

Mr Comley: Mitigation, adaptation and international engagement.

Senator IAN MACDONALD: There are 80 in Ms Sidhu‟s department. How many are in the other two areas?

Mr Comley: The total department at the moment, as we have talked about, is currently at 900 and reducing to

between 600 and 650 by June next year. We probably at the moment have in the order of no more than 30 people

specifically working on adaptation policy in the department.

Senator IAN MACDONALD: Ms Sidhu just said 80.

Mr Comley: No. She heads up a division of adaptation, science and communications. So only part of that

division of 80 deals with adaptation policy. The important thing to note—

Senator IAN MACDONALD: So you run the propaganda unit, the communications?

Ms Sidhu: I do not have to answer that.

CHAIR: Ms Sidhu, you do not have to answer that.

Senator IAN MACDONALD: I will come and ask you. Sorry, I should not have interrupted, Mr Comley.



CHAIR: Senator Macdonald, you are experienced enough to know not to put that proposition.

Senator IAN MACDONALD: I will ask her what the communications mean.

CHAIR: Senator Macdonald, this will have to be your last question.

Senator IAN MACDONALD: I should have—

Mr Comley: The important thing about adaptation policy, though, is that many other departments in Canberra

effectively do adaptation policy on a sectoral basis at times. So if you think about adaptation policy in the

broadest context, it is asking the question: are the institutions that we have in the country, the way that policies are

set up, the best institutions to have in the context of a change in climate? So some things could be right decisions

in terms of a non-changing climate.

Senator IAN MACDONALD: That is not really the question. That is interesting, but it is not answering the

question. I was asking for numbers in each department.

Mr Comley: But what I am saying, Senator, is that you cannot just look at adaptation policy in our

department. Agriculture does resilience work. Infrastructure look at the questions of, for example, whether roads

are adapted to higher climates. You have the energy department that has had questions to do with, for example,

whether the Basslink Interconnector safety protocols are at the right level for a changing climate. So there is

actually quite a lot of activity across the Commonwealth on adaptation.

Senator IAN MACDONALD: I have a lot more questions but I only have one more, according to the

chairman. Ms Sidhu, I will sneak in a question on notice. Can you can tell me what „communications‟ means? If

you are not going to be allowed to answer that, give it to me on notice, please.

Senator Wong: It is not that she is not allowed. It is that the time frame of the committee—

Senator IAN MACDONALD: Well, the chairman has just indicated that this is my last question.

Senator Wong: Hang on. It is not that she is not allowed. The committee has made decisions about how you

timetable questions, and the opposition has made decisions about who gets priority and what subjects you want to

traverse.

Senator IAN MACDONALD: Thank you for that useful time-saving comment, Minister.

Senator Wong: I am always glad to be of assistance to you, Senator.

Senator IAN MACDONALD: Ms Sidhu, when you work on your adaptation, do you look at the low

scenario, the medium scenario or the high-end scenario, or do you cover all three?

Ms Sidhu: We do not base the decision on the scenarios themselves. So, when I look at adaptation, there are

two things I am considering. One is, in any scenario, are we making the correct decisions to safeguard the welfare

of the Australian community going forward? If not, where are the gaps and how well can we address those gaps

and those barriers to making the correct decisions? The second thing I look at is whether that information is

strong enough or good enough to make decisions. What we find in adaptation is instead of there being a solid

body of information and a clear decision path, information improves over time as the science improves over time.

So part of the effort goes into improving the kinds of information that people need to make decisions about where

to locate suburbs or where to locate their houses or where to build bridges or roads that will withstand future

climate impacts. The second is looking at what information is currently available from which we can take those

decisions. That is an iterative process that we work through with communities and other agencies.

CHAIR: Mr Comley, just on this issue before I go to Senator Milne, you spoke about cross-departmental

analysis and work that is being done. I saw recently that UK defence have a department looking at climate change

in the context of the armed forces. I also note that the US have a similar department. Do we have one? Are you

aware if we have one? Is there that cross-fertilisation of ideas and concerns?

Mr Comley: There is some cross-fertilisation. I will throw to Ms Sidhu because she can probably expand in

more detail. I think one of the interesting things is that the defence community is actually more used to thinking

about risk scenarios and threats than most others. In fact, at times as a layperson looking at the strategic

community, I find that they are often very focused on what may be unlikely threats but that have very significant

consequences if they come to an event over a long period of time. So it is actually a natural disciplinary starting

point to think about climate change where you do not know with absolute certainty precisely what has happened

but you have a distribution of risks, some of which have really quite catastrophic consequences if they come to

pass. So I think those communities are actually quite fertile ground for thinking about climate change risk. On the

specific interaction, I think Ms Sidhu is best placed to comment.



Ms Sidhu: While I cannot speak for the Department of Defence and their relations with their counterparts

overseas, I am aware because of the interactions we have with the Department of Defence that there are a number

of levels at which Defence is considering climate impacts. One is in their strategic planning—in other words,

looking at the kinds of national security impacts that might flow from various climate scenarios. That is going

into forward defence planning as another source of threats that the defence forces might need to encounter in the

future. The second is much more close to home, where the defence department is looking at its properties,

installations and facilities and assessing the likely impact of climate change on those facilities and what needs to

be done to make sure that they withstand those impacts going into the future.

Senator MILNE: I want to ask particularly about local government in relation to the materials that you have

produced over quite a period of time now, which are giving fairly good indications to local government about the

likely anticipated impacts of various scenarios on not only sea level rise but also extreme weather events.

However, I am concerned that local government now wants to be indemnified against the fact that, in spite of

having been provided with this information over some period now, and a lot of good information, they have

continued to give planning permission for subdivisions and all sorts of things on coastal floodplains and all kinds

of vulnerable areas. Now, of course, they are concerned that they will get sued when the extreme weather events

occur. Can the minister or anyone in the department tell me where we are up to in terms of having some kind of

reasonable discussion among the insurance industry, local government and the federal government on this

nonsense of indemnifying local government against their own stupidity?

Ms Sidhu: Senator, we have had a longstanding dialogue with local government. But you can appreciate,

Senator, that there are limits to what the federal government can do, because effectively local governments are a

creature of state governments. That said, we have conducted a number of demonstration projects, most recently

under coastal adaptation partnerships projects, with local government to look at the impacts of sea level rise on

local governments. The government, in the context of the Queensland flood issue and the insurance inquiry that

arose from that, is considering one of the recommendations of that inquiry—the Trowbridge inquiry—which is to

provide unified hazard mapping across the country so that that information is available to the public. I think some

consideration of that is underway. That is not in our department. That sits with other organisations.

Equally, our department has supported the coast and climate council over the last couple of years. The most

recent report of the coast and climate council, which I believe is public, has looked into this question of legal

liability for local governments and state governments around this issue. The laws vary from state to state. There is

not a great deal of harmony around them. The New South Wales legislation on local government does provide

indemnification for local governments that declare flood risk or sea level rise risk. But other states do not have

similar provisions. In fact, it is this lack of harmony in the laws that really does need looking into to ensure that

effectively the community gets the information they need to make the decisions they need and there is not a fear

of legal action that is hindering local governments or other organisations from providing that information.

Senator MILNE: Maybe I could ask the minister. Is there any process through COAG to try to get some

greater uniformity around the country on this question of an agreement about indemnifying to a degree or limit or

whatever in relation to various states and local government?

Senator Wong: Not that I am aware of specifically, but I can take that on notice in terms of the various

discussions. I do not recall in the context of the COAG that being on the agenda. I do not know if there is any

other interjurisdictional ministerial council where this is being considered, but I will take it on notice.

Senator MILNE: Another issue I want to raise is whether there is any scenario development in the

department on the likely cost in terms of the damage from extreme weather events under the low-, medium- and

high-risk scenarios from storms, extremely hot days et cetera? Have we actually got any figures based on what

has happened to date? There are plenty of figures on what the cost of mitigation is, but there are very few figures

around on the actual cost of cleaning up and then adaptation as a consequence of extreme weather events when

the science is showing increasingly that the intensity of those events is impacted by climate change.

Ms Sidhu: Some work has been done around disasters and extremes that has mapped the past cost of those

disasters. But, as you can appreciate, the cost varies a great deal depending on where those disasters occur. In

other words, in highly populated areas with a great deal of infrastructure, the costs will be higher than in areas

where there is no human population or very little. Those costs are harder to quantify because obviously they

consist of damage to natural environments et cetera. But they are of a different category. The department did

some work around the sea level rise mapping that we had done. We had come up with some cost estimates, most

recently last year, where we estimated the value of assets that would be under threat from a 1.1 metre sea level

rise. We arrived at an estimated value of $226 billion in current assets and current dollars.

Senator MILNE: That is $226 billion?



Ms Sidhu: That is $226 billion.

Senator MILNE: Has that been made public?

Ms Sidhu: Yes. It was published at the time.

Senator MILNE: Well, let us hope we get somewhere with it.

CHAIR: Professor Steffen, the Climate Commission released a report called The critical decade: New South

Wales climate impacts and opportunities. I notice there was a bit of an exchange between you and the Australian

newspaper. You were accused of being a bit over the top, in colloquial terms, in your analysis. Can you just

explain what that critique was and the problems with that critique?

Prof. Steffen: Thanks, Senator. I should say first that I did answer that critique in writing. It appeared in this

morning‟s Australian. The gist of it was—

CHAIR: We have been here since early this morning.

Prof. Steffen: Sorry. I appreciate how hard you work. You come in at 9 o‟clock and you are still going strong.

The gist of it had to do with the number of hot days—days over 35 degrees—and the trend in these across the

greater Sydney basin. We have data going back to the 1960s, so we nearly have 50 years worth of data. If you

have that report in front of you, Senator, it is on page 4, where we show graphs for two sites. One is Parramatta in

Western Sydney suburbs and the other is at Observatory Hill, which is in central Sydney. You can see that that

light purple line at the bottom is Observatory Hill. There is basically no trend. In other words, there is no increase

in the number of very hot days over that period. In Parramatta, there is a trend. It has been going upwards. There

is a lot of variability from year to year, but the overall trend is upwards. It has increased by about 60 per cent.

Now the Australian made the complaint that we were cherry picking and that we were only choosing two sites

and you cannot make any generalisations. To a certain extent that is true, but we were very careful to choose two

sites that were representative of much broader trends that we see around New South Wales and around the

country.

I will show you what happens when people who are not experts in the game try to do their own scientific

analysis. They actually make some pretty fundamental blunders, which is what the Australian did on Tuesday

morning in their paper. They published three more data sets for the Sydney region. They published Sydney

airport, Bankstown airport and Prospect Reservoir. As you might guess, Sydney airport, being near the coast,

shows a similar trend to Observatory Hill. I think there is a very, very slight rise at Sydney airport that is probably

not statistically significant. That is because these two sites are well ventilated by sea breezes, which caps the

upper temperature. The inland sites are obviously less well ventilated by sea breezes. They are subject to two

phenomena. One is an urban heat island effect. Over the last 50 years, there has been a lot of development in

Western Sydney. But also the underlying global warming trend is also evident in those records because we also

see them in rural New South Wales.

Now, in the two Western Sydney sites, the additional ones that the Australian published, one showed a slightly

lower trend than Parramatta. That was Bankstown airport. But the other one—Prospect Reservoir—had a

significantly higher trend—it was 200 per cent—which was really frightening when you looked at that. We did

not choose that because it was extremist. It was alarmist, if you like. So I thought it was rather interesting that the

Australian newspaper chose a really quite frightening trend to publish in their newspaper when in fact we took the

careful, conservative approach of using Parramatta, which actually is the closest one to what you see across New

South Wales and across rural New South Wales. In fact, it is a good example of why you need people who are

experts in science to actually do these analyses so that you do not fall into the sort of blunders that the Australian

did.

CHAIR: It seems to me that the evidence of anthropogenic global warming is becoming clearer and there is

more evidence coming in. Are you aware of Dr Joelle Gergis?

Prof. Steffen: Yes. Joelle Gergis. Yes, I know him.

CHAIR: He is from the University of Melbourne.

Prof. Steffen: Yes.

CHAIR: Have you seen the manuscript that he has submitted to the Journal of Climate, where he says:

In 94.5% of the 3000-member reconstruction ensemble—

I am not sure what that technical jargon is—

there are no other warm periods in the past 1,000 years that match or exceed post-1950 warming observed in Australasia. The

unusual 20th century warming cannot be explained by natural variability alone, suggesting a strong influence of

anthropogenic forcing in the Australasian region.



Senator IAN MACDONALD: Who is this guy?

CHAIR: This is Dr Joelle Gergis from the School of Earth Sciences at the University of Melbourne.

Prof. Steffen: It is from David Karoly‟s group, basically. I am aware of that paper. I should add that in fact it

has not only been submitted; it has been accepted and published, which means it has gone through the peer review

process, so it has been checked over quite critically by experts in the field. That is also consistent, by the way,

with Northern Hemisphere records. They have a lot more records in the Northern Hemisphere which also show

that the 20th century warming is unusual. The jargon that you refer to—that 3,000-member ensemble—means

that they are using all sorts of different so-called proxy records. Tree rings are a good example of that. We did not

have thermometers a thousand years ago, so we have to infer temperature from other processes that are

temperature sensitive. The growth of trees in certain conditions is one of them. So they have taken a whole

number of different pieces of data and they have found that nearly 94 or 95 per cent, I think, as you quoted, agree

with the fact that this recent warming in the second half of the 20th century to the present is definitely unusual

over the last thousand years. That is also consistent with our understanding of the physics of the system and the

amount of greenhouse gases that have been emitted and the response of the climate system too. So it is another

important strand of evidence that supports what we have been saying for quite some time now.

Senator IAN MACDONALD: Most physicists would disagree with it.

CHAIR: Most physicists disagree?

Senator IAN MACDONALD: Yes.

CHAIR: Is that correct, Professor Steffen?

Prof. Steffen: No. It is not correct. I think they are the physicists who are not experts in the physics of the

climate system. Physics is a broad area. What I said is the physics involved in the climate system. That is the

physics of greenhouse gases, of radiative force and radiative transfer and so on. That has been understood for

nearly 200 years now by experts in the field. That big body of knowledge we have amassed over 200 years has

been borne out quantitatively by the amount of warming that we have seen. This work that you refer to simply

confirms by going back much further in time well beyond the period of thermometers that what we are seeing is

indeed unusual and cannot be explained by natural variability.

Senator BIRMINGHAM: What is the Climate Commission‟s budget for the forward year, please?

Ms Wilson: Senators, are you after the costs of the Climate Commission for this financial year?

Senator BIRMINGHAM: For the coming financial year, yes, please.

Ms Wilson: It is $1.6 million.

Senator BIRMINGHAM: Thank you, Ms Wilson. Is that consistent with the year just concluded?

Ms Wilson: It is, Senator. The financial year ending. I should just confirm that that is consistent with 2010-11

and then 2011-12.

Senator BIRMINGHAM: And is it funded into the out years as well?

Ms Wilson: My understanding, Senator, is that it is funded for four years from the Prime Minister‟s original

announcement in 2010.

Senator BIRMINGHAM: So just for 2012-13 and 2013-14, then?

Ms Wilson: That is correct.

Senator BIRMINGHAM: And it is funded just within the departmental appropriations within existing

resources? Is that how it is funded?

Ms Wilson: The costs of the secretariat are met within departmental resources.

Senator BIRMINGHAM: And additional costs are met?

Ms Wilson: Through an appropriation.

Senator BIRMINGHAM: But there is not a particular budget line that I can see in the PBS.

Ms Wilson: Sorry, but I did not bring the PBS with me. I will have to take that on notice.

Senator BIRMINGHAM: Take that on notice. That is fine, thank you.

Ms Sidhu: I can just explain that it was $1.6 million a year but funded as departmental appropriations and not

administered funding, which is why it does not appear as a line item.

Senator BIRMINGHAM: Thanks, Ms Sidhu. We are almost out of time in this area. Lastly is the National

Climate Change Adaptation Research Facility. I note that the Commonwealth‟s commitment is coming to an end



there. I also note that on their website, in a section called the 'next phase', they indicate that they are seeking from

2013 major partners to provide $100 million in cash and in kind support over the next seven years. They seek a

major contribution from the Commonwealth towards that together with state and territory governments et cetera

plus at least $40 million from investors. Are we to take it from the budget papers that the facility‟s bid for that

funding from 2013 has been unsuccessful?

Ms Sidhu: I do not think that is a correct construction on the budget. The Commonwealth‟s funding of the

facility concludes at the end of this financial year; that is correct. The facility is continuing for an additional year

on its own funds because it is funded from other sources than the Commonwealth. It is obviously looking beyond

that additional year, beyond the 2012-13 year, to see how it might continue, hence the prospectus you would have

seen on the website. It does not presume that the Commonwealth funding will continue to be the anchor funding.

The more recent discussions that the board of the facility have had have registered this both at the Commonwealth

level and at the state level. So the facility is adapting its approach to seek funding from various sources to allow it

to continue beyond 2012-13.

Senator BIRMINGHAM: The adaptation centre is adapting?

Ms Sidhu: Precisely correct.

Senator BIRMINGHAM: There are no contingency funds set aside for this at present, though? They would

have to go through next year‟s budget process if they are to secure any funding for the future?

Ms Sidhu: Exactly right.

Senator BIRMINGHAM: Chair, you have usually stopped me by now. I was just 15 seconds after the time.

CHAIR: That concludes the questions—

Senator IAN MACDONALD: I want to ask an internal question. Is Professor Flannery, the chairman of the

Climate Commission, ever going to come before this? Is there some reason he does not?

Mr Comley: Senator, there was a question on notice whether Professor Flannery would attend. The answer

was Professor Flannery would attempt to attend if he was invited. Once again, he was not invited.

Senator IAN MACDONALD: How come Professor Steffen, who is excellent, as always—

CHAIR: He does not need an invite.

Mr Comley: He is here to assist the committee.

Senator IAN MACDONALD: But would Professor Flannery not be here to assist the committee too?

Mr Comley: Well, he could be. But his presence has not been requested.

Senator IAN MACDONALD: So are you saying at the next estimates we should specifically request him to

come and then he will pop along?

Senator Wong: Well, you can.

Mr Comley: I think that statement has been made at the last two or three estimates.

CHAIR: We are moving on. On behalf of the committee, I invite Professor Flannery to the next hearing along

with Professor Steffen.

Mr Comley: We will convey that request to Professor Flannery.

CHAIR: I also thank everyone, particularly Professor Steffen. I know that fighting the fight against ignorance

and opposition to scientific fact is always a big job and you are doing it well. Thanks.

Senator FISHER: It will only get bigger, Chair.

CHAIR: It is ignorance.

Senator IAN MACDONALD: It will only get bigger. Yes, you are right. You are losing the battle, I am

sorry, Professor.

[22:02]

CHAIR: I now call officers from program 1.4, Helping to shape a global climate change solution.

Senator MILNE: I would just like to get some figures on climate finance. Basically, as I understood it, at

Copenhagen there was an agreement for $30 billion to be made available in fast-start financing between 2010 and

2012 and that Australia would contribute $599 million. Has that been fully expended? Was that for the 2010-11

and 2011-12 financial years?

Mr Comley: Of the fast start money, which was—you are right—$599 million, by June 2012, the end of

Australia‟s second fast-start year, approximately $380 million of the package will be disbursed, so actually spent.



The funding will be completely disbursed by 30 June 2013. We have already allocated $544 million of the fast

start finance, so only 10 per cent remains unallocated. So, in summary, 90 per cent has already been allocated. Of

that, $380 million, or two-thirds of the total, has been disbursed with all the money to be disbursed by the end of

June 2013.

Senator MILNE: So the 2012-13 financial year is a lag, then, on what was agreed that would be spent? Is that

correct?

Mr Comley: Well, it is a little difficult, as is the case in a number of UN matters, because many other

countries are on calendar years and we are on financial years. We often use the financial year—

Senator Wong: Progress.

Mr Comley: rather than the actual calendar year.

Senator MILNE: So to go beyond 2013 and out to 2020, I understand that in Copenhagen the agreement was

$100 billion by 2020 globally that would be raised and spent. Can you tell me what percentage of the total amount

that Australia has agreed or will contribute? How is that percentage of burden share being calculated?

Mr Comley: The first point to make is the $100 billion was from all sources, both public and private.

Australia has not specified precisely the burden share that it would intend to take on. It is typically used language

that it will do its fair share. It depends on the various benchmarks people would use. Typically, the sort of fair

share formula that Australia would be ascribed is in the order of 1½ per cent of total funding. Australia has never

formally made a commitment, but that is sort of in the ballpark of what is normally expected to be Australia‟s fair

share contribution.

Senator MILNE: So is that contribution in the forward estimates?

Mr Comley: No. Well, first of all, 2020 is beyond the forward estimates.

Senator MILNE: Yes, I know. But leading out. Specifically, what allocation towards that is in the forward

estimates?

Mr Comley: There are two parts to the question. The first part that is relevant is that the $100 billion is public

and private, so there is no specific commitment at this point as to what share of that is public, which is the thing

which would show up in ODA or the ODA equivalent. The second thing is that whilst there was an agreement in

Copenhagen, which was again picked up in the Cancun agreement and, therefore, internationalised through the

UNFCCC process, there was no agreement on the way in which it would evolve from the fast start period to the

$100 billion. So on both those specific issues, Australia has not made a formal commitment at this point in time.

Senator MILNE: But have you allocated any money across the forward estimates for that regardless of

whether or not you have committed to a sum internationally?

Mr Comley: My understanding is what is captured within the forward estimates at the moment is the fast start

financing and there has been no specific climate change commitment beyond the fast start period at this point in

time. That would be considered, among other things, in the context of the overall aid budget.

Senator MILNE: Yes. But is it not also true that the agreement said that the climate finance had to be

additional to existing aid commitments?

Mr Comley: No. The language was 'new and additional'. It is the case that there are different interpretations of

what new and additional means in the international community.

Senator MILNE: So from the Australian point of view, why is there not any transparency in the aid budget so

that people can see clearly what is climate finance and what is overseas aid?

Mr Comley: Well, climate finance is also overseas aid at the same time. They serve both purposes. There is

transparency in the sense that the fast start financing is identified separately. Going forward, I would anticipate in

line with the overall aid review that there would be disclosure of the nature of what purposes aid has been put to,

both on a country basis and on a thematic basis. Precise details on how that would be revealed is really a matter

for AusAID in their estimates.

Senator MILNE: The issue I have is that the way that the aid budget is presented, you cannot separate out the

climate commitments from the ODA commitments, particularly around the 0.5 Millennium Development Goals.

There appears to be double-dipping in the sense that there is one budget allocation that covers both but neither. It

is not clear.

Mr Comley: I think people have raised questions of transparency and that is why Australia, along with a

number of other countries, have put out public information on the nature of their climate finance so it is clearer to

people what is being paid in climate finance. I recall in Cancun there were a number of developed country parties



that put out in a common template form the nature of their climate finance commitments so that it was easier for

people to understand what was allocated under climate finance.

Senator MILNE: So given that the fast start financing of $599 million is going to be out the door albeit 12

months after we thought, there is nothing in the budget for anything after that. Are we assuming, then, that the

$100 billion by 2020 is a figment of people‟s imagination?

Mr Comley: No. Again, the point I made before is that there is no specific commitment as the pathway from

the end of the fast start finance period to 2020. I expect that that will be one of the issues that is negotiated as part

of the Durban platform.

Senator MILNE: I will switch to another question in relation to the international climate work. I go to the

Kalimantan Forests and Climate Partnership. I asked a series of questions on notice about that at the last

estimates. The answers show that about one-third of the $100 million has been spent and only 1,000 hectares has

been replanted. I come to the Kalimantan project. It really is quite a serious issue here because this project has

been a total failure compared with what was claimed for it and what has actually happened. The facts sheet said

that the initial work was to avoid deforestation of 50,000 hectares and rehabilitate an additional 50,000 hectares of

degraded peatland. As I said, the answer you gave me showed you spent about one-third of the $100 million and

replanted just under 1,000 hectares. So it is a total failure, in other words. Can you explain to me what went

wrong, why, when it started to go wrong and what this means realistically for REDD in Indonesia?

Mr Comley: I think Mr Owen-Jones is looking for some material. In broad terms, I think the issue that has

been found in Kalimantan has essentially revolved around the fact that land tenure issues have been more

complex than first thought and resolving the land tenure issues has taken longer than first thought. We have been

working very closely both with the Indonesian government and the indigenous people of the area to try to resolve

these land tenure issues. What does it mean for REDD? I think it means that until such time as further work on

those land tenure issues is resolved, REDD will take longer than first thought. That is the principal reason. It is

not dissimilar, in a sense, to when we have been working on the Carbon Farming Initiative here. Here we have

clear land tenure. As you know, there are obligations that will be attached to the titles of properties as a way of

ensuring permanence and durability. But the clarity of the land tenure situation in Indonesia has proved more

problematic than first thought.

Senator MILNE: So that is where I wanted to go next. Basically, under the UN Declaration on the Rights of

Indigenous Peoples, to which we are a signatory, it is very clear that the rights of indigenous people have to be

guaranteed. To date, that has not happened and nor is there any clarity about Indonesia‟s preparedness to

recognise indigenous rights in this regard. So can I assume from that that REDD programs are not going to

proceed in the short term until these matters are sorted? What is your time frame on it? What are you thinking?

Mr Comley: Mr Owen-Jones will comment and I will come back to it. Clearly, a whole range of issues need

to be addressed, but I will ask Mr Owen-Jones to comment and then I will come back to it.

Mr Owen-Jones: There are two things. Firstly, this is a program that is specified administered by AusAID, so

they will be able to respond to some of your questions in detail. Secondly, it is a demonstration activity. It has not

been as vast as originally expected. AusAID still expects it to come to completion. One of the reasons why it has

been slower than originally expected has been the interaction with the local communities.

Senator MILNE: Well, that is one way of dressing up a failure, I suppose. Can you tell me why the

Australian REDD scheme in PNG was cancelled? Was that for the same reasons? Can you explain why there was

no formal announcement when we pulled out of that? If the indigenous land tenure issues were not the main

reason, what was? When did we pull out of the PNG project?

Mr Comley: I will have to take that on notice. I do not know off the top of my head.

Senator MILNE: Maybe I will go to Ms Thompson on this issue of REDD and progress on REDD in the

international negotiations. Could you just summarise briefly where you think it is up to, because every year there

is hope that REDD will be sorted and every year people come home disappointed. What is your take on where

REDD is up to?

Ms Thompson: Senator, I would have been very happy to answer your question, but in fact it is Mr Robert

Owen-Jones that has responsibility for that issue.

Senator MILNE: I will redirect it, then.

Mr Owen-Jones: As you know, Senator, REDD is an area of very active discussion in the negotiations. It is

one of the areas that has tremendous support across all parties. It is also, as you know, an extremely complex area.

So it continues to be taken forward. Australia has been very active in that negotiation and we also support the



general approach towards REDD through things like the REDD+ Partnership, which we are co-chairing with the

Democratic Republic of the Congo at the moment. So it continues. It is an active part of the negotiation.

Senator MILNE: So give me a time frame. Tell me where we are up to. What can we expect in Qatar?

Mr Owen-Jones: REDD, Senator, is part of the overall negotiations. That has a four-year time frame that will

come to its eventual conclusion in four years. What milestones and progress can be made up until that point

depends on the general dynamic in the negotiation. But the end point is in four years.

Senator MILNE: I know that. What are the barriers that people are working on at the moment? What are the

active areas of dispute in these international discussions on REDD? What are the obvious ones, or the most

problematic ones?

Mr Owen-Jones: I am quite happy to come back with a more comprehensive answer to that, Senator.

Senator MILNE: All right.

Senator BIRMINGHAM: I want to look overseas but fairly close to home in Timor Leste and the discussions

about how the carbon price will impact on the gas fields of Timor and the deposits there and their income in the

joint petroleum development area. What role has the department had in those negotiations?

Mr Comley: The involvement of the department is effectively to advise the department of foreign affairs of

the underlying issues associated with potential carbon price liability. The negotiations, then, are essentially run

out of the department of foreign affairs. Essentially, that is an input to what the perceived cost burden would be

across the development area. Then it is a matter for foreign affairs to negotiate directly with their Timorese

counterparts.

Senator BIRMINGHAM: So from this department‟s analysis of the Clean Energy Future legislation, there is

a cost burden that will apply to the development, and that is just a legal statement of fact and it is up to DFAT to

then negotiate how those costs may be met under the agreement?

Mr Comley: The fact that there is a liability, which is clearly a cost impact on the proponents of the scheme,

is a statement of fact. It is not a matter of dispute. Naturally, there are actually a whole range of other costs that

government policy has on any development. Occupational health and safety standards, for example, could be

argued to put a cost on business that they otherwise would not incur in some circumstances. So the question of

whether there should be any arrangement between Australia and East Timor with respect to those costs is a matter

of negotiation between the two countries. I do not really want to go into the precise nature of the negotiation, but

that is really the discussion between Australia and Timor Leste.

Senator BIRMINGHAM: Has the department put an estimate on the potential revenue from the development

area?

Mr Comley: We have had discussions with Foreign Affairs and we have certainly had conversations with the

project proponent, but to my knowledge we have not publicly made available an estimate of the impact of the

carbon price.

Senator BIRMINGHAM: Could you just take on notice and check for me? If you have made it available

somewhere such that I have not seen it, perhaps you could provide those details to me. But was this an issue that

the department was aware of prior to the finalisation of the clean energy future legislation?

Mr Comley: I will take that on notice. Just to be helpful, my recollection is this is an issue that has been

known going back as far as the CPRS.

Senator BIRMINGHAM: Were there discussions in that finalisation of the legislation with the project

developers or representations from them or the government of Timor Leste?

Senator Wong: Mr Comley may be able to answer some of that, but it is probably a complicated way of

asking him the question that he has indicated he is not going to go into, which is that it is a matter for the

negotiations.

Mr Comley: I think, Minister, in this case I can answer the question of whether there were representations. I

think there were certainly representations made by the project proponents. In many respects, they were making it

clear that they were partly making representations on behalf of East Timor, who were concerned about the issue.

Whilst we were not directly party to it, I understand that there were representations made by the government of

East Timor to the government of Australia.

Senator BIRMINGHAM: And in terms of the status at present, just so that I am crystal clear here, there

would be no position under the clean energy future legislation that could allow a discount, exemption, waiver or

reduction of the Timor share to apply? If there is to be any type of arrangement with Timor, that would obviously



be a matter for the two governments to sort out. But if there is to be, that would have to be sorted out elsewhere in

government.

Mr Comley: We are a bit hypothetical here. If you are trying to deliver a particular policy outcome, there are

a range of ways you can implement that. But the general understanding is that it would lie outside the clean

energy future package itself.

Senator BIRMINGHAM: Thanks, Mr Comley. That is all on that topic.

CHAIR: Let us go to Senator Fisher.

Senator FISHER: The department‟s website highlights the five-year plans of China. So that is for 2011, 2006

and 2001. In particular, you have a facts sheet that highlights aspects of the 2011-15 five-year plan as evidence of

serious action on China‟s part. Is that right?

Dr Banerjee: That is correct, Senator.

Senator FISHER: Do you talk about whether or not China achieves the targets that it puts in its five-year

plans?

Dr Banerjee: I am not sure if the document that you are referring to does, Senator. But I can provide some

information about whether or not China met the targets that it put in its 11th five-year plan.

Senator FISHER: Now?

Dr Banerjee: I can do so in general terms and then check on the exact figures offline. My understanding is

that the energy intensity target that was put in the 11th five-year plan was very close to being met. It was within a

couple of percentage points of being met.

Senator FISHER: Anything else?

Dr Banerjee: Well, in the 11th five-year plan, the target was an energy intensity target. In the 12th five-year

plan there is an energy intensity target and a carbon intensity target.

Senator FISHER: Did you carry out any sort of thorough analysis of China‟s record in meeting its various

climate change targets in the five-year plan? Did you go through each of its commitments and see whether China

had met them?

Dr Banerjee: Senator, the five-year plan process in China is a very extensive planning process and an

evaluation process. We look at the results of that. We look at the information that is available on that and read

commentary also about the robustness of those sorts of figures. Our understanding is that the energy intensity

targets and then the reported figures that were provided are robust, and it was on that basis that I reported back

that the intensity targets were almost met. They were not quite. I think it was within a couple of points.

Senator FISHER: How about China‟s forecast that it will consume 1.1 billion tonnes of coal in the fifth year

of the plan? Are you familiar with that forecast in 2001 to 2005?

Dr Banerjee: Not that specific forecast, Senator.

Senator FISHER: Is it true that China actually consumed in that period 2.3 billion tonnes of coal in the fifth

year?

Dr Banerjee: I am not familiar with the specifics of the coal targets and projections that you are citing there,

but I can certainly take that on notice.

Senator FISHER: If it were true, it would be the case that China consumed more than double its forecast

estimate of coal in the fifth year of that particular five-year plan.

Dr Banerjee: I am not familiar with the figures, Senator.

Senator FISHER: Can you on notice confirm whether that is the case or not?

Dr Banerjee: Sure. I certainly can.

Senator FISHER: What about looking at the 2006-10 five-year plan where China forecast it would consume

2.5 billion tonnes of coal, again in the fifth year of the plan? Are you familiar with that goal?

Dr Banerjee: Again, I can check those on notice.

Senator FISHER: If in fact China consumed 3.5 billion tonnes of coal in the fifth year of that plan—so that is

3.5 instead of 2.5; not as bad as the previous fifth year of the five-year plan, but it is something like a billion more

tonnes than it forecast—perhaps you can confirm on notice or otherwise whether that is the case.

Dr Banerjee: Sure. I would be happy to.



Senator FISHER: Thank you. Look at the decade to the end of 2010. Are you aware that China‟s five-year

plan forecasts of coal were 3.6 billion tonnes but its actual use was 5.8 billion tonnes? So that is an overrun of 2.2

billion tonnes or nearly, as I understand it, seven times Australia‟s total coal output. That is just in the overrun.

Dr Banerjee: Sorry, Senator. Would you like me to confirm that on notice as well?

Senator FISHER: Yes, I would. All of those figures have been drawn to my attention on good authority. Can

the department explain how it is prudent or sensible to continue to publish with tones of approval China‟s five-

year forecasts when it is obvious that it is not going to make the grade?

Dr Banerjee: Senator, perhaps I can make a couple of points about the metrics that are being discussed here

without, as I say, being familiar with the specifics of the figures that you put. Firstly, there is the issue of what is

projected to happen and what actually happens. As in any forecasting exercise, there is a projection and there is

the actual and you compare one to the other. So, as you say, it is a matter of looking at what actually happened

and seeing how close it was to the original projection. I am happy to check those on notice. Secondly—

Senator FISHER: And could you also let me know whether the department undertakes a uniform evaluation

of commitment versus achievement?

Dr Banerjee: Sure. I am happy to do that.

Senator FISHER: Because if you do not, the very point you are making is somewhat disingenuous, I suppose.

Senator Wong: These are also issues which are being canvassed in the international context, so I do not know

if there is an official who can perhaps discuss what progress is being made on that.

Mr Comley: I think there are two points. First of all, as Dr Banerjee said—

Senator FISHER: Dr Banerjee was going to make a second point.

Dr Banerjee: My second point was just going to be that the targets I talked about from a climate change

perspective are intensity targets. They are not absolute usage targets. So when you consider the different metrics,

there is a difference between thinking about how much was actually used and the energy intensity with which the

coal or whatever the fuel was used. It is certainly possible that there was an increase above what was initially

projected in terms of energy usage and that energy intensity targets were still met. So those two facts could

coexist. I will certainly check the coal usage figures that you have put on notice.

Senator FISHER: But even if that were the case, it could also be the case that the commitment of use was

nonetheless exceeded, could it not, even though intensity was not exceeded?

Dr Banerjee: As I say, it is a matter of the energy usage and what was projected and what actually happened.

Then there is the matter of the energy intensity targets and whether or not they were hit. The energy intensity

targets are relative targets, so they do not depend on the absolute amount used. Those two are separable issues. As

I also said previously that, when you look at the previous five-year plan, those were about energy intensity.

Looking at the 12th five-year plan, there are now targets about energy intensity and carbon intensity. So the

targets and the goal over the 12th five-year plan cover both energy usage and climate change.

Mr Comley: Dr Banerjee has covered the key point I was going to make. I suppose you do have to be a bit

careful in the Chinese planning framework between what are targets and what are forecasts. So the target is an

energy intensity target. The parameters, including growth rates and inputs like coal, that are put in the projections

do change. But I think you have to focus on the targets. The second point that is relevant here is that China does

have its five-year plans.

Senator FISHER: Mr Comley, are you saying that the consumption figures are energy intensity? Surely not.

Mr Comley: No. What I am saying is that the target they set themselves was energy per unit of GDP. There is

a difference between targets and estimates that people have done in plans.

Senator FISHER: Yes. Of course.

Mr Comley: We can check this, but I am not clear that the coal estimate was a target. I think it was an

estimate of what would be used. If, for example, GDP turns out to be higher, which would include factors like

using more coal, as Dr Banerjee said, that does not invalidate the fact that they are taking measures to achieve

their energy per unit of GDP target. The second thing I was going to add is that China does report a fair bit

externally on what it does in its five-year plans. But part of the international architecture that moved forward

significantly at Cancun and then Durban was putting in place monitoring, reporting and verification for major

developing countries, such as China. At the moment we have quite a lot of information out of China, but, going

forward, there will be an international regime where China‟s actions and the outcomes of those will be subject to

external scrutiny in a way that feeds back into the negotiation process.



Senator FISHER: The question underlying my questions is: how much robust analysis the department does

of projections, targets, consumption or whatever in China‟s five-year plans—the 10th, 11th and 12th five-year

plans—before you highlight them on your website as some exemplar of climate change ambassadorism or

something?

Mr Comley: We do quite a lot. Our major focus is on economy-wide trends rather than particular sectoral

changes. That is why we focus a lot on what is happening to the energy intensity and the emissions efficiency of

their economy and how that measures up against the commitments they have made internationally. We also draw

quite a lot on different external analyses on China that are done around the world. Could we do more? You can

always do more. In fact, there are many countries it would be good to do more on. But we do do a reasonable

amount of work on analysing where China is and have spent a fair bit of time recently with people trying to visit

China and understand what is driving the dynamics of both their climate policy outcome—

Senator FISHER: Perhaps on notice you could refer to the specific figures that I have suggested to you. Can

you confirm whether they are right or not? Then explain why the department thinks that that still means in one

way or another China is meeting an acceptable target, be it through energy intensity—what was the terminology

you were using?

Mr Comley: It is either energy intensity per unit of GDP or—really, emissions per unit of GDP is the relevant

measure.

Senator FISHER: Thank you.

CHAIR: Senator Xenophon can tell you all about that.

Senator FISHER: I prefer to hear it from the department, no offence to Senator Xenophon.

CHAIR: I am looking at the World Energy Outlook 2011 report. Is anyone familiar with that?

Mr Comley: In broad terms. If you pick out a number from a table in index A, I might be in trouble.

CHAIR: Listening to Senator Fisher, you would think that coal is going to just continue to grow as it has been

growing. This cannot be too good for the Australian economy over the longer period. In the period—it is a graph;

it is figure 5.11 in the World Energy Outlook—it shows that the fastest-growing energy source between 2010 and

2035 is, in fact, going to be renewables. Is that consistent with the analysis that has been made by the department?

Dr Banerjee: That is consistent with the broad understanding of how people have modelled the global

economy under a range of different scenarios. I think the work that you are mentioning is from the International

Energy Agency, if that is right. They do broad-scale modelling on the basis of some plausible policy scenarios.

Under those plausible policy scenarios, I have certainly seen presentations that refer to substantial growth in

renewables. In the medium, as a bridge, there is a substantial growth in gas.

CHAIR: Yes. Growth in gas and a decline in coal?

Dr Banerjee: Over the longer term.

Senator MILNE: I want to ask about article 3.4 and the commitment to forest management. There is a great

deal of interest in this currently, as you might appreciate, in negotiations that are going on. Given the progress that

was made in Durban, is there an expectation in Qatar that Australia may well commit to mandatory forest

management. Where are we up to on that?

Ms Thompson: As I think you are aware, because you were in Durban, the Australian delegation was very

pleased at the progress that was made on the land sector accounting in Durban. I think our sense is that we did

move towards a more comprehensive accounting approach. The outcomes on dealing with emissions from forest

fires and, indeed, the approach to forest management in the broad are broadly in line with Australia‟s negotiating

position. I think the question about what Australia will decide to do about the 3.4 activities is something that sits

within the government‟s more general consideration of the Durban package and is about looking to the second

commitment period of the Kyoto protocol. So people are working through all of those issues at the moment. I

think the government will be, at least on the forest management 3.4 activity and the land sector rules, advising

stakeholders soon about the next steps it will take on that.

Senator MILNE: This is particularly important in the context of the intergovernmental agreement

negotiations with Tasmania and forest conservation and the like. I am specifically asking whether you expect

there will be progress in Qatar, or are you thinking that it is going to be further off than that?

Ms Thompson: One of the issues that has emerged is that the IPCC needs to do some further work on

guidance as to how these new land sector rules will be applied. My understanding is that they are just moving

towards thinking about and settling on a process for that. In fact, the outcome of that good practice work will not



be available until 2014. So I think there is a sense in which that technical work needs to be done. That will be

very important towards informing how countries decide to approach these issues.

CHAIR: I think we are exhausted. That concludes the examination of the Climate Change and Energy

Efficiency portfolio. I thank the minister and officers for their attendance. The committee will recommence its

examination of the Sustainability, Environment, Water, Population and Communities portfolio tomorrow morning

at 9.00 am. I remind senators that written questions on notice should be provided to the secretariat by close of

business on Wednesday, 6 June 2012. I thank Hansard and Broadcasting for their long day.

Committee adjourned at 10.42 pm

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