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COMMONWEALTH OF AUSTRALIA

PARLIAMENTARY DEBATES

SENATE

Official Committee Hansard

ENVIRONMENT, RECREATION,COMMUNICATIONS AND THE ARTS

LEGISLATION COMMITTEE

(Consideration of Estimates)

THURSDAY, 26 SEPTEMBER 1996

BY AUTHORITY OF THE SENATECANBERRA 1996

Thursday, 26 September 1996 SENATE—Legislation ERC&A 517

SENATE

Thursday, 26 September 1996

ENVIRONMENT, RECREATION, COMMUNICATIONS AND THE ARTSLEGISLATION COMMITTEE

Portfolios: Environment, Sport and Territories; Communications and the Arts

Members: Senator Patterson(Chair), Senators Childs, Eggleston, Lees, Ian Macdonald andSchacht

Substitute member:Senator Campbell to substitute for Senator Ian Macdonald for the period9 to 19 September 1996

Participating members: Sentors Abetz, Allison, Bolkus, Boswell, Bourne, Brown, Calvett,Carr, Bob Collins, Coonan, Cooney, Crane, Faulkner, Ferguson, Harradine, Hogg, Kemp,Lundy, Mackay, Margetts and TierneySenator Woodley for the consideration of the 1996-97 Budget estimates

The committee met at 9.09 a.m.

DEPARTMENT OF COMMUNICATIONS AND THE ARTSProposed expenditure, $1,160,682,000 (Document A).Proposed provision, $88,068,000 (Document B).Expenditure from the Advance to the Minister for Finance, $9,783 (Document D).Consideration resumed from 25 September.

In AttendanceSenator Alston, Minister for Communication and the ArtsDepartment of Communications and the Arts—Executive

Mr Neville Stevens, SecretaryMs Cathy Santamaria, Deputy Secretary

Program 1—Department of Communications and the ArtsSubprogram 1.1—Policy, Regulatory and Operational FrameworkSubprogram 1.2—Cultural Development Assistance

Dr Alan Stretton, First Assistant Secretary, Arts, Heritage and National BroadcastingDivision

Mr James Barr, Assistant Secretary, Arts Development BranchMs Dawn Casey, Assistant Secretary, Heritage BranchMr Alan Edwards, Acting Assistant Secretary, National Broadcasting and Music BranchMr Peter Young, Director, Arts Support

ENVIRONMENT, RECREATION, COMMUNICATIONS AND THE ARTS

ERC&A 518 SENATE—Legislation Thursday, 26 September 1996

Ms Rhonda Thorpe, Director, National Broadcasting SectionMs Antonia Syme, Director, ArtbankDr Rod Badger, First Assistant Secretary, Film, Licensed Broadcasting and Information

Services DivisionDr Beverly Hart, Assistant Secretary, Licensed Services BranchDr Kay Daniels, Assistant Secretary, Multimedia Development BranchMr Craddock Morton, Assistant Secretary, Film Industry Development BranchMr Brian Stewart, Assistant Secretary, Information and Communications Services BranchMs Fay Holthuyzen, First Assistant Secretary, Telecommunications Industry DivisionMr Colin Oliver, Acting Assistant Secretary, Trade Development BranchMr John Neil, Assistant Secretary, Enterprise and Standards BranchMr Tom Dale, Assistant Secretary, Regulatory Policy BranchMr Robert Palfreyman, First Assistant Secretary, Corporate Management Division, Old

Parliament House and Centenary of FederationMr Les Neilson, Assistant Secretary, Corporate Services BranchMr Tony Shaw, First Assistant Secretary, Planning and Review Division

Subprogram 1.3—National Transmission AgencyMr Vic Jones, General Manager

Program 2—Arts and Heritage ServicesSubprogram 2.1—Australia Council

Mr Michael Lynch, General ManagerMs Sarah Gardner, Director, Strategy and PolicyMs Catherine Watts, Director, Corporate ServicesMr Gabriel Chan, Finance Manager

Subprogram 2.2—Australian ArchivesMr Malcolm Wood, Acting Director GeneralMr Rod Cook, Director, Corporate Accountability

Subprogram 2.3—Australian National Maritime MuseumDr Kevin Fewster, DirectorMr Quentin Howarth, Director, Budgets

Subprogram 2.4—National Gallery of AustraliaMs Betty Churcher, AM, DirectorMs Helen Knight, Assistant DirectorMr Alan Proud, Deputy Director

Subprogram 2.5—National Library of AustraliaMr Warren Horton, AM, Director GeneralMr Peter Hughes, Assistant Director, Accounting Policy and Services Section



Subprogram 2.6—National Museum of AustraliaDr Bill Jonas, Director

Subprogram 2.7—National Science and Technology CentreMs Christina Bee, Deputy DirectorMr Gary Bullivant, Business Manager

Program 3—Broadcasting, Film and Multimedia ServicesSubprogram 3.1—Australian Broadcasting Corporation

Mr Brian Johns, Managing DirectorMr Russell Balding, General Manager, FinanceMs Penny Chapman, Head, ABC TelevisionMr Robert Batten, Acting Head, ABC Radio

Subprogram 3.2—Special Broadcasting ServiceMr Malcolm Long, Managing DirectorMs Maureen Crowe, Head of ResourcesMs Chris Sharp, Manager PolicyMr Jon Torpy, Manager Finance

Subprogram 3.3—Australian Broadcasting AuthorityMr Peter Webb, ChairmanMr Colin Knowles, General Manager, Corporate and PlanningMr Gareth Grainger, Director, Policy and Programs Division

Subprogram 3.4—Australian Film CommissionMs Cathy Robinson, Chief ExecutiveMr Malcolm Day, Manager, Human Resources Corporate Operations BranchMr Ron Neale, Director, Finance and Systems Corporate Operations Branch

Subprogram 3.5—Australian Film, Television and Radio SchoolMr Rod Bishop, DirectorMr Denis Green, Manager, Corporate Services

Subprogram 3.6—National Film and Sound Archive

Mr Ron Brent, Director

Ms Margaret Baird, Manager, Accounts Resource Management

Subprogram 3.7—Film Australia

Mr Bruce Moir, Managing Director

Mr Alan Jones, Chief Financial Officer

Subprogram 3.8—Australian Film Finance Corporation

Mr John Morris, AM, Chief Executive

Mr Michael Malouf, Financial Controller



Program 4—Communications, Infrastructure and ServicesSubprogram 4.1—Australian Postal Corporation

Mr Gerry Ryan, Corporate Secretary, Group Manager, Corporate ServicesMr John Power, Group Manager, LettersMr Maurice Castro, Group Manager, Strategic PlanningMr Rowland Hill, Group Manager, Corporate Communications

Subprogram 4.2—Telstra Corporation LimitedMr Gerry Moriarty, Chief Executive Officer, Telstra Multimedia Pty LtdMr Graeme Ward, Group Director, Regulatory and External AffairsMr John Stanhope, Director, FinanceMr Peter Shore, Managing Director, Commercial and ConsumerMr Tony Bundrock, National Manager, Strategy and Business Development Mobile

Communication ServicesMr Robert Cartwright, Group Managing Director, Employee RelationsMr Lawrence Paratz, Executive General Manager, Network and IT InfrastructureMr David Krasnostein, Group Director, Strategic Planning and Development/General CouncilMr Ross Marshall, National General Manager, Network Planning and ProductsMr Geoff Barkla, Director, Industrial Relations

Subprogram 4.3—Spectrum Management AgencyMs Christine Goode, Acting Spectrum ManagerMr Jeremy Chandler, Manager, Finance

Subprogram 4.4—Australian Telecommunications AuthorityMr Neil Tuckwell, ChairmanMs Lesley Gordon, General Manager, Corporate Resources

Department of Finance—Tony BoxallCHAIR —I declare open the public meeting of the Senate Environment, Recreation,

Communications and the Arts Legislation Committee. On 22 August 1996 the followingdocuments were referred in legislation committees for examination and report: particulars ofproposed expenditure in relation to the parliamentary departments in respect of the year ending30 June 1997, particulars of proposed expenditure for the service of the year ending 30 June1997, particulars of certain proposed expenditure in respect of the year ending 30 June 1997,and advance to the Minister for Finance statement of heads of expenditure and the amountscharged thereto pursuant to Section 36A of the Audit Act 1991 for the year ending 30 June1996.

Following the hearings the committee will prepare its report for the Senate, to be tabled on9 October 1996. Responses to questions placed on notice at today’s hearing can be sent to thesecretariat up until close of business on 4 October 1996. The committee has agreed that it willexamine subprogram 4.2 on Telstra Corporation Ltd. It will suspend the hearing at 12.30 p.m.for lunch break and resume at 1.15 p.m. to examine subprogram 3.1 on the AustralianBroadcasting Corporation.



Draft annual documents of departments are available for consideration by legislationcommittees during the course of the estimates hearings. Senators will have the opportunityunder each subprogram to raise questions concerning both the departmental draft annual reportfor 1995-96 and the portfolio budget statements 1996-97. I welcome Senator the Hon. RichardAlston and officers from the communications and the arts portfolio.

The departmental officers will not be asked to comment on the reasons for certain policydecisions or advice you may have tendered in the formulation of policy or to express apersonal opinion on matters of policy. I now invite you to make an opening statement to thecommittee and at the conclusion of your remarks we will ask questions. Do you have anopening statement?

Senator Alston—Madam Chair, there is no opening statement. I might just indicate,although it probably affects the ABC more than anyone else, that the hearing is scheduled tofinish at 4.30 p.m., but I have commitments in Sydney which will require me to leave hereat 3.30 p.m. I am not objecting to the committee continuing on for that additional hour to 4.30p.m., but I am just giving people advance notice in case they might want to pursue issues withme prior to that time.

Senator SCHACHT—We appreciate that, Minister. We do not want to be difficult but Ihave to say I do not think the opposition has been overenthusiastic at the idea—some othercommittees have already done this—of having an estimates meeting where for an hour or sothere was no minister present. It just makes it a bit irrelevant in a sense because as soon asany question of any slight policy nature comes up, dead silence comes over the officers—andquite rightly. We will see how we go.

Senator Alston—We will have a couple of hours prior to 3.30 p.m. in which we can pursueas many policy issues as you like.

Senator SCHACHT—Just the same, I have been through one other hearing where that wastried and, I have to say, I do not think it was a great success. Nevertheless, thank you forwarning us that you will be leaving at 3.30 p.m. Minister, in Budget Paper No. 1 it says onpage 26 that provision for dividends from government business enterprises was $1,395,600.In Budget Paper No. 1 the dividends for communication government enterprises for 1996-97is $1,389,000. It is marginally different by a few million, which you might say, at that level,is not worth arguing over, but is there any correction to those figures?

Senator Alston—I will certainly get some information for you on the difference betweenthe two.

Senator SCHACHT—In Budget Paper No. 1 the business enterprises are listed for yourarea, communication government business enterprises—Australia Post and Telstra. What isthe estimate for 1996-97 now that both figures have been declared? This is probably more forthe department than it is for Telstra. But I just want to get—

Mr Stevens—Senator, 1996-97 have only been estimates at this stage. It is not an actualfigure.

Senator SCHACHT—Have Australia Post given the government an estimate yet of whatthe actual Australia Post dividend will be for this year?

Senator Alston—I did get some advice on this the other day, which I have acknowledged—Ido not know that it has been made public as yet.

Senator SCHACHT—I see. Do you have to wait until they want to make it public or—



Mr Stevens—Senator, there are Stock Exchange rulings here. It is the company itself whichhas to make these issues public as part of its reporting process.

Senator Alston—I think they have a statutory obligation to bring it to my attention as amatter of courtesy.

Senator SCHACHT—And then Australia Post will release it.Senator Alston—Yes.Senator SCHACHT—Telstra, of course, have released in their annual report the financial

result for the year ending 30 June. Has that all been notified to the Stock Exchange?Mr Ward —It has, Senator.Senator SCHACHT—And your dividend to the government is what?Mr Stanhope—Our declared dividend for 1995-96 is $1,368 million dollars.Senator SCHACHT—For 1996—Mr Stanhope—No, 1995-96.Senator SCHACHT—Minister, for 1995-96 it says in Budget Paper No. 1—and I do not

know whether this is the 1995-96 actual—you have already declared that for 1995-96 theactual dividend will be $1,368 million—is that right?

Mr Stanhope—That is what we declared, yes.Senator SCHACHT—Well, that is actually more than the combined dividend already that

is in the estimate, Budget Paper No. 1, for 1995-96 which includes Australia Post. So whenAustralia Post comes in, this actual for 1995-96 is going to be—

Mr Stevens—The dividend which appears in the budget paper is in respect of thegovernment’s financial year. The Telstra declared dividend in respect of 1995-96 is anhistorical dividend; it is a dividend declared in respect of the previous period and is an actualpaid over two financial years for the government budgetary purposes. So for any onegovernment budget year it is composed of dividends in respect of two financial years forTelstra, which is perhaps the explanation you are seeking.

Senator SCHACHT—Well that is a bit more information than we have received—Mr Stevens—The dividend from Telstra is paid in two tranches.Senator SCHACHT—So the $1,368 million, which is a dividend from the profit of 1995-

96—Mr Stevens—In respect of the 1995-96 financial year for Telstra there is an interim dividend

paid which was received by the Commonwealth government in 1995-96. There is a finaldividend declared which is received by the government in 1996-97.

Senator SCHACHT—What was the interim dividend paid during 1995-96 from Telstra ofthat ultimate figure of 1,368?

Mr Stanhope—The interim dividend paid, which was paid in June 1995-96, was $686million. The remainder of the 1,368 will be paid in December of the 1996-97 year, addingto the 1,368.

Senator SCHACHT—Perhaps again, Mr Stevens, you can help me. We certainly know thatthe actual payments for 1995-96 of 1,352 includes the 686. How does it get to 1,352 if it isthe actual and it is not paid until December?

Mr Stevens—Because the previous—



Senator SCHACHT—So you have got the other half—Mr Stevens—It is the other half, so we are always lagging six months, in a sense.Senator SCHACHT—So the second half of the previous year is in the figure?Mr Stevens—That is correct.Senator SCHACHT—In Budget Paper No. 1 the estimate for 1996-97—the year we are

now in—is 1,389, which is the remaining $700-odd million still to come from Telstra from1995-96, plus the first half of 1996-97—

Mr Stevens—Correct, which is an estimate.Senator SCHACHT—Is the same thing done with the Australia Post dividend? Do they

pay half and half?Mr Stevens—Yes, I believe so.Senator SCHACHT—Mr Stevens, during the morning could your departmental officers

scribble on a piece of paper what the actual payments were for 1995-96, which are the actualsfrom the two GBEs. We know what the second half of 1995-96 will be paid in December,which is around $700 million—

Mr Stanhope—$682 million.Senator SCHACHT—That is actually fixed?Mr Stanhope—It is, because we have declared our dividend for 1995-96.Senator SCHACHT—On present growth figures based on the business plan, would you

expect that the interim dividend that you would pay by the end of this financial year—Junenext year—would be at least equivalent to what you are going to pay in December or wouldit be an improved figure?

Mr Stanhope—We would expect that our declared dividend for 1996-97 would be less thanit was for the year just gone, because we have a provision for redundancy in the 1996-97 year.

Senator SCHACHT—That is the $1.1 billion?Mr Stanhope—That is correct. But because of the interim and final dividend payment

arrangements, the payment will be close to what was paid in 1995-96. It means the actualpayment in the following year will be less.

Senator SCHACHT—I wish to ask about the ability of Telstra to put aside $1.1 billion thisfinancial year for redundancies. My colleague Senator Carr and I will come to the issue ofredundancies a bit later on. Are you anticipating in your business plan that once thoseredundancies are paid out, the following year you are going to have an extra $1.1 billionimprovement in the bottom line because you have reduced your salary cost by $1.1 billion?

Mr Stanhope—We expect that the ongoing labour cost reduction, because of the amountof redundancies in the plan, will be around $600 million per annum.

Senator SCHACHT—For how many years?Mr Stanhope—In perpetuity, unless we start to recruit more staff.Senator SCHACHT—If it is in perpetuity, ultimately you will have no-one employed

because you will have got rid of them all.Mr Stanhope—No. The $1.1 billion is the cost of redundancy for around 20,000 people.Senator SCHACHT—You can fund that in one year out of the present budget?



Mr Ward —That is a provision, not a cash outflow in that year; it is important to make thatdistinction.

Senator SCHACHT—Yes, I know it is a provision, but I presume you are planning theprovision to become actual.

Mr Ward —Over a three-year period.Senator SCHACHT—So you are putting aside in this year $1.1 billion for redundancies

for people to go out for the following two years as well?Mr Ward —Correct.Mr Stanhope—That is right.Senator SCHACHT—You have put the $1.1 billion in the pot now for the 22,000. Does

that mean that you do not have to put that in the following year’s budget because you havealready provided for it and put it in a hollow log until it is all paid out? Or does that meanyou are looking at paying out more redundancies on top of the 22,000?

Mr Stanhope—No, it means we have provided for the full three years of redundancies. Aspeople move out of the company over the next three years, the cost of that will be offsetagainst the provision that we are providing for in this financial year. As Mr Ward pointed out,the actual cash payments will be made over the three years.

Senator SCHACHT—Yes, out of the provision of that $1.1 billion. So if 15,000 leave in1996-97, the remaining 7,000 that would go the following year for whatever reason are stillgoing to be paid for out of the $1.1 billion. So if the provision is not spent, you will roll itover into a reserve saying that the 22,000 who go came out of this year’s budget. In yourbusiness plan in the following year are you planning to put more money aside for furtherredundancies in 1997-98 and 1998-99, making a provision on top of the $1.1 billion?

Mr Stanhope—No, we are not.Senator SCHACHT—In one sense, I suppose, many companies in Australia would welcome

a cash flow like that of Telstra; in one hit you can put aside $1.1 billion and still be runningprofitably. I take that as being a credit to the company and a recognition of the size and thevalue of the company. I have one last question on redundancies, which we will come backto. What do you anticipate will be the average redundancy package that you will pay to peoplefrom that $1.1 billion pot?

Mr Stanhope—We are assuming about 15 years service on average. Rob can probably helpme with the redundancy agreements.

Mr Cartwright —It is four weeks for the first five years and then three weeks for each yearafter that.

Mr Stanhope—So it works out at about $47,000 or $50,000.Senator SCHACHT—That does not include the superannuation?Mr Stanhope—No, it does not.Senator SCHACHT—That is all covered elsewhere?Mr Stanhope—By the superannuation schemes.Senator SCHACHT—Does the redundancy package also cover accrued annual leave and

those entitlements?Mr Stanhope—Yes, it does.



Senator SCHACHT—If they have got accrued leave of four or five weeks when they leave,they are entitled to get that paid out?

Mr Stanhope—No, we have employee provisions for long service leave and we haveemployee provisions for recreation leave. Those payments are offset against those provisions.

Senator SCHACHT—So the $1.1 billion is only for the calculation of the number of weeks’salary corresponding to the number of years of service?

Mr Stanhope—The eligible termination payment.Senator SCHACHT—Madam Chair, because there is only one line in the appropriation—

just ‘Telstra’—we may as well continue with further questions on redundancies.CHAIR —Yes.Senator CARR—In terms of the provision of redundancies, what does that actually mean

for the dividend in that particular financial year? What impact does it have on the dividendfor any particular year in which those redundancies are paid out?

Mr Stanhope—In 1996-97 it does reduce the profitability of the company by $1.1 billion.The dividend is calculated on the profit after tax and abnormals, and it would be consideredan abnormal item in the accounts. So the dividend payable would be reduced by the percentageof dividend attributable to that profit after tax and abnormals. So there would be quite areduction in the dividend payable in the 1996-97 year.

Senator CARR—So that is payable in the 1996-97 year; I can be clear on that?Mr Stanhope—Yes.Senator CARR—So it reduced the dividend for that year by $1.1 billion?Mr Stanhope—No, it would not reduce the dividend payable by $1.1 billion. It reduces the

profit after tax and abnormal items by $1.1 billion. Our dividend payment is 55 per cent plusa special dividend. That calculation would reduce the dividend from the previous year becauseof the impact of the redundancies.

Senator SCHACHT—Can I just come back in here. I have just done a quick calculation.Twenty-two thousand employees times $47,000, the average package, comes out to, accordingto my calculation, just over $1 billion, which is what you have allowed for. Of the 22,000people going, what would be their average salary? Have you averaged out the annual salaryof the 22,000? Would it be $47,000 a year?

Mr Stanhope—As I said, about $600 million per annum would be the net labour savings.In other words, when you stop paying the salary, $600 million per annum is the saving youobtain.

Senator SCHACHT—The 22,000 will go over three years. By the end of those three years,an improvement to the bottom line of Telstra will be a $600 million improvement in profit.

Mr Stanhope—Per annum.Senator SCHACHT—Per annum.Senator CARR—I understand that management now has established broad categories of

personnel to be made redundant. Is that the case?Mr Stanhope—Sorry, I do not know what you mean by ‘broad categories’.Senator CARR—You have now ranked all employees in the company on a scale of one

to five. Would that be right?



Mr Stanhope—No, we have not.Mr Cartwright —That is not correct, Senator.Senator CARR—Let me go about it another way. What is the method of selecting personnel

to be made redundant?Mr Cartwright —We have a redundancy agreement—it actually formally expired at the end

of January this year but carries on—which is based around the philosophy of essentiallyattempting to redeploy people who become available through restructuring in any area andon a voluntary basis people taking redundancy. The redundancy agreement does provide,though, for the ability to refuse applications for redundancy. The issue I think you are referringto is the basis on which managers would decide which applications to accept and whichapplications to refuse.

Senator CARR—How do you rank employees so that you can reach a decision as to whichemployees to accept and which to refuse?

Mr Cartwright —We have made a proposal to our unions on a process to do that, and thatis currently in the AIRC in arbitration.

Senator CARR—So you are saying the evidence received by this committee in the Telstrainquiry about the resource rebalancing projects and the ranking of employees is not true?

Mr Cartwright —What I am saying is that we developed a process, which we discussedwith our unions but were not able to reach agreement on, that became the subject of a hearingin the AIRC and that is continuing.

Senator CARR—Yes, I understand that there is a matter before the commission at themoment, but is it not the case that all managers were advised that they were to rank allemployees within their respective units?

Mr Cartwright —I am sorry, Senator. I now understand the question. One of therecommendations of the commissioner in that conciliation hearing was that Telstra should ceaseany activity around ranking and not implement action on any of the rankings that had beendone up to that stage—and that remains the position.

Senator CARR—So prior to that you were following a process of ranking all employeeson a one to five basis?

Mr Cartwright —Some of that had begun, yes.Senator CARR—How far had that progressed before the commission’s intervention?Mr Cartwright —I can let Mr Shore answer that.Mr Shore—We have probably done about 9,000 out of 75,000 staff.Senator CARR—Thank you. In your calculations for the $1.1 billion redundancy fund, have

you been able to establish target figures for the different categories of personnel?Mr Stanhope—We have not actually established target figures for categories of—Senator CARR—In terms of skill levels, have you not established that you will need to

make redundant certain numbers of personnel with certain skills?Mr Shore—Taking the business unit that I look after, which has probably the largest

downsizing—Senator CARR—You have about 4,900 in your unit, have you?



Mr Shore—Yes, that is right—out of about 34,000 people. The cost reduction program isbeing driven by a series of projects—perhaps 15 right across the company—that are designedto do a number of things. Eliminating work that no longer has much value and eliminatingoverlaps, duplication and so on is one sort of category.

Another falls into, if you like, the category of automation. We, as you know, spend about$4 billion a year on networks, systems and so on. We are automating processes and, frankly,once you automate some processes, jobs disappear. They disappear in all industries. So, if youmove towards computer voice responses and so on so that a percentage of the normal inquirycalls that would come into a customer service centre no longer come in, you do not need thestaff.

So, Senator, we have projects which, as they are implemented, will reduce staff numbers.Some of those staff are in operator service centres. Some are in sales centres. Some are fieldbased employees. We do not have a formula that drives a certain number of heads to leavethe business, either in certain job categories or in certain physical locations. There is noformula.

Senator CARR—Am I to infer from that that you have no program, no way, of identifyinghow those 23,000 persons to be removed from the company will be made up?

Mr Shore—We have a program, absolutely. Certainly for the first year there is quite a highlevel of detail about which projects, if successfully implemented, will result in the downsizingof the work force in certain areas.

Senator CARR—So can you tell me how many persons by classification will be removedfrom the company to give you the 23,000 figure?

Mr Shore—I could not tell you for the 23,000. I could tell you, given time, the make-upin a rough sense of the first 9,000, but we are not managing in that fashion. Therefore, wehave not collated the detail in that way before.

Mr Cartwright —I might add by way of clarification that most of the redundancies wouldbe voluntary redundancies.

Senator CARR—That is not the issue at stake here.Mr Cartwright —Okay.Senator CARR—There will be some compulsory redundancies, won’t there, if you do not

get the figures you want? As you want them, there will be some that will be madecompulsorily redundant?

Mr Shore—I think that is correct.Senator CARR—It is. There is no question. All the documents suggest that this is a

management initiated redundancy package. Isn’t that the case?Mr Shore—Take a country town, for example, where you had 10 technicians and you

introduced a process change and you wanted seven. If two wanted to leave the business andthe third one did not, if, after a reasonable period—say, three months—of looking for otherjobs, that person is perhaps offered redeployment in a city and knocks it back, thenmanagement would initiate a redundancy package.

Senator CARR—That is right.Mr Cartwright —I might add, that is what happens now; that has been the practice for some

time.



Senator CARR—It has to be clearly understood that there will be sackings; it is not entirelya question of voluntary redundancies. But how have you determined which persons will go?How do we get a figure of $1.1 billion? You say there is an average of $47,000 per package.That is a very high figure for most linesmen, for instance, is it not? Most pit and pipe workerswould not earn that sort of money. They would have to be there a very long time to get anaverage of that figure.

Mr Shore—If you work for a company for 20 years, you are entitled to the maximum ofabout 80 weeks in the eligible termination payment, and 80 weeks is 1½ year’s salary and$47,000 is not unusual in that respect.

Senator CARR—But not that many that you are getting rid of have worked for 20 years.Mr Shore—In the field based work force the average age of the employees is in the 40s

and 50s. A large percentage of people have been in the company for a long time.Senator CARR—So the average age of the pit and pipe workers that you are getting rid

of is 40 and 50?Mr Shore—I am not concentrating on the pip and pipe. In the lines category of the field

based work force the average age and period of service with the company is quite long.Senator CARR—They are the ones that are highly re-employable at 40 and 50. They can

be picked up by anybody else in the industry, I suppose. You would calculate that into yourprojections as well, would you not?

Mr Shore—I did not say that.Senator CARR—It is a rhetorical question. I am trying to get to how you determined that

figure of $1.1 billion. You said $47,000 averaged across 23,000. Therefore, you must havean idea of how many people at each classification within the company will be asked to takeredundancy or will be encouraged to volunteer for redundancy. You must have those sorts offigures.

Mr Shore—Let me say again: from a business unit input point of view I will explain insome detail the program of work changes that we have for the coming 12 months and, to theextent that the detail is available, for the next two years. I provide that information forplanning purposes to my colleague, who then looks at the previous track record ofredundancies.

Senator CARR—Will you take that question on notice? We would like access to thatinformation about the categorisation of those 23,000, by classification, to the extent possiblewithin the company. You have undertaken a program for the first 10 months for 9,000.

Senator SCHACHT—Is 9,000 the figure that you anticipate for 1996-97? Or will you getmore than that out of the 22,000?

Mr Shore—No, our plan is to get 9,000 people in the six, seven year—Senator CARR—You must know some very stringent calculations to get to that figure

within 10 months. You must know which business units and you must know under whatclassifications you are expecting redundancies.

Mr Ward —The $1.1 billion is an estimate and is based on a number of assumptions. I donot know if Mr Stanhope wants to say a little more about the assumptions, but we can providemore detail on that.

Senator CARR—Over a three-year period it might be more?



Mr Ward —I think that is a reasonable estimate from what we know at this point in time.But it is not a bottom-up calculation, it is an estimate.

Senator CARR—But you may have more than 23,000 people exit the company within threeyears.

Mr Ward —Our current employment records suggest it is in the order of just over 22,000and we will monitor that and business conditions as we review our plan.

Senator CARR—You indicated, Mr Shore, that before the commission intervened you hadabout 9,000 employees. Did that 9,000 coincide with the 9,000 that you identified to beremoved in the first 10 months?

Mr Shaw—No. In fact, we began the process of assessing the skills, experience and so onof the employee so that as we downsized we would retain our very best people in the companyso that we could remain competitive. But we began that process in the field work forces inC&C. There are about 20,000 people in the part of the business I look after.

Senator CARR—So the 9,000 came out of commercial and consumer?Mr Shore—No. We began intending to assess the entire 20,000 people in the field work

force so that something like 3,500 who were going to leave the company in the coming 12months out of that 20,000 provided us with an objective set of assessments that would allowus to keep the very best people that we could in the company. So we began in C&C.

Senator SCHACHT—In this process of assessing the best people, you mentioned ananonymous example in a country town of 10 technicians being assessed to seven. Obviouslyyou would rely on the assessment of the manager of that unit of the 10 classifications. Is itup to him to decide which seven he wants to keep to be more efficient and which three shouldbe offered the package? If three that he identifies do not want a package and two of the goodpeople who think they can get a job elsewhere want to go, how does he handle that internalindustrial relations issue?

Mr Shore—There are several stages in the question you ask. In the first instance, theimmediate supervisor was responsible under the program that we were adopting for goingthrough and rating the employees. He did not give them a five point scale, by the way. Therewere five criteria, including safety awareness, customer focus, the skills and experience to dothe very specific job he was being asked to do, commitment, track record and so on. Thesecriteria each had a one to five rating.

There was some training for the supervisors. They went through a process of understandinghow to rate the performance. They rated the 10 or 15 people within their group. In amanagement area there could have been 10 of those groups. The 10 groups of 15 and theirratings were then provided to the manager at the next level who made sure that there was aprocess of equity in the distribution of the ratings so that if there were four adjoining areasin Sydney 15 employees in one did not all get 25 and 15 employees in the other all got sevenor eight.

So there was a two-phase review process: one for a group of about 150 employees for equityacross that; and then a one step up review at the level of the regional manager, who just gavea final sanity check on the way the work had been done.

Senator SCHACHT—A downsizing by one-third of the work force means that it is not justpit and pipe people who will be asked to go. Obviously a number of supervisory positions willgo as well. Who looks at the supervisor who is looking at the seven or eight technicians? The



supervisor may be looking at a number of people to go and then someone is looking at whetherhe ought to go. That will be the overlapping arrangement.

Mr Shore—That is right. The supervisory structure was the subject of a separate and fairlylengthy negotiation with the CPU. It is still work in progress; it is not actually there. But atthe end of the day, if you needed 10 supervisors and you had 15, basically the same processwould apply. There has always been a two up review process to make sure that objectivityand equity is applied.

Mr Cartwright —The redundancy agreement has always had the provision for the companyto refuse applications for redundancy. But what was not apparent was the basis on which suchdecisions would be made.

That decision was made by the local manager and, indeed, we went through the earlynineties where something like 25,000 people left the company under this scheme. Decisionswere made as to which applications to accept and which to refuse, but without the criteria—theprocess—being visible and open. Essentially, what is happening here is that the company hassaid that, in order to make the decision to maintain service in an area, we have to have theskills to be able to maintain service; therefore the managers do need to exercise carefully thedecision about which applications to accept and which to reject. In rejecting applications thereshould be a clear process that is visible to people, that people understand, and where managerscan be protected against any claims for wrongful dismissal based on all sorts of spuriouscriteria that might be used.

What the company is seeking to do is establish a visible process which has fair appealprocesses and which provides a fair go to all the people involved and also protects themanagers against any claims of wrongful dismissal. What we are doing is putting out in theopen the decision making that has always been made, but which has not been apparent.

Senator SCHACHT—This average figure of 47,000: is it possible to also provide us withthe figure for the ‘mean average’ when you take out a few of the high-fliers at the top thatmight choose to go? It is a bit like average weekly earnings: it always looks like an averageof $800 a week or something, which is really not what most people are earning. What wouldbe the mean or the median of what people would be taking when you lop off the very top andthe very bottom? Are we looking at still around the $47,000 or is it going to be a significantlylower figure? I am happy to take it on notice.

Mr Stanhope—I do not have that figure.Senator CARR—Could you give us a state by state breakdown of where you anticipate the

redundancies will be located? The classifications we have already asked for, but a state bystate breakdown would be useful.

Senator SCHACHT—Within each state you have a regional structure; could we have abreakdown of metropolitan and non-metropolitan?

Senator CARR—And by division?Mr Shore—It is not difficult to provide an assessment of the total 9,000 in the first year—

the breakdown by state and within that the breakdown into metropolitan and non-metropolitan.Senator CARR—And by division?Mr Shore—Yes, we can then do that by division. The only thing is that it will take a little

longer to do it by job classification because it is not the way that we have in fact—Senator CARR—How much longer do you think it would take?



Mr Shore—I do not know; probably not too long.Mr Cartwright —While you gentlemen are thinking about that, may I just make a comment?

We do not have a regional structure; we have a business unit structure, and each business unitmay well be organised slightly differently.

Senator SCHACHT—I understand that: I was in Bathurst last Friday and the people ofBathurst, because they live in the local community, see themselves—though they are in thebusiness; the people I spoke to clearly explained that—as ‘Bathurstites’ in regional terms. SoI know that they all understand that; they were very clear in explaining that. But if the jobsgo they see it as having impact right across the economy of the town. Even given that, it isnot an unreasonable identification because that will be a major issue that you are, obviously,already facing.

Senator CARR—Minister, I understand that Mr Cartwright just indicated, as well, that hethought that there had been some 25,000 jobs lost inside Telstra. You said, on 16 Septemberin the chamber, that you thought some 25,000 jobs had been removed from Telstra between1991 and 1994. Where did you get those figures?

Senator Alston—I think it is a matter of record that the numbers went down from about93,000 to 68,000. They have since gone up to about 77,000.

Mr Cartwright —I didn’t say that, I don’t think.Senator CARR—I am glad you corrected that.Senator Alston—Hang on, are you putting a question to me or to Mr Cartwright?Senator CARR—I indicated that I thought Mr Cartwright had said it as well, and I was

wrong, but you did say it, Minister.Senator Alston—Yes, I said it in the chamber.Senator CARR—Did the annual report in 1991—Senator Alston—I just want it to be clear that that figure is one that is on the record—they

were not just numbers I conjured up—and that can be confirmed by the officers here.Senator CARR—Could we just go through those?Senator Alston—Have you got those?Mr Cartwright —I do not have the numbers with me, but certainly that is my recollection

from our records.Senator CARR—Did the annual report for the financial year 1990-91 give the following

figures for employment: average full-time staff, 83,934; total full-time staff, 81,106; averagefull-time operative staff, 82,039; and total full-time operative staff, 79,219 as of 30 June ofthat year. Is that last figure, because it excludes staff on long service leave, the measure mostnormally quoted?

Mr Cartwright —Can you mention those categories again?Senator CARR—The operative figure that I think is most commonly quoted is the total full-

time operative staff of 79,219 at 30 June, according to the annual report for the financial year1990-91. Is that the figure that would normally be used, given that it excludes staff on longservice leave?

Mr Cartwright —Certainly, the practice now is that we talk about full-time staff and donot differentiate between operative or inoperative. The number that would be in the inoperativecategory would be relatively small, but when you hear us quote staff numbers now, we are



talking about the total of full-time staff. There may have been some changes in the way wecategorise them over the years.

Senator CARR—Is it not also the case that the EEO report from January 1994 gives yourstaff figure at 68,000?

Senator Alston—You want Telstra to say what is in the EEO report?Senator CARR—Is that yes or no? This is a straight factual question.Mr Cartwright —That is from the EEO report?Senator CARR—Yes.Mr Cartwright —It is obviously correct, in that case.Senator CARR—Where does the 25,000 come from then, given that 1994 is the dip in the

cycle? Would you agree that 1994 is the bottom of the curve and that employment figures goup again from that time?

Mr Cartwright —I think it was 1993 when we had the dip.Senator CARR—So where do we get the 25,000?Mr Ward —We will go back and confirm those numbers. I think if you are quoting the 1991

report, that probably excludes OTC before the merger, which would account for some—Senator CARR—How many?Mr Ward— Probably 3,000.Senator CARR—It is nowhere near the figures that have been quoted.Mr Ward— We will reconcile those figures over the years. I do not believe we have all the

information here today.Senator CARR—So I can just be clear about this, could you indicate to me whether or not

staff levels are now quite close to those in 1991—about 2,000 or 3,000 fewer. And after theshedding of staff in 1993-94, staff numbers rose again quite dramatically. That last statementis definitely true. Staff numbers have risen quite dramatically.

Senator Alston—Quite dramatically is your term.Mr Ward— Yes.Senator Alston—That is subjective. If you want to know the facts, I think they have gone—Senator CARR—All right. Have they risen again?Mr Ward —Since the 68,000, we probably peaked at 77,000.Mr Cartwright —We currently are at about 75,000 now.Mr Ward —But we probably peaked at about 77,000.Senator CARR—According to Mercury you are 75,000, if I recall. Why was there that rise

in staff numbers?Mr Ward —A number of the reasons were related to the capital program, in terms of the

roll-out of our two mobile networks and the broadband network. There were also someadditions on the customer service side but, primarily, that increase was driven by the capitalprogram.

Mr Cartwright —Certainly over the last two years the increases are predominantly tosupport the cable roll-out and connection of pay TV and a very significant growth in ourmobiles business.



Senator SCHACHT—On the roll-out of the cable, I was under the impression that muchof that was contracted out, but you are saying that you actually went and employed peopleon the payroll as full-time employees to roll out the cable.

Mr Moriarty —The staff that are involved in the cable roll-out are predominantly employees.Many of them are on contract terms. Some of the work has been contracted out. Thepermanent staff or those on contract terms are employed in either the vision stream or in theC and C business unit where they are doing the underground pit and pipe work.

Senator SCHACHT—When you put people back on and the numbers went up, were theyformer Telstra employees who had left the system and then you re-employed them—they hadalready taken a package and then when this decision was taken to roll-out the cable you re-employed those people and put them on a fixed contract?

Mr Moriarty —That is not my understanding, no.Senator SCHACHT—Did you actually recruit labour to get the increased numbers for the

capital works program?Mr Moriarty —Yes, we did.Mr Cartwright —Award labour. Full-time employees.Senator SCHACHT—In the planning that you go through when you are at the stage of the

roll-out, over a period of time,does that mean that those people have got some sort of fixedcontract to that project? Are they then automatically out of a job or are they then eligible togo through the redundancy process that we have discussed previously?

Mr Shore—I have probably the largest number of those. I have had about 4,000 people inpit and pipe contract work and in installations. Many of those have been on either one-yearor two-year fixed term contracts. The nature of the pit and pipe work is that you go througha suburb, you do the work, and that is the end of it. Once you have gone through Melbourneor Sydney or Brisbane or the Gold Coast and done it, the work is over, so we purposelyworked through an arrangement with the unions and took on a number of fixed termcontractors. When their term is up, their term is up. There is no redundancy eligibility, theyjust stop.

Senator SCHACHT—How many were there on one- or two-year contracts?Mr Shore—I suspect 2,000 in C and C.Senator SCHACHT—When do they finish? When they finish will they automatically come

off? They are not included in the 22,000 over the three years, are they?Mr Shore—Yes, they are.Mr Cartwright —Yes, they will be.Senator SCHACHT—They will be? So when they go, they do not get a redundancy

package?Mr Shore—No.Senator CARR—So that $47,000 average—Senator SCHACHT—Is for fewer people than the 22,000 because, if you have got 2,000

or 3,000 on fixed contract, it is really effectively only 20,000. Does that affect the averagefigure or the mean figure that we tried to discuss before?

Mr Cartwright —Certainly, the calculation for the provision is not on the basis that therewill be 22,000 redundancies.



Senator SCHACHT—I see.Senator CARR—What is the calculation for that provision?Mr Cartwright —I defer to Mr Stanhope, but people leave the company other than for—Senator SCHACHT—Yes, I appreciate that.Mr Cartwright —And we are factoring that into our calculations.Senator CARR—What is the calculation for the provision, Mr Stanhope?Mr Stanhope—It is round 20,000.Senator SCHACHT—The figure that Senator Carr read out for where we were in 1991 was

round 79,000; after all of these additional jobs for capital works, it rose to what?Senator CARR—Mercury says it is 76,961; is that correct?Mr Cartwright —Would that have been around May?Senator CARR—Yes.Mr Cartwright —Around 77,000 was the peak figure in about March.Senator SCHACHT—That is for the peak employment; back in 1991 it was 79,000, right?Mr Cartwright —Senator, I was not with the company then. We will reconcile all those

numbers.Senator CARR—The annual report states it was 79,000.Senator SCHACHT—So it is down 3,000. Between those two dates, what was the

maximum figure it reached for employment, using the definitions that we have basically triedto put in?

Mr Cartwright —It was 77,000. Sorry, let me clarify—Senator SCHACHT—There are two points.CHAIR —Senator Schacht, Mr Cartwright is speaking.Mr Cartwright —We trended down. My recollection is that the lowest figure was at the

end of 1993, and since then there has been a steady trend up. Over the last two years we haveincreased by 10,000, most of which is associated, as I said, with mobiles, et cetera, and wepeaked at 77,000. There will be a change in definition somewhere along the line because whenwe count 77,000 we are including everybody in the whole company and its subsidiaries,including offshore subsidiaries. Practices in those earlier years probably did not include thosesubsidiary companies offshore, et cetera. So there is a reconciliation issue for us to followthrough for you.

Senator SCHACHT—In that period of four years when it went up to the high seventiesand down to the low seventies and so on, there was a suggestion that around 25,000, or maybe20,000, left—

Senator CARR—The minister said 25,000.Senator SCHACHT—Twenty-five thousand jobs had gone. So, when we are talking about

this present project Mercury getting rid of 22,000, 24,000 over the next three years, it is aboutthe same factor. But in the 25,000 that the minister mentioned over a four- or five-yearperiod—

Senator CARR—1991 to 1994.



Senator SCHACHT—That is four years if it is all of 1991 and all of 1994: 1991, 1992,1993, 1994. It is fully four years. Does that figure of 25,000—I think Mr Ward nodded inagreement that that was around the figure—include natural attrition, people who volunteeredto go rather than through directly saying, ‘Your job’s finished.’

Mr Cartwright —While Mr Ward is thinking, I will just make one correction: the objectof project Mercury was not to get rid of 22,000 or 24,000, whatever the figure was—

Senator CARR—We will come to that, do not worry, Mr Cartwright. We will give youplenty of opportunity to give us a review on project Mercury.

Senator SCHACHT—The point is that, even if 25,000 jobs had gone straight net, as theminister said, we still would have ended up with an organisation employing somewhere around70,000 people. But with project Mercury, we are about to go from somewhere in the 70,000to somewhere in the low fifties. There is a quantum change in the size of employment in theorganisation. I think that that is what the minister, in those remarks, is talking about—notcomparing apples with apples, with what you are now doing. You are absolutely—in straightterms—reducing the size of employment. If you did get rid of 25,000 in those four years, forwhatever reason, the employment level stayed roughly within a range of five per cent to 10per cent of previous levels. There was not a dramatic one-third reduction, because the figuresshow it stayed around the seventy mark.

Senator Alston—I think Mr Shore did say that ongoing automation and technologicalchange does continue to open up opportunities for job reduction around the world.

Senator SCHACHT—Yes, he did. Mr Shore, how many people have you employed underthe project of the roll-out under these one- and two-year fixed contracts?

Mr Shore—What I was trying to say is I have got about 4000 people at peak that have beenworking on the broadband roll-out and connections and I would estimate—

Senator SCHACHT—But, are they all on contract—Mr Shore—I estimate that about 2000 of those are on fixed term contracts.Senator SCHACHT—When the roll-out is completed, or substantially completed, will the

other 2000 that are permanent employees have to go as well and are they part of the 22,000?In job aggregate terms, not in individual terms?

Mr Shore—In my view, what will happen is some of those people will begin to move outof the company by a natural attrition process, by retirement, by ageing and so on. Some willmove back in to some of the core jobs in the company. Frankly, if we go through Melbourneand there are 300 people doing pit and pipe work, when it is completed they will be subjectto the same redeployment, retraining and redundancy program that exists in the company now.

Senator SCHACHT—When you do these figures for us, if there were 25,000 jobs that wentin the period of four years we talked about, can you identify how many were natural attritionand how many were retirement? Are they actually included in the 25,000?

Mr Cartwright —Yes, we have all that.Senator SCHACHT—There is a quantum difference between the 25,000 said to be

redundancy driven to downsize the company and 25,000—over that period of four years—whowent through natural attrition, retirement and so on. That happens in any organisation.

Mr Cartwright —Equally, the 22,000 that has been talked about in the three-year plan alsoincludes retirements, resignations—



Senator SCHACHT—Okay, when you give us those figures, could you indicateapproximately—

Senator CARR—There is a substantial difference, Mr Cartwright.CHAIR —Senator Schacht, are you finishing your second question?Senator SCHACHT—You have taken on notice a number of questions about the structure

and the classifications, for both what happened in that period back in the early 90s to mid 90sand what you are doing now. Please identify what are the natural attrition figures, which Ipresume are people who have reached the retiring age, as well as the people who get a betterjob somewhere else, presumably, and leave the organisation.

Senator CARR—Could you please also tell us, Mr Cartwright, what do you expect the totalfull-time operative staff number to be in three years time?

Mr Stanhope—Maybe I could help out here. I have not got the past history; we will getthat to you. But, of the 22,000 that we are talking about over the next three years, only 1200of those will be through attrition.

Senator CARR—Yes.Mr Stanhope—That is our assumption in the plan. Our expected full-time staff level at 30

June 1999 which is the end of our three-year plan is 53,797. We have yet to submit that planto the minister and we will be doing so shortly.

CHAIR —I am going to suggest that we have a break at quarter past 10 for 15 minutes. Iwant to have a private meeting so we can look at that report.

Senator SCHACHT—Madam Chair, I would rather not give up 15 minutes now. In viewof the—

CHAIR —I am sorry, the minister has to do something for 15 minutes, and so—Senator CARR—I see, so it is for the minister’s—CHAIR —And we need to have a meeting.Senator SCHACHT—I would like to do the private meeting at the end of the day rather

than now. I accept that the minister is out for 15 minutes, if that is unavoidable.CHAIR —If you could live with that, we will do that, but we will have the private meeting

at lunch time. It will only take us 10 minutes. Are you happy to go on without the ministerfor 15 minutes?

Senator CARR—If he has got to duck out for 15 minutes, then—Senator SCHACHT—You can duck out for 15 minutes; we will keep going for a little

while. I am sure that Mr Ward and the other officers will—CHAIR —If we have any policy questions, we can wait until the minister gets back.Senator CARR—Before he goes, though, I have got one matter I am hoping he can attend

to. Minister, you indicated in the parliament that you thought some 35,000 new jobs had beencreated since 1993. What month in 1993 was the figure drawn from?

Senator Alston—I will come back to you on that.Senator CARR—Thank you. There was no source given on that. I understand, though, that

you have been indicating that the Telecommunications Industry Development Authority hasshown the creation of 20,000 jobs in the last two years in the equipment manufacturing andservice provider areas. Is that the figure that you have been relying on?



Senator Alston—I will come back to you.Senator CARR—Thank you. Minister, are you aware that the ABS has produced a figure

of 167,600 communications industry jobs, that is right across the sector, for May 1996, asopposed to 144,900 in May 1991, so that is some 22,000 jobs added? If the Telstra jobs aretaken out of that, it would seem to me that perhaps you might get somewhere near 25,000 jobscreated. Would you agree that the 22,000 redundancies that Telstra has proposed would in factwipe out that figure, depending on, of course, how much of that 22,000 was outsourced?

Senator Alston—You are asking me to compare past changes to future changes?Senator CARR—That is right.Senator Alston—I will do the best I can. I will come back to you.Senator CARR—Thank you. In those ABS figures, is it a fact that the telecommunications

industry statistic does not disaggregate, and does include postal services?Senator Alston—I do not know.Senator CARR—I will ask you to take that on notice. I will also ask, given the time, what

you anticipate will be the number of new jobs, given the record over the last 11 years in thetelecommunications industry or communications services directly, what are your projections,your department’s projections, on new jobs being created in the industry?

Senator Alston—Well, I am not sure that we are in a position to make those assessments,but I will certainly see if—

Senator CARR—You have been making the claims, have you not, Minister, in theparliament—

Senator Alston—About the past.Senator CARR—No, you have made claims about the past, but—Senator Alston—That is a very different thing to asking me to predict the future.Senator CARR—Yes, but you have also claimed that the redundancies in Telstra will be

made up for with growth in the industry as a whole. Is that true?Senator Alston—I will get you all the available material from relevant sources that gives

you an indication of what is likely to happen in the future, but I do not think it is reasonableto ask me to make a personal prediction.

Senator CARR—Thank you. I understand you are taking that on notice. Our report refersto the 11-year period which showed a very small growth in the number of employees incommunications services, as distinct from the broad creative sectors of multimedia whichworkers in the 40-50 age group may find some difficulty applying themselves to.

Senator SCHACHT—The multimedia jobs.Senator CARR—We might try and get a fix on how many jobs in telecommunications

services have been created in that 11-year period. And these, as you know, can vary accordingto which month you choose them and from what year you choose them, but if we could getit over a longer period, I would appreciate that. Thank you.

CHAIR —I wonder if we could move on to Telstra research laboratories.Senator CARR—I have got a series of questions that flow from these employment matters.

I take it that you are not presuming that we have completed—



CHAIR —No, but Senator Allison has been sitting very patiently. Because we have not gota structure—

Senator SCHACHT—Yes, we know. That is fine.Senator CARR—I am just saying we have got a number of questions—CHAIR —If you let me finish speaking: because we have not got a structure, she could sit

here all day, and then not get a question in. So I am just, with a logical break, seeing that wewill move on to Senator Allison and then we will go back.

Senator SCHACHT—Fine. Thank you.Senator ALLISON—The research laboratories have been described as Australia’s leading

telecommunications research and engineering centre and perhaps the largest research facilityin the southern hemisphere. I am just wondering whether you would agree with thosesentiments. Could you make some comments about that?

Mr Moriarty —I think that that is a fair claim. Indeed, Telstra is the biggest investor intelecommunications research, certainly in Australia. We intend to continue that.

Senator ALLISON—To continue?Mr Moriarty —To continue to be a leader in research, particularly focused application

research within the industry.Senator ALLISON—Do you see any change in emphasis? How would you describe the

trend in the forthcoming period?Mr Moriarty —We clearly need to continue to refocus our research and development to

support the changing business needs, particularly the changing needs in a competitiveenvironment. The focus of our research and development is very much on new applicationsand new product development. That will, obviously, change over time and we will continueto refine it.

Senator ALLISON—Coopers and Lybrand conducted a study and identified Telstra as beingthe largest corporate investor in R&D in Australia in absolute terms with a total investmentof $203 million, but only $68 million of that went to the laboratories. Could you tell us howmuch Telstra spent on R&D this last financial year and on R&D in total?

Mr Moriarty —I believe it is in the order of $220 million. That represents, I believe, about1½ per cent of revenues.

Senator ALLISON—Is this a rising or a falling trend in the organisation?Mr Moriarty —I believe it has been in that order in recent years, certainly in the last three

years from my recollection. Our intention would be to try to maintain those sorts of levels ofbroad based, application focused research and development.

Senator ALLISON—What percentage of that funding went to TRL?Mr Moriarty —I cannot give you the precise percentage.Senator ALLISON—You would not know whether there was a trend there either?Mr Moriarty —It has probably been reasonably static over the last three years.Senator ALLISON—The next few years you see as being also—Mr Moriarty —It may be that that balance might change. One of the things that we need

to be aware of here is that some of the functions that might currently be in TRL might bebetter undertaken in some of the business units. For example, there is an increasing application



development in the content areas in Telstra Multimedia, for example. Those activities spanboth TRL and the subsidiary company of Telstra Multimedia, which I lead.

Those things we need to be flexible about over time. In the current year’s budget there issome adjustment in the resourcing in TRL and it is particularly focused in the support areas.For example, in building services, support functions that have been with and TRL and TRL’sbudget are being rationalised across the whole of Telstra so that we can provide a moreefficient service. So those costs which were in TRL’s budget in past years will not necessarilyappear in TRL’s budget.

Senator ALLISON—This is not actual research; this is building maintenance or something,is it?

Mr Moriarty —Those sorts of support functions, computer services, IT costs, workshopfacilities and so forth which are being rationalised.

Senator ALLISON—Those costs would still be there to TRL, but not through jobs withthe organisation?

Mr Moriarty —They are not through jobs that would be within TRL, they will draw thosesupport functions from elsewhere in the company.

Senator ALLISON—How much of Telstra’s research and development funding was spentin Australia?

Mr Moriarty —I do not have a precise figure, but my feeling would be that certainly themajority of it would be spent in Australia as part of our very major commitment to investmentin the industry in Australia.

Senator ALLISON—Can you tell me of the monies from research and development inTelstra that do not go to the TRL? Where is it spent? On what sort of project is it spent? Withwhom is it spent?

Mr Moriarty —We have a number of cooperative projects with external organisations,particularly universities. We make contributions to national initiatives like the CRC programand the CMCs, which the government has led the establishment of. There is a CMC nowlaunched in each one of the states. Telstra is a significant contributor to each one of those.

Senator ALLISON—As I understand it—just coming back to the laboratories—the staffnumbers for the laboratories will be reduced from 530 to 380, and that represents about 30per cent of the work force, compared with 12 per cent across the board in Telstra. Is thatcorrect?

Mr Moriarty —The figures are in that order. But I stress that many of those reductions arefrom support areas. There are very few indeed that relate to core research programs.

Senator ALLISON—Could you give us a breakdown of which are support jobs and whichare actual research jobs?

Mr Moriarty —We can provide those on notice.Senator ALLISON—I understand there are 50 staff who have taken voluntary redundancies

outside those figures up to date. Is this correct?Mr Moriarty —I would think that they would be part of the totals.Senator ALLISON—Perhaps you could confirm that.Mr Moriarty —I would be pretty certain that they are not in addition to the figures that you

have quoted.



Mr Cartwright —I can confirm, Senator, that has already taken place.Senator ALLISON—Yes, they have taken place, but I just wanted to look at them in the

full picture of how that reads as a percentage of the total. That is what I am interested in.Could you explain how that level of cut will impact on TRL’s ability to carry out its activities.In answering that question, could you tell me whether you have seen the recent work ofProfessor Littler, who looked at, I think, around 2,000 companies which had significantlydownsized and their productivity and efficiency. I wonder whether you are familiar with thatwork and whether you can make some comments about what he says to be serious problemsassociated with large cuts—culture shocks I think he calls them—within organisations and theevidence he produces which shows the downside of downsizing.

Mr Moriarty —I am not personally familiar with that work, but I think we are consciousthat downsizing is a difficult management task. I think we have all of the mechanisms in placeto manage the reductions in staff on the scale that we have discussed today with thecommittee. Those mechanisms are different in different parts of the company recognising thedifferent drivers for those reductions. Those drivers are business requirements, as we indicatedearlier.

Senator ALLISON—One of the points that was made by Professor Littler was, firstly, thatdownsizing of this sort of order rarely works, and, secondly, it does not work unless there isgood consultation and communication and if management is not just concentrating on cuts perse but also on strategic areas of reform or restructure. Can you comment on how yourconsultation has been conducted with staff in TRL, what the staff has said to you about thesechanges and whether or not you have done a formal survey of staff satisfaction, for instance?

Mr Moriarty —I can only talk generally because Graham Shepherd, who runs TRL, is notwith us. To my knowledge, he has undertaken extensive consultation with the staff themselves.I know of concerns expressed by the unions, but I am not sure that that is necessarily reflectiveof the staff per se. There is constant consultation taking place with staff right across thecompany, particularly in TRL, to explain the background, the areas that are being rationalisedand the preservation of the core research programs that TRL undertakes.

Further, one has to recognise that TRL is a service to the retail and product business units.One of the things that I would suggest TRL has done extremely well in the past 12 to 18months is to work with those business units to link the research activity and programs to thecompetitive business needs of the retail and product business units. Seeing as I am one ofthose, I can certainly tell you that, in the area of multimedia and broadband development, thereis a very close matching of our requirements with the service that TRL is providing.

Senator ALLISON—Would it surprise you to hear that somebody like myself gets perhapsa dozen letters a week from people within the organisation who express serious concerns aboutTRL’s ability to carry on with this research work?

Mr Moriarty —No, it would not surprise me to hear that because of the nature ofdownsizing and change which we are undertaking. That certainly does produce uncertainty.I do not think you can ever over-communicate with staff during these periods of change.

Senator ALLISON—So you reject the notion all together that there is no effect on TRL’scapacity to continue the level of research that it currently conducts?

Mr Moriarty —I am saying that it will not be significantly affected. We are refocusing it;we are refining it; and we are trying to make reductions in support areas rather than in coreresearch programs and activities.



Senator ALLISON—Do you have a definition of what the significance of those cuts is atpresent? If you cannot categorically say it is not going to happen, there may be some that arenot so significant. Can you tell us what they are? Have you decided what cuts there will be?

Mr Moriarty —They are being discussed at the present time. I have taken on notice yourprevious question to come back to you—

Senator SCHACHT—Senator Allison, on this point about cuts that are not significant, Ijust want to point to some of the areas that I think are being cut in technical areas and seewhether Mr Moriarty—

CHAIR —No, just let Senator Allison finish her question.Senator SCHACHT—Fine, if I can then come back to it.CHAIR —You can come back to it, but just let her finish. You have had a fair crack of whip

and there are two more senators who want to ask some questions. So you can come back toit. It would be better if Senator Allison finished.

Senator ALLISON—I have to ask you to what extent you think the cuts to TRL are beingdriven by the privatisation process?

Mr Moriarty —The cuts right across Telstra are being driven by the market needs of thecompany. We cannot afford to undertake activities that do not serve the business requirementsof the company. I think it would be irresponsible of us not to be matching all of the supportareas, particularly the research and development areas, to our business requirements in a veryrapidly changing market.

Senator ALLISON—Can I ask you to focus on the long term rather than the short term?Arguments that have been put about what is happening to TRL are that it is now focused onshort-term adaptation of existing technologies rather than the longer term research.

Mr Moriarty —I think there has been a shift in focus and that is driven by the marketplace.That is to ensure that we are using the capability of TRL and the resourcing that we have tomeet a changing competitive marketplace. Telstra is having to make adjustments right acrossits operations to meet that different market circumstance.

Senator ALLISON—does the market place always think in long-term ways?Mr Moriarty —I think you have to balance the short, medium and long term. That is

management judgement. One has to also recognise that this industry is changing dramatically.We are no longer just a telephone company. We are making a transition to being aninformation services company as we find our industry, traditional telecommunication industry,coming together with the computing industry, coming together with the content publishingbroadcasting industry.

Senator SCHACHT—It is an argument for expanding strategic research rather than reducingit.

Mr Moriarty —I think it is an argument, certainly, to ensure that we maintain a very strongresearch base—we are committed to that—and that we make sure it is focused on the needsof that market.

Senator ALLISON—Perhaps you could put to rest a rumour that senior management intendsto outsource all its telecommunications research to Bell Corp. in the United States. I supposethe progressive downsizing of Telstra would lend some weight to that rumour. Can you makesome comments on that.



Mr Moriarty —That is a rumour that has been around for the three and a bit years that Ihave been with the company. We have not done it. We have used Bell Corp. for a few veryfocused assignments on a consultancy basis where they had skills that we did not have. It isabsolutely untrue that we intend to outsource all of our research and development to otherproviders outside the company, and it is absolutely untrue that we intend to outsource it toBell Corp.

Senator ALLISON—You said ‘all’ of your research. What about a percentage, and couldyou put a figure on that?

Mr Moriarty —I have already indicated to the committee that we do have collaborativeprograms, sensibly, with outside organisations: universities and those entities which are beingestablished in the new areas. I think the CMCs are an area where the country as a wholerecognises that we need to build new capabilities in the emerging multimedia and content area.We are very much a part of that.

Senator ALLISON—I will come back to the US organisation Bell Corp. In the next fewyears, do you see Telstra outsourcing more and more research to this organisation and, if so,how much?

Mr Moriarty —I have not had any discussion with Graham Shepherd on this issue. I thinkI have addressed it robustly. It is not my understanding that we intend to significantlyoutsource our research and development. That is my understanding, and I would invite mycolleague Graeme Ward to make a statement.

Senator ALLISON—You have just said you will not be outsourcing all of it and that itwill not be very significant, but it is hard to get a handle on a trend or to understand what youreally mean by that. I am not assured by what you are saying.

Mr Moriarty —I am not aware of a major initiative to outsource our research anddevelopment other than the sorts of programs that we are currently embarked upon withrelationships with the universities and those organisations that I have previously referred to.I personally am not aware of any, and I would ask my other colleagues to indicate if theyare.

Mr Ward —I am not aware of any major outsourcing initiatives associated with researchat TRL.

Senator ALLISON—I wonder if any consideration has ever been given to the possibilityof separating TRL from Telstra and setting it up as a national telecommunications researchcentre or even incorporating into CSIRO.

Mr Moriarty —Again, I am not personally aware of any serious consideration of doing that.It may be that others might have at some point in the past, but I am personally not aware ofthat.

Senator ALLISON—What is your view of the value of such a suggestion?Mr Moriarty —I do not have a view on that other than to say that if we felt Telstra’s

interests in the competitive situation were going to be better served by that sort of structure,then obviously it would be responsible for us to consider it. Merging it with CSIRO, on thesurface of it I would not see great value because of our particular industry focus andrecognising that research and development in a competitive environment is something that onewants to be able to do in a commercially sensible way with confidentiality and so forth.Whether TRL can serve the broader industry and serve Telstra’s competitive needs in someother structure, I have not given thought to that.



Senator ALLISON—With the record profits that have been announced by Telstra, are thereany bonuses to be paid to senior management? If so, what are the details of those?

Mr Cartwright —We have as part of our standard compensation package a variablecomponent which is based on results. That has been the practice now over several years. Therehas been no major change to that. I can confirm that, generally, bonuses paid will be less thisyear than last year, because the measures on which we base those things have fallen short ofour targets.

Senator ALLISON—In what sense?Mr Cartwright —There are a number of targets that are part of those in terms of things like

our product unit costs, our profitability, our employee opinion survey, our financial results andso on. The combination of those has generally produced lower results this year than last.

Senator ALLISON—Can you tell me a bit more about those?Mr Cartwright —We set very high targets.Senator ALLISON—Have the targets been increased from last year?Mr Cartwright —Yes. In each year we establish plans obviously to improve our performance

and improve the business.Senator ALLISON—Can you give me a figure on what the bonuses were for senior

management as a result of the results?Mr Cartwright —I do not have that degree of detail. Certainly the practice on the variable

component, the performance based component of our remuneration packages, has not changed.Senator ALLISON—Perhaps you could give us a figure for this year and last year. You

can take that on notice.Mr Cartwright —I will have to look for assistance from my colleagues on that. I guess we

will have to take it on notice.Senator SCHACHT—Senator Allison has asked a number of questions I would have asked

about the Telstra research laboratories, so some of that has been covered. Mr Moriarty, yousay that there has not been a significant change to the research program at the Telstralaboratory. At the moment I do not think we have time to go over the balance betweenstrategic and applied research and so on. While Telstra remains the dominant carrier inAustralia and, in many areas, will be the natural monopoly, I still think that—

Senator Alston—What are those areas?Senator SCHACHT—There will be areas of Australia where Telstra will consistently be

the major carrier.Senator Alston—I am sorry; I thought you said, ‘Natural monopoly.’Senator SCHACHT—That is almost a natural monopoly in the sense that most people will

be relying on Telstra to provide them with a telephone service.Senator Alston—That is not a natural monopoly.Senator SCHACHT—It is almost a natural monopoly. I will not go through that. Can I just

ask you—CHAIR —No, Senator Schacht. Senator Childs is ready to ask a question.Senator SCHACHT—I started to ask a question, I got interrupted by the minister, I

responded to him and then you say that I cannot ask a question.



CHAIR —When Senator Allison was speaking I said that Senator Childs had some questionsand Senator Lundy had some questions. If we can go in that order, you can then have anothergo.

Senator CHILDS—In rural areas such as Tweed Heads in New South Wales people aredisadvantaged by their inability to access the 1800 and the 008 phone numbers, therebyisolating them from access to both their state and Commonwealth departments and even theirdynamic New South Wales senators. When will Tweed Heads, as an example, have itsequipment upgraded? I believe this situation exists in about 50 other places. Could you giveus an indication as to what the program of upgrading is?

Mr Shore—I certainly can fairly quickly, but I cannot today.Mr Ward —I will ask my colleague Lawrence Paratz whether he can respond to that. If he

cannot, we will take it on notice.Mr Paratz —Telstra has a program of upgrading the network, generally, to provide the full

range of products and services and, certainly, whilst not having specific knowledge of theparticular codes and numbers that you refer to, they would fall within the ambit of that generalupgrading. I could certainly get some information for you about those particular codes andprovide that on notice.

Senator CHILDS—I would be particularly interested in Tweed Heads, for example, butI am under the impression there are 50 areas. Of course, this is making a mockery of theadvantage of these access phones. In the case of Tweed Heads, because it is linked toQueensland, people cannot access the New South Wales departments or have New South Walesaccess which is the actual sovereign situation. So I would like to know just what the programis.

Mr Paratz —Yes. I think we could supply that.Senator LUNDY—You responded to Senator Allison’s questions before regarding the

changes in the TRL structure and funding reductions. Could you take this on notice andprovide a tabulated comparison with TRL expenditure from the last financial year and thisyear’s estimates, including notations about the changes in structure that will be occurring, andthe resources and funding allocated to each section and project within TRL?

Mr Moriarty —We will take that on notice, Senator.Senator LUNDY—With respect to cooperative research centres, can you tell me what

research centres Telstra is involved in and the levels of funding, and whether there have beenany changes in the levels of contributions to each of those cooperative research centresbetween this financial year and last financial year?

Mr Moriarty —Yes. We would have to take that on notice. But, including the new CMCs,my impression would be that the funding would have increased because we have entered thatnew program of CMCs.

Senator LUNDY—CRCs. I was asking specifically about the cooperative research centres.I have another question about the multimedia centres.

Mr Moriarty —Fine. I understand that you want it particularly related to CRCs. We willtake that on notice.

Senator LUNDY—With respect to CMCs, is there any program for expansion—that is, moreCMCs around Australia?



Mr Stevens—That is probably a question which could be directed to this government ratherthan Telstra because the CMCs have been funded by the federal government. I think that theyhave been funded through the DEETYA portfolio in the past.

Senator LUNDY—Perhaps the minister might be able to enlighten the committee aboutwhether there is any intention to broaden the CMC.

Senator Alston—I will make inquiries of DEETYA and we will come back to you.Senator LUNDY—How important has TRL been in positioning Telstra and Australian

telecommunications in the position that it is in when it comes to telecommunicationsinfrastructure and research ability?

Mr Moriarty —I think that is a fairly broad based question.Senator LUNDY—It is a broad based question, but I am trying to get an indication of the

importance of well funded research in the telecommunications area.Mr Moriarty —We do regard it as important, and I think that has been illustrated by the

investment that Telstra and its predecessor organisations have made. As I indicated earlier,we intend to maintain a strong and a particularly application based research function andactivity. We will resource it at appropriate levels to meet our business and market needs.

I think it has served the company and the country well in the past. I think it is now beingrefocused to recognise the changes in the industry, generally, and the changes in our marketcircumstance. We must continue to refine that focus into the future.

Senator LUNDY—Mr Moriarty, you mentioned before about Telstra’s move intoinformation services, as opposed to carrier. Can you outline for the committee, in terms ofTRL resources, what amount of resources are being moved away from hardware andinfrastructure into application in research and preparation, and so forth?

Mr Moriarty —I do not have that information with me but I am sure we can provide thaton notice. I think it does demonstrate that there is a movement of the research focus to thenew areas—particularly broadband, multimedia and content areas—and, as I say, that is drivenby TRL working very closely with the retail and product parts of the company. We will takethe question on notice and show you the current distribution of activity.

Senator LUNDY—Thank you, Mr Moriarty. It really goes to the heart of any reductionsthat we are speaking of in TRL. Whilst you have been able to articulate quite specifically thechanges in TRL, what that shift in fact represents is a significant reduction in research in thehardware and infrastructure area. I was wondering if you could tell the committee if there isany other area or organisation that you are aware of that will be able to pick up that slack thatwill exist with respect to research in the infrastructure and hardware areas?

Mr Moriarty —I believe that the manufacturers are doing that. We work with them. Themanufacturing industry obviously is having to refocus itself. The profile of research anddevelopment needs to reflect the profile of our capital investment and, again, I believe thatis demonstrated in the refocusing at TRL.

Senator LUNDY—Mr Moriarty, can you explain why you think manufacturers will takeup research when manufacturers will be providing a demand that is established by the carriersand the service providers themselves? And what sort of position will those manufacturers bein to determine the types of technology that may be used down the track that would beconducive to some far-reaching and long-sighted investment in infrastructure technology?

Mr Moriarty —Is the question: what is the incentive for the manufacturers?



Senator LUNDY—Yes. If Telstra is determining the technology they are using in their roleas carrier and information services provider, what incentive is there for the manufacturers todetermine what the future infrastructure technology will be, given that they are respondingto demands by people actually using the infrastructure?

Mr Moriarty —The incentive is to ensure that they have products to meet our requirements.I think we have to recognise that, as a result of the opening of the industry, we are not nowthe only provider of infrastructure. That is clearly demonstrated by the investment that is beingmade by others. Manufacturers therefore have the challenge to ensure that their research anddevelopment is focused on the whole needs of the industry, not just on Telstra’s. We do workvery closely with the manufacturers. The modernisation program for our network FMO, whichwe report to this committee on, is based on strategic alliances with four major companies—Alcatel, Ericsson and Siemens in particular, and, to a lesser extent, Nortel. Within thosestrategic alliances we work very closely to share information about our future needs—

Senator LUNDY—Mr Moriarty, how many of those companies have a significant presencein Australia, and how much of their research and development is conducted within Australia?

Mr Moriarty —The three major strategic partners have a very significant base here inAustralia and, yes, some of their development work is now conducted in Australia.

Senator LUNDY—Mr Moriarty, would you accept the fact that one of TRL’s strengths isthat in their investment in research for telecommunications infrastructure they do it forAustralian conditions and that one of the reasons TRL has been so successful is that nointernational company has been able to service the needs of Australian carriers?

Mr Moriarty —I think that is where they have served Telstra, its predecessors, and thecountry very well. I expect that, in those areas, we will still want to focus a certain level ofour research activity.

Senator LUNDY—But you have just spent the last five minutes outlining the reasons wedid not need to have a significant base within TRL for infrastructure development because ofthis reliance and relationship with four overseas companies. I think you are contradictingyourself, Mr Moriarty.

Mr Moriarty —Senator, I hope that is not the interpretation. I have said we need to focusTRL and our whole research activity on the needs of the market. Some of that will relate toinfrastructure. It is being shifted to the broadband infrastructure. TRL have done someexcellent work in looking at the environmental needs of our broadband roll-out. I believe,therefore, that we will have a robust broadband network as a result of the input that they haveprovided, together with advising us on what we should be purchasing from manufacturers andsuppliers.

Senator LUNDY—Mr Moriarty, I will go back to a question that I asked earlier. TRL’sposition in positioning Telstra and the Australian telecommunications industry globally hasbeen quite important, given the export of some of the long-distance technology in areas ofoptical fibre technology, and so forth. Do you think that a withdrawal or reduction in thatinvestment will compromise Australia’s ability to lead the industry globally with those far-reaching technologies that specifically go a long way to addressing some of the distanceproblems associated with telecommunications?

Mr Moriarty —I have not indicated today that there is any significant reduction in theresearch resources for TRL.



Senator LUNDY—You have in the sense of hardware, though, and hardware infrastructure.You have said that there will be a decided shift away from that area into the informationservices and application development. Because the funding for TRL has not increased, it goeswithout saying that there will be a reduction in investment in those areas.

Mr Moriarty —There may well be some reduction in those areas, but we will retainadequate investment in those areas to meet what we see to be the requirements of the companyin the current circumstances.

Senator LUNDY—Will the perspective that the company takes with respect to that researchstill be a global one, or will it be more insular?

Mr Moriarty —Again, I think it needs to reflect the business requirements of the company.If our business requirements involve a global requirement, TRL’s activities will support andbe linked to that.

Senator LUNDY—So there will be a direct relationship with the work that TRL does andany need for long-distance networks and hardware for long-distance networks?

Mr Moriarty —That is the point that I have been making to you. I think the thing we havedone extremely well under the leadership of Graham Shepherd and Hugh Bradlow is to workwith the retail business units and the product business units in the company to identify whatresearch and development they need in their market circumstance. So, to the extent thatinternational needs are reflected in that work, yes, we have made the link.

Senator LUNDY—I would like to return to a point you made earlier. You have stressedthat TRL’s resources will be developed in the area of broadband and content, in theinformation services area, application, development, and so forth. I am an ACT senator andwe recently had the unfortunate experience of the Gungahlin broadband project having changedits nature. I understand the Telstra position is that they have not abandoned the project. Butthey have abandoned the broadband content application aspect of that proposal and it has beenreduced to an Internet based project.

Can you explain how Telstra can run a line in the ACT saying, ‘There is no need for abroadband content application pilot project in the ACT because we are not investigating inthose areas any more and we are moving to an Internet based technology,’ and how thatreconciles with the statements you have just made about TRL moving into exactly those areasthat the original Gungahlin broadband project was designed to pilot with respect to residentsand their usage of such services?

Mr Moriarty —The background to the change in the Gungahlin trial was a global change.We need to recognise that this is a very fast changing industry, particularly in the multimediaarea. We believed, and I think the industry generally believed, that the next wave of services,particularly interactive broadband services, would have been based on the television set. Thatwas the view of the industry 12 to 15 months ago. In fact, until the end of 1995 that was stillthe view of the industry globally.

In that relatively short period of time we have seen all of the global players embrace theInternet. We have been watching it for a number of years, and it has been embraced. Webelieve it is a sustainable phenomenon, and all of the major players—both telecommunicationcompanies and computer companies—have locked in strategies related to the Internet. We havehad to shift to recognise and adopt that global movement. The next wave of interactiveactivities are certainly those that are going to be driven by the Internet and based on the PC.



We had to take that into account and refocus what we were planning to do in Gungahlin.We have come to arrangements with the ACT government to provide some access to theInternet for the local community. The other thing that we learned in planning the Gungahlintrial was that service providers had real reservations about developing content with us in sucha limited geographic area. Those who were serious about investing wanted to have access toa much broader market.

The Internet direction allows them to do that because the Internet is not just restricted toa limited community. We could not mount a credible trial just by ourselves. We have to haveother partners and that was an issue but not an overriding issue. The activities of TRL are notprimarily based on content; they are based on developing what we call platforms. They arealso based on some infrastructure issues in looking at the architecture of networks for thefuture so that we can make them as interactive as possible. We are installing some hardwarein the network which is being installed in Australian conditions, rather than in the content area,although they have done some work there.

Senator LUNDY—Mr Moriarty, can you tell me how TRL’s research into TV set top boxesis proceeding at this point in time? What role did that technology have in the originalGungahlin broadband project?

Mr Moriarty —I cannot tell you specifically because I am not totally briefed on specificresearch into set top boxes. What we are looking at is the future generation of services,whether they are based particularly on set tops related to the television set or related to PCs.

Senator LUNDY—That research is proceeding at TRL, is it not?Mr Moriarty —There is some work being done on that area, but I cannot brief you

specifically.Senator LUNDY—My understanding was that part of the technology and the platforms that

you were looking at were for the original Gungahlin project.Mr Moriarty —We certainly expect TRL to be keeping across all of those broad technology

directions, and they are moving quite rapidly. I think it is an absolute demonstration of therapid rate of change that took place during the past 12 months which led us to change thefocus of the Gungahlin trial.

Senator LUNDY—The Gungahlin trial, as you have mentioned, covered hardware, theplatform or applications as well as content. Do you believe that in retrospect Telstra’s demandsover commercial ownership of the content provided by the various partners was a factor innot gaining the sort of commercial support you required for that project?

Mr Moriarty —I do not think that is true at all. We are very flexible in the arrangementsthat would apply to content partners. We want to encourage the development of content andare prepared to enter into flexible commercial arrangements.

Senator LUNDY—Do you believe that content provided as part of your Internetinvestigations should be owned if it is prepared by a third party? Is Telstra looking atembarking upon a program of controlling content in that way?

Mr Moriarty —Not that I am aware of. I doubt that we would have the ability to controlcontent, particularly in an Internet environment.

Senator LUNDY—The Gungahlin project is now proceeding off an Internet format. Canyou explain the exact nature of that project in its current form and the relationships that youhave established with the local community, including government?



Mr Moriarty —I cannot, and I am quite happy to take that on notice. We are providing alevel of access to the local community through the Internet. I cannot cover the precisearrangements here, but I am happy to take it on notice.

Senator TIERNEY—I have two supplementary questions regarding the Gungahlin trial.You mentioned that the market was not big enough for providers so you have moved to addingan Internet base as well. How many providers expressed interest or were doing things toprovide material for the Gungahlin trial before you changed to the Internet and how manyafter? Or is it too early to tell that at this stage?

Mr Moriarty —I can cover that generally. The number that we were in discussion with wascertainly less than a dozen. There is not a specific number that is providing content specificallyfor the Gungahlin trial into the Internet. What the Internet does is to allow the end-users, thecommunity, to access a huge amount of content. We are not developing particular Internetcontent for Gungahlin under the present arrangements.

Senator TIERNEY—On the demand side, what has the Gungahlin trial told you about theway in which the consumers are reacting to these sorts of new services in terms of take-uprate and spread of services that they are interested in?

Mr Moriarty —We have not got any results because the trial was not actually implemented.We do not have that data, and we will not have that data until we implement a further trial.

Senator TIERNEY—What is the program for doing that?Mr Moriarty —We do not have a date for the re-establishment of Gungahlin. It will depend

on this technology movement and when we believe that interactive content based serviceswarrant us doing a pre-market trial.

Senator LUNDY—What sort of infrastructure was laid in Gungahlin in preparation for theGungahlin broadband project?

Mr Moriarty —I do not believe any special infrastructure was laid. We ensured that thepipework being put into Gungahlin was capable of carrying a broadband cable.

Senator LUNDY—Could you take that question on notice, because my understanding isthat some of the infrastructure was laid in anticipation during the construction of those earlysuburbs in Gungahlin.

Mr Moriarty —I am quite happy to take that on notice. My understanding was that that wasonly in underground pit and pipe infrastructure.

Senator LUNDY—My understanding is that in the original Gungahlin broadband projectTelstra was going to act as a service provider. Will Telstra be the Internet service providerfor the Internet project you have embarked upon?

Mr Moriarty —Certainly, the concept of a broadband interactive service in Gungahlin wouldhave seen Telstra as the service provider. In the case of Internet, we do have a retail serviceprovider at the present time.

Senator LUNDY—Will that company be the ISP for the Gungahlin Internet project?Mr Moriarty —Correct.Senator LUNDY—Can you outline Australia’s pricing program in relation to ISPs?Mr Moriarty —In detail, no I cannot.Senator LUNDY—Can you outline broadly how they charge people for accessing the

Internet?



Mr Moriarty —I am happy to take it on notice.Senator LUNDY—What is Telstra’s view on the establishment of a pricing policy with

respect to ISPs and access to Telstra’s infrastructure and pipes.Mr Moriarty —I think the whole area of Internet ISPs is a very volatile, very fast moving

area of the market. The explosion in the use of Internet is a global phenomenon and we needclearly to adjust our pricing to reflect the infrastructure that we provide to service that partof the market. We have had to increase the infrastructure for Internet on an almost exponentialbasis.

Our backbone was increased in several steps from six megabytes to 32 megabytes in thepast 12 months. We expect to expand it to 42 megabytes in October. We have got two furthertranches of increases between now and January. If you look at the international capacity thatInternet is using, our forecasts indicate that it may exceed the requirements for our telephonybusiness by the middle or end of 1998. That is a demonstration of the phenomenal nature ofInternet. Therefore, our pricing strategies need to be flexible and need to reflect that sort ofvery fluid dynamic market.

Senator LUNDY—Is the intention of Telstra to change their pricing policy from chargingby bandwidth to any other form of charge?

Mr Moriarty —As far as I am aware, there is no particular proposal that we are evaluatingat the present time.

Senator LUNDY—Can you guarantee that you will not move to volume or time basedcharges on those connections in the future?

Mr Moriarty —I do not think it would be responsible or sensible for us to give guaranteesalong those lines because of the nature of that growth. At the present time, I am not awareof any proposal that we are seriously evaluating in that regard.

Senator SCHACHT—I will place my questions relating to Telstra laboratories on noticein view of the time. Some of them may already have been covered by Senator Allison. Theydeal with the areas of research that you are doing and job cuts.

Senator CARR—Is it the case that the budget for the laboratories for 1995-96 is $60.4million?

Mr Moriarty —Unless my colleague Mr Stanhope can answer that, we would have to takeit on notice.

Mr Stanhope—I do not know precisely, but it is around that figure.Senator CARR—And it falls to $63.1 million in 1996-97?Mr Stanhope—Again, I do not know the precise figure.Senator CARR—Can you take on notice whether funding falls in 1997-98 to $57.6 million

and in 1998-99 to $57.3 million and whether staff numbers move from 580 in 1994-95 to 526in 1995-96, 376 in 1996-97, 366 in 1997-98 and 328 in 1998-99?

Mr Moriarty —We will take them on notice.Senator CARR—Would you please indicate to the committee what the Strawman project

is?Mr Moriarty —I am not aware of that project.



Senator CARR—Let us have a look at that. I seek leave to have incorporated inHansarda document labelled ‘Telstra Confidential: Not to be distributed’ entitledStrawman: Draftproposal on TRL resource reduction.

CHAIR —I think it would be more appropriate for it to be tabled, Senator.Senator CARR—I would like it to be incorporated inHansard.CHAIR —Is there any objection to its being incorporated inHansard?Senator Alston—Perhaps we should have a look at it first.CHAIR —I think I should see it first.Senator CARR—Sure, but I need it back. We must have some brilliant people who think

up these names; there must be a special unit with funny hats and various other things. Is itthe case that project Strawman outlines proposed reductions in TRL of 154 jobs over the nexttwo years?

Mr Moriarty —No, I am aware that TRL is looking at reductions in the order of 150, andI believe that is in 1996-97. Let me take you through the areas—and I did cover some of thembefore. They are in support areas where functions will be rationalised across the company. Inbuilding services—

Senator CARR—There are 14 going in building services.Mr Moriarty —I understand that building services is being rationalised with transfers to

other parts of the company. Presumably, there will be some rationalisation there. Computersystems support—

Senator CARR—But there are a further eight technical staff to go from building services,are there not?

Mr Moriarty —I am not aware of the details. That is why I said I would take it on notice.With standards and regulatory, the functions that are in TRL are being moved to my colleagueMr Ward. My understanding is that there will not be a reduction there. That is why I thinkwe need to be very careful that activities are being shifted to other parts of the company ratherthan reducing the capability.

Senator CARR—I see the point you make, but is it not the case that the computer facilities,for instance, will be reduced by 13 out of a unit of 13—

Mr Moriarty —But they are being transferred to the—Senator CARR—Are they being transferred or outsourced?Mr Moriarty —They are being transferred to the ITG part of the company. That is an area

where we have announced that we are in discussions with IBM and ISSC, and those activitiesmay well become part of a joint venture with IBM and ISSC. They are being rationalised sothat they are not just specific to TRL.

Senator CARR—And with the national information resource centre, 31 of the 35 are beingremoved from that unit. Is that the case?

Mr Moriarty —I understand that is the major library function and there are reductions totake place there. Again, on the balance that will be shifted to business units and those thatwill be reduced totally, I am not familiar with those figures.

Senator CARR—Could I just have that document back, Madam Chair, for a minute becausethere is a reference there that I would like to ask Mr Moriarty a question about. In regard tothe library service, could you explain what would be meant by the reference here to the



proposition that laboratory staff could rely on their own sources of information. It is arguedthat that is a non-TRL function and that clients can obtain target information through theirown information sources. What do you mean by that?

Mr Moriarty —What I expect is meant by that is that the national information service thatTRL provides is one that is provided to the whole of Telstra, so business units are being askedin this case to service that function themselves rather than relying on a centralised activity fromTRL.

CHAIR —Could I just say that we are refusing leave to incorporate that document. Leavewill be granted to table it if you request it to be tabled.

Senator CARR—You are refusing leave to incorporate?CHAIR —Yes.Senator SCHACHT—What is the reason for refusing leave to incorporate?CHAIR —Because I think it is quite appropriate for it to be tabled and, also, it is an

enormous amount of work forHansardto incorporate that table into the record.Senator CARR—It is a photocopy of nine pages. How could it possibly be an enormous

amount of work?Senator SCHACHT—So the only reason is the work forHansard?CHAIR —Also because I think it should be tabled. I am not sure of the authenticity of the

document and I think it is more appropriate for it to be tabled. Leave is not granted.Senator SCHACHT—What goes round comes round in the Senate, you know.CHAIR —That is fine. Leave is not granted.Senator CARR—I will certainly have that tabled.CHAIR —Is leave granted for the document to be tabled. There being no objection, leave

is granted.Senator CARR—Thank you. I could, I suppose, read it intoHansard. We could try it that

way.Senator SCHACHT—Yes.Senator CARR—But perhaps we will do it in the chamber.Senator SCHACHT—We could do it in the chamber when the estimates come up in the

full chamber.Senator CARR—In the committee of the whole.CHAIR —You might find that the chamber makes its own decision about how long we spend

on that topic.Senator Alston—If we have to have a committee of the whole—Senator CARR—Minister, if you read your standing orders you will find that you might—Senator SCHACHT—It is very easy to have a committee of the whole. You will be hung

out to dry for a long time in a committee of the whole.Senator Alston—I am delighted you are putting on the official record your determination

to frustrate the processes of debate.Senator CARR—No.



Senator SCHACHT—We have been given no reason for this document not to beincorporated, other than that it is too difficult to incorporate the nine pages.

CHAIR —And also that I am concerned about the authenticity of the document, so it is moreappropriate for it to be tabled. It is then a public document, and we have made the decisionthat that is an appropriate way for it to be on the record.

Senator SCHACHT—I just say that we object to the ruling. Standing orders are clear. Ifsomeone objects, it cannot be incorporated.

Senator CARR—That is right. That is fine. Mr Moriarty, what research activity skills groupsare being dispensed with entirely or in part?

Mr Moriarty —I cannot give you an answer, but, again, I indicate our preparedness to takeon notice where the reductions are proposed.

Senator CARR—Thank you. While you are doing that, could you indicate the following:the rationale applied in identifying projects to be eliminated or reduced, by category; whatactivities will be outsourced, by category; what comparative cost study was undertaken toevaluate the process for identification for outsourcing; what skill groups are to be significantlyreduced or eliminated; and why they are no longer necessary? I take it you will take all thoseon notice.

Given the way in which that matter has been dealt with, you will find there will be otherquestions that will need to be taken on notice because the document itself will probably comesome way to identifying these problems. Can you indicate to the committee how Telstra isspending its total research and development budget in compliance with this obligation underthe telecommunications industry development plan?

Mr Moriarty —How does it comply with that?Senator CARR—Yes.Mr Moriarty —My understanding is that we are required to report to the government under

those arrangements to indicate the expenditure and the programs that we have undertaken inresearch and development, and also in local industry development. I think Telstra’s record istruly outstanding in that regard. In terms of local manufacture, three years ago we indicatedthat we would spend $10 billion on local manufacture and local services over a five-yearperiod.

We exceeded that $10 billion within three years and we have announced that the programwill in fact be $20 billion over the further five years. Related to that, we have reported eachyear on the level of research and development. I think that is a truly outstanding record andis an indication of the company’s future intention.

Senator CARR—I have a further eight questions related to compliance with thetelecommunications industry development plan, which I will place on notice, and a furtherfive questions that relate to the research and development management company.

[The questions appear at the conclusion of today’s proceedings]Senator CARR—To what extent does the Telstra research and development management

company formulate and direct the corporate research and development plan?Mr Moriarty —It is the coordination body to ensure that the things that I have spoken about

previously are achieved and that is the linking of our research and development to the businessneeds of the company. It also meets requirements that relate to the funding and the taxationprovisions to research and development.



Senator CARR—I will come back to further questions on notice on those matters, butSenator Schacht has some issues to raise.

Senator SCHACHT—Going back to the issue of the financial results in the annual report,on 13 September—and this may also be to you, Minister—Alan Kohler said on the7.30Report, and I think he subsequently wrote articles in theAustralian Financial Reviewaboutit, that Telstra’s unit costs per line are now below the average of world telecommunicationscompanies for the first time. I think he said that that meant it was a positive outcome. Hecommented:they’re 8 per cent below the average of the world and they’re planning now to stay there.

Do you accept his comments, both what he said on the7.30 Reportand in the articles hewrote, that there had been considerable improvement in the per unit cost and that Telstra hadnow improved its average compared with other telcos?

Senator Alston—If you take the starting point as being the recent announcement of theprofit figure, 90 per cent of that is due to increased revenue, particularly from mobiles andabout 10 per cent is due to cost improvements. On that basis, it is hard to see Telstra’s ownassessment that they are 30 per cent off the pace in terms of operating costs per employee andtherefore the international benchmark. I do not see how that would have improved very much.

The other normal international indicator is the number of access lines per employee. It isimpossible to see how that could have dramatically improved from where it is now, whichI think is 135, compared to over 200 for BT and TCNZ and over 300 for some of the R box,perhaps most of them. Certainly Stet and South Korea are I think approaching 350. Revenueper employee for Telstra I think is in the order of about $200,000, compared to Optus, whichis $509,000. So I think there are a number of indicators that suggest that Telstra still has afair way to go.

Senator SCHACHT—In that article in theFinancial Reviewit was clear that Mr Kohlerhad been talking to senior people in Telstra—he did not actually name them—who were verypleased with the result and the improvement. Is that the case?

Mr Shore—I think we have made some improvements; but, as the minister said, there isa long way to go. I think there are two other factors. The first thing is that, with the marketin general and those comparisons in general, our peer group is moving at about five per centa year, so you have to move at five per cent just to keep up.

The second thing is that, whereas we look at ourselves as a carrier covering the whole ofAustralia with a certain density of population, we may be improving relatively rapidly for ourdensity; but many of our competitors are not going to have the same problems of dealing withthe entire country. They will just set up in Sydney, Melbourne and Brisbane and run at us inthose cities. They will have a much lower operating cost than a normal comparison ofbenchmarks for the same density. They just do not intend to cover all of the country.

Senator SCHACHT—You have proven the point that we discovered in the Telstra inquiry—that the density issue makes comparison of apples and apples very difficult and it always will.Having a continent the size of Australia with 18 million people—continental America is onlymarginally bigger and it has 260 million and British Telecom operates in an area the size ofVictoria with 55 million—the density issue will always be an issue that has to be—

Senator Alston—That is 10-year-old methodology. Telstra does not subscribe to that view.The distance means that those factors are much less important than they used to be.



Senator SCHACHT—Even the people who turned up at the inquiry supporting yourposition of privatisation, such as BZW, agreed that you cannot discount the density issue. Thatis on the record of the inquiry. We asked them questions and they presented information. Theyare in favour of full privatisation; they are in favour of your total view of—

Senator Alston—One BZW swallow does not—Senator SCHACHT—They gave evidence and they were in favour of your position.Senator Alston—Did they persuade you on one point but not another?Senator SCHACHT—I am saying that I find it interesting that they are on your side—Senator Alston—I find it interesting that you can find them persuasive on one issue but

not on the fundamental issue.Senator SCHACHT—They say the density issue cannot be ignored.Senator Alston—So what do you say?Senator SCHACHT—To serve 18 million people on a continent the size of Australia is

a national obligation which we ought to make sure has occurred.Senator Alston—But are they wrong on the fundamental issue of privatisation? If they are,

why wouldn’t—Senator SCHACHT—One of the issues they also said would improve the running of Telstra

was that there would be many more analysts writing articles. Mr Kohler is an analyst. He haswritten a positive thing for the improvement in Telstra and you have immediately bagged himand said that it is not relevant. I ask the Telstra officials: is it true that Telstra is now eightper cent below the average of the world? In his article he quoted this figure after clearlytalking to Telstra officials. Is it true that Telstra is now eight per cent below the average ofthe world?

Senator Alston—On one comparison.Senator SCHACHT—On unit costs, which is a pretty significant measurement. Is it true

that Telstra is now eight per cent below—Mr Ward —I will make the first comment on that and then Mr Stanhope will go to the

specifics of the question. I think both notions are right here. The cost competitivenesscomparisons that we do take into account density. It has been proven that density is significant,but it is far less significant today than it was several years ago. So both points are right. Theapples to apples comparison is difficult. But we have done the most comprehensive analysisof cost competitiveness comparisons which have taken a lot of factors into account. On thatbasis we will move to eight per cent below the average.

Mr Stanhope—I think we did mention in the inquiry as well that we do use Mercers to helpus with this benchmarking. They apply methodology that does take into account density. Itis not perfect—no benchmarking is—but it is the best that we can find. We have applied thatmethodology to the 1995-96 outcome—the year’s outcome. It is yet to be confirmed byMercers coming and doing their more rigorous testing of that result, but certainly it looks likewe have improved on that one metric opex per access line by about eight per cent. It hasoccurred for a couple of reasons: the number of access lines has increased and we havereduced the costs in the core business related to that operational expenditure.

Senator SCHACHT—When the Mercer report is finished, will it be a confidential documentto Telstra management or could it be available to the Senate committee?



Mr Stanhope—We treat that document as a confidential document. It has some proprietarymethodology, and we sign a confidentiality agreement with Mercers on the methodology.

Senator SCHACHT—For those so-called analysts who like writing about Telstra, you willprovide them with your summary of the Mercer information, but they have no way of checkingit if they want to go through the figures themselves about the cost structure.

Mr Stanhope—I am sure the analysts make a lot of assumptions when they ask questionsin the organisation. I am sure that, in his article, Mr Kohler did just that.

Senator SCHACHT—But he did discuss it with senior Telstra officials before he wroteit. It was clear in the article that he had spoken to somebody in Telstra.

Mr Stanhope—He must have done so if he stated so.Senator SCHACHT—In the financial results, revenue growth was 8.2 per cent or $15

billion for a total of $15.2 billion. Do you have any projections in your business plans for whatrevenue growth will be in 1996-97 and 1997-98?

Mr Stanhope—Yes, we do.Senator SCHACHT—Are they confidential?Mr Stanhope—We have not submitted our corporate plan to the minister yet; we will do

so in a couple of weeks. I would be reluctant to mention those numbers as the plan has yetto be signed off by the chairman.

Senator SCHACHT—Okay. Again, that business plan will show the projected costs forTelstra in the same period?

Mr Stanhope—Yes, it will.Senator SCHACHT—It will outline what market shares, in what particular segments of

the market the growth will be and what the cost will be?Mr Stanhope—That is a requirement of our corporate plan submission to the minister, yes.Senator SCHACHT—I note in the annual report that in 1995-96 capital expenditure was

$4 billion. Can you give a breakdown—you might like to take this on notice—of how the $4billion capital works was spent, with more information than is actually in the report?

Mr Stanhope—Yes, I will take that on notice.Senator SCHACHT—Would you include such things as how much was spent on optical

fibre cabling, coaxial cabling, digital radio concentrate systems, microwave radio links, landand building and the breakdown of the plant and equipment? The reason I ask is that yesterdaythe minister announced that the coalition’s promise to complete digitisation—by July next year,I think—has now been put back 18 months. Can you give an estimation of what that costwould be, even putting it out now—in capital works terms—to December 1998?

Mr Stanhope—We had a plan prior to the 2 March election that had modernisation out tothe year 2000. We have now accelerated that modernisation process program to effectcompletion by December 1998.

Senator SCHACHT—By bringing it forward two years or thereabouts, what has been theincreased cost in capital works to complete that new deadline?

Mr Ward —In the course of our three-year plan in capital expenditure and operatingexpenses it is probably in the order of $220 million to $230 million brought forward into thisplan period to meet an effective completion by December 1998, to be precise.



Senator SCHACHT—By bringing that forward, you will adjust your business plan that yousent forward to the minister for signing off over the next couple of weeks?

Mr Ward —Indeed. In fact, it has been an integral part of the development of the plan. Wehad the two major issues to work through in the modernisation program: firstly, the technicaland logistical issues of accelerating the program; and, secondly, aligning it with ourcommercial business plan. Both of those issues have now been addressed quite satisfactorilyand it is a very good result in what that program will deliver.

Senator SCHACHT—What will be the total cost of the digitisation program when it iscompleted by June or December 1998?

Mr Ward —Essentially, $3.3 billion; but I will conform that.Senator SCHACHT—And the extra cost would have been $3.1 billion if it had gone out

to the year 2000—and it is now $3.3 billion?Mr Ward —No, the total program is $3.3 billion. We are really talking of the timing of

completion of that program and addressing all of the issues in ensuring that it goes acrossAustralia in all of the difficult areas, et cetera.

Senator SCHACHT—Has there been any diversion of resources out of other programs tomeet the new timetable of the end of 1998?

Mr Ward —In putting together our business plan with a capital program in the order of $4billion as you suggested, we have a lot of balancing of demands to get a balanced program.Our business planning process, which started in November-December last year, had a capitalenvelope of about $4 billion for the year 1996-97 and continuing. Our business planningprocess has balanced all of the competing demands to get to a final plan which the board iscomfortable with and the chairman will sign off to the minister in a short time frame.

Senator SCHACHT—You said that by bringing $200 forward—Senator Alston—No, the same amount will be spent but in a shorter time frame.Senator SCHACHT—Would human resources have to be diverted to achieve that?Mr Ward —Both diverted and increased.Senator SCHACHT—And that is the reason for the $230 million increase in the budget?Mr Ward —Operating and capital resources would be required to bring that forward.Senator SCHACHT—You can assure us that no other program in your capital works

program has been adversely affected by bringing this one forward?Mr Ward —The digitisation program has been looked at in the context of all of the

competing demands of our business units. The program that we have pulled together, includingthe acceleration of the modernisation program, is one that the board is fully confident is acommercial program ensuring all our obligations are met.

Senator SCHACHT—You advised the minister that it was impossible to achieve thedigitisation program by June 1997.

Mr Ward —In terms of some of the technical and logistical matters, we could not completethe program by June 1997.

Senator SCHACHT—So the minister had to break another promise in the electioncampaign?

Senator Alston—No.



Senator SCHACHT—You did promise by June 1997.Senator Alston—On the best advice available to us, given that we were not allowed to talk

to Telstra prior to the election, we were making the best judgment we could. We havedelivered on the promise, as you will see in all the media today. We have simply put—

Senator SCHACHT—You have just put it out by 18 months.Senator Alston—That is right.Senator SCHACHT—You broke a promise.Senator Alston—You read the NFF press release and you read all the newspapers articles,

then you will see whether they think we have welshed or not.Senator SCHACHT—I would be surprised if the NFF did not welcome your statement.

They have been fully supportive of all your Telstra policies, but other groups in the communityhave not been.

Senator Alston—That ought to tell you something.Senator SCHACHT—No. That is just the NFF.Senator Alston interjecting—Senator SCHACHT—I would have to say that, if the NFF did not support you, Minister,

that would be the startling outcome.Senator Alston—Go on—keep bagging them. You are doing yourself a lot of good.Senator SCHACHT—I would be surprised—Senator Alston—Put you another three years behind the eight ball.Senator SCHACHT—You are 18 months behind because of another broken promise. These

keep accumulating on you at an extraordinary rate.Senator Alston—You will have trouble selling that one.Senator SCHACHT—You promised it. You are 18 months out. I presume this is no longer

treated as a core promise by the government, in using those definitions.Mr Ward, in 1995-96 the capital expenditure was $4 billion. For 1996-97 in the business

plan that the minister is about to put is it going to be about the same figure or will it be anincrease?

Mr Ward —The details of that will be in the plan that we will deliver to the minister, butit is in the same order.

Senator SCHACHT—How much of that $4 billion is for the cable roll-out?Mr Ward —I cannot answer on that figure. We perhaps have an approximation.Mr Stanhope—It is about $600 million.Senator SCHACHT—How much have you expended until the end of 1995-96, the year

just ended, on cable roll-out for that project? You have got $600 million in this coming budget.How much after that do you still have to invest in achieving the cable roll-out to the level thatyou think you need to to protect your share of the market?

Mr Moriarty —I do not have the actual figure, but we can take that on notice. We are ontrack with our roll-out. When the board made the investment decision, we announced that wewould cable four million homes by the middle of 1999. That is still our intention. Weannounced that it was a $4 billion project and it still is. You need to understand that the $4



billion includes operational costs as well as the capital investment over the first five years ofthe program. That includes—

Senator SCHACHT—After the business plan is adopted, could you provide us withinformation about what are operating costs and what are capital investment for the roll-out?

Mr Moriarty —We can.Senator SCHACHT—Mr Ward, have you put aside any money in this year’s budget for

the cost to Telstra of the preparation for privatisation? It could be employing extra lawyersor stockbrokers—I do not know. The preparation of what some would call the ultimate duediligence, providing information for the scoping study and so on.

Mr Stanhope—We have set a small amount aside, but it is not being used because the bill,obviously, has not been through the parliament.

Senator SCHACHT—You mean to say that, even without the bill being passed, there hasbeen no work done in providing advice to the scoping study, which is the first stagedevelopment? In anticipation of the bill being passed, the government announced a scopingstudy, which I think is costing over $1 million all up. You have provided no resources, noinformation or no diversion of labour, human resources, to provide information to the scopingstudy?

Mr Ward —The majority of resources for interfacing with CS First Boston came frominternal resources. We would have spent probably a small amount on some external assistance,which primarily would have been in the last financial year.

Mr Stanhope—That is right.Senator SCHACHT—From internal resources, can you give any estimation of the staff

years that are being provided in people’s time to the scoping study?Mr Ward —I could not answer that. A lot of it has been carried by corporate.Senator SCHACHT—Could you ask corporate to take it on notice to give any estimation?Mr Ward —Sure. It is not a significant or material effort to date.Senator SCHACHT—So, if the legislation were carried by the end of this year, then there

would have to be an adjustment to the year’s budget to take account of the sudden newrequirements on Telstra to meet the privatisation process?

Mr Ward —I would say that is right, but again I do not know how material that would be.Senator SCHACHT—So there have been no contingency arrangements?Mr Ward —As Mr Stanhope said, there is probably an amount in this current year’s fiscal

budget.Senator SCHACHT—You can take that on notice then. If you could tell us how much it

is, I would appreciate it.Mr Ward —I would be happy to do that.Senator CARR—Have you seen the final report of the scoping study?Mr Ward —Certainly not from the Telstra management.Senator CARR—Have you seen any of the draft reports?Mr Ward —No.Senator SCHACHT—Or discussion papers?



Mr Ward —No, we have just seen papers that, in a sense, are seeking verification of datathat we have provided the scoping study.

Mr Stanhope—Can I just add that we saw the Coopers and Lybrand input to CS FirstBoston. It is the only document that we have seen, to my knowledge.

Senator SCHACHT—What document did Mr Frank Blount see that led him to makecomments which were reported in theFinancial Reviewthat the issue of structural separationwas being considered by CS First Boston?

Mr Ward —I am not aware that he saw any document. I do not believe he would have seenany document.

Senator SCHACHT—Are you aware of what communications or discussions he had hadorally, obviously, with CS First Boston which would lead him to unequivocally state in theFinancial Reviewin an article a month or so ago that there were structural separation issuesbeing dealt with by CS First Boston?

Mr Ward —The CEO and Paul Rizzo, who heads up internally the privatisation group inTelstra—

Senator CARR—Mr Rizzo is not here today, is he?Mr Ward —No, he is overseas, Senator.Senator SCHACHT—He followed up his threat that it was a waste of time coming before

a Senate committee.Mr Ward —It was a long-scheduled overseas trip and he is looking forward to getting back.Senator CARR—So he will be back for the supplementaries. We could probably go through

these things with him, if he is so keen to appear.Senator SCHACHT—Tell him we look forward to him appearing before the supplementa-

ries with great enthusiasm.Mr Ward —I will make sure I convey that to him.Senator SCHACHT—We say that with good humour.Senator CARR—We are happy to see him too.Mr Ward —If I could return to the question: the CEO and Paul Rizzo, I think, met on a

routine basis with CS First Boston in terms of the dialogue we had and our input. I think theymay have met monthly or twice monthly during the process.

Senator CARR—So how many times is that in total?Mr Ward —I would not know exactly how many times—probably five or six, but I would

not swear to that number.Senator CARR—These were lengthy discussion, were they?Mr Ward —They were primarily discussions about input CS First Boston were seeking from

us, about whether we were providing the information in a timely and comprehensive way andjust an overview of the interaction.

Senator SCHACHT—The information you provided to CS First Boston was clearly in theform of written reports, documentation?

Mr Ward —We provided a significant amount of data and reports.Senator SCHACHT—Was getting all that information together the responsibility only of

the corporate affairs section or did it flow down through various divisions?



Mr Ward —It was not the responsibility of corporate affairs. It was governed by a corporatebody, headed up by Paul Rizzo.

Senator SCHACHT—Again, that is a cost to Telstra.Mr Ward —Sure.Senator SCHACHT—That nominal figure that is in the budget covers all of this effort of

preparing the materials of the scoping study, does it?Mr Ward —It actually meant that a lot of corporate people worked a lot harder.Senator SCHACHT—Extra hard. They added this on top of all their other duties.Senator CARR—Overtime.Senator SCHACHT—Overtime?Mr Ward —Not overtime.Mr Stanhope—It is true to say that by and large the amount of effort that went into

providing information to the scoping study was absorbed in our budgets. It was prudent tobudget in this fiscal year should the bill go through the parliament, because we would beexpected, no doubt, to participate in any due diligence study. So it is just a prudent thing todo.

Senator CARR—So, in your interrelationship with CS First Boston through this period ofreporting and evaluation, what impact did that process have on the preparation of the corporateplan?

Mr Ward —I would say absolutely minimal. Our business planning guidelines were set, asI said earlier, in November and December of last year. The process was well and truly underway before CS First Boston came on board.

Senator CARR—So there were no changes in the corporate plan since the beginning of theyear?

Mr Ward —No, I did not say that. The process of the corporate plan has taken from itsbeginning the outlines we give the business units of strategic directions and performanceresults. It was finalised by the board at the September meeting. So the process evolved throughall that time, and that is not atypical of our planning process.

Senator CARR—What projected changes were made throughout that year?Mr Ward —Mr Stanhope can correct me if I am wrong but, essentially, the strategic

directions and the performance envelopes were fairly static over that period. The process isabout actually coordinating, making judgments about the detail and ensuring that the bottomup planning process coalesces with the top down planning process. For a company of our sizeand scale, it is a very large process.

Senator CARR—So were there changes, for instance, in terms of the projected financialresults?

Mr Ward —At the corporate level, I think our financial envelopes stayed reasonably robustover that time.

Senator CARR—So there were no assumptions of increased revenues?Mr Stanhope—We had a financial envelope that we set back in January. It contained an

expense to revenue ratio that we were trying to achieve and a revenue growth figure that wewere trying to achieve. During the months that ensued, we had a number of iterations of theplan. The market, targets, product, revenue achievement and sales all drove the plan. In fact,



we have a plan that has come very close to the financial envelope that we set back in January.So it was well before, I guess, the privatisation issue was on the table.

Senator CARR—I see. So there were no assumptions in terms of increases in revenue?Mr Stanhope—There were assumptions in the financial envelope. We were aiming at a

certain revenue growth across the three years of the plan.Senator CARR—They did not change in the last period?Mr Stanhope—No, we did not change the envelope. Our objective in the planning process

was to get as close as possible to that envelope that was set in January.Senator CARR—Thank you. When will the plan be submitted to government?Mr Ward —In the next week or two, Senator.Senator CARR—Is that the usual time period that one would expect to be followed?Mr Ward —No, the corporate plan over the last few years has been submitted in late May

or early June.Senator CARR—Why has there been a delay?Mr Stanhope—In terms of the work we had to do on this year’s plan and the government

policy issues that we talked about a little earlier, about acceleration of digitisation and theISDN acceleration, we needed more time to work those through in the context of the plan.Also, I would point out that this particular corporate plan embraces a three-year period andwe will have a further major deregulation period. So the planning period in prospect was avery challenging period, and we needed that time.

Senator CARR—Did you want to add anything to that, Mr Ward?Mr Ward —No.Senator CARR—No. So the ISDN roll-out and the network modernisation are the two

factors. What impact do these matters have on the expected results over the life of the plan?Mr Ward —They clearly impact on the expenditure side of the equation, as per the

discussion we had a little earlier. We would also hope that they would help support operationalsavings that are included in the plan as we digitise faster. We would also hope that the greaterISDN coverage would bring in additional revenues in that time. So those initiatives have beenfully incorporated into the plan in terms of their revenue and expenditure side of the equation.

Senator CARR—So you say that the policy changes of government have been incorporatedinto the plan and that is part of the delay process. That goes to the questions in terms of ISDNand the network modernisation, but you then say that privatisation does not.

Mr Ward —Privatisation per se has had no impact whatsoever on our planning process.Senator CARR—No impact whatsoever.Mr Ward —Whatsoever. Our planning process has been directed towards what we have to

achieve in the competitive marketplace.Senator CARR—So, for instance, Project Mercury discusses the ‘exploration of off balance

sheet options which maximise cash injections without exposing Telstra to the greater futureoperating costs, consistent with the privatisation of Telstra’. That is a quote from a Mercurymeeting—I do not know whether or not you were present at that one—that was held on 22May in boardroom 42 on Exhibition Street, Melbourne. You say that has no bearing on thequestion of privatisation.



Mr Ward —The planning process in Telstra consists of the corporate office working withthe business units in terms of meeting the envelopes that Mr Stanhope alluded to before.Project Mercury was an exercise which developed some options. Those options were put tothe business units, and they could look at those to see whether they were helpful or otherwisein meeting the planning guidelines that were sent out several months ago.

Senator CARR—Yes, but your documentation refers specifically to policy options beingconsidered consistent with the privatisation of Telstra. That is a presumption that runs throughthese documents. Would that be a fair characterisation of the Mercury documents?

Mr Cartwright —Senator, you actually have a majority of the steering committee of ProjectMercury present.

Senator CARR—Yes, I understand that. I am coming to that in a minute.Mr Cartwright —Let me say that, while that might have been written by one staff member,

that was certainly not the view and not the approach taken by the steering committee.Senator CARR—Yes, but it was nonetheless the recommendation put to the steering group,

and there was the outsourcing project documentation on that particular date. What I am goingto is the issue that Mr Ward has raised about the impact of government policy on the corporateplan. You acknowledge that the government policy in terms of the ISDN and the networkmodernisation had an impact on the plan, but you claim that privatisation had no impact. Butall the written documentation that we have seen points to that linkage. The delay in thepreparation of the plan surely was influenced by the government policy in regard toprivatisation.

Mr Ward —Absolutely not. I would not characterise those documents as being privatisationdocuments at all. I would characterise those documents as structural cost options for thecompany to consider in the lines of business as to how we will meet the competitive challenge.

Senator CARR—But the reference to privatisation, you would agree, is threatening—Mr Ward —You are reading from the document so clearly it says—Senator CARR—Yes, it is clearly—Mr Ward —You went on to say that the totality of the document that you have was

characterised by privatisation briefings.Senator CARR—That is a point of argument about the nature of this project. I say it is a

privatisation project and you say it is something else.Senator SCHACHT—You said early today that the downsizing by 22,000 over three years

improves the bottom line profit by $600 million per annum. Is that not going to make a privatesector investor more attracted to buying Telstra if it was successfully privatised by legislationin parliament? That will increase the bottom line profit to make it a much more attractiveinvestment for the private sector. You will be telling them $600 million—as of next year orthe year after—will be added to the bottom line profit.

Mr Ward —That is to address the competition in the marketplace, Senator, in terms of—Senator SCHACHT—Look, are you saying, if the legislation is passed, it will not be in

any prospectus put out, saying, ‘We have got our costs down and there is an extra—Senator Alston—Let us be clear: are you opposed to these improvements—apart from the

conspiracy view?Senator SCHACHT—I have to say very clearly, Minister, if 22,000 people lose their jobs

and there is a $600 million improvement in profit, I want it to stay with the Australian people,



generally, and be spent on improvements in education, health, welfare and even retrainingprograms, rather than go to the bottom line of a-

Senator Alston—Do you now disown Mr Keating’s talk about $400 million from Telstra?Senator SCHACHT—I am just saying that, if the legislation is carried, that figure of $600

million will be up front in lights in any prospectus document, saying, ‘We have an improvedprofit coming! Our costs are down!’ I want the $600 million staying with the public purse tobe used for the welfare of all Australians and not for the private sector investors. That is myview.

Senator CARR—Can I perhaps press on with these employment and matters related to theconstruction of the corporate plan. Frank Blount said onPM on Friday the 13th that he hadnot been involved in Project Mercury and he thought that outsourcing should only be pursuedwhere there was a cost advantage to Telstra. The minutes of the Project Mercury meeting on22 May—where, as you say, many of the officers at the table were present and which wasreferred to in our report on page 104—suggests the contrary. What those minutes say is thatit was agreed in principle that the activities on Mr Pitt’s list would be the preferred outcomewhen the cost benefits of outsourcing were equal or marginal to retaining in-house and thiswould assist in bridging the gap between Telstra and best practices in relation to the cost—andthe words are not quite clear to me—in relation to head count benchmarking. Can youexplain—

Mr Cartwright —Senator, you are quoting from the draft minutes. The final minutes whichwere presented to the Senate has my handwritten amendment as the chairman of that meetingand the sentence you are referring to reads:This will assist to reduce management complexity and assist with bridging the gap between Telstra andbest practices indirectly in relation to cost and directly in relation to head count benchmarking.

Senator CARR—Yes, I acknowledge those changes were made, but what was clearly statedin those minutes was that they will be the preferred outcome when the cost benefit ofoutsourcing is equal or marginal to retaining in-house. That is clearly the record of thatmeeting.

Mr Cartwright —The point that the amendment picks up is that there are a lot of invisiblecosts in an organisation and certainly there is a cost of management complexity and complexityin operation that needs to be factored in as well. What the committee was saying was if webelieve that outsourcing will make a significant simplification in our business, and thereforereduce some hidden costs, that also has to be considered.

Senator CARR—Yes. I could also raise the issue here about your denials concerning headcount benchmarking which are quite clearly referred to in these minutes. Should that not beamended as well?

Mr Cartwright —I doubt, Senator, that we have ever denied that we have donebenchmarking—

Senator CARR—Head count benchmarking.Mr Cartwright —On either costs or head count. In fact it is a part of the Mercer report.

From the Mercer report, there are benchmarks produced on many criteria and I personallypresented to the board in March this year the results of the Mercer benchmarking in relationto some of these factors. We benchmark our accommodation costs, our vehicle costs, our headcount, our total costs—all those sorts of things. I doubt that we have ever denied that we dothat. On page 1 of those minutes, you will note that the steering committee in its considerations



picked up this point that in fact it is not reliable to benchmark head counts, but rather weshould concentrate on benchmarking costs.

Senator CARR—I accept the inadequacies of head count benchmarking. I will not argueon that point. The point I was going to make was whether or not these policy issues had everbeen agreed to within Telstra and what arguments you were pursuing within Telstra on thosematters. But specifically I am concerned that Mr Frank Blount said onPM that he had notbeen involved on Project Mercury and as a consequence the inference was that these thingswere not going on, yet your minutes clearly indicate that the motivation for outsourcing willbe the preferred outcome where the cost benefit of outsourcing is equal or marginal to retainingin-house. Is that or is it not the criterion on which you are determining what activities willbe outsourced?

Mr Cartwright —Those minutes go on to say that where this reduces managementcomplexity that is a fact to be considered as well. In other words, that is also a hidden costin the organisation. Perhaps my colleagues might like to comment but certainly we are lookingfor advantages in our competitive ability as a result of any outsourcing that we do. Whetherthat advantage is service capability, whether it is simplifying the business and thereforereducing hidden costs, or whether it is taking out direct costs, obviously we would be lookingfor some competitive advantage as a result of any outsourcing initiative. I think that is whatthe chief executive is reflecting.

Senator CARR—As I understand it, the assumption underlying the work force charts thatwere presented to Project Mercury was that outsourcing yields an 80 per cent cut in staff forany function as 20 per cent of staff retention is required internally to manage the relationshipand monitor delivery. Is that assumption sound?

Mr Cartwright —Perhaps my colleagues might also like to comment but you will note inthe Project Mercury papers that those particular graphs were produced twice. The reason theywere produced twice was that the steering committee did not take any notice whatsoever ofthat graph the first time it was produced. It is so speculative and so illustrative that we didnot deem it worthy of any consideration.

Senator CARR—But you took notice of it the second time?Mr Cartwright —It was put to us again by the secretariat, ‘You did not talk about this.’

We simply noted that it was there, but it in no way reflects what the steering committee wasabout or any sort of target or decision by the steering committee. We took that as indicativeinformation that was just part of the background and moved on.

Senator CARR—There are a number of questions relating to Mercury issues that I will needto pursue. Given the time, I will have to pursue those in supplementary estimates. I amparticularly interested in Mr Blount’s comments. Given that Mr Blount said that because hewas not directly involved it was not happening, can you explain how policies on such mattersare made in Telstra? What delegation of responsibility is assumed? I take it that, as seniormanagers of Telstra, you have certain authority. Do I assume that, unless Mr Blount knowsabout your activities, they are not happening?

Mr Moriarty —I think I can actually clarify this. Much too much has been made of ProjectMercury. It was an activity to identify some possible options. We as colleagues looked at somepossibilities. When it came to implementation, the responsibilities were left to each of thebusiness unit managers, and they were folded up into the corporate plan on a budget. At thatpoint, the chief executive made his own views very clear about criteria that would apply to



outsourcing. That postdated Project Mercury. I think at that stage Project Mercury had probablybeen disbanded. Any activities that might have been canvassed were being dealt with by the—

Senator SCHACHT—Is it purely coincidental that the Project Mercury documents that wehad at the reference committee inquiring into Telstra said that approximately 24,000 jobswould go in one form or another? It has now been confirmed that nearly 23,000 are to go overthree years. The figures are almost exactly the same. It does lead someone looking fromoutside to say that Project Mercury had an outcome. Are you saying you told Project Mercurythat you already knew the figure of 23,000 and it was a process of how to get the 23,000?

Mr Cartwright —Of the figure of 24,000, which is on the charts that were presented, 15,500are from outsourcing. Now we are not looking at anything like that figure—

Senator CARR—How many are you looking at for outsourcing?Mr Stanhope—The plan has got around 5,000 in it for outsourcing.Senator CARR—In total?Mr Stanhope—Yes.Mr Cartwright —It is entirely coincidental that 24,000 was the sum total of what was shown

in those illustrative charts. In amplification of that, you can see that that 15,500 is made upof potential outsourcing opportunities. Those charts are headed maximum work force impact.Clearly, the figures of 22,000, including 5,000 outsourcing, do not line up with 24,000including 15,000 outsourcing.

Senator CARR—I understood that Mr Moriarty was saying that Mr Blount’s commentswere made at a time when Project Mercury had been wound up.

Mr Moriarty —I cannot be precise but it was certainly towards the end of the very shortlife that Project Mercury had.

Senator CARR—It is just that this committee was told that it could not have the finalminutes of that meeting because that meeting had been cancelled for want of a quorum, orwords to that effect. That was shortly before Mr Blount’s statements were made public. Whenwas Project Mercury wound up?

Mr Cartwright —The work of Project Mercury was basically completed by July. Thecorporate plan picked up the ideas, initiatives and options that were seriously pursued out ofit. I formally reported to the executive committee a couple of weeks ago that the project hadcompleted its work and was wound up.

Senator CARR—In the documents you presented to us, Mercury steering group meetingNo. 9 was held on 1 August. This committee was told, presumably by you or an officer actingon your authority, that we could not have the final outsourcing figures because the finalmeeting of the project had not concluded, and that was just before we presented our report.

CHAIR —Senator Carr, I will correct that. The references committee was told, not thiscommittee.

Senator CARR—Okay. This parliament was told a few days before our putting down thereport into Telstra that Project Mercury had not concluded. When was it completed? If it wasnot completed just before our report, why weren’t we able to get the documents that we askedfor?

Mr Cartwright —The final meeting was in fact the meeting that was rescheduled as a resultof there being no quorum. If you say that it is 1 August, obviously that is picked up from thedocuments. That meeting was cancelled because of overseas travel. One of our other members



broke his achilles tendon and was not able to attend. So that meeting was cancelled andrescheduled I think for two weeks later. Looking at the six teams that were operating, alreadyby the middle of July three had completed their work.

Senator CARR—I understand the point you are making, but I am going to the issue ofwhen the project was completed. When did it have its final meeting?

Mr Cartwright —It had its final meeting in August some time.Senator CARR—But you told the references committee that that documentation was not

available because a final meeting had not taken place. Which one is correct?Mr Cartwright —I am sorry; I am not aware of what was told to the committee. I can tell

you what happened with Project Mercury.Senator CARR—It just seems to me that we have a prima facie inconsistency here that

perhaps we will need to follow up in other quarters. The secretary to the department no doubthas read the report. There have been a number of inconsistencies in regard to these matterswhich I trust he has noted. I will perhaps come back to him later on in terms of what actionhas been taken.

CHAIR —Senator Carr, Senator Allison has some questions. It now being 12.20—Senator CARR—I have not actually got an answer to my question. Specifically, what was

the delegation responsibility one can assume in regard to Mr Blount in terms of his commentson 13 September that he was not aware of these projects and therefore they were nothappening? What responsibility is assumed, in terms of you as senior managers, forparticipation in those meetings where these decisions were made?

Mr Ward —The CEO’s focus has been on the development of our business plan. In thefocus on the business plan, he has dealt with the lines of business in terms of what they aregoing to achieve in the marketplace over the next three years. The lines of business in parthave been facilitated by an off-line Project Mercury which they have looked at and pickedup in some instances and not picked up in others. The CEO’s focus has not been on ProjectMercury; it has been on each business unit’s business plan which is driven by a set of strategicand financial envelopes and is not driven by any head count benchmark. In part, the financialsare driven by a cost competitiveness benchmark which Mr Stanhope referred to before.

Senator ALLISON—Is it true that a committee has been set up to explore the viability ofthe sale of Visionstream and that a tendering process is already in place, being managed bythe Macquarie Bank?

Mr Moriarty —It is true that a group of executives—Mr Stanhope and I being two of thoseadvised by Macquarie Bank—is working through a process to seek a buyer for Visionstream.That is correct.

Senator ALLISON—When did they make an announcement about this?Mr Moriarty —An announcement to whom? We have invited a number of companies to

express an interest. We are preparing a memorandum of information, which will be providedto a number of those companies as advised by Macquarie Bank. If we get a satisfactory offerto buy Visionstream, that will be taken to the board of Telstra and a decision will be madeas to whether we sell it.

Senator ALLISON—How profitable was Visionstream in the last financial year?Mr Moriarty —Visionstream operates at cost. It is not set up to make a profit.CHAIR —Was there a description of Visionstream in last year’s annual report?



Mr Moriarty —It is included in last year’s report in terms of the consolidation of itsfinancials and so forth.

Senator ALLISON—If it operates only at cost and it does not make a profit, of whatinterest would it be to a private organisation to purchase?

Mr Moriarty —There could be an interest from private organisations. That is what is beingtested through the sale process. Visionstream will continue the cable roll-out work and positionthemselves to do other work in construction activities within the industry here in Australiaand possibly overseas. That is a judgment that potential buyers will have to make. That is whywe have no final decision as to whether we are going to sell Visionstream.

Senator ALLISON—If it were sold, would there be a political guarantee of all the contractwork for rolling out cable?

Mr Moriarty —No. There will be a very limited guarantee in terms of the future contract.We are testing whether it is a sufficiently attractive proposition through the process. The lifeof Visionstream is relatively limited. It is to complete the roll-out that we spoke about earlierin the meeting, which is to conclude in the middle of 1999. Visionstream is only resourcedin four areas where we are currently rolling out. We will go beyond those areas. For Telstra,there are some significant issues to be addressed if we maintain the ownership. We felt theremay well be an advantage in private owners continuing that work, meeting our cost objectivesand expanding the role of Visionstream beyond the cable roll-out, therefore guaranteeingemployment for the Visionstream staff. If that can happen, we think that is a positive thingto try to achieve.

Senator ALLISON—If you say that the roll-out will be completed by 1999 and that thereason for getting rid of it is that it has a finite end, what are these other opportunities youare talking about which would present themselves to private organisations?

Mr Moriarty —There could be further work with Telstra, which we, over time—beyond1999—believe could be better done by a Visionstream entity. There is an opportunity for itto do work offshore. We do not want to distract it while we own it. But if a private ownerbelieves that it can service our needs, meet our cost and time objectives and do other work,that is an expansion opportunity for the company.

Senator ALLISON—Can you encapsulate all that in a sentence that says why Telstra wouldwant to sell off Visionstream? I am not clear about what the problem is in keeping thisdivision of Telstra in public ownership?

Mr Moriarty —It has a limited life in terms of Telstra’s requirements. It may, outside ofTelstra, have a longer term life. We are testing that. That will require private owners to makea judgment about that opportunity. If they make a judgment that that looks limited and risky,we will continue with the ownership of the company.

Senator ALLISON—Will the 2,000 employees at Visionstream all be taken on board bya private company?

Mr Moriarty —Certainly initially. But that is our expectation. They are required to continuethe roll-out to meet our targets.

Senator ALLISON—There has not been any discussion about a possible management buy-out of Visionstream?

Mr Moriarty —Yes. That is clearly one of the options. We have said to the managementgroup which has expressed that interest that we are prepared to accept an offer from it alongwith offers from other companies, if other companies respond.



Senator LUNDY—I have a number of questions covering various areas. The first one isthis: how will the relationship between infrastructure technology and the provision ofinformation services be handled structurally within Telstra?

Mr Moriarty —That depends on what the particular services are. If they are services on thePSTN, there is a structure which is governed by the act. If they are services covered by thebroadband infrastructure, there are other provisions, which include the carrier associate regimethat currently exists. It gives some freedoms which do not exist for narrow band PSTNservices.

Senator LUNDY—Are you familiar with the Productivity Commission’s information papercalledMapping IT?

Mr Moriarty —I am not personally familiar with it.Senator LUNDY—Perhaps I could ask you to take it on notice. They have mapped out the

information technology industry in various quadrants. I would be interested to see whereTelstra and their various partnerships fit across that quadrant structure as mapped out in thatreport.

Mr Moriarty —I am happy to take a copy of the particular section.Senator LUNDY—I will read the reference intoHansardfor you. It states ‘Mapping the

information industries: a staff information paper by the Productivity Commission, July 1996.’The table I am referring to is called the IT map. I have a question with respect to the localloop. Given that the future mode of operations does not really address the local loop, whatis Telstra considering with respect to customers being able to determine the nature of theirconnection with the local exchange?

Mr Paratz —As you correctly state, the FMO digitisation in itself does not address the localloop. There is a variety of access technologies in place at the moment for a large number ofour customers. That is a copper based access. Other customers have access based on a varietyof radio technologies. Some customers are directly connected through optical fibre. In the caseof the copper based technologies, a wide range of technology enhancements is progressivelyallowing the delivery of a range of services from basic telephony through to ISDN and high-band width and even video interactive services. In a very real sense, the technology of deliveryultimately becomes transparent to the customer. It is about the product and the service youare delivering to the customer. It is about matching technology options that in some cases arecompatible with existing plant and in other cases may not be.

Senator LUNDY—If customers could determine the nature of their own connection, do youthink that would remove the necessity for the duplication of infrastructure that exists at themoment to secure potential market share?

Mr Paratz —The real arbiter and driver of the nature of connection really has to be anamalgam of the products and services being delivered and an understanding of the emergingrange of technologies. Certainly in terms of many of our customers, we see technologiesmaturing over the next two or three years that will enhance markedly, from the customerviewpoint, the utility of the existing customer loops. In a sense, to preselect or punt on aparticular technology would probably be—

Senator LUNDY—Do you think it is fair to say that the ownership of the local loopbecomes less significant once that customer flexibility is introduced between their home andtheir local exchange?

Mr Paratz —I will ask my colleague Mr Ward to deal with that question.



Mr Ward —I am not quite sure that I follow that line of argument.Senator LUNDY—I am putting to you that if customers could determine the nature of their

connection between their place of residence and their local exchange—by that, I meandetermine their bandwidth, the technology, such as ISD or analogue connection, and whichcarrier they opted to use—that would remove the necessity for the duplication of infrastructure.Ownership would go back to the issue of rental and maintenance and upgrades in relation tominimum standards provided by regulation.

Mr Ward —I personally cannot agree with that conclusion. I think that the breadth ofproducts and services and the ability for consumers to have choice across those products andservices demands competition in facilities as well as competition in those products andservices.

Senator LUNDY—The competition would be in the services, not in the actual hardware.Mr Ward —To get that competition in products and services, breadth of products and

services and, ultimately, customer choice are intrinsically related to competition in facilities.That would be my view.

CHAIR —I am going to have to suggest that you put the rest of your questions on notice.Senator LUNDY—I have only one question about billing technology. Can you explain to

the committee what technological capability exists to determine the difference between thedata transmission on a fax modem and voice telephony at the billing point?

Mr Paratz —At the billing point, that technology is not in place within the company.Certainly there are technologies theoretically available that can detect those differences. Theyare sometimes exploited in the international arena to maximise the utilisation of extremelyhigh-cost circuits, et cetera. At this stage, we have no capability within the company to lookat the information stream and detect its nature.

Senator LUNDY—I will put the rest of the questions on notice with respect to billing.Senator SCHACHT—I have some questions I want to put on notice. I think it means that,

when we look at the supplementary hearings, we will have to take account of the fact thatthree hours for Telstra is really not enough.

CHAIR —Put your questions on notice. I encourage Telstra to answer them as fully as theycan to avoid an elongated and tiresome time in the supplementary hearings.

Senator SCHACHT—What part of the business plan would be available to the estimatescommittee if we meet in October and has it been signed off by you and by the book? Howmuch of the information in that business plan would be available? How much would you claimas confidential?

Senator Alston—I am not sure what the statutory obligation is. It is my understanding thatthe corporate plan in its entirety remains confidential.

Senator CARR—It is available to the stock exchange.Senator SCHACHT—What information goes to the stock exchange? Anything out of the

business plan?Mr Stanhope—No, it does not go to the stock exchange.Senator CARR—I understood Mr Cartwright to say before that Project Mercury’s meeting

No. 9 on 1 August was the one rescheduled. Mr Cartwright, when you review theHansard,you may wish to correct some of those answers. I just draw to your attention letters received—



Mr Cartwright —Sorry, Senator. I was just assuming the date you mentioned was correct.Senator CARR—No, I was saying to you that the parliament was denied documents on the

basis that a final meeting had not occurred. I was going to the question of whether Mr Blountknew or did not know about what senior management were doing in preparing these plans.I draw to your attention a letter dated 27 August by Bob Samarcq to the committee indicatingthat a further meeting of the steering committee scheduled for 26 August was not held dueto lack of a quorum. When was that final meeting held? When did the project conclude? Whencan we have the minutes and documents associated with that meeting?

Mr Cartwright —We will certainly take that on.Senator CARR—Thank you.Mr Ward —Senator, I am a little unclear. Given that that was a different senate committee-Senator CARR—It is a reference committee. Nonetheless, this estimates committee is the

other half of the committee. It is still a committee of the parliament. I am asking for thosedocuments which have been sought through another committee and, for one reason or another,have not been produced. I would ask through this committee for that document to beproduced—

Mr Cartwright —I understand.Senator CARR—That is the final outsourcing report.Mr Ward —Project Mercury report.Senator CARR—Project Mercury report. Thank you very much.

[1.37 p.m.]

Program 3-Broadcasting, film and multimedia servicesSubprogram 3.1-Australian Broadcasting Corporation

CHAIR —I welcome officers from the ABC. I call for questions.Senator SCHACHT—Minister, do you think it is odd that you cut the money first to the

budget, then hold a review afterwards?Senator Alston—No, we have had this discussion in the chambers, I thought, and made it

clear that it was important to set out the parameters against which Mr Mansfield shouldconduct this review, so he understood the—

Senator SCHACHT—Is it not true that you recommended to cabinet that there be areview—

Senator Alston—Well, we could probably save time by not expecting answers to those sortsof questions.

Senator SCHACHT—Was it your original view—Senator Alston—We can also save time by not dissecting my personal views.Senator SCHACHT—Can you name other occasions in broadcasting or elsewhere in your

portfolio where a review is announced after the cuts have been put into the organisation?Senator Alston—I think you could probably say that the film review was announced

subsequent to the budget and therefore against the background of funding parameters.Senator SCHACHT—This is becoming a feature of your portfolio administration, that you

cut the money first—



Senator Alston—No, we are infinitely flexible.Senator SCHACHT—And then try and get out of it by having a review afterwards.Senator Alston—We have to respond to the mess you left and we have done our best.Senator SCHACHT—Mr Donald McDonald, the chairman that you appointed, has said—Senator Alston—You know who he is.Senator SCHACHT—I have had a very useful meeting with him.Senator Alston—Apologise for that release, did you?Senator SCHACHT—The one about the error of the name?Senator Alston—Yes.Senator SCHACHT—I’ll tell you what, if that is the only trouble I get into in being shadow

minister—Senator Alston—But it is not.Senator SCHACHT—I am happy, because the trouble you are in in your portfolio on policy

is enormous. If an occasional gremlin in a press release is the only place you can have a goat me, fine, I am more than happy to put up with that, because we have got you cold on ABCfunding, we have got you cold on Telstra—

Senator Alston—How is the Web site going?Senator SCHACHT—We have got you cold on media cross-ownership rules—CHAIR —Senator, ask questions, don’t make a statement.Senator SCHACHT—Well, when he starts interjecting—CHAIR —It does not matter. You are here to ask questions, not to make statements. Will

you please ask questions. Thank you.Senator SCHACHT—The chairman of the ABC is on the public record as saying that if

he believes the ABC will be affected by these cuts of $209 million over four years he wouldthen seek to review the level of those cuts. Does he have any chance of convincing you andthe government, in light of either the Mansfield inquiry or his own work as chairman of theABC, that these horrendous cuts can be reviewed in a subsequent budget?

Senator Alston—I think that is a very loose translation of what he actually said. I think hesaid something along the lines of serious concerns rather than simply concerns, butundoubtedly our door is always open. I am more than happy to discuss issues with MrMcDonald and I have done to date and I look forward to doing that in the future.

Senator SCHACHT—Did you say when that first came out that you did not think it likelythat you could convince the ERC to change the view on the funding?

Senator Alston—That is a rough approximation of what I said, but it is pretty much right.Senator SCHACHT—So really when we get down to it Mr McDonald’s chances are not

much better than a snowball’s in hell, I presume.Senator Alston—I am not going to compete with you for metaphors.Senator SCHACHT—Minister, I just want to raise a few issues that come out ofOur ABC,

a Senate report of which you were chair, I understand. It was a recommendation which yousigned as chair:



The committee believes that the actions of government departments and agencies also have the potentialto constitute interference with the program making integrity of the ABC. It is therefore recommendedthat guideline 15.6.7 of the ABC editorial policy should be extended to cover such bodies.

Has this recommendation been implemented?Senator Alston—I cannot recall in what context that was said. Can you remind me about

what the actions of government, departments and agencies were?Senator SCHACHT—It is in your report.Senator Alston—I have no doubt it is there and you are quoting accurately, but it does not

help me to refresh my memory.Senator SCHACHT—I thought, that whatever the context is, the recommendation is self-

explanatory.Senator Alston—It might be to you. I am happy to get back to you on it with a considered

reply.Senator SCHACHT—Are you taking that on notice? Therefore the recommendation has

not been implemented?Senator Alston—I do not understand the context of it. You simply said guideline 15. I do

not know what that is.Senator SCHACHT—There is another similar recommendation:

The ABC Board should amend editorial guideline 15.6.9 so as to spell out the circumstances in whicha program proposal must be rejected.

Has that recommendation been adopted?Senator Alston—Mr Johns probably has a better memory on this than I have, but I thought

that changes were actually made either during the course of the inquiry or shortly afterwards.Mr Johns—We did make some changes as part of our review of editorial policies as a result

of this inquiry.Senator SCHACHT—You did that of your own volition, without direction or advice from

the government itself.Mr Johns—Yes.Senator SCHACHT—On 15.6.7—the first one I asked about—did you make any change

according to that recommendation of your own volition?Mr Johns—I do not have the exact wording.Senator SCHACHT—If you would take it on notice and give us any further advice from

the ABC as well as from the minister.Mr Johns—Yes.Senator SCHACHT—The final paragraph ofOur ABCsaid:

. . . the Committee believes that the basic structure of the ABC is sound and that the organisation isconsiderably stronger and more relevant to the Australian community now than it was ten years ago. TheCommittee is confident that the ABC has the ability to overcome the problems which it has identified,and that the ABC is strongly placed to meet the challenges ahead.

Do you still hold to that view that you signed off on last year?Senator Alston—Yes, indeed. That was very much in the context of co-productions and

the extent to which commercial activities had a tendency to compromise the editorial integrityof the ABC. I think that it was our view that these problems could be overcome. I am not



aware of ongoing problems in that regard. There were certainly some senior changes inmanagement personnel and other changes, both to the editorial guidelines and elsewhere. ButI think we have ensured that those problems do not occur again.

Senator SCHACHT—That is too specific.Senator Alston—I am just saying that is the context in which that inquiry was commis-

sioned.Senator SCHACHT—That is your view about the context, but this next one I want to quote

to you was from 8.46 on page 156. It says:The Committee supports the maintenance of current funding levels in real terms, and would supportfavourable consideration of any application for the provision of additional funds to ensure the viabilityof new joint Parliamentary and ABC approved Charter activities.

Do you still hold to that view?Senator Alston—Yes, that was in the context of the budgetary considerations that were

operating at the time. We were supportive of current levels of funding. That is the policy wetook into the last election following that report. Clearly, events since the election have causedus to take a different approach to a whole range of government funded activities.

Senator SCHACHT—The phrase says:. . . supports the maintenance of current funding levels in real terms. . .

A $209 million cut over four years, no matter how you look at it—upside down, back to front,in the middle of a fog or in the middle of the desert—that is still not maintaining currentfunding levels in real terms, is it?

Senator Alston—As you would well understand ‘current’ applies to the situation that wasoperative at the time of that report. Indeed we said pretty much the same sort of thing in ourelection policy. That was very much focused on the prevailing triennial funding arrangementsand that is why, other than for the reduction in running costs which applied to all governmentdepartments and agencies, we did not cut the ABC’s budget for the current financial year beingpart of the triennium. The cuts that were announced are to operate beyond the triennium, inother words beyond current funding arrangements.

Senator SCHACHT—But after you had clearly won the election, while being interviewedby Mr Middleton from the ABC on election night, you clearly said yes in response to aquestion that the level of the maintenance of funding in real terms was for the term of theparliament.

Senator Alston—I think I said ‘absolutely’ and went on to explain what I meant by all ofthat. If you are seriously suggesting that being sprung by Jim Middleton in the euphoria ofelection night should somehow be regarded as overturning a solemn policy provision whichwas spelt out in writing, taken right through the campaign and clearly understood, you arequite wrong.

Senator SCHACHT—Throughout the full length of the campaign nobody from the LiberalParty had ever been on the record as qualifying to say that it was only for a year. There isno record anywhere.

Senator Alston—We have used the term ‘current funding arrangements’.Senator SCHACHT—And then on election night, even allowing for your euphoria, which

is somewhat understandable—Senator Alston—Well, I think there was a fair bit of background noise.



Senator SCHACHT—So you misheard Mr Middleton?Senator Alston—At the tail end of what Middleton said, I then went on and made it clear

what we were endorsing in our policy commitment. I think that the thrust of it was whetherwe were going to renege on this, the obvious implication being in the same way that Laborhas done over the years. The answer was no, we would maintain our current fundingarrangements.

Senator SCHACHT—When this question was put to you you used the word ‘absolutely’.Do you maintain your commitment to the ABC continuing real funding over the life of theparliament—that is, three years? Your answer was ‘absolutely’. It is not qualified.

Senator Alston—What I am putting to you is that Middleton was putting an utterly novelproposition to me.

Senator SCHACHT—What?Senator Alston—I am just explaining to you. He was asking me, as though somehow this

was already our position, whether we would maintain it. He was, in fact, putting to me a verydifferent form of words to that contained in our election policies.

Senator SCHACHT—Why did you say ‘absolutely’?Senator Alston—I do not know whether that was by accident or design; I am simply telling

you that in that forum, where there was a lot of noise going on—I was listening to as muchas I could of this question—I went on to make it clear that we were going to maintain ourelection commitment, which we did.

Senator SCHACHT—So now the excuse is that there was background noise, you wereeuphoric, which means you had been on the champagne for a while.

Senator Alston—No, I had not even started, I don’t think.Senator SCHACHT—Well, you don’t even have the drunkenness defence. You were sober

then, you may have been hung-over the next morning and all you can say now is that you didnot quite hear or that there was background noise. I would have thought that if there wasbackground noise you would not have said ‘absolutely’; you would have said some other formof words that gave you an out. You would have said, ‘Repeat the question’ or ‘I don’tunderstand’ or ‘I can’t hear you’.

Senator Alston—I thought Middleton was asking me about our existing commitment. I didnot think he was intruding an entirely novel and very different proposition. As a matter ofcaution, I went on to say that we would maintain the election promise that we had made. Icannot explain any more clearly than that.

Senator SCHACHT—You have just confused it, Minister.Senator Alston—We have had this debate many times, as you know.Senator SCHACHT—Why don’t you just say, ‘I got it wrong, I have broken a promise’,

and then move on.Senator Alston—Simply because it ain’t so. I have told you many times that our policy

document was the basis on which we went to the election.Senator SCHACHT—But you didn’t say that to Jim Middleton. It was a clear question.Senator Alston—Jim Middleton is not the arbiter of our policy and he doesn’t have the

ability to unilaterally vary our policy commitment on the basis of a question put in thosecircumstances. The policy is the policy is the policy.



Senator SCHACHT—But you said ‘absolutely’ to his questions; why didn’t you qualifyit?

Senator Alston—I have explained it. You have had your fun.Senator SCHACHT—No, I haven’t had my fun at all. This is an extraordinary position.Senator Alston—Well, if you’re not enjoying it, why are we pursuing it?Senator CARR—Because he is a masochist.Senator SCHACHT—Maybe I am a masochist to get enjoyment out of barbecuing a

minister, because it is all self-inflicted, Senator Alston. You said the word ‘absolutely’; it wasclear. It has been repeated on television. It has been repeated so many times, to yourembarrassment. Every time it has been repeated and used by various current affairs programs,not just the ABC, to any person watching it being replayed it is very clear what it asked. Youranswer is very clear and unequivocal. I just say to you in the end: why don’t you just cut yourlosses and say ‘I got rolled in ERC, I have had to cut the budget, it is a broken promise andI have to wear it’?

Senator Alston—The answer to all that is because it is not so.CHAIR —You were told that there was no deficit in the budget, either, until two days after

the election.Senator Alston—I think Senator Schacht is acutely aware of the chaos that was caused by

the lack of frankness and candour on the part of senior Labor ministers in terms of the budgetoutcomes. Despite all of that, we would not renege on the policy, otherwise we would havehad—

Senator SCHACHT—During the election campaign it was put to Mr Howard, ‘If you findthat the deficit is even bigger than you expect or have been told or anticipate, will you stillstick to all your election promises?’ He said yes. The ABC funding was one of them. Youhave broken it.

Senator Alston—We are here to talk about the ABC. I have said on many occasions thatif we had wanted to renege, we would have cut the current financial year as part of thetriennium. We did not do that; we announced reductions on the basis of the expiry of thetriennium.

Senator SCHACHT—The usual practice on the triennium funding with those agencies thathave it is to have discussions with those agencies first to at least give them a chance to defendthemselves and argue what they think the basis of the triennium should be. They usually askfor a larger amount than any government may wish to give them, but at least there isconsultation and discussion. You proposed this 55 per cent cut or $209 million cut over thenext four years without any consultation with the ABC.

Senator Alston—It is about a 10 per cent cut, actually.Senator SCHACHT—You proposed the cut with no consultation with the agency. Is that

true? That is true, isn’t it? The $55 million cut starting in the next triennium—Senator Alston—It was not on the advice and recommendation of the ABC.Senator SCHACHT—No, but did you even have discussions with them before to say,

‘What do you think the base funding of the triennium should be for the next three years?’ Didyou have any discussion with them and indicate anything to them—like Amanda Vanstonedid that maybe the universities were going to get a 12 per cent cut? Did you give any hint?That is a reasonable question about the appropriation.



Senator Alston—Other than discussions in general terms, I think it is fair to say that theABC was not aware of precisely what we had in mind.

Senator SCHACHT—It was not aware of the sledgehammer that was coming.Senator Alston—I think I did ring Mr Johns shortly before the announcement.Senator SCHACHT—To say, ‘Cheerio, Brian, cop this.’ He had no chance to put his case

or have the ABC put its case to go back to the ERC because this was announced several weeksbefore the budget. He had no opportunity to say, ‘This is still two or three weeks out fromthe budget.’ Did he have any opportunity to come back and say, ‘This is a savage cut,’ whichI think is the phrase he actually used later on, even that day or the next day, and argue,‘Because this is such a savage cut, can we have a chance to review this before the ERCcompletes all its budget discussions for this budget?’ Did you give him that opportunity?

Senator Alston—As I have said, I think I tracked Mr Johns down in Alice Springs. I simplygave him the bones of the imminent announcement. In the circumstances, he probablyresponded better than I might have expected. I can understand that the ABC might have likedan opportunity to have discussed these matters in advance, but it was not to be.

Senator SCHACHT—Mr Johns, did you seek at any stage after that announcement to havethe matter reconsidered by the minister or ERC?

Mr Johns—No, I did not because I regarded it as a settled decision.Senator SCHACHT—When the minister rang you and told you it was $55 million to the

beginning of the next triennium, did that figure surprise you?Mr Johns—Yes.Senator SCHACHT—Did it surprise the board members?Mr Johns—I don’t know.Senator SCHACHT—You can’t speak individually for the board members?Mr Johns—No, I can’t.Senator SCHACHT—Minister, I shall put this to you or to Mr Johns, although I expect

it is more to Mr Johns. I refer to the cuts that have been announced so far, or the changes toprograms. I know some of them were only speculation. Are they all related to what somemight call the cashflow problem that had been identified—I think a shortfall of $13 million—and had to be dealt with by the board and the board accepted that as its responsibility, whichhad nothing to do with government funding as I understand it? Have all of the issues andadjustments to the budget relating to dealing with that $13 million shortfall now been dealtwith and taken account of in readjusting the budget?

Mr Johns—There are three elements of our budget situation and the budget cuts. Firstly,there is the efficiency dividend of two per cent that was imposed upon us for 1996-1997. Thatis $10.8 million. Then there is the prospective cut of $55 million for 1997-1998. That is about10 per cent. You are referring to the $13½ million. There was an underlying element in myview that over the last eight years the ABC has absorbed something like $50 million in realcosts. It has done this by increasing its efficiencies, selling off property and reducing staff bysome 15 per cent, or 1,000. That is the underlying situation.

We are coping with the 1996-1997 budget framework. We had a prospective shortfall of$13½ million. On top of that there is the two per cent dividend, so we are now talking about$24 million. We are working our way through those cuts.



Senator SCHACHT—Are you able to desegregate the impact of the $13½ million fromthe efficiency dividend cuts about the impact on the planning and the operation of the ABC?

Mr Johns—I do not think we can identify it that way.Senator SCHACHT—So you are dealing with the $13½ million plus the efficiency dividend

as a job loss, so to speak, which is a total of $23 million. Is that right?Mr Johns—It is about $24 million.Senator SCHACHT—There is some confusion in the public about the cuts that have been

announced because some have only been speculated about. Have you completed the impactof reductions and changes to budget, staffing levels, program levels, et cetera, to make thesaving of $24½ million?

Mr Johns—I do not know whether I can say we have actually completed it, but we havecertainly addressed them. We have announced program cuts and other cuts in the case oftelevision. Yesterday the board decided on cuts for radio that we are going to be making for1997.

Senator SCHACHT—Will that be announced publicly tomorrow or in the next couple ofdays?

Mr Johns—We can provide details of that.Senator SCHACHT—Can you give it now?Mr Johns—Yes.Senator SCHACHT—Has it been publicly announced?Mr Johns—No, not as yet.Senator SCHACHT—When were you planning to publicly announce the board’s decision

of cuts to radio?Mr Johns—We are advising staff today.Senator SCHACHT—Can you provide us with a copy of the statement or the information?Mr Johns—We have not made a statement yet.Senator SCHACHT—Is a document being prepared, as a result of the board decision, on

the cuts to radio?Mr Johns—Yes.Senator SCHACHT—Can we have it available today or do you want to take it on notice?Mr Johns—We will take it on notice for the moment.Senator SCHACHT—That cut to radio and the board decision is still dealing with the $24½

million?Mr Johns—Yes.Senator SCHACHT—Do you expect any more announcements on cuts to the programs,

et cetera, of the ABC to complete the $24 million reduction?Mr Balding —No, the cuts that will be announced in respect of radio will basically put

radio’s budget on line to live within its allocation.Senator SCHACHT—And that has already occurred for television?Mr Johns—Yes.



Senator SCHACHT—And it has already occurred in the corporate section and RadioAustralia, et cetera—wherever you applied it?

Mr Johns—Yes.Senator SCHACHT—Can you just briefly, as we have a public hearing, give some

indication of what is the cut to the radio budget as a result of the board decision yesterday,because of the impact of the $24 million?

Mr Johns—In general terms, the radio has had to find savings of $10.2 million for 1996-97.Mr Batten —That is made up of part of the $13.5 million, which in radio’s case is about

$6 million.Senator SCHACHT—Is that $6 million of the $13.5 million?Mr Batten —Yes.Senator SCHACHT—And $4.2 million efficiency dividend.Mr Batten —Plus provision for redundancies.Senator SCHACHT—I will come back to the provision for redundancy. First of all, which

programs have obviously been cut, that the consumer of radio programs will notice?Mr Batten —We are planning changes in January of next year which relate to local radio,

which is mainly metropolitan radio. Also there will be some changes to some Radio Nationalprograms. There are some minor changes as well on Classic FM, with regard to automationovernight.

Senator SCHACHT—What do you mean by local metro radio changes?Mr Batten —There are nine metropolitan stations around Australia and 45 or 46 regional

stations. At the moment they are regarded as two separate networks. We are proposing to bringthem closer together and to, at times of the day, share programs, particularly in the afternoon,and exchange more material between them. We are also proposing to make changes to ourshift allocations across the day on metropolitan radio. Whereas at the moment we have twoshifts in the morning—between 8.30 and 10, and 10 and midday—we are proposing to haveone shift on those stations.

Senator SCHACHT—That means that the announcer in Adelaide on 5AN between halfpast eight and 10 presumably will go from half past eight to midday?

Mr Batten —The concept is in framework terms, that there will be one shift. The actualdetail we are still working through as to whether that will be the same person for a start. Wehave made no commitments yet to who will be on air next year—that is an annual processof reviewing line-ups—but there will be a longer shift across the morning, yes.

Senator SCHACHT—How many people do you expect to have to take redundancy becauseof the changes to what you call local metro radio?

Mr Batten —We estimate at this stage in the order of 62 or 63.Senator SCHACHT—Are they spread across Australia?Mr Batten —Yes, they are.Senator SCHACHT—Can you provide us a list of what they are on a state basis?Mr Batten —I do not have that detail with me, but I am happy to get it for you.Senator SCHACHT—Then you mentioned changes to Radio National. What does that

mean?



Mr Batten —In broad terms we are trying to maintain the best of what we have on RadioNational—the range of speciality programs at the moment—but we are bringing someprograms together and in fact extending some timeslots to include material for other programs.That affects about 10 or 11 existing programs on air.

Senator SCHACHT—When you say ‘affect’, does that mean they disappear or they merge?Mr Batten —Some disappear as individual programs. Others are merged into existing

timeslots.Senator SCHACHT—When will you announce which programs disappear?Mr Batten —We will be doing that in this statement, in the next 24 hours or so.Senator SCHACHT—As it is coming out, what are those programs that are going to

disappear?Mr Batten —The program changes on Radio National involve some religious programs, a

drama series, a science program, a couple of art programs and a music program. Programs thatare being incorporated include an education report into life matters. That is the main changein terms of talk programs.

Senator SCHACHT—The drama program is an ABC produced radio drama?Mr Batten —Yes.Senator SCHACHT—So there will be no ABC radio drama?Mr Batten —There will be less ABC radio drama. There will still be some on Sundays.Senator SCHACHT—Has it been reduced by 50, 20 or 30 per cent overall?Mr Batten —It has been reduced by about 50 per cent.Senator SCHACHT—There will be no more science programs on Radio National?Mr Batten —There will be science programs on Radio National.Senator SCHACHT—Has it be reduced by 50 per cent, 20 per cent?Mr Batten —The science reductions are about one hour.Senator SCHACHT—Out of how many?Mr Batten —Out of almost two hours.Senator SCHACHT—So it is about 50 per cent. With regard to the arts program, is that

about a 50 per cent reduction?Mr Batten —No. It is about 15 to 20 per cent.Senator SCHACHT—And the music?Mr Batten —That is an incorporated program. That is one that is being incorporated into

another program.Senator SCHACHT—Into another program?Mr Batten —Yes.Senator SCHACHT—What about the religious programs?Mr Batten —There is a one-hour decrease in over 3½ hours.Senator SCHACHT—Three and a half. It is just under a third?Mr Batten —A quarter.Senator SCHACHT—A quarter?



Mr Batten —Yes.Senator SCHACHT—Twenty-five per cent. How many people will go in redundancies

because of these changes in this area of Radio National?Mr Batten —Again, I do not have the details of specific work areas. We are still working

through that at the moment, Senator. I can provide that to you.Senator SCHACHT—How many are employed presently in Radio National?Mr Batten —I do not have the exact numbers, Senator.Senator SCHACHT—Okay. There were three areas that you mentioned. You said local

metro, Radio National cuts and there was a third area you mentioned in radio. Classical FM,was it?

Mr Batten —It is only an automation issue overnight.Senator SCHACHT—It is automation overnight. Does that mean any reduction somewhere

in Australia of someone—not only an announcer, but also a producer, overheads and so on?Mr Batten —Yes, there are overheads. We have tried, in this case, to minimise the program

impacts by taking as much as we can in infrastructure and other costs.Senator SCHACHT—Okay. Are there any redundancies in the changes to automation?Mr Batten —Again, I do not have the details. We are still working through that at the

moment, Senator, to refine that.CHAIR —Senator Schacht, when you come to a logical conclusion, Senator Kemp has a

couple of questions he would like to ask.Senator CARR—Cuts to Melbourne.Senator KEMP—Absolutely.Senator SCHACHT—I see. Right. You mentioned, Mr Batten, redundancies. How many

redundancies are you expecting as a result of the board’s decision yesterday?Mr Batten —We are estimating, at this stage, Senator, around 150 in the radio division.Senator SCHACHT—Out of those, how many of them are in the radio division now?Mr Batten —Approximately 1,660.Senator SCHACHT—Sixteen hundred and sixty. That is a 10 per cent cut in staff.Mr Batten —Just under.Senator SCHACHT—Just under. What do you anticipate would be the cost of the

redundancy packages?Mr Batten —In round terms, around $50,000.Senator SCHACHT—Each?Mr Batten —Yes.Senator SCHACHT—Is that $7.5 million—the redundancies for 150 at about $50,000?Mr Balding —It is roughly 20 redundancies to the million dollar.Senator SCHACHT—Per million dollars.Mr Balding —If it averages out at $50,000 a redundancy, you get 20 for every $1 million.Senator SCHACHT—That is about $7 million.Mr Balding —Yes.



Senator SCHACHT—Is that roughly right?Mr Balding —Yes.Senator SCHACHT—I am not going to argue. You can take it on notice and give me the

more accurate figure. In your own budget, for those redundancies, how are you going to getthe money to pay for them in view of the fact that there is already a major reduction in thebudget full stop?

Mr Batten —Mr Balding may be able to give you more details on the funding ofredundancies.

Senator SCHACHT—How are you going to fund them?Mr Balding —Senator, we have already had discussions with officers in the Department of

Finance. For 1996-1997, the corporation is confident, from our own cash management pointof view, that we will be able to fund redundancies in 1996-1997. We will need additionalfunding in 1997-1998 for redundancies.

Senator SCHACHT—What are you anticipating will be the total redundancies in 1996-1997, beyond what the radio figures we have got?

Mr Balding —At this stage, it would be in the order of just over 300 as a result of this firstround. The first round was the expressions of voluntary redundancy to address the immediatebudgetary problems.

Senator SCHACHT—That means, this year, about $15 million would be the cost ofredundancies of that 300—

Mr Balding —That is out of the first round.Senator SCHACHT—The first round in 1996-1997?Mr Balding —Yes. There could be further redundancies—Senator SCHACHT—Can I just stop there at the moment?Mr Balding —Sorry?Senator SCHACHT—You will be able to fund the $15 million out of your own internal

resources?Mr Balding —Yes, through our own cash sinking funds at the moment.Senator SCHACHT—Right. You will not have to go to finance and borrow for a period?Mr Balding —Not for this financial year. We will need to borrow in 1997-1998 to replenish

the funds that we will be using this year.Senator SCHACHT—Do you have any idea yet what the redundancies in 1997-98 will be?Mr Balding —No, but I will be looking for additional borrowings for redundancies in 1997-

98 in the order of $25 million to $30 million.Senator SCHACHT—If you multiply that out, that is about 600 redundancies on top of

the 300.Mr Balding —That is the additional funds; I believe I will be—Senator SCHACHT—If you are taking $30 million, under your own figure, that equates

with about 600 redundancies in 1997-98.Mr Balding —It is also dependent upon the extent of savings we can achieve through the

non-employment—



Senator SCHACHT—In that case it means even more redundancies. The figure we arelooking at over this year and next year is a minimum of 900 redundancies. Is that too wildlyan inaccurate figure?

Mr Balding —No, I do not think so.Senator SCHACHT—What percentage is that of the total present staff numbers in the

ABC—900 out of how many?Mr Balding —There are about 5,400 at the moment.Senator SCHACHT—That is getting close to just under 20 per cent. In 1998-99, do you

have any further anticipation of redundancies?Mr Balding —We are anticipating to complete the downsizing before the commencement

of 1998-99.Senator SCHACHT—Before the commencement. So around 900 is the global figure in

this—Mr Balding —For the organisation to live within its projected funding, it needs to be

downsized before the commencement.Senator SCHACHT—The 300 redundancies next year are a result of the $55 million cut

that comes in next year.Mr Balding —Yes.Senator SCHACHT—These figures are all based on the total of $209 million, I have

calculated, lost over the next four years.Mr Balding —Yes. Once you achieve a saving—provided that saving is ongoing—then you

have to—Senator SCHACHT—It is around an 18 to 20 per cent cut in staff. The 150 are from radio

this year—is that right? And it is a total of 300 for the ABC this year?Mr Balding —Yes.Senator SCHACHT—When you get 300 for this year, how many of those are people who

are defined as administration and how many are defined as program makers?Mr Balding —We have not got that information available at the moment.Senator SCHACHT—Will you be able to supply us with that within a reasonable time?Mr Balding —Yes. Senator. Could I just clarify a point, please?Senator SCHACHT—Yes.Mr Balding —The 300 we have mentioned is a result of the first round. There could be

further redundancies this financial year.Senator SCHACHT—There are 300 in the first round in 1996-97.Mr Balding —Yes. There could be a further round of expressions of interest in voluntary

redundancy in 1996-97 which would be addressing the problem projected for 1997-98.Senator SCHACHT—So that would reduce the 600 from the following year.Mr Balding —Yes.Senator SCHACHT—So we are still looking at—Mr Balding —The total is still roughly the same.



Senator SCHACHT—It is still the same. Has the board or the senior management putparticular emphasis on where the redundancies should take place—between programs, or withinprograms, between administration and program makers?

Mr Johns—We are obviously trying to give priority to programs. Take, for example, theradio budget cuts that we have just been talking about this afternoon. The overall savings wementioned are about $10.2 million. The bulk of those savings—approximately $7.3 million—will be achieved from capital management, support, transmission and other non-program areas.We are obviously working hard to minimise the direct impact on programs.

Senator SCHACHT—In all these changes to radio, is there going to be any actual reductionin hours on air irrespective of the quality of the program, the merging of program, whetheror not it is canned music—pre-recorded, automated music? Do we just go off air frommidnight to six in the morning anywhere?

Mr Batten —No, Senator, we are not proposing—Senator SCHACHT—So the transmission hours stay the same.Mr Batten —We are still proposing 24 hour transmission—Senator SCHACHT—While I am on radio, you mentioned that there might be some

alternation in regard to FM radio. Has the radio program Triple J suffered any cuts?Mr Batten —There is a small reduction in their budget, but it has no direct program impact.Senator SCHACHT—Has the reduction led to redundancies?Mr Batten —There is a possibility of some redundancies but in the administrative support

areas.Senator SCHACHT—Five, 10?Mr Batten —We estimate possibly three at this stage.Senator SCHACHT—And all in administrative areas?Mr Batten —Yes.Senator SCHACHT—Will there be any reduction in the hours of Triple J’s transmission?Mr Batten —No.Senator SCHACHT—Will there be any merging of programs on Triple J—as you described

for metropolitan radio, merging of shifts and such things?Mr Batten —No, we are not proposing that at this stage.Senator SCHACHT—Six hundred staff were cut in the following year as a result of the

$55 million cut. Have there been any decisions taken yet, including yesterday’s board meeting,of what programs will have to be cut in 1996-97 to take account of the $55 million?

Mr Johns—No.Senator SCHACHT—These are the cuts that occur for $24 million. Is it reasonable to

extrapolate that the cuts on programs are going to double if you are going to cut an extra $55million?

Mr Johns—What you should take account of is that even before these cuts we were, asdescribed at the ABC, going through a reshaping process. In the course of my first year at theABC I mentioned that the ABC had absorbed shortfalls in funding to the tune of about $50million over the previous seven or eight years. I didn’t expect that we were going to be funded



much more generously in the coming years. So it seemed sensible to address that underlyingproblem and that underlying issue.

We had been addressing that, as I say, even before these cuts. We have been looking at theorganisation from top to bottom, and we are still in the process of that—how we makeprograms; what are our business support units; what are our property portfolios. At the endof the process, we will have gone through the ABC as a corporation, as I say, from top tobottom.

By the end of this year I would expect that, as a result of a whole range of reviews that wehave undertaken, we will be in a clearer position to know what savings may be available tous in the coming years. Again, when we look at the way we are operating, we will see whatsavings and what efficiencies may come to us as a result of that and how these changedoperations, work patterns and so on may help with our programming. So it is hard to quantifywith all those elements there just what the impact is going to be on programming in the waythat you are suggesting because these are all factors.

Senator SCHACHT—Obviously in the next year or so we will come back here to theestimates committee and explain the final outcome. We have supplementary estimates in twoor three weeks time. But that will be an ongoing report which you will be able to give to us.When you talk about a $50 million reduction over the last seven or eight years in one formor another, during that same period I observed the fact that the ABC was, in a number of areas,increasing some of its program range—extension of Triple J, for example, the extension ofFM music and the parliamentary news broadcast station. There was a whole range of newservices that took place, despite the fact that $50 million was carved off over seven or eightyears. Is it because management responded to the changes in staff that they were able to usethe new technology and increase productivity to expand the service?

Mr Johns—As I have already mentioned, in that period staff was reduced by some 15 percent.

Senator SCHACHT—Yes.Mr Johns—So there have obviously been efficiencies all round.Senator SCHACHT—Over the last decade or more since you got triennial funding there

was always an argument. I think there was the 8c a day campaign by one former chiefexecutive—all those sorts of things. During all of that period, has the ABC at any stage takena direct hit—a reduction of $55 million in a year’s budget straight off the top?

Mr Johns—Not that I am aware of.Senator KEMP—I wanted to get a bit of a feeling for how these cuts are distributed

amongst the states. You mentioned 150 cuts in radio. What proportion of those are going tobe in Melbourne?

Mr Batten —I do not have that detail with me today but I can provide it to you.Senator KEMP—I think there is concern. The last time there was a round of cuts in the

ABC, cities other than Sydney took the heavier share of the cuts. I am interested to seewhether that pattern is being repeated.

Mr Batten —We are trying as much as we can to maintain our geographic diversity acrossthe country and to take account of the major centres of activity. So we will certainly take thatinto account to make sure that we do not overload in one particular area.



Senator KEMP—For example, in relation to the recent cuts announced in the TV area—Ithink 29 positions were announced—some 12 of those were in Melbourne. What numbers arein Sydney?

Ms Chapman—I will have to take that on notice and give those to you by tomorrow. Theywere significantly higher in Sydney than they were in other states. Across the division the vastmajority of the 150 redundancies that we anticipate will happen in this voluntary redundancyround will come from Sydney—in the order of over 100. Between 20 and 30 will come fromMelbourne.

Senator KEMP—We are speaking about radio, are we?Ms Chapman—I am speaking about television. So there is an equivalent of about 150

redundancies under this voluntary redundancy round in television, of which the vast majoritywill come from Sydney and less than 10 by far in each of what we call the BAPH states,Brisbane, Adelaide, Perth and Hobart, and between 20 and 30 in Melbourne.

Senator KEMP—So there will be 20 to 30 in Melbourne overall and in Sydney overall?Ms Chapman—I will have to get back to you with the confirmation of those precisely, but

it is over the 100 mark.Senator KEMP—I think one of the themes that Senator Schacht was touching on was that

presumably with these changes in radio programming more will be networked. Would thatbe a reasonable assumption?

Mr Johns—Yes, but we are networking primarily on a state basis if we can and in off-peaklistening times.

Mr Batten —We are at this stage proposing night-time networking with two programs forthe country on metropolitan and regional stations, but we are also looking at techniques—bothtechnology and production—to insert local material into those network programs.

Senator KEMP—The basic material will come from where?Mr Batten —That is not yet decided. It will depend on where the best available people are.Senator KEMP—It may well come from Sydney.Mr Batten —It may. We will be aiming, as I said, to use the best—Senator KEMP—Just to put it on record—I think you would all be aware of this—there

is a lot of aggravation amongst ABC staff in areas other than Sydney that when cuts comeand decisions are made the senior management of ABC is largely based in Sydney and it isthose areas apart from Sydney which bear the cuts. I will give notice that I shall be lookingvery closely at just where these cuts are made and whether we see, once again, people outsideof Sydney being discriminated against.

Senator EGGLESTON—I want to ask some questions about the impact on news andcurrent affairs services and whether there will be any impact on regional news centres. Willthere be any closures of any regional news centres, and what impact will that have onmetropolitan based state news in radio and TV?

Mr Batten —In terms of radio, we are aiming to maintain all of our regional journalists. Weare also aiming to maintain our current schedule of bulletins as far as possible. The currentaffairs programs are also to remain as is on the current radio schedule.

Senator EGGLESTON—Does that mean, for example, that there will not be any increasein radio or television news networked out of Sydney to various states?



Mr Batten —At this stage, we are not proposing that.CHAIR —Senator Kemp has left a question to be put on notice. Is it the wish of the

committee that this question be placed on notice? There being no objection, it is so ordered.[The question appears at the conclusion of today’s proceedings.]Senator SCHACHT—Mr Batten, you have outlined these cuts to ABC radio of some 62

people.Mr Batten —In local radio.Senator SCHACHT—In local radio in the two areas we just went through. Would you

anticipate that next year, when the other 600 have to be found, the staff in various regionalABC radio stations, which total several dozen across Australia, are going to have to take someof the staff redundancies? I take my own state as an example. Mount Gambier has a regionalstation with five people. Would you anticipate that when you are looking at redundancies nextyear—600 people out of the ABC to get it up to nearly 1,000—there are going to be someredundancies in the areas of Mount Gambier with five, Renmark with five, Port Pirie-PortAugusta with seven, Port Lincoln with two, Broken Hill with four—that is administered fromSouth Australia—and state-wide programs with three, a South Australian total of 26.

Mr Batten —I am not anticipating them. I am not planning them, but no area, I wouldsuggest, would be able to be quarantined totally, given the magnitude of the situation we mayface on current estimates of what radio’s budget situation will be in 1997-98.

Senator SCHACHT—Those of us who grew up in the country will know of the traditionalABC radio broadcasts of a morning at 6.30. There is a local announcer with interviews onlocal current events, interviewing someone about the local price of milk or grapes or whateverthey are—all those useful pieces of information for those of us who grew up in the bush. Doyou anticipate that those programs at that regional level will continue as is, despite the cutsnext year?

Mr Batten —We will be doing everything we possibly can to maintain regionalprogramming.

Senator SCHACHT—Does that mean that the cuts will fall disproportionately on programsin the city area and in other areas of the ABC?

Mr Batten —As I have said, no area can be quarantined. If we were to quarantine aparticular area, the cuts would be disproportionate in other areas.

Senator SCHACHT—Has the board or senior management formulated a policy that thesecuts, across the board, are all going to be taken to with a scalpel and cut around?

Mr Johns—We are addressing the 1996-97 cuts and our budgetary situation. That is whatwe are addressing at the moment. As my colleague has said, no area can expect to bequarantined from these cuts or cuts in the future. But we are embarking upon, and we haveembarked upon, what I think it would be fair to say is a vigorous program of examination andre-examination of the functioning of the ABC to put it in the best position we can for thecoming years.

Senator SCHACHT—Since the announcement of the cuts, various politicians, includingmyself, have made announcements about preservation of particular ABC programs. I think TimFischer, as the Deputy Prime Minister, has argued strongly for the preservation of regionalradio stations, not surprisingly, for his constituency. I have asked for the defence of TripleJ, et cetera. Mr Bradford, I think, a Liberal member from Queensland, has said Triple J should



be abolished. Are the comments by all of us politicians, as a job lot, having any influence onwhere the cuts will take place?

Mr Johns—Senator, we take account of comments that are made not only from Canberrabut also by our listeners and our viewers. We will be working as conscientiously as we can.

Senator SCHACHT—So political pressure from Canberra from politicians of any persuasionfor a particular outcome will be successfully ignored by the board and the senior management?

Mr Johns—The ABC is an independent corporation, and we cherish and prize ourindependence, as you well know.

Senator SCHACHT—Yes, I know. I just wanted to get that on the record so that if someof us continue to lobby we will know that you will tell us to go jump in the lake, apparently.

Mr Johns—No, we will not tell you to go jump in the lake—we will listen to you.Senator SCHACHT—I am never quite sure, with the structure of the ABC, whether these

fall into radio or current affairs. Has current affairs and news for radio—which runs the newsservices, journalists and so on, and then has the ABC programs such asAM and PM, etcetera—taken any cuts in the announcement from yesterday?

Mr Batten —The news, sport, current affairs portfolio within radio has a savings target ofapproximately $1.7 million.

Senator SCHACHT—Will that lead to reductions in staff?Mr Batten —Yes, it will, in some areas.Senator SCHACHT—How many do you think it would be?Mr Batten —Again, I do not have the—Senator SCHACHT—Will you take it on notice?Mr Batten —Yes, we are still working through that.Senator SCHACHT—Can you give an indication as to what news and current events

programs in ABC radio look like hitting the fence or being amended accordingly because ofthe—how much was it?

Mr Batten —$1.7 million.Senator SCHACHT—Is that a 20 per cent cut in the budget?Mr Batten —No, the budget for news, sport, CAP is about $36 million.Senator SCHACHT—So that is four or five per cent?Mr Batten —Yes.Senator SCHACHT—Is there any indication yet, from the announcement tomorrow or when

you get the document out, of particular programs that may be affected?Mr Batten —As I mentioned earlier, Senator, there will be very, very little impact on news

and current affairs programs.Senator SCHACHT—Other than some staff reductions?Mr Batten —Yes, and we are also taking through efficiencies within the production behind

the scenes.Senator SCHACHT—When the bigger cuts come next year, will you be able to again fence

off ABC news and current events programs from the impact of those much more draconiancuts?



Mr Johns—I would repeat, Senator, that no area of the ABC will be quarantined, let us say,from the impact of cuts. But we will be doing everything we can to minimise the impact.

Senator SCHACHT—We accept that every area is up for grabs, but you have said that inthe searching for cuts the board or management for next year has not actually dealt with wherethe scalpel will run or tried to set a priority, and that maybe ABC radio news and currentevents—

Mr Johns—No.Senator SCHACHT—is more important and will suffer fewer cuts.Mr Johns—No, that has not happened.Senator SCHACHT—That has not happened yet.Mr Johns—No, it has not happened. The committee may well be very interested that the

board has approved a restructuring of news and current affairs within the ABC. We are tryingto bring, and we will, the two divisions of radio and television—news and current affairswithin those divisions—closer together. This, again, is part of what we are calling the oneABC, to make the ABC a much more effective organisation. We believe that we will improvethe quality and the content of our news and current affairs by bringing in closer links betweenthem.

Senator SCHACHT—Does that mean, for example, that Fran Kelly suddenly appears ontelevision and Jim Middleton is onPM?

Mr Johns—We will wait for the specifics, Senator. At the moment we are bringing themanagement closer together. We are having unified management at the senior levels betweenradio and television news and current affairs. We will see how that works through the process.The great strength of the ABC, in my view, is that it is spread throughout the country.

This is why we are very concerned about cuts into the rural areas, for example. The ABCis a media organisation and its spread and reach through the length and breadth of Australiais a tremendous competitive advantage. You would appreciate that, when we have six networksfor radio and one network for television, those resources that we have spread throughout thecountry—in particular in news and current affairs—tend to focus on radio, not on television.

One of the advantages of this change in news and current affairs bringing the divisions closertogether, having a unified management and operating more effectively together, is that wewill draw the benefits of the spread that we have throughout the country. We will be able tochannel that much more effectively throughout the organisation.

Senator SCHACHT—When you say ‘bring them closer together’, does that mean there willbe only one person in charge of both?

Mr Johns—Yes, it will.Senator SCHACHT—So there is a job gone?Mr Johns—Yes, this is part of the process of flattening management.Senator SCHACHT—In whatever nastier sense.Mr Johns—Reducing it.Senator TIERNEY—The government has done that.Senator SCHACHT—Yes, the government has certainly flattened it. In the good old Aussie

sense, it has been shirt fronted. If you got rid of management by merging divisions, et cetera,



would you still need to make cuts to programs to meet the objective of $209 million over fouryears?

Mr Johns—Yes.Senator SCHACHT—So, no matter how good you are at management—Mr Johns—To programs, but I am not identifying what areas at the moment.Senator SCHACHT—No. Even if you were bloodthirsty and put a broad sword through

the management and got rid of it all, would you still not have enough savings to account for$209 million over four years?

Mr Johns—That is my view, Senator.Senator SCHACHT—Right. Would you be in a position by the latter part of this year to

be able to give us some figures on the balance between the management and the program side?Mr Johns—Yes, I would hope so.Senator SCHACHT—Fine.Senator IAN MACDONALD —I have a question. I was made to come here by outrageously

parochial questions by my colleague Senator Kemp. I just wanted to clarify an answer thatwas given to Senator Eggleston by Mr Batten. Did you say that it was not your intention toin any way reduce the regional news journalism staff in the rearrangements?

Mr Batten —It is not our intention to do so, Senator.That is in this financial year. We havebeen focused on 1996-97 and addressing that budget situation.

Senator IAN MACDONALD —Would you be able to give me on notice—I do not expectyou to have this now—how many ABC radio networks there are in each of the capital citiesand how many commercial, community and other stations? Do you have access to that sortof information?

Mr Batten —I can provide that to you, Senator—not today but on notice.Senator IAN MACDONALD —That would be helpful. I am sure this came up in parliament.

What was the end result about theCountrywideprogram?Mr Batten —There will be no changes in this financial year to the programs produced by

the rural department, which include the rural reports on regional radio in the morning,Countrywideon Radio National and theCountry Houron regional radio.

Senator IAN MACDONALD —I do not often listen to Radio National. What is thedifference between theCountry Hour and Countrywide? Are a lot of the programsinterchangeable?

Mr Batten —Some of the material is exchanged between the two programs but, basically,the Country Houris a state-focused program produced in each state andCountrywidelooksmore at the broader issues across the country on a national basis.

Senator IAN MACDONALD —But Countrywideis only on Radio National.Mr Batten —Yes.Senator IAN MACDONALD —What part of Australia does Radio National not reach in

geographic and listener terms? Do you have that?Mr Batten —Yes. Our figures indicate that Radio National is carried on 248 transmitters

and is available to 96.7 per cent of the Australian population. That compares with regionalradio which is available to 99.6 per cent of the Australian population.



Senator IAN MACDONALD —Is Radio National only FM?Mr Batten —No, it is a mix at the moment of AM and FM. It is carried on a mix of AM

and FM transmitters.Senator IAN MACDONALD —Thank you.Senator EGGLESTON—I noticed in all your answers you put in the qualifier ‘in this

financial year’. What might we expect in the next financial year in terms of local news servicesand such?

Senator SCHACHT—Mayhem and blood!Senator CHILDS—Protest to your local Liberal member.Mr Batten —Senator, as I mentioned earlier, we have been focused on 1996-97. We have

not started any planning at all yet for 1997-98 in terms of direct program areas.Senator EGGLESTON—Thank you.Senator SCHACHT—Mr Johns, you will probably have to take this on notice. Can we get,

as a result of the announcement yesterday of the board’s decision, a list of all the programchanges that the ABC has agreed to as a result of these cuts of $24.5 million, so we have alist that is not mixed up with the speculation around? I understand some people got very upsetin New South Wales with the suggestion that Rugby League would go off radio. I think thatis probably an eminently sensible suggestion.

Mr Johns—Lots of people would not agree with you.Senator SCHACHT—I know, but the great game of Aussie Rules should always have

precedence over Rugby League. Can you give us the information across radio and television,because I am not sure that all of us have—

Mr Johns—You have written off New South Wales apparently.Senator SCHACHT—No, it is just that, if I talk to my colleagues in New South Wales,

they have a different view about the pre-eminence of their game over Aussie Rules. It is a partof the Australian culture. Will you take that on notice?

Mr Johns—We will provide you with that.Senator SCHACHT—Minister, I have a couple of questions regarding a letter that Mr

Stevens sent to Professor Stuart Harris, President of the Remuneration Tribunal, concerningthe tribunal’s review of the salary of the new chair of the ABC to reflect his two- to three-daycommitment to the job. I quote from the letter. It says:The new chair will have significant responsibilities. The chair will be required to refocus the ABC,narrowing the range of its activities to concentrate more clearly on its public service role. The chair willbe required to instil within the corporation the need for higher standards of professionalism and integrityto provide a greater level of public confidence in the ABC’s objectivity.

Can either you or Mr Stevens give us examples of the work you will be doing to refocus theABC, narrowing the range of its activities?

Mr Stevens—Senator, if I can put it in context, the reference to that was in regard to anumber of the commercial activities of the ABC which had, over the last few years, provedto be unsuccessful.

Senator SCHACHT—Could you table the letter?Senator Alston—I thought you were reading from it.Senator SCHACHT—No, I have a quote from it. It may well be a public document.



Mr Stevens—I think that is right.Senator SCHACHT—So are you saying that that phrase is referring to the commercial

activities?Mr Stevens—The reference was very much to the commercial activities, in my

understanding of it.Senator SCHACHT—I stand to be corrected. I will look at the letter and I will come back

to you in supplementaries if I have any further queries about that.Mr Stevens—Certainly.Senator SCHACHT—By:

. . . to instil within the corporation the need for higher standards of professionalism and integrity . . .

What do you mean, Mr Stevens?Mr Stevens—Senator, the letter referred to some of the outcomes of the Palmer inquiry and

some of the concerns expressed following that.Senator SCHACHT—Before you wrote to the Remuneration Tribunal to increase the salary

for the extra days of work of the chair, had the department, or you, Minister, taken up thoseissues—your concerns about professionalism and integrity in this limited area that Mr Stevenshas now narrowed—direct with the board of the ABC?

Senator Alston—Obviously the Senate inquiry canvassed these matters at great length. Ithink I subsequently attended an ABC board meeting where we discussed a number of therecommendations. Since that time there have been various discussions with ProfessorArmstrong and Mr Johns.

Senator SCHACHT—I would be wrong to in any way infer that the new chairman’s roleis in any way to check individual journalists, reporters or presenters and run a thumb overthem about their individual performance to make sure that the need for higher standards ofprofessional integrity does not actually affect the current events, news division, et cetera.

Mr Stevens—Sorry, Senator. No, not at all. It would not be his role. What we are referringto is a very generic issue which I explained earlier and which is not designed to do what youwere suggesting.

Senator SCHACHT—The increase of the chairman’s role: I think in the old determinationone day a week was set aside and now it is a three-day commitment. Apart from thosematters—now that you have defined them and narrowed them down—presumably the chairmanwill probably fix those in the first couple of months. What other areas of activity will thechairman be doing in the three days a week?

Senator Alston—I do not think you can foresee the precise workload of the ABC, but quiteclearly there is a lot on the board’s plate. Whilst we do not—and I am sure Mr MacDonalddoes not—want to cut costs of the work of the managing director, I think the board itself willhave a very busy schedule in the months and years ahead. We therefore want a chairman whois going to be able to immerse himself fully in those issues rather than simply taking anoccasional interest.

Senator SCHACHT—Under the act it is the prerogative of the board to determine themanagement of the ABC and to give directions to the chief executive about his or herperformance, as I understand it?

Mr Stevens—I think that is right, yes.



Senator SCHACHT—Does the board have any say in the role of this chairman and thework he does for three days a week?

Senator Alston—I suppose other than discussions around the board table about therespective responsibilities, workloads and perhaps particular areas of interest, you do notnormally have a chairman’s responsibilities being defined by the board.

Senator SCHACHT—But if the board decided by majority vote—whatever else it may sayabout the inner workings of the board—that they would say to the chairperson, ‘Though youare working three days on this particular area, we do not think that is your function, that isthe chief executive’s function,’ that would be a reasonable decision by the board, would it?

Senator Alston—I think all of that is utterly hypothetical. I am not privy to the manner inwhich this or previous boards have operated, but I would have thought the intention wouldoverwhelmingly be to work cooperatively and to discuss issues, both formally and informally,in such a way that those sorts of decisions and votes would simply not arise.

Senator SCHACHT—So you have not been involved yourself, Minister, in giving anyindication to the board, the chair or the chief executive of how their roles should bedetermined, what the chairman does three days a week and what the chief executive does 7½days a week?

Senator Alston—Mr Johns and Mr McDonald no doubt meet on a regular basis. From allI have read publicly and from what I have heard privately, I do not think there is any difficultyin their each pursuing their own areas of responsibility. We were simply indicating that wewanted the chairman to be more hands on, but not at the expense of existing officers and thosewith particular responsibilities—simply to spend more time on the job than had previouslybeen the case.

Senator SCHACHT—Mr Stevens, as the right hand of the minister, you have not beeninvolved in any discussions to differentiate the workload or suggest the role of the chairpersonvis-a-vis the chief executive, vis-a-vis the board?

Mr Stevens—No, Senator.Senator SCHACHT—The only thing we have on your record is this letter which was a

different issue—Mr Stevens—It was a very different issue about remuneration.Senator SCHACHT—Mr Johns, have you and the chairman worked out a basis of what

he will be doing that in no way conflicts with your chief executive role?Mr Johns—No. We are working our way through our relationship. There has been no

suggestion that we sit down and discuss it and say, ‘You will do this and I will do that.’ Tothis point it has been a normal chairman-managing director relationship, in my experience.

Senator SCHACHT—Have you noticed that, because the chairman—the RemunerationTribunal has approved it—is being paid for three days work per week, he is doing anythingthat a previous chairperson was not doing?

Mr Johns—I have not quantified it in those terms. On the matter of time, in my experiencewith chairmen, it is very flexible and I have never really sat down and toted up the hours andthe minutes. That is not the sort of relationship I think a chief executive has with the chairman,or with members of the board for that matter.

Senator SCHACHT—One of the reasons I raise it is that there have been in the corporatesector occasionally from time to time episodes where, for whatever reason, the shareholders,



the board, have made the chairman an executive chair as well as a chief executive which hasusually meant, at some later stage—usually sooner rather than later—some almighty brawlhas broken out about who is doing what and who is running the company. That is not the casehere—Mr McDonald is doing his three days a week—but it is a halfway step. It could beperceived as a halfway step to a full-time executive chairperson, but you are so far confidentthat your role in no way has been compromised by the appointment of a three days a weekchairperson?

Mr Johns—Certainly, Senator.Senator CARR—I go back to the reportOur ABC. Can you indicate to us what

recommendations have been implemented from this report?Senator Alston—I cannot do it off the top of my head, but if you would like me to get back

to you I will.Senator CARR—Yes. Can you identify in this budget what recommendations were

implemented and what recommendations were picked up prior to the change of government?I understand some were.

Senator Alston—Yes.Senator CARR—Just following on with some of these questions regarding the chair of the

ABC: Mr McDonald claimed last week that the ABC must provide a comprehensive servicecatering for all Australian needs and tastes, which simply complements what others do. Yetone of the terms of reference of the Mansfield review is the government’s desire for a morefocused role for the ABC which strengthens its effectiveness in key areas. What are the keyareas, Minister, that you believe the ABC should focus upon?

Senator Alston—That is a matter for the inquiry.Senator CARR—So you have no sense in which we can establish the key areas?Senator Alston—I think if you go on you will see that the terms of reference do refer to

news and current affairs and rural services. There may be mention of children’s television—Iam not sure. But, at the end of the day, I think part of the function of the Mansfield inquiryis to identify key areas. It is not up to us to define them in advance, but we have given someindication of our priorities. It is not meant to be definitive.

Senator CARR—It is not meant to be definitive. Before your appointment of Mr McDonaldto the position of chair of the ABC, did you have any discussions with him about the futurerole of the national broadcaster?

Senator Alston—Yes, I certainly had discussions with him about the ABC.Senator SCHACHT—Was it he or you who suggested he should work three days a week?Senator Alston—I cannot remember how it came about. The process of osmosis I suppose.Senator SCHACHT—There always was strange osmosis in the Liberal Party.Senator Alston—Better than the brutality of the factions.Senator SCHACHT—At least we know where we stand.Senator Alston—If you are still standing.Senator SCHACHT—It is always much cleaner. Was it the Prime Minister’s idea—because

he is a close friend of the Prime Minister, which is openly acknowledged—that he work threedays a week?

Senator Alston—As I say, there were discussions.



Senator SCHACHT—Did you ask him to resign from the job of general manager of theAustralian Opera to take the job or did he volunteer that?

Senator Alston—I think he volunteered.Senator CARR—What was the rationale for the decision not to have public hearings as part

of the Mansfield inquiry process?Senator Alston—We did not specify the precise manner in which the inquiry should be

conducted. I think the concern was to ensure that the public had an opportunity to put its viewsto Mr Mansfield. He subsequently made it plain that he did not think the idea of having forumsin which everyone could protest their views very loudly was likely to lead to the mostproductive outcomes. He preferred an approach which involved direct discussions with allstakeholders. As I understand it, he is in the process of doing that on a one-on-one basis. Ithink he takes the view that that is ultimately likely to enable people to express views morefrankly or to have them explored more fully than perhaps the formality of a public hearing.

Senator CARR—To be clear, you are saying that it was his initiative not to have publichearings.

Senator Alston—We left it to him to formulate the best way in which the views of thepublic could be properly taken into account.

Senator CARR—How many letters has your office received in relation to the ABC budgetcuts?

Senator Alston—Most of them would have gone through the department. I cannot recallexactly, but I think it was in the vicinity of 6,000.

Senator CARR—What proportion of those letters are in fact opposed to the cuts?Senator Alston—I have an idea that a fair number of them followed a fairly similar pattern.Senator CARR—How many supported the cuts?Senator Alston—I cannot recall offhand, but I think you know the way these things work.

Normally the campaign is run on a particular direction.Senator CARR—Do we have an answer to that?Mr Stevens—About five per cent.Senator CARR—Five per cent supported cuts to the ABC.Senator Alston—I have certainly had individual correspondence from people about the

ABC. As you are probably aware, a lot of the letters I get from the general public concernallegations of bias or people taking offence at various programming decisions of the ABC.I know, in the course of those, it is not unusual for people to comment favourably on the—

Senator SCHACHT—Are you suggesting that a lot of those letters were pro forma—thatis, where you sign your name down the bottom of a letter of protest?

Mr Stevens—About 2,000 would fit that description.Senator SCHACHT—Of pro forma? So 4,000 aren’t?Mr Stevens—Yes.Senator CARR—That is a significant number of letters on any particular matter, isn’t it?Senator Alston—Out of 18 million people?Senator CARR—In terms of the number of people who actually write to us, to get 4,000

individual letters is a significant number of Australians.



Senator Alston—I do not know. When I was in the overseas aid field about 15 years ago,I think we managed to generate about 8,000 or 10,000 letters.

Senator SCHACHT—In what area?Senator Alston—Overseas aid.Senator CARR—When you ran campaigns like this.Senator Alston—Yes, that is right, against the Fraser government, as I recall.Senator CARR—That is why you have done so well.Mr Stevens—Senator, can I correct the figure I gave you? There are 6,000 non-pro-forma

letters, so the 2,000 should be added to that list.Senator CARR—So there are 8,000 odd. I see. Mr Johns, how many letters has the ABC

received regarding budget cuts?Mr Johns—I cannot tell you offhand, but I do know that when you look at rallies around

the country there has been very strong public support expressed for the ABC.Senator SCHACHT—Have you kept a running tally of the rough idea of numbers turning

up at these rallies, public meetings, of which there have been an astonishingly large numberby any measure. As an old anti-Vietnam campaigner from the 1960s, I wish we could havecracked some of these sizes.

Mr Johns—Just in response to your earlier question, we have had some 5,000 telephonecalls over the last three months supporting the ABC. I have not kept a running tally of thoseattending the rallies, but it has been very strong.

Senator CARR—Could you give us an indication of how many letters you have receivedfrom people on this subject?

Mr Johns—Yes, I will take that on notice.Senator CARR—Mr Costello indicated that he thought—and this is according to the

Weekend Australianof 22 June—that there was a lack of accountability as to how the ABCspends taxpayers’ money. He was, of course, singling out some of the criticism made in theaudit commission report. Mr Johns, how do you respond to the charge by Mr Costello thatthere is a lack of accountability?

Mr Johns—Replying to that in general terms, I think you would realise that our presencehere today is one measure of the ABC’s accountability. I think it would be very difficult tothink of another organisation that has to exercise such a degree of accountability. We areaccountable to parliament, parliamentary committees, a whole range of committees. We haveto deal with the full extent of the departmental structures within the Commonwealth. So I thinkwe are a very accountable organisation.

Senator CARR—There seems to be suggestions by the audit commission that you are notaccountable. Have there been growing criticisms of the ABC in recent times that you havefailed to be accountable?

Mr Johns—I am not aware of that, Senator.Senator CARR—I just recall, in terms of the ABC committee, there were something like

57 inquiries into the ABC in recent years. Would I be within range with those sorts of figures?How many inquiries have there been into the ABC in recent years—parliamentary inquiries,various other government inquiries?



Mr Johns—I would have to take that on notice. I do not get the feeling that there has beenany shortage of inquiries.

Senator CARR—That is certainly the case. It just seems to be one of the most inquiredinto bodies, next to ATSIC perhaps.

Senator SCHACHT—In recent months, the Prime Minister at one stage said that the ABCseems to give only one sort of view and is too politically correct. Have you received manypublic complaints on those sorts of issues—that you are too politically correct and only onepoint of view is heard on the ABC?

Mr Johns—No. I think an indication of the standing of the ABC, which would encompassthis issue as well, by one recent survey, is that 85 per cent of Australians believed that theABC is the most important cultural organisation in the country. So I think we are in goodpublic standing on that issue.

Senator SCHACHT—If someone has a complaint about bias, et cetera, they obviously writeto you. Is there an independent mechanism for assessing those complaints?

Mr Johns—Yes, there is. First of all we have the charter responsibilities for impartiality.We have detailed editorial policies; we have a code of practice; and we have an independentbody, a panel, that can review complaints if they do not think they have been dealt withsatisfactorily by the ABC. Again, the Australian Broadcasting Authority can deal withcomplaints from anyone who feels that they were not dealt with satisfactorily provided thatthat complaint was covered by our code of practice. So I think we have a very extensive andvery good range of mechanisms for dealing with complaints.

Senator SCHACHT—Over the last 12 months has there been any upsurge in complaintsabout political bias from any angle in the ABC or are there just the steady usual complaintsthat an organisation of your size would normally have to put up with in my view?

Mr Johns—Not that I am aware of. Like most media organisations, there is a naturaladversarial stance between a media organisation and politicians.

Senator SCHACHT—We can understand politicians complaining. I am more interested inthe general public. Is there consistently an upsurge from the general public?

Mr Johns—No, Senator.Senator SCHACHT—Ms Chapman, what is the budget for 1996-97 for TV drama?Ms Chapman—It is just on $30 million.Senator SCHACHT—What was it last year?Ms Chapman—Slightly over.Senator SCHACHT—So there is a slight drop. Is that the efficiency dividend impact?Ms Chapman—The result of the impact of the efficiency dividend, or the $13.5 million,

which is the efficiency dividend in what we were carrying over from earlier years, was a cutto the drama budget of $900,000, which equates to about five hours of programming.

Senator SCHACHT—For a cut of only a million or something?Ms Chapman—Yes.Senator SCHACHT—Is that five hours for the year?Ms Chapman—Yes, that is right.



Senator SCHACHT—Have you any preparatory thoughts about next year, when the $55million cut comes into effect, of an impact on the TV drama budget in view of the fact, Isuspect, that many people might think it is the easy option for savings to cut the productionof TV drama and buy off the shelf from somewhere else and put hours to air, even if it reducesAustralian content levels? Have you had any thoughts about what that figure could be nextyear?

Ms Chapman—Just as we have not quarantined any area of programming in our minds fromthe $55 million cut or what percentage of that relates to television, neither have we at thisstage singled out any particular area of programming which we think will come in forparticular pain as a result of those cuts. It is very clear to us that all areas will be affected.

Senator SCHACHT—So it is not final, but we could expect a further reduction in hoursfor TV drama?

Ms Chapman—Yes, we can.Senator SCHACHT—Somebody made a comment the other day that that would mean that

the commercial television stations in Australia, irrespective of the quality of the productions,would have more Australian content on air.

Ms Chapman—The commercial television networks already have more Australian contenton air.

Senator SCHACHT—So the gap will grow?Ms Chapman—In television drama, yes, the gap will grow.Senator SCHACHT—It has been speculated that, irrespective of the cuts, in the structure

of drama, instead of keeping the number of in-house productions, the TV drama would bebasically a small cell of people overseeing and putting it out to various production companiesand houses around Australia, who now have an international reputation, as we know, and youare doing that already. Are these cuts going to force you to reduce the in-house capacity?

Ms Chapman—Yes, they are. At the moment the mix of our drama production is acombination of: in-house productions which are financed entirely by the ABC and producedentirely in-house; co-productions which are financed both by the ABC and other organisations,such as the Film Finance Corporation, and involve contribution of in-house facilities andservices to these co-productions; and programs that are commissioned from independentproducers and involve no production by the ABC facilities and resources at all.

It is likely that that mix will change and there will be more commissioned programs fromindependent producers outside, but we are still in the process of establishing what that mixis likely to be. It is true that if we are to increase the mix of programs commissioned fromoutside the ABC—from the independent sector—drama is more likely to be affected by thatthan other specialist areas in which there is very little infrastructure outside the ABC to beable to provide those programs.

Senator SCHACHT—What are the total staff numbers in TV drama now and running thedivision or branch?

Ms Chapman—I will have to get back to you on that, Senator.Senator SCHACHT—When you come back to us could you separate out those who are

in-house producers, like the film editors, studio sound people, et cetera, from those whose jobswill obviously be at risk if you went right outside, with outside—

Ms Chapman—Yes, I can do that.



Senator SCHACHT—I am not sure I have the right nomenclature on that. Secondly, is therea risk that if you did go too much outside you lose an ongoing skill—an intellectual skill—thatis a valuable skill that ought to be maintained? I will not say it is in the national interest; itis not like the defence department, but in some sense it is probably even better than thedefence department. There is an institutional skill that is an advantage. Even though you aregoing out, those people know how to give direction and they have the sort of productionneeded to meet the development of Australian drama.

Ms Chapman—Yes, this is a risk that we are addressing right across the board, not onlyin drama—that is, the importance of maintaining a critical mass of production in the ABC.It is a debate which is going on at the moment among the creative community in televisionabout how much the ABC can afford to pass outside. There are varying views on that ofcourse.

Senator SCHACHT—I would presume that over the years a lot of people are now out inthose private production houses, et cetera, who at some stage or other have learnt their skillinside the ABC.

Ms Chapman—There are a great many people in the feature film industry as well as thetelevision industry, including Dean Semler and Jan Chapman, who started out in—

Senator SCHACHT—Dean Semler started out at Renmark television in South Australia.Senator CARR—Don’t hold that against him.Senator SCHACHT—No, it is a great achievement for South Australia.Ms Chapman—It is indeed. The training and development role played by the ABC over

the years has been a very vital part of the health of the industry—both the television and thefilm industry.

Senator SCHACHT—The size of the cut is $55 million—$20 million in excess of yourtotal TV drama budget. That really brings the size of the cut home when most of the dramayou have been producing in recent times may well be controversial but no-one has argued thatit has not been of particular interest and attracts a lot of attention and, in the end, a lot of goodwill, to Australia.

Senator CARR—On 18 September theAustralianreported that the federal government ispursuing the tendering out of Australia Television. I understand the minister may haveconfirmed that he has written to the board concerning ATV. I also understand that MrMcDonald has made public that he does not want to see ATV sold without looking atalternatives. Minister, what discussions have you had with the ABC board, and what decisionshave been made in relation to the selling of ATV?

Senator Alston—I have not had discussions with the board, but it is correct that I havewritten to Mr McDonald outlining the decisions that were taken in relation to ATV and werecontained in my press release of 16 July. I am not aware that I have had a formal responseyet. I have had an interim response from Mr McDonald.

Senator CARR—What is the nature of that response, Minister?Senator Alston—I cannot remember, and I am not sure whether it is desirable to canvass

that in public at this stage.Senator CARR—Have there been discussions concerning alternatives to the sale of ATV,

Mr Johns?



Mr Johns—Before we were notified of the government’s decision in relation to ATV, wewere looking at how it was operating and the relationship it had with, for example, RadioAustralia. We were looking at the ABC’s activities in international broadcasting. We have beenin the process of doing that, and we agree with the suggestion by the government that weshould bring those examinations of how ATV should operate to conclusion by the end of thisfinancial year.

Senator CARR—Mr Johns, did the previous government agree to extend additional moneysto the ABC for the funding of ATV?

Mr Johns—It did—$18.6 million over three years, beginning in July this year.Senator SCHACHT—Is that ending in July this year?Mr Johns—No, beginning in July this year.Senator CARR—And is that part of the existing budgetary arrangements? Has that money

been maintained?Mr Johns—Yes.Senator CARR—So the $18.6 million has been extended and you can expect it to be

extended?Mr Johns—Yes.Senator CARR—That is correct?Mr Johns—Yes.Senator CARR—Yet there are now discussions about selling ATV.Mr Balding —The $6.2 million has been appropriated. It will be part of the appropriation

for this financial year, and its continuation is already flagged in the forward estimates.Senator SCHACHT—At $6 million a year?Mr Balding —At $6.2 million a year.Senator SCHACHT—For another three years.Senator CARR—That essentially covers the shortfall between what revenue—Mr Balding —Yes.Senator CARR—I recall that, when the matter was put before the Senate inquiry, it was

that figure. If I recall correctly, the minority report recommended paying that amount ofmoney.

Mr Johns—Yes.Senator CARR—So it does cover your shortfall. So there is no—Mr Johns—It is premised on the idea that we would get $1 million a year as well in

sponsorship.Senator SCHACHT—Which has not turned up yet.Mr Johns—It has. It has turned up.Senator SCHACHT—It has?Mr Johns—Yes.Senator CARR—You have met your commercial targets for advertising?Mr Johns—Yes.



Senator CARR—Has that $1 million come from other government departments oressentially private corporations?

Mr Balding —It is a mixture.Senator SCHACHT—Fifty-fifty?Mr Balding —No. I will have to take that on notice.Senator CARR—So what is the rationale for selling ATV if there is no shortfall? There

is no shortfall that is being met, and there is no additional cost to the ABC.Mr Johns—To whom are you directing this question?Senator CARR—Perhaps the minister could answer the question.Senator Alston—It probably is a matter for government. As you would be aware, ATV has

already been subject to several inquiries. I think Mr Hutchinson conducted an inquiry intoATV several years ago, and there have been ongoing difficulties in terms of sponsorship. Wetook the view that it may well be that there are difficulties inherent in sponsorship becauseof the difficulty of identifying the actual audience that is watching. The research generallycannot identify people because it is an open service—it is not a subscription service. Therefore,we thought it was worth while to at least explore the possibilities of delivering the service ina more efficient way, which would obviously include the possibility of tendering the operationof the service to the commercial sector. We have asked the ABC for its response to thatproposal.

Senator CARR—In the consideration of these matters before the Senate committee,paragraph 315 clearly indicates that during that committee process, Minister, as chair of thatcommittee, you actually recommended that this ATV shortfall be funded from the budget.What has led to the change in your position?

Senator Alston—We have funded it from the budget.Senator CARR—Yes, but you are now saying it should be sold.Senator Alston—ATV has had a hand-to-mouth existence for some years. The representa-

tions that were made, even to Senate committees under the reign of David Hill, I have to say,in hindsight, I do not think really disclosed the true picture. We certainly were not aware ofthe magnitude of the shortfall that seemed to have become chronic which led to the Hutchinsoninquiry. It is against that background and our understanding of continuing difficulties in raisinga sufficient level of sponsorship that we thought it sensible to explore all of the other options.

Senator CARR—The inquiry indicated a shortfall of $18.6 million, and that is the amountof money that has been budgeted. Now you are saying that was not the true figure.

Senator Alston—I do not think $18.6 million is in that report.Senator CARR—It is not? It is clearly the figure that I recall. In the minority report I think

we used that figure, didn’t we?Senator Alston—That was the figure the government announced in about November last

year.Senator CARR—Yes, following this report.Senator Alston—In time it was following it but not in relation to that report and not arising

out of it. I think the ABC itself put in a request for a higher sum which exempted them fromsponsorship altogether, and your government decided it should maintain the requirement forsponsorship and gave them the $18.6 million which we had matched.



Senator SCHACHT—Minister, what do you see is the difference between what RadioAustralia provides and what ATV provides? Obviously they are different broadcastingmediums.

Senator Alston—Yes. I did not think you wanted me to make the obvious comment. I thinknews and current affairs would be the core elements of ATV’s programming. I have alwaysbeen generally supportive of the proposition that we are seen as an honest broker in the regionand that our news and current affairs is regarded as fairly impartial on the international stage.Therefore, that is something that really should be supported, if at all possible.

Beyond that, I suppose I am agnostic. You really need to know what it is that appeals tolocal viewing audiences. I do not think it is sufficient to say that expatriates and diplomatslike to watch the service, whether it is repeats of AFL football orThe Investigatorsor anythingelse, which sometimes poses cultural difficulties. I think you really need to do an analysis ofthe audience.

Senator SCHACHT—I was trying to find out what we pay to run Radio Australia out ofthe budget each year? Is it $13 million?

Mr Stevens—In addition to that there are significant transmission costs which are metthrough the NTA in addition to the programming costs.

Senator SCHACHT—Mr Stevens, from your excellent memory, what would that be addedon?

Mr Stevens—I could be misleading you if I tried to recall that figure. It could be $10million.

Senator SCHACHT—On top of the $13 million?Mr Stevens—On top.Senator SCHACHT—So it is $23 million to run Radio Australia, which we take as a

straight budget cost and do not expect any revenue back. ATV is running, on average, at whatat the moment?

Mr Balding —I have not got those with me. The gross expenditure would be in the orderof $7.2 million.

Senator SCHACHT—Of which we get $1 million from sponsorship.Mr Balding —Yes.Senator SCHACHT—Minister, we are quite happy to accept a running cost of $23 million

for Radio Australia. No-one argues over that. We think it is in our national interest to getmessages out, in a whole range of languages, promoting Australia and to deliver an honestnews service that people respect and has probably the same status as some of the BBCprograms. Yet we are always arguing over ATV running at $7 million—at about one-third ofthe cost—of which $1 million is from sponsorship, that this is a cost and is not a successfulprogram. Does the government have any view that ATV should be treated like Radio Australiais in relation to its budget, that it is just as much in our national interest to fund an ATVservice as Radio Australia?

Senator Alston—I think Mr Johns indicated that there could well be some overlap in manyrespects between ATV and Radio Australia. I do not know to what extent you can have audiosidebands on the international television service, but the brutal truth is that the funds are notthere to simply call up another $10 million or $15 million because you would like to haveRadio Australia on video running in tandem. You may be right in the scheme of things: if we



were prospering, if the economy was much healthier than it is and we did not have a budgetdeficit, maybe there would be a case worth examining. But that is not the situation.

Senator SCHACHT—In the argument that took place several years ago for theestablishment of ATV, I think that it was seen that it would be a parallel service to RadioAustralia.

Senator Alston—I do not know—you were probably more aware of this than I was—butI thought that the figure that was ultimately made available, which was about $5.4 million,was a compromise figure.

Senator SCHACHT—I am not talking about the figure itself. Let us not argue about thefigure.

Senator Alston—But there are those who say that you should never have embarked on itwith a sum as modest as that. You either went in boots and all and gave it a very significantsum of money, or you really did not go down that track at all. The compromise figure wasalways said to be sufficient and that you would get sponsorship in the relatively short term,I think within a five-year period. I cannot remember what it was. I thought it would be self-funding by that time. In any event, the formal aspirations have not been realised, and it stillcontinues to pose funding difficulties. That is why we want to explore other possibilities.

CHAIR —I draw the committee’s attention to the fact that it is now 3.30 p.m. and SenatorAlston has indicated that he will be leaving. You can put the rest of the questions on notice.

Senator SCHACHT—Chair, we agreed several days ago that we would go to 4.30 p.m.with the minister. The minister has knocked an hour off, with no consultation with us. I stillhave some questions, which I am just in the middle of asking, and some more in some otherareas which relate to policy issues. If the minister is not here, there is no way Mr Stevens isgoing to chance his arm in answering them—I do not blame him, and no-one from the ABCshould answer them. So it is rather unfortunate that we have not completed, as agreed, in thetime.

Today and last night I put heaps of questions on notice to make sure that the deadline of4.30 p.m. would be met. Unilaterally, it has been reduced to 3.30 p.m., and I still have a rangeof questions—I do not know whether other senators do—to the minister. So I would suggestthat we adjourn now and have a look at a time to finish off the ABC on another occasion.

CHAIR —I have looked at some time possibilities, Senator Schacht, and it is not going tobe easy to meet the time constraints of reporting to the Senate. Maybe we should have thoughtabout this the other day when we had the ABC here.

Senator SCHACHT—We did.CHAIR —Hang on, we had the ABC here—Senator SCHACHT—Hang on, we agreed to 4.30 p.m., and this morning it was sprung

on us that an hour would be chopped off with the minister.Senator Alston—The reason I raised it this morning rather than after lunch, or even now,

was to give you ample warning. As I understood it, you accepted.Senator SCHACHT—No, we did not; we just noted.Senator Alston—You might have noted, but I am saying that there were no protests about

that time frame.Senator CARR—Oh!Senator Alston—You were not here, Senator Carr, so you would not know.



Senator CARR—I was here.Senator Alston—I made it clear—Senator SCHACHT—I made it clear that it was unacceptable.CHAIR —Senator Schacht, let the minister speak.Senator Alston—I made it clear that I would have to get a flight that would require me to

leave at 3.30 p.m. and that the committee would continue to 4.30 p.m.Senator CARR—No, no, no.Senator SCHACHT—No, we made it clear—Senator Alston—As I understood it, you were prepared to accept that.Senator SCHACHT—We made it clear that this practice that has suddenly developed in

the last week of ministers leaving for an hour and an hour and a half was not acceptable.Senator Alston—We have had two hours available for policy questions.Senator SCHACHT—For a major policy area where the government has made significant

changes to an agency’s appropriation which have had a dramatic effect in the community, Iwould have thought that it was not unreasonable—I thought we were more than generous—tosuggest 4.30 p.m. rather than to sit on.

Senator CARR—These estimates are not concluded. It is as simple as that.CHAIR —I suggest you put the questions on notice.Senator SCHACHT—The estimates are not concluded; unless you have an opposition

member present, they have not concluded.CHAIR —You are present; I declare the estimates concluded.

Committee adjourned at 3.34 p.m.

QUESTIONS ON NOTICESenator Brown to the Department of the Environment, Sport and Territories—Subprogram 1.4

How many blue whales exist? Who did the assessment upon which this figure is given and how reliableis the figure?

What is Australia doing to actually benefit or enhance the blue whale’s survival?What benefit does removing krill from Antarctic waters give, if any, to the ecosystem’s strength in

offering blue whale’s a chance of survival?Subprogram 1.4—EnvironmentANCA—Endangered Species program—Blue Whale

Can the Minister give an indication of how many blue whales remain in existence?Can the Minister give details of recent surveys carried out into numbers of blue whales (as referred

to in questions during the discussion of program 2, Antarctic)?What impact is the extraction and exploitation of krill in Antarctic waters having on numbers of the

blue whale?What is the Australian Government’s policy on exploitation of krill?How is this policy reconciled with the high profile taken by the Australian Government on whaling?

Forests—



Subprogram 1.1Could the minister provide a breakdown by program of the $48 million allocated over the next three

years to complete the RFA process on forests?Could the minister provide a region by region breakdown of estimated DEST expenditure on the RFA

process?Given overall cuts to the environment budget of approximately 13 per cent, which environment

programs were sacrificed and by how much, to enable this additional expenditure on forests?What guarantee does the Australian community have that this money will increase the level of

protection afforded our old growth, wilderness and High Conservation Value forests?Given that the RFA process has been pre-empted by the government’s recent woodchip decision how

can the government hope to convince the Australian public that this unprecedented level of publicexpenditure on a forest process is anything other than an expensive and elaborate public relations exercise?

What proportion of the overall RFA funding has been allocated to facilitate strong community inputto the RFA process?

Given that the forest assessment process is nearly complete in some areas, notably East Gippsland, atwhat stage does the government intend to offer community groups financial assistance to participate inthe process?Subprogram 1.2—Environment Protection

(1) What was the total 1995-96 expenditure of the Office of the Supervising Scientist? What per centof the OSS work was dedicated to the Alligator Rivers Region?

(2) What is the budget of the Office of the Supervising Scientist in 1996-97 What per cent of the OSSwork was dedicated to the Alligator Rivers Region?

(3) What component of the funding was dedicated to the ERRISS in 1996-97?(4) What additional funding will be allocated to the OSS in 1996-97 given the increased workload in

assessing uranium mining proposals?(5) Will additional funding be provided to other sections of the Portfolio to assess proposals? Please

provide details.(6) What per cent of the OSS activities in 1996-97 will be involved in issues relating to the

development of Orebody 3?(7) Does the existence of the exemption for Orebody 3 preclude the requirement that the OSS be

consulted by the NT Department of Mines and Energy in relation to approvals for Orebody 3? When didthe OSS provide advice to the NTDME on Orebody 3?

(8) Given the Minister for the Environment’s commitment that any expansion plans for uranium miningwould be assessed under the ‘strictest environmental and heritage guidelines’, why was an exemptiongranted for Orebody 3?

(9) Why were the details of the five year water management plan not provided to the July 5, 1996meeting of the Alligator River Region Advisory Committee which was meant to assess the plan as theminister advised on June 26, 1996? (QWN, (Margetts), p2242, June 26, 1996)

(10) Why did the minister exempt the approval of Orebody 3 from the Commonwealth environmentalapproval process without details released about the water management plan, tailings management ar-rangements and knowledge of the radiological impacts?

(11) Can the minister provide details and table relevant documentation regarding the radiologicalimpacts and tailings management arrangements for Orebody 3?

(12) In relation to the Kintyre proposal, at what stage is the proposal? What will be the level ofCommonwealth involvement in the assessment of this proposal? Why hasn’t the Commonwealthautomatically decided to assess this proposal at the highest level under the Environmental Protection(Impact of Proposals) Act 1974?

(13) Is the Commonwealth considering not conducting its own environmental impact assessment ofthe Kintyre uranium project?



(14) If yes, does this mean that the Commonwealth is prepared to rely on the WA State governmentand its agencies to conduct a full environmental impact assessment?

(15) Can the minister ensure that Kintyre will not only be assessed at the highest level of environmentalassessment, but with a full public inquiry which would enable the highest level of consultation withindigenous people?

(16) According to the CRA proposal, uranium processing at Kintyre would be by radiometric sorting.What is the status of this technology and what resources are being allocated to the OSS or other sectionsto assess this process?

(17) Why hasn’t the Office of the Supervising Scientist extended its role to include monitoring theoperations of the Roxby Downs uranium mine?Program 1—Environment PortfolioRestructure

Given that the Environment portfolio is to be restructured can a breakdown of the forward estimatesfor 1996-97 be provided according to the new structure?Subprogram 1.1.—Environment strategiesBiodiversity (See also attachment ‘A’—QWN from Senator Margetts)

The 1995-96 Portfolio Budget Papers indicate that the Biodiversity Conservation Program announcedin the 1995-96 budget would receive the following allocations:

1995-96 1996-97 1997-98 1998-99

$2.52 million $5.26 million $5.05 million $4.83 million

On page 37 ofInvesting in our Natural Heritageit indicates that only $0.9 million will be allocatedto the biodiversity program in 1996-97.

What is the explanation for the discrepancy between this and the previous forward estimates?How much was spent on the Biodiversity Conservation Program in 1995-96 and what are the revised

forward estimates for this program? What are the specific components comprising this program?The intent of the Biodiversity Conservation Program was to provide for the implementation of

Australia’s obligations under the Convention on Biological Diversity and the National Strategy for theConservation of Australia’s Biological Diversity. What are the Government’s priorities in relation to thisprogram?

Cape York

Can the minister provide details of the breakdown of the $40 million funding from the Natural HeritageTrust for the advancement of the Cape York Heritage Area? i.e. which program areas will the funds bedrawn from

Program 1.1—Environment

Environment Program Budget Cuts

The Government says that there are savings of $28 million in Budget Measures on the Environment,Sport and Territories. Can the Minister provide a breakdown of that $28 million?

Which environment programs will be cut? Can the Minister provide a detailed list of which environmentprograms are to be affected for each agency.—ie actual programs—such as Biodiversity, Green-house/Climate Change, Wetlands etc, rather than just aggregated figures for each agency.

The Budget Papers say there’ll be a $139-million saving over four years for DEST—why does theEnvironment have to bear the brunt of this slashing, especially given the Coalition’s electoral emphasison the environment in February 1996. (Note that spending on Territories and Local Government hasincreased.)



Forward estimates for Natural Heritage Trust (NHT) fundingNeither the Budget Papers nor the Natural Heritage Trust Bill gives any indication of how the NHT

funds will be spent from one year to the next. Can the Minister provide forward estimates for NHTspending—broken down by Department and year?Regional Forest Agreements

In the Government Budget measures, $24.3 million have been allocated to carry out Regional ForestAgreements throughout Australia in 1996 and additional funds in 1997-98 and 1998-99.

Can the Minister provide a breakdown of how that money is to be spent from state to state, and yearto year?

How much of that has been allocated to Tasmania?Can the Minister provide a breakdown of how that money is to be spent in Tasmania?As part of the RFA process, a World Heritage assessment of Tasmania’s forests is to be undertaken.

Can the Minister give details of how that assessment will occur?I understand an Expert Panel has been established to assess World Heritage—values throughout

Australia. Can you tell me who is on that Panel?Can you provide details of the decisions to date of that Panel with respect to the assessment of World

Heritage values in Australia’s forests?Can you provide minutes of the meetings of that Panel?How will previous assessments of World Heritage values (eg Hitchcock 1988, 1991; Parks, Wildlife

and Heritage 1990; Kirkpatrick 1987, 1994, 1995; Australian Heritage Commission 1987, 1994; DEST1993, 1994) be taken account of during the RFA process?

Is the Minister aware that the joint Commonwealth/Tasmania report of December last year said thateight coupes had been identified which would impact on potential extensions to the WHA—and that onlyfive of those eight were excluded from logging?

What are the five coupes of World Heritage value which were stopped, and what are the three whichwere given the go-ahead?

Why were only eight coupes identified as having World Heritage impact given that the reports ofKirkpatrick et al (1994 and 1995) each identified at least 20 coupes of concern?

How much did the Commonwealth pay in consultancy fees for each of those two reports?Is the Minister aware that the World Heritage Bureau has expressed concern about the impact of these

logging operations?Is he aware that in December 1995 and July 1996, the Bureau considered the impact of forestry

operations on the Tasmanian World Heritage Area?Can the Minister provide a copy of any written submissions to the World Heritage Bureau or Committee

at those meetings—or a summary of verbal assurances to the Bureau/Committee at those times?Can the Minister provide copies of all correspondence between the IUCN, the World Heritage Bureau,

the World Heritage Committee and the World Heritage Centre on this issue since June 1994At the meeting of the World Heritage Committee in December 1995, the Committee requested the

World Heritage Centre obtain a written report from Australia on this matter as soon as possible. Has thatreport been provided, and if so, can the Minister provide the Committee with a copy?

If not, why not?Did the report concede that logging of at least three coupes of World Heritage significance has been

given the go-ahead?With respect to the New South Wales forests, have there been any communications between the

Commonwealth and New South Wales advising against national-park declarations?Has the Minister received communications from Mr Andrew Ricketts of the Reedy Marsh Forest

Conservation Group (letter dated 7 July 1996) regarding breaches to the IFA agreement, and if so, what



action has been taken to address those concerns? Have copies of his report been sent to the WoodchipExport Monitoring Unit?Biodiversity

Does the Minister agree that the protection of Australia’s biodiversity is an international obligationarising from the Convention for the Protection of the World’s Natural and Cultural Heritage and theConvention on Biological Diversity?

Does the Minister agree that the Commonwealth has the power to regulate activities of tradingcorporations in order to protect Australia’s biodiversity?

Does the Minister agree that the Commonwealth has both the power and the obligation to ensure theprotection of forest biodiversity, including rainforests, native forest listed or interim-listed on the Registerof the National Estate, places identified by national and international authorities as having World Heritagevalues or potential World Heritage values, and forest areas where species listed as rare or endangeredunder state or Commonwealth legislation have been recorded?Core fundingThe 1995-96 Budget Environment Portfolio statement indicate that about $70 million over four yearswould be allocated for funding of a range of core activities (Page 14).

The funding was allocated as:Funding for a range of core activities—

l995-96—$10.771996-97—$21.031997-98—$22.221998-99—$22.68On page 20-21 there is a description of these core activities. Can a breakdown of the particular

programs and their levels of funding be provided over the four years as at the time of the 1995-96 Budgetbe provided.

Can details of the current status of each of these programs be provided?What are the other ‘core’ programs or functions of the Environment Portfolio. Can funding details be

provided for each of these?

RestructureGiven that the Environment Portfolio is to be restructured can a breakdown of the forward estimates

for 1996-97 and the next three years be provided according to the new structure?Sub-program 1—Environment ProtectionPaper recycling

The 1995-96 Budget Portfolio papers indicated that $5.5 million over three years would be allocatedto assist with the uptake of high grade paper recycling. At the same time the 22% sales tax exemptionon recycled paper was removed. It was argued that the exemption was ineffectual in encouraging the useof recycled paper and that the new allocation was to explore alterative measures to encourage the useof recycled paper.The projections were:

1995-96—$4.51 million1996-97—$720,0001998-99—$260,000Is it true that only $500,000 was expended on this program in 1995-96. Is it true that the unspent $4

million will not be rolled over? Can the exact details and revised forward estimates be provided?Why wasn’t the full 1995-96 allocation spent? Can details be provided on what measures were

developed during 1995-96? On what basis did the Government decide to curtail funding to this program?



What measures will the Government undertake to ensure a higher level of recycling of high gradepaper?Cleaner production

In the Prime Minister’s Environmental statement of 1992 $4.7 million was allocated over 4 years toprograms to promote cleaner production and to establish a National Industries Database. Funding for theseprograms was due to decline at the end of l995-96.

The l995-96 Budget Portfolio statement indicates that about $70 million would be allocated for fundingof a range of core activities (Page 14). On page 20-21 there is a description of these core activities. Point6 of these details that additional funding would be provided to the cleaner production program. How muchwas allocated in 1995-96 and at that time were allocations made for forward years? Can details of thisbe provided?

What is the current status of the cleaner production program? Can details be provided of the programcomponents and their funding levels over the last four years? Can forward estimates for this program forthe next four years be provided?

Has the program been reviewed? If yes can the review be tabled to the Committee?The Prime Minister has stated that "Australia has the opportunity to lead the world as a ‘clean’ and

‘green’ nation, an objective which is not only environmentally responsible but will produce majoreconomic benefits and job opportunities for the nation" (January 1996) . . .

Experiences suggests that industry will not move towards cleaner production unless ‘pushed’ to byregulatory controls or through financial incentives.

What ongoing measures/programs/regulatory or financial incentives will be put in place to encourageAustralian industry to become ‘clean’ and ‘green’.Regional Forest Assessments

What is the total level of anticipated funding required to complete the RFA process?Could the Minister provide a complete breakdown of what this money will be spent on including any

amounts allocated to resource community groups to participate in the RFA process?When will funding be made available to community groups to enable their proper participation in the

process?Is it correct that the assessments for East Gippsland have been completed and options for forest

protection in East Gippsland are being generated now without funding having been made available forcommunity participation?

Given the intense community interest in the outcomes of the RFA process, why has the governmentbeen so slow to fund community participation?

While in opposition the government acknowledged that the process for deciding which areas of forestwould be given interim protection was unscientific and followed a ‘quick and dirty’ assessment. Whatprovision has been made in the RFA process to redress these flaws?

Given that decisions about what trees are logged and how they are logged, are decisions determinedby the availability of export woodchip sales, what steps will the government take to ensure that no exportsales of woodchips are allowed without first proving to the Australian public that logging for woodchipsposes no threat to our ancient forests nor the multitude of species dependent on them?

Does the Minister acknowledge that the conservation significance of the private forest estate has neverbeen thoroughly assessed; that no areas of private forest have been included in the areas of forest to bedeferred from logging; and that many areas of private forest in Tasmania, Queensland, NSW and Victoriaare known to be of extremely high conservation value? How will the government avoid abrogating itsresponsibility to protect the entire native forest estate through its recent woodchip decision on privateland? What funding will be directed towards conservation assessment of the private forest estate and overwhat time frame will this assessment occur? How will acquisition of crucial areas of private forest forthe reserve system be funded? How will the government ensure that the entire private forest estate ismanaged in sympathy with conservation objectives as required by the National Forest Policy?



Senator Carr to the Department of the Environment, Sport and Territories—1. The decision to include in the EIS

(1) Why was Holsworthy site included in the EIS process already under way for Badgerys Creek?(2) Was any preliminary assessment done prior to the announcement by the Minister for Transport on

20 May 1996?(3) Was there any re-assessment of the earlier studies where Holsworthy was rejected?(4) Were any of the other sites (eg Goulburn, Wilton, etc) considered prior to the re-listing of

Holsworthy?(5) and (6) Was the Department of the Environment consulted prior to the decision? Did they provide

any advice? If so, what was it?(7) Was there any independent advice or expert advice provided to the Department/Minister in relation

to the decision?(8) Did the Department consult with Transport and/or Defence departments?

2. Questions to the Minister particularly(9) Did the minister review any submissions supporting the site from developers or any group at all

prior to the listing of the site?(10) If so, when and in what form?(11) May we have copies of any such proposals?(12) In particular, did the minister or his staff have any meetings with a group called Lawrence

Hargraves Project or LH Project?(13) What about Bonpara Pty Ltd?(14) If so, what was the nature of those discussions.

3. The EIS Process(15) Over 50,000 submissions have been lodged against an airport at Holsworthy. Senator Hill’s staff

is quoted as saying that this was an attempt to clog up the system (see attached article)(16) Does the Minister stand by that statement?(17) Given that statement how can the Minister ensure that the submissions will be given the

appropriate weight and consideration?(18) Has the Department of Defence or the Defence Housing Authority made a submission to the EPA

on the EIS into Holsworthy? Can a copy of this submission be made available to the committee?(19) Is it available to the public?(20) If not, why not?(21) Are submissions generally made available to the public, particularly for the local community?

4. Page 36, Program 1.2—response to EIS for airport, Uranium mining, etc.(22) What amount has been allocated for the EPA to conduct the EIS? (Note: $21 million is set aside

in Transport Budget papers). There does not appear to be any specific dollar allocation for this work.Subprogram 1.2—Environment Protection

On what basis was it scrapped? Was the program evaluated?Are funds available in the 1996-97 budget for the Eco-design and Cleaner Industries Incentive Program?

If so, how and what amount?

If not, why has the program been abandoned?

Subprogram 1.2—Tasmanian Water Quality

When were funds first identified in the EPA’s budget for this initiative?

Do the funds allocated represent new money?



Subprogram 1.2—National Pollutant InventoryIs it necessary to delay the funding allocation for the implementation of the National Pollutant Inventory

until the development work has been completed?Isn’t it possible that the data entry component of the database can progress concurrently with the

implementation of the inventory?What does the implementation involve that requires the delay?Is the EPA currently involved in any programs dealing with Coastal and/or Ocean management and

upkeep program? If so, how much is allocated for these initiatives in the 1996-97 budget? What is thenature of the programs?Subprogram 1.3—Australian Heritage Commission

The Australian Heritage Commission budget allocation for 1996-97 is $12 million. This represents a15 per cent cut on last year’s budget allocation of $14 million. How will these cuts be achieved?

The Commission’s National Estate Grants Program has been cut from $5 million to $1 million. Whatwill be the impact of these cuts on community based environment and heritage programs?

Has the Government offered an alternative source of funding to the community based groups affected?How will the remaining $1 million under the National Estate Grants Program be allocated?Please provide a list of the projects that will receive funding? The criteria on which the project were

judged and the reason for their inclusion in the project?Isn’t it true that the Government’s cuts to the National Estate Grants Program will have a devastating

effect on the identification and conservation of Australia’s natural, cultural and indigenous heritage inthe lead-up to the Sydney Olympics?

Did the Commission investigate alternative avenues for these community based organisations tocontribute to the identification and conservation of heritage sites?

The Commission has indicated that in the future it will only fund projects of national significance—howwill a heritage project be evaluated as being of national significance?Subprogram 1.5—Great Barrier Reef Marine Park Authority

Q. Associate Professor Owen Stanley of James Cook University in the Great Barrier Reef Marine ParkAuthority Review of the Environmental Management Charge published in December 1994 concluded that‘any substantial increase in the real level of the Environment Management Charge (EMC) will increaseboth the Administrative and Monitoring costs, because of increased incentives for evasion’. Have theseincreased costs to GBRMPA been factored into the budget allocations for GBRMPA’s budget?

Q. The same report also noted that ‘many operators and industry representatives believe that theAuthority made a commitment that the EMC would be increased only at a rate of the Brisbane CPI, andto change this procedure so soon after the understanding was reached would cause loss of faith in thenegotiation process by operators and possibly loss of their cooperation. This would create problems forthe Authority as the existing EMC system relies heavily on the cooperation of operators. Minister, haven’tthe increased charges severely undermined GBRMPA reputation and influence and consequentlyjeopardised its capacity to manage the reef?

Q. Minister, doesn’t this increase expose the extreme arrogance of the Howard Government managementstyle?

Q. Does the Government acknowledge that the pre-budget structure of the EMC include inequitieswhich will only be compounded by this significant increase? For example, while current permit holdersare charged $1 per person, private boats owners and their passengers incur no charge at all.

Q. Is it true that it is private boats which tend to do the most damage to the reef?Q. What does the Minister make of the comment by Professor Owen Stanley that "In terms of the

principle of economic efficiency, the EMC component of the EMC structure imposes a price on an activitywhich may not directly lead to social costs being incurred (ie., organised tour operators) and is thereforeinefficient because it equally discourages activities which cause no monitoring costs or environmental



impact or crowding, than those which cause them (ie, private boat owners) [Charging Users of the GreatBarrier Reef Marine Park 1992 page 46].

Q. Ask GBRMPA—Could the increased charge lead to a decrease in the size of the moreenvironmentally ‘passive’ group of users, while the size of the less passive group will increase with acorresponding increase in the EMC to the Marine Park; of course in the process increasing the need formonitoring systems?

Q. What funds has the Commonwealth allocated for the day-to-day management of the Marine Parkin 1996-97; what funds were allocated for the same purpose in 1995-96?

Q. What is the Queensland contribution for day-to-day management in 1996-97; what was it in 1995-96?Q. Does this funding amount enable the GBRMPA to manage the entire reef? Are there areas of the

reef particularly the northern section that stretch the GBRMPA resources to the extreme?Q. Has GBRMPA made any projection on what the future revenue from the EMC will be in the future?

Can they be provided?Q. Is the Minister concerned that as larger portions of the GBRMPA’s budget becomes dependent on

the revenue from the EMC that it may not be able to operate as an independent authority and couldbecome dependent on the tourism industry, a major user of the reef?

Q. What problems would this pose for the Authority’s capacity to fulfil its statutory obligations? Isthere a conflict of interest?

Q. What is GBRMPA doing to address the substantial and complex problems posed by enhanced erosionof agricultural lands entering the Marine Park?

Q. Does the Minister intend to modify the structure of GBRMPA following his Department’s responseto the Coopers-Lybrand report?

Q. What changes are proposed?Q. Will the independence of the Authority be modified in any way eg. will it be joined with other

sections of the Department of the Environment and other statutory agencies?Q. To GBRMPA—what advice did you convey to the Minister regarding the proposed development

at Oyster Point?Q. What was your advice based on?Q. Does GBRMPA believe that it is desirable for the strategic planning to occur before the values of

an area are compromised by a development?Q. Does GBRMPA have reservations about the longer term effects of the dredging as the direct and

indirect effects of maintenance dredging are issues that have yet to be satisfactorily addressed? Does italso believe that there is insufficient environmental information to predict with certainty what impactsof long-term dredging on seagrass might be?

Q. Did GBRMPA provide this advice to the Government on the development at Oyster Point?Q. Is the Authority concerned that the impact of dredging a marina access channel and implementing

a beach and foreshore management plan would have an adverse impact on the protection, conservation,and presentation of the areas World Heritage values?

Q. Is the Authority concerned that the ‘low growing’ mangroves are capable of stabilising the mangrovesediment and preventing erosion?

Q. Does the evidence suggest that the hedging mangrove component of the Beach and ForeshoreManagement Plan will be effective?Subprogram 4.2—Telstra

1. Why, when the telecommunications industry is the strongest growth area of the economy, are thestaff numbers at Telstra Research Laboratories (TRL) being slashed?

(a) What is the rationale for these cuts given that R&D activities are regarded as the source ofinnovation, differentiated products and advanced service development contributing to the growth of theenterprise in a competitive environment?



(b) What was the number of full-time equivalent (FTE) staff at TRL as at 1/7/95 and 1/7/96?(c) What is the number of FTE staff projected to be at TRL as at 1/7/97, 1/7/98 and 1/7/99?(d) By what manner are staff being ‘selected’ to facilitate the reduction?2. What Research activities/skills groups are being dispensed with entirely, or in part?(a) What was the rationale applied in identifying projects to be eliminated or reduced?(b) What activities will now be outsourced? Who did the comparative cost study?(c) What skills groups are to be significantly reduced or eliminated? Why are they no longer needed?3. How is Telstra spending its total R&D budget in compliance with its obligations under the

Telecommunications Industry Development Plan (TIDP)?(a) What was Telstra’s total investment in R&D for 1993-94, 1994-95 and 1995-96? What was that

investment as a percentage of sales revenue for each of those years?(b) What proportion of Telstra’s total R&D investment for each of the last 3 years was expended on

the Jindalee Operational Radar Network (JORN) being developed by Telstra Applied Technologies? Whatrelevance does this project have to Telstra’s aspirations to be ‘the leading provider of electroniccommunication and information services in Australia and the Asia-Pacific region, and a significant globalprovider’? Does this project sit well with the telecommunications intent of the TIDP?

(c) What proportion of Telstra’s total R&D investment for each of the last 3 years was expended onthe development of the Flexible Charging and Billing System (FLEXCABS) by the InformationTechnology Group, part of the Network and Technology Group? What was the initial budget for thisproject? What is the total investment expended to date? What other R&D expenditure is attributed to ITG?

(d) If the Jindalee project is sold to a private consortium and/or the FLEXCABS project is transferredto a joint venture, what will be the impact on Telstra’s commitment to the TIDP?

(e) What proportion of Telstra’s total R&D investment for each of the last 3 years was expended onSocial Research and Development? How? What? Why?

(f) What proportion of Telstra’s total R&D investment for each of the last 3 years was expended byTRL? What proportion of this investment was attributable to labour, materials and general expenses, andtransfers to other business units? What are the projected investments in each of these areas for the next3 years, 1996-97, 1997-98, and 1998-99?

(g) What other R&D is funded by the balance of the total investment? What is the relevance of eachof the R&D activities to Telstra’s ‘core’ activities?

(h) What are the risks involved in doing, or in not doing, each of the R&D activities?4. To what extent does the Telstra R&D Management Company (TRDM) formulate and direct the

Corporate R&D plan?(a) What is the TRDM’s source of revenue? What was the revenue for 1995-96?(b) What R&D activities is it investing in? What is the R&D plan?(c) What has been the beneficial impact on the R&D tax concession as reported in the Annual Report

of the establishment of the TRDM?(d) What is the expected revenue from TRDM ownership of Telstra’s Intellectual Property?(e) What risk evaluation is undertaken on all facets of the Telstra R&D program?5. What strategy underpins Telstra’s R&D expenditure?

(a) How is this strategy developed? Does the TRDM play a part?

(b) Who in Telstra is on the strategy? Who in Telstra is accountable ‘signs off’ for the total R&Dinvestment?

(c) What is Telstra’s technology strategy?



Senator Faulkner to the Department of the Environment, Sport and Territories—1.4 National Reserve System (National Parks and Reserves)

Q: Could you list the main priorities for Australia’s National Reserve system for the next 12 months?Q: ANCA is responsible for the protection and preservation of 13 parks and reserves as well as

providing cooperative management of an additional 6 parks and reserves. How will the budget cuts impacton each of these parks and reserves? Please list the budget allocation for each park and reserve.

Q: What is the total amount of money to be allocated to the National Reserve System from ANCA’sbudget? What was the amount last year?

Q: How can the Coalition Government maintain Australia’s National Reserve System with its allocationof just $1 million this financial year, when they claimed Labor was letting the system run down with itsallocation of $16 million over 4 years?

Q: Which of Australia’s 12 World Heritage Properties, does ANCA contribute financially toManagement and Upkeep costs?

Q: Of the $9.8 million allocated to World Heritage Management and Upkeep, in the 1996-97 budget,how much is allocated to ANCA?National Off-Reserve System

Q: What are ANCA’s 5 top priorities for its Off-Reserve system?Q: How will the recent budget cuts affect these programs?Q: Could you list the main priorities for Australia’s Off-Reserve system for the next 12 months?Q: What is the total amount of money to be allocated to the National Off-Reserve System?Q: How many of ANCA’s staff are employed to specifically deal with matters relating to the Off-

Reserve System?1.4 Endangered and Vulnerable Species:

Q: What is the budget for this program in 1996-97? What are the forward estimates?Q: Is the allocation of $1 million to the Endangered Species program in the 1996-97 budget meant to

cover costs for:- Recovery plans and surveys?- Threatening processes?- Education and publicity?- Strategic plans?- Administration?Q: In ANCA’s draft annual report for 1995-96 it was stated that nine endangered or vulnerable species

were being helped by pest control projects. These projects are:- The red-tailed phascogale, bridled nailtail wallaby, brush-tailed rock wallaby and the western swamptortoise which benefit from fox control.- Fox and feral cat control assist in the recovery of the bilby and numbat.- Rat control on Norfolk Island assists in the recovery of the Norfolk Island green parrot.- In Victoria, the barred galaxias is protected through the removal of trout and the construction of weirsto prevent immigration.- An integrated competitor and predator control program is showing promising results for the yellow-footed rock wallaby in South Australia.

Q: What funding has been allocated to each of these projects over the next 12 months? How does thiscompare with the 1995-96 allocation?1.2 National Vegetation Program

Q: Is it correct that Queensland leads Australia in the rate of land clearing? Satellite data has showedthat around 308,000 hectares were being cleared every year from 1991 to 1995. This is equivalent to



clearing an area stretching from the New South Wales border north to Gympie and 15 klm inland everyyear?

Q: Is ANCA aware that the Queensland Natural Resources Department issued permits in one 14-monthperiod allowing 1.04 million hectares of the State’s leasehold land to be cleared. The Department issuedthe five year permits from July 1994 to August last year. These permits apply to virgin timber, regrowth,and for fodder which encompasses species such as mulga—used as drought feed. The former LaborGovernment put in draft guidelines, aimed at controlling such massive uncontrolled clearing. Theguidelines were aimed at regulating clearing and maintaining biodiversity and sustainable production(Courier Mail, Monday July 22, 1996 p.3. The current Queensland Government is proposing legislationto change the guidelines back to their original form, thus private landholders will no longer need Stateor local Government permission to clear natural bushland. What action has the CommonwealthGovernment taken to respond to this serious development?Note: The Coalition stated that the Commonwealth Government should provide national leadership inensuring significant areas of remnant vegetation are preserved and properly managed. They said that theCoalition was committed to working with the States, Territories and Local Government as well aslandholders in the establishment of guidelines governing the provision of incentives for landholders whovoluntarily preserve vegetation which may otherwise be cleared (Policy Document p. 15).

Q: Is the Government’s goal as stated in ‘Saving Our Natural Heritage’: ‘that by year five, theCoalition’s target of revegetating an additional 250,000 hectares per annum will be achieved’ on target?

Q: Is the Government still committed to this target? (If not, why has it been abandoned so quickly)?Q: How many hectares of land were revegetated in 1995-96?Q: The Coalition in their Environmental Election Policy ‘Saving Our Natural Heritage’ promised that

a Council for Sustainable Vegetation Management would be established. Has such a council been estab-lished? Who is on it a when does it meet, what is its charter?1.4 Save the Bush

Q: What is the Budget allocation from the 1996-97 Budget and how does it compare to the 1995-96Budget? What are the forward estimates?

Q: Is the Commonwealth providing only $1.5 million to the States and Territories for the ‘Save theBush’ program as published in theBush Chronicle(No. 57 August, 1996: See Attached copy)? Was $3million allocated during the previous year, as stated in theChronicle?

Q: Could you supply a list of all organisations which have asked for funds and those which will beprovided funds for the ‘Save the Bush’ program?

Q: Are any new initiatives being developed for the ‘Save the Bush campaign’?1.4 National Corridors of Green:

Q: What is the 1996-97 Budget for the National Corridors of Green and how does it compare to the1995-96 Budget? What are the forward estimates?1.4 Grasslands Ecology Program:

Q: What is the 1996-97 Budget for the ‘Grasslands Ecology’ program and how does it compare to the1995-96 Budget? What are the forward estimates?

Q: Are any State or Territory Governments providing additional funding to this program?Q: How many grassland communities and endemic grassland species have so far been identified by

ANCA and other agencies that require immediate action in order to save them? What funding is availableto do so?1.4 One Billion Trees:

Q: What is the 1996-97 Budget for this program? How does it compare to the 1995-96 Budget? Whatare the forward estimates?

Q: What is the latest estimate of the number of trees planted since the program began?Q: How many volunteer organisations will be funded over the next 12 months to assist in this program?

Provide a breakdown of funding, and name the organisations.



Q: How much funding is available for the One Billion Trees program as part of the Greenhouse 21CAction Plan?

Q: What is the 1996-97 Budget for the Forest Biodiversity program?1.4 Wetlands:

Q: What is the 1996-97 Budget allocation for the conservation and preservation of Australia’s Wetlands?How does this compare with the 1995-96 Budget? What are the forward estimates?(If cuts from last year, ask the following question):

Q: With the recent addition of seven new sites to the Ramsar Convention in 1996 by Australia as wellas the extension of an existing site, how can ANCA increase its responsibilities, while at the same timereceiving a reduction in funding?1.4 Waterwatch:

Q: What is the 1996-97 Budget allocation for the Waterwatch program? How does this compare withhe 1995-96 Budget? What are the forward estimates?

Q: What ratio of funding is being supplied by the Commonwealth and State/Territory Governmentsto the Waterwatch program?Australian National Botanical Gardens

Q: In 1994-95 planning of stage 1 was completed for the Australian National Botanical Gardens newnursery, trades and horticultural complex. A project identified in the Plan of Management. During 1995-96a draft master plan was released for public comment. A revised master plan was submitted to the Ministerfor consideration. In the 1996-97 Budget Paper (No. 1) it is stated that this project has been scrapped.How much money to date has been spent on the development of the Management Plan and how manyrecommendations have been implemented?Australian Environmental Volunteers

Q: The coalition stated in their Environmental Policy that environmental volunteer organisations playan important role in building public awareness and in taking practical action to rectify environmentalproblems. It also stated that there would be significant increases in funding for community basedenvironmental activities. Accepting the value of volunteer organisations in not only promotingenvironmental issues and effective measures in dealing with environmental problems, why has ANCA’s‘Green Volunteers’ program been scrapped?

Q: Is any funding being allocated to volunteer groups and, if so, how much and to which organisations?1.4 Australian Biological Resources Study (ABRS)

Q: What is the 1996-97 Budget allocation for ABRS? How does this compare with the 1995-96 Budget?What are the forward estimates?1.4 Marine Wildlife Conservation:

Q: What is the 1996-97 Budget allocation for Marine Wildlife Conservation? How does this comparewith the 1995-96 Budget? What are the forward estimates?

Q: Could you provide an update on the National Wildlife Response Plan, particularly the componentrelating to the National Oil Spill Contingency Plan? When do you expect it to be operating?

Q: Is ANCA considering a national response plan for whale strandings? If so, when will it be operating?~1.4 Wildlife Protection

Q: What is the 1996-97 Budget allocation for Wildlife Protection? How does this compare with the1995-96 Budget? What are the forward estimates?

Q: What is the current status of the recent outbreak of kangaroo viral blindness disease at a State andTerritory level? How is the Government responding to this outbreak?

Q: What is the current threat to the albatross by commercial tuna longline fishing operations?



Q: Is the Macquarie Island subspecies of the wandering albatross still listed as an endangered species?If so, what action has been taken to reduce the impact of longline fishing operations on this and otherbird and mammal species?

Q: What are the details of the recently announced ‘Asia-Pacific Migratory Waterbird ConservationStrategy’ and the ‘East Asian-Australasian Shorebird Reserve Network’?1.4 States Cooperative Assistance Program

Q: The States Cooperative Assistance Program is aimed at providing ‘funds or expertise to the Stateand Territory agencies to undertake research and management across the spectrum of species and habitats,information exchange and strategic planning’. How will the 17% budget cut impact on ANCA’s abilityto carry out the functions of this program?

Q: Of the 43 joint projects with the States and Territories, which will continue to be funded and at whatlevel? Which, if any, will have to be cancelled?1.4 Indigenous Programs:

Q: What is the 1996-97 Budget allocation for all Indigenous Programs run by ANCA? How does thiscompare with the 1995-96 Budget? What are the forward estimates?

Q: In 1995-96, $3.85 million was provided to 37 Aboriginal and Torres Strait Islander incorporatedorganisations from the Contract Employment Program for Aboriginals in Natural and Cultural ResourceManagement (CEPANCRM). This employed 407 Aboriginal and Torres Strait Islander people through111 CEPANCRM projects. What level of funding or expertise does ANCA contribute to CEPANCRM?(If ANCA supports financially to CEPANCRM ask the following three questions): Q: Does theGovernment support these programs and will they be continued to be funded at the same level?

Q: How many Aboriginal and Torres Strait Islander people ill continue to be employed through theseprograms?

Q: Also, how many additional projects are likely to be developed over the next 12 months?

Senator Woodley to the Department of the Environment, Sport and Territories—Program 1—Environment

1. Do you agree the dugong is an endangered species?2. Do you agree that in the Southern GBR dugong numbers have declined by 80% to a critical level?3. Are the dugong one of the values which were described as world heritage values for the purposes

of the world heritage nomination of the GBR?4. What are the other values which were described?5. Are seagrasses one of them?6. Are seagrasses at the limit of their turbidity?7. Do dugong rely on seagrasses and are their numbers declining in the Hinchinbrook channel or staying

put?8. Are boat strikes a threat to these animals and their world heritage values? Can you envisage boat

strikes would increase should 250 boats be zipping around the channel?9. Can you list for me all the threats to world heritage you believe are involved with the Port

Hinchinbrook development?10. Have you let the world heritage unit in Paris know about these threats?11. Have you asked them for their advice?12. Has any member of the IUCN or the World Heritage Bureau expressed any concern that you are

aware of, directly or indirectly through written material or verbally about the effects of the PortHinchinbrook development on the world heritage values of the region?

13. How much is the mangrove planting at Oyster Point costing?14. Which part of the budget does that come from?15. Why are the mangroves being planted there?



16. Why is this being paid for by the Commonwealth?17. When can I have a copy of your statement of reasons for your consents to the development?18. Some commentators have speculated to me that the reason for giving Oyster Point consents is that

this was one of the prime ministerial paybacks to the National Party in Queensland for the guns decision.Is this correct?

19. Did you have any representations from National Party backbenchers on this matter?20. What about National Party ministers?21. What about Queensland National Party members?22. How many National Party people made representations to you for this?23. What were their concerns?24. Did you make your decision completely independently of the PM’s office and the Prime Minister?25. I have a copy of the advice you received from Roger Beale. It is, at best, equivocal, is it not?26. It points out a number of concerns from senior scientists and indeed your own portfolio areas over

the impact of this development. What made you go ahead despite this?27. Do you believe that as long as problems are all anticipated and there is best engineering practice,

there will be no problems?28. Do you believe that all of the concerns of the scientists and your portfolios have been met?29. Do you believe that all problems which could happen have been identified and catered for?30. What will you do in the event that boat strikes start happening or rapidly increase in the channel?

Once the resort is built you will probably find it too late to stop the marina, won’t you?31. Are you prepared to take legal action should the regional planning process or the agreements made

be breached?32. Under what circumstances could you see yourself taking legal action?33. Under what circumstances would you revoke a consent you have given?34. Under what circumstances would you proclaim further parts of the area under the World Heritage

Act?35. What do you intend to do should the Queensland Government allow a rise of 10%, 50%, 100%,

1000% in the tourist numbers allowed to visit Hinchinbrook Island36. What do you have the power to do?37. Was the erosion prone zone at Oyster Point originally about 110 metres?38. Did the Queensland Beach Protection Authority, after a preliminary inspection, suggest to GBRMPA

that a substantial reduction in the 110m might be possible?39. Did the Queensland Beach Protection Authority formally endorse the reduction in the erosion prone

zone to 40m?40. Was 40m the erosion prone zone distance cited in the 1994 Queensland Environmental Review

report?41. Did Senator Hill then reduce the set back to 20 metres in the 1996 Deed of Variation associated

with his consent for activities at Oyster Point?42. Does the Minister agree that the GBRMPA report on a site inspection by experts that took place

on Sept 30 1995 states that there was at least incipient erosion of the land margin already occurring atOyster Point?

43. Does the Minister agree that the same report stated that there was at least moderate erosion of the0.8 kms of foreshore already occurring at Oyster Point?

44. On what scientific basis did Senator Hill therefore decide that the erosion prone zone should bereduced to 20 metres when it was originally 110 metres and no recursion in the width of this zone wasever endorsed by the Queensland Beach Protection Authority and when the GBRMPA report on a site



inspection by experts on Sept 30 1995 reported that there was erosion already occurring both of theforeshore and the land margin itself?

45. Does Senator Hill agree that the Tripartite Deed of Agreement required the developer to pay$100,000 to the Queensland Government for the destruction of the mangroves?

46. Is it correct that the developer has only paid $20,000 of this amount?47. Does Senator Hill agree that the new Deed of Variation removes the requirement that the developer

pay the balance of the 100,000 required under the original tripartite Deed of Agreement?48. On what basis did Senator Hill decide to allow the developer to keep the 80,000 he owed under

the original deed of agreement?49. Does Senator Hill agree that scientific studies indicate that dugong populations are likely to be

displaced or killed by the presence of high density boating traffic?60. On what basis did Senator Hill decide that the introduction of boat attracting facilities would not

displace or kill dugongs in the channel?51. Is Senator Hill in receipt of a Request for Reasons from any organisation for the consent decision?52. Are you aware that you have only 28 days from the date of the issuing of consents in which to

provide reasons to all requesting parties?53. Will you comply with that law?54. On what basis did you decide that any of the experimental foreshore stabilisation techniques

mentioned in the Deed of Variation would (a) be effective to stabilise the foreshore?55. and (b) would not harm any world heritage values?56. Senator Hill, can you explain generally what the term ‘benthos’ refers to?57. On what scientific basis did Senator Hill decide that physical removal by dredging of a section of

the Hinchinbrook channel benthos could be done without damage to the channel’s benthic community?58. Did you identify the benthic communities in the proposed dredge area first?59. Who determined the scope of the Reichelt Report’s review of the studies attached to Cardwell

properties applications for consent?60. On what basis was that scope determined?61. To Ian McPhail GBRMPA?62. Did you receive either in writing or orally any pressure instructions, suggestions, recommendations,

advice or directive to alter or adjust GBRMPA’s advice regarding the impacts of the Oyster Point proposalon world heritage?

63. If so, from whom?64. What was it?65. What actions did you take in response?66. Has any GBRMPA advice changed in nature, content or strength regarding this proposal in the last

6 months?67. Does the Minister agree that there are no bonds provided by the developer which will in any way

repair serious environmental damage?68. If such damage arises from the activities of the developer and affects the world heritage area, will

the Minister be prepared to halt the development from proceeding to protect the environment?69. Can you give an iron clad guarantee that no dugong will suffer as a result of this development?70. Two recent studies have been conducted into the funding needs of the Great Barrier Reef Marine

Park Management Authority. Are both those reports publicly available?71. If not, why not?72. What do those two reports together say about the funding needs of the GBRMPA?



73. Is the Minister/Department concerned about large and ongoing shortfalls of funding to theGBRMPA?

74. How does the Minister/Department intend to address the long-term funding needs of the GBRMPAif it is to manage the Park in the best long-term interests of Australia and in accordance with ecologicalsustainability?

Senator Allison to the Department of the Environment, Sport and Territories—1. We note that there are no current Torres Strait Islander sites included in the Register of the National

Estate. There does not appear to be a reference to this in the budget papers, even though it has beennamed as a priority by the AHC. Will there be funds directed to this purpose?

2. We note that funding for the National Estates Grants Program, drawn from the AHC has been cutfrom $5.5 million to $977,000. How will the AHC maintain this program?Program 1.3—Heritage

1. The National Trust of Australia has identified the need for restoration work valued at more than $28million for extremely urgent works, urgent works and highly desirable works around Australia, some ingovernment ownership. What measures are there to assist trusts in funding these works?

2. The forthcoming Olympics is an opportunity to celebrate Australia’s heritage and capitalise on thetourism it will generate. Are there any measures to begin this process?

Senator Ian Macdonald to the Department of Communications and the Arts—Subprogram 3.1—Australian Broadcasting Corporation

1. There have been a number of managerial changes within the structure of the ABC in the last fewmonths. For example, Paul Williams has been appointed as the Head of TV and Radio News and CurrentAffairs.

Was the position advertised? Who appointed him to the position? Could you please supply a CV ofMr Williams and an outline of the size of budget he will be overseeing in the position? Could you alsoexplain the job appointment and appeal mechanisms within the ABC?

2. Mr Williams oversaw the nationalisation of the7.30 Report. Can you remind me of the number ofpositions that were saved as a result of the nationalisation? Can you tell me how the show is performingin the terms of ratings now, compared to before the change? What are the future plans for the timeslot?Does the ABC have any intention to move the program or change its format?

3. What is Kerry O’Brien’s precise job description? What other duties or functions does he performin relation to the7.30 Reportapart from his role as an on air presenter of the7.30 Report?

4. The National Commission of Audit identified an ABC employee getting $490,000 a year. Who isthat person? When did the current salary commence and on what basis was it said? Was the salary ap-proved by the Board?

Mr Peter Loxton was the former head of radio but has been moved. To what extent is it correct—asreported in theAustralianby Errol Simper—that there was a disagreement between the Managing Directorand Mr Loxton shortly prior to his change of position?

7. The ABC recently announced its intention to reduce staffing levels in news and current affairs intelevision. Could you explain what formula was used to determine the reductions for various newsrooms?

Could you also confirm that the Melbourne TV News had their ‘on the road’ reporting numbers cutby two? Could you also confirm how many reporters are on the road at any one time in Melbourne? Arethose ‘on the road’ reporters also required to perform other duties to ensure the production of a dailybulletin including being the day editor etc?

8. Does the Melbourne newsroom also produce a weeklyStatelineprogram which requires thededication of an ‘on the road’ journalist for a week? What are the impacts on the newsroom because of



this requirement? (ie: How long does a reporter need to spend preparing aStatelinepiece?) Why is thenews department producing aStateline program, given its current affairs format, when it wouldpresumably be more appropriately produced by the Current Affairs section?

9. Is it correct that during the same round of reductions the7.30 Reportalso had two journalists cutfrom its staff and one manager? Were any producers cut from its staff?

10. Why doesn’t the7.30 Reportproduce theStatelineprogram each week?11. Could you identify the number of Victorian generated7.30 Reportstories, either political or

otherwise, which have made it to air in the last 12 months? Could you then average out the number ofstories this equals per week? Please provide the same information for Queensland.

12. Could you provide the number of stories screened on the7.30 Reportwhich were generated outsideof the Sydney and Canberra offices in the past 12 months? Could you then average out the number ofstories this equals per week?

Senator Lundy to the Department of Communications and the Arts—Local Data Calls:

1. Is Telstra intending to introduce time based charging of phone calls that use modems or faxes?2. What is the purpose of time based charging of data calls?3. When is this new charging scheme to come into effect?4. How much will it cost the consumer?5. Will there be a connection charge as well as a time based charge?6. Now that Telstra will be charging specifically for data connections, will there be an increased

assurance of line quality to ensure a reasonable connection speed?7. What method will be used to detect whether a call is a data call?8. Will it be based on phone numbers being registered for data use?9. If yes, what happens when a phone line is used for both data and voice calls (Like in most

households with one phone line).10. If no, how will it be decided that a call is a data call?11. What happens to combined data and voice calls where the phone is used and then switched to a

modem and then possibly switched back to phone?12. Will only the data section of the call be time charged?13. Are there any estimates of the administrative cost increase to time charging data calls (Cost of

equipment for detection and timing, extra billing costs).14. What software technology is available for these purposes?15. Have Telstra invested in research, and with whom to explore these options? What is the value of

any contract or investment in these technologies?16. What is the nature of the research undertaken in a joint venture with Bellcore in February 1996?17. What parallels exist between the pricing policies of FSN (Full Services Network), the delivery of

telephony over the broadband network and pricing policies with respect to data/voice telephony over UTP.(Unshielded twisted pair)

18. Are there any estimates on the increased revenue earned from time charging of local data calls?19. Will there by any circumstances that will be exempt from time charging. (EG. The use of chat

programs by deaf people)Internet and ISPs

21. Internet users are charged for use through their ISP (many on a timed basis). Will the connectionbetween the Internet user and their exchange be charged as a data call?



22. This constitutes double charging by Telstra, once through the ISP (who on-sell Telstra bandwidth)and again through a timed data call via the exchange. How will Telstra ensure that Internet users are notdiscriminated against in this way?

23. How will Telstra differentiate between an ISP connection and a standard data call?24. Given Telstra is now a provider of Internet services directly to the consumer, (On Australia) will

the charging of data calls be used as leverage to discourage the use of other ISPs to provide Internetconnections?

25. Does this constitute anti-competitive behaviour in Telstra’s view?26. Will Telstra institute an increased flagfall for data calls?27. How will these increased costs affect small business users of the Internet?28. Given that ISPs are already charged at a rate which affects the nature of their line usage, are these

increased user charges an example of ill concealed double dipping?Dual Infrastructure

1. Has duplication of telecommunications infrastructure occurred in any areas that are currently cross-subsidised under the USO?

If so, which areas?3. If not, why not, and are any scheduled to be done?

Senator Schacht to the Department of Communications and the Arts—TelstraNetwork upgrade and ISDN

1. Last year’s annual report noted that towards the end of 1994-95 Telstra was achieving digital switchinstallation rates of 200,000 lines a month. What is the current rate?

2. What was the target number of lines for 1995-96? Was this met?3. What percentage of the network had been digitised by the end of 1995-96? What percentage of the

network had been digitised in country areas? What percentage in metropolitan areas?4. What are the current ISDN roll-out timelines?5. What does the roll-out include? Will it include conditioning of lines, or only equipping of exchanges?

Will it include ensuring availability of Customer Premises Equipment?6. What are Telstra’s estimates of the costs associated with the ISDN roll-out? How are these costs

broken down (eg do they include CPE)?7. How will Telstra deal with customer demand beyond the radius of 5 km from the exchange? What

are the cost implications of providing access beyond that range? How are these reflected in the provisionsTelstra has made in its capital expenditure plans for the next few years?

8. What sorts of prices will Telstra charge for ISDN services? Will there be any variations in priceif, for instance, customers live more than 5-6 kms from an exchange?

9. Better Communicationssaid that the Coalition would require Telstra to accelerate the FMO so thatthe digitisation of exchanges is completed across the country by 1 July 1997. Yesterday’s press releaseby the minister said that this promise was on the basis of the best advice available prior to the election,and that ‘subsequent discussions with Telstra have made it clear that there are valid technicalconsiderations which will require a longer time frame.’ The minister’s press release said that non-metropolitan subscribers can now look forward to 85 per cent of exchanges being converted to digitalby December 1997, and to effective completion of the digitisation program by December 1998.

What are the ‘valid technical considerations’ to which Telstra has alerted the minister since the election?Were these considerations known to Telstra prior to the election? Did the minister ask Telstra, prior tothe election, whether the Coalition’s promise of digitisation by July 1997 was technically feasible?



10. Industry literature from the US is suggesting that ISDN may soon be superseded by othertechnologies that allow much higher bandwidth to be squeezed out of the copper network, for example,Asymmetric Digital Subscriber Line (ADSL). Is Telstra considering the use of these technologies?

11. What are the implications for the ‘shelf-life’ of ISDN?12. Has Telstra made any investigation of the relative cost benefits of using ADSL or related

technologies, as opposed to Fibre/Coax, for the delivery of Pay TV or other broadband services?13. How do the numbers compare?14. At what penetration rates does ADSL become more cost effective than HFC for Pay TV?15. Telstra is reported to be using aerial cabling for Pay TV in some areas, presumably for cost reasons.

Couldn’t it use ADSL instead?16. Have environmental costs been factored into Telstra’s considerations on this question?

Investment in the Customer Access Network17. What are Telstra’s projections for all-up capital expenditure on the Customer Access Network over

the period covered by the current plan?18. How does this compare with previous years?19. I have been told that Telstra is making use of ‘pair-gain’ systems in some parts of the Customer

Access Network. Can you explain what these are?20. Why are pair-gain systems used?21. Is Telstra in fact planning to increase the use of ‘pair-gain’ systems in any areas? In Tasmania?22. What are the implications of pair-gain systems for service quality and availability, particularly in

relation to services requiring high bandwidth?23. Can you offer a 64kbit/sec service over a pair-gain system?24. Can you give any indication of the percentage of services in operation that are at present connected

through pair-gain systems? Roughly?25. What is the level of use of pair-gain systems in metropolitan as opposed to regional and remote

areas?Changes in service offerings

26. Is Telstra investigating alternative ways of delivering Customer Premises Equipment services (ieinstallation and maintenance)? What options are being considered? How will they affect the provisionof the first phone?

27. Last week, Telstra announced it was withdrawing its ServiceNet Wiring Maintenance Plan,following a finding from the ACCC that it had misled customers in relation to the plan. Can you explainthe background to this decision?

28. What will the decision to withdraw the ServiceNet Wiring Plan mean for consumers?29. How will consumers get their wiring fixed in future?30. What will Telstra charge for work done on wiring before the first socket?31. How does that compare with charges under the ServiceNet plan?

Financial results32. On 13 September Alan Kohler said on the7.30 Reportthat Telstra’s unit costs per line are now

below the average of the world telecommunications companies for the first time. Kohler commented ‘. . .they’re 8 per cent below the average of the world and they’re planning now to stay there’. Do you acceptthese figures?

33. On page 1 of Telstra’s Financial Results for the Year Ending 30 June 1996, it is noted thathighlights included revenue growth of 8.2 per cent to $15,239 in an increasingly competitive market. Whatare Telstra’s projections for revenue growth in 1996-97 and following years?

34. I note that capital expenditure for 1995-96 was $4.093 billion. Can you give the committee adetailed breakdown of this figure? How much was spent on optical fibre cabling? How much on coaxial



cabling? How much on DRCS? How much on microwave radio links? How much on land and buildings?How much on other property, plan and equipment (give a breakdown)?

35. Last Monday you said in the Senate, in relation to the Acting Prime Minister’s suggestion that thegovernment had received a windfall of ‘a couple of hundred million extra’ to the budget which could bespent on other policies:

If you look at the dividend figure of $1.368 billion, you find that is only about $74 million more thanthe implicit figure which we had budgeted for. In other words, there is a very minor increase.

36. But then on 18 September you said in the Senate that the Treasurer had told you that the specialdividend in respect of 1996-97 had not been taken into account by the Treasury in assessing the extentof the difference between the budget estimate and the actual announced dividend. And you said that oncethat is taken into account, the dividend is running at about $26 million behind the budget estimate.

37. Are you sure you’ve got the figures right now? If so, would you please explain why it took youso long to get it right?

38. The day that Telstra announced its massive $2.3 billion profit for 1995-96, it also announced 22,000jobs would go. Do you accept that regional Australia is going to be severely affected by these job losses?

39. Which regions are likely to be most affected?40. Has Telstra considered closing any Customer Service Centres? If so, which ones?41. What are Telstra’s plans in relation to centralising its Network Operations Centres and Software

and Data Loading Centres in Sydney and Melbourne?42. Can you guarantee that Queensland jobs will not be relocated to Sydney and Melbourne as a result

of such restructuring? Can you guarantee that there will be no work centre closures in Brisbane,Townsville, Rockhamptom, Toowoomba or other Queensland towns?Overseas activities

43. What proportion of Telstra’s profits is derived from overseas activities, and what is the likely impactof the proposed privatisation of Telstra on this figure?Policy re late payment of bills

44. What is Telstra’s policy in relation to extensions of time for payment of overdue bills?45. Has Telstra recently introduced a policy or practice of advising people who have been late with

payment of a bill that in future should they not pay their bill by the due date, they may or may not begiven a courtesy call to remind them to pay their bill before their phone is disconnected? If so, what wasthe rationale for this change?Billing system

46 The West Australianreported on 10 September that concern over continuing difficulties withTelstra’s billing system had led AUSTEL to warn Telstra that it was violating the terms of its licence.According to the report, the chairman of AUSTEL, Neil Tuckwell, had issued an ultimatum and was notsatisfied with the rate of progress in correcting the problems. What was the nature of the problem, whatis Telstra’s explanation of how it arose, and what is the current situation?Subprogram 4.2—TelstraTelstra Research Laboratories

It has been widely reported that Telstra proposes to cut 150 jobs at the Telstra Research Laboratoriesby the end of 1996. I am also aware of strong rumours that even more jobs are to be cut over thefollowing months. What is the number of positions that have been cut since the election until 30 June1996, and in the current financial year?

What is the number of positions that will be cut?What is the classification profile of these positions?What are the numbers of positions that will remain after these cuts? [I understand that the proposal

is to reduce numbers from 530 to 380 by the end of the year. Is this correct?]



What are the changes, such as abolition of functions or efficiencies, that will allow the agencies tooperate effectively with these numbers?

How many of the jobs being shed are administrative positions?How many of the people to be sacked are engineers?How many of the people to be sacked are mathematicians?What are the occupations of the other people who will be sacked?What are the costs of redundancies and estimated future redundancies?What are the numbers, by gender, of employees who have accepted redundancies?I understand that the National Information Resource Centre is to be subjected to a 90 per cent cut. Is

this correct? Over what period?What changes are proposed in relation to the National Information Resource Centre?Is it the case that TRL is heading in a new direction which gives decreasing emphasis to hardware and

more emphasis to systems and applications software? If so, what are the reasons for this change ofdirection?

How will Telstra’s field trial of ADSL be affected by job cuts in the Research Laboratories?How will TRL’s research into TV set-top boxes be affected by job cuts?How will TRL’s research into ATM (asynchronous transfer mode) be affected by job cuts?TRL’s publication New Horizonsnotes that the Telstra Laboratories are playing a leading role in

defining TINA—telecommunications information networking architecture. Can you explain what TINAis? What is the progress on this research? How will the research be affected by job cuts?

TRL’s publicationNew Horizonsalso refers to TRL’s work on ‘one of the world’s first corporateelectronic directories based on X.500 standards devised by the International Telecommunications Union. . . now being marketed by Telstra’s National Directory Services. . . ’. Can youtell the Committee moreabout this project? What is the expected revenue? Is TRL’s work in relation to the project finished ordo the Laboratories have an ongoing role? Will job cuts affect this project in any way?

TheNew Horizonspublication also refers to development of a ‘Human Factors Kit’. Can you explainwhat this is, and whether this is an ongoing project. If it is, to what extent will it be affected by job cuts?

Can you tell the Committee about Telstra’s Priority One service, and to what extent TRL job cuts willaffect the further development of the service?

Can you tell the Committee about TRL’s collaborative project with the State Film Centre of Victoriato investigate online access to digitised compressed video material? To what extent will this project beaffected by job cuts in TRL?

Can you tell the Committee about TRL’s work in the last financial year and planned work for 1996-97in relation to the digital technology known as SDH—synchronous digital hierarchy. How will this workbe affected by job cuts?

Can you tell the Committee about TRL’s work in relation to development of ‘frame relay’? How willthis work be affected by job cuts?

Can you tell the Committee about TRL’s research in relation to security systems? How will this workbe affected by job cuts?

Can you tell the Committee about TRL’s work in relation to speech recognition technology? How willthis work be affected by job cuts?

One section of TRL’sNew Horizonspublication is headed ‘Costing the Superhighway’. It briefly refersto TRL’s role in investigating how the network will evolve in response to customer demand. Can youexplain this role in more detail? How is TRL’s work in this area used in making strategic decisions aboutthe rollout of new services? How will this work be affected by TRL job cuts?



Senator Lees to the Department of the Environment, Sport and Territories—Program 4:Subprogram 4.1—Recreation DevelopmentSubprogram 4.2—Australian Sports Commission

1. What is the extent of cuts to sporting organisations under the sports assistance program, ie what wasthe budget for 1995/96 and what is the budget for 1996/97 and 1997/98?

2. What is in the Sports Assistance Scheme for grants to sports for participation for 1996/97 and1997/98?3. What constitutes a "minor sport" as described in the ASC Media Release of 5 September?

4. Similarly what constitutes a "Comparatively wealthy professional sport"?5. Does the Government fully support the manner in which the budget cuts have been passed on to

sport by the Australian Sports Commission?6. Is the Government happy with the lack of consultation that took place with those sports suffering

a funding cut?7. Is the Government committed to sport for all?8. In view of the discriminatory cuts, is the Government happy that the ASC is operating within its

charter to enrich the lives of all Australians?9. What are the 20 positions to be cut at the ASC?10. Where were the $2.7 million savings made in the ASC?11. How do these cuts hold up with Government policy commitments, i.e.(a) The Coalition will maintain funding at current levels for sport(b) Support for participation programs and elite athletes must be provided in a balanced way(c) The Coalition will continue to work through the Australian Sports Commission to ensure ongoing

equitable funding12. What has been he increase in SES positions since 2 March at the ASC?13. What is the current number of SES positions and SES equivalents at the ASC?14. Will there be further deductions to sporting organisations through current reviews of the sports

assistance scheme? If so, will any cuts be distributed in total to other sports through the sports assistancescheme or to other ASC programs?

15. What is the rationale for funding cuts to peak umbrella organisations?16. Will the ASC require NSO’s to use the services/products of the commercial sponsors of the ASC

if NSO’s wish to be part of any ASC program, eg NST/Ansett?17. Why is there nothing in the Budget for National/Community facilities for sport?18. Why is there nothing in the Budget to encourage physical education in schools?

Senator Kemp to the Department of Communications and the Arts—Subprogram 3.1—Australian Broadcasting Corporation

Could you indicate the ABC staff levels in radio and television and other major functions by state, forthe last five years (June 30)*

What are the current levels of staffing (eg September)?What are forecast levels of staffing as at June 30 1997?

* Also metropolitan and regional areas



Senator Bourne to the Department of Communications and the Arts—Communications—Australian Broadcasting CorporationQuestion 1I refer to Budget Paper 1, page 3-16.

Could the Minister kindly inform the Committee of the meaning behind the figures in Table 4, underthe entryreduced funding for the ABC, which reads at though the Australian Broadcasting Corporationis going to have $55 million cut from its budget in each of the next three years, totalling a cut of $165million from the ABC budget over the next four years and are also subject to the 2 percent per annumefficiency dividend?Question 2I refer to Budget Paper 1, page 3-20.

Could the Minister kindly inform the Committee why, when he was Chair of the Senate SelectCommittee into the ABC Management and Operations, he agreed to continue to quarantine the ABC fromthe so-called efficiency dividend and yet in these Budget Papers, the ABC has been subjected to the 2percent running cost reduction?Question 3I refer to Budget Paper 1, page 3-20.

Could the Minister inform the Committee why the ABC has been subjected to a budget reduction of$55 million, contrary to the Government’s own policy statements which stated that the Government wouldnot cut the ABC’s budget, and would honour the tri-annual funding agreement?Question 4I refer to Budget Paper 1, page 3-20.

Could the Minister kindly inform the Committee how he expects that ABC to be able to deliver thefull range of comprehensive services required of it under the Australian Broadcasting Corporation Act,with a Budget reduction of $55 million?Question 5

This question is directed to the Managing Director of the ABC, Mr Brian Johns. Mr Johns, could youplease inform the committee what you intend doing about these cuts in terms of restructuring of the ABC,programming decisions, and the like?Question 6I refer to Budget Paper 1, page 3-20.

Would the Minister kindly inform the Committee how the figure of $55 million was chosen? Did itcome from the National Commission of Audit?

Did it come from the Expenditure Review Committee?Would the Minister inform the Committee of the factors taken into consideration in the determination

of this budget cut?Question 7I refer to Budget Paper 1, page 3-20.

The amount of $55 million is a curious one, (as we have heard during the course of this EstimatesCommittee).

Would the Minister please inform the Committee of what, in the ABC, he thinks is actually worth $55million?

If it is not an amount targeted to one specific service or one specific program, where does the Ministerexpect cuts to be made?Question 8I refer to Budget Related Paper No 1.2, page 42.



Under Subprogram 3.1—Australian Television Satellite Broadcasting—the papers state that theGovernment has also asked the ABC to examine the scope for contracting out the ATV service.

Could the Minister inform the Committee whether this examination is being undertaken as a part ofthe Mansfield inquiry into the role and functions of the ABC, or is this to be yet another inquiry?

If it is to be another inquiry, when will it be undertaken? Will the Government provide any resourcesto the ABC to enable it to undertake this review?Question 9I refer to Budget Related Paper No 1.2, page 42.

In relation to the recoup funding for pay TV of $6.9 million dollars. Given that the ABC had itslegislation amended, and was provided with a special grant to undertake the pay TV venture, it is notirregular for the agency to have to refund that particular allocation?Question 10I refer to Budget Paper 1, page 3-133.

Would the Minister please advise the Committee of the reasons for the reduction in funding to theNational Transmission Facilities, forecast to be cut by 27 percent over the next four years?

In reference to the Budget Related Paper 1.2, page 22;With the reduction in the appropriation to the NTA, how can the Government claim that the costs ofextension of the SBS (to the five regional areas of Murray, Grafton, Upper Namoi, the Central Tablelandsand Rockhampton) if the costs of extension are to be absorbed by the NTA?Question 11I refer to Budget Paper 1, page 3-131.

Would the Minister kindly inform the Committee of the reasoning of the budget cuts to the ‘Unearthed’Triple J radio program, which sought to discover new Australian talent?

How does this move seek to assist the Australian music industry?Question 12I refer to Budget Paper 1, page 3-16.

The ABC budget has had, for the past five years, enjoyed being able to adequately and appropriatelyplan its program and projects through the triennial funding arrangement. This arrangement was furtherendorsed by the Senate Select committee review into ABC management and operations.

How does the Minister consider the ABC to be adequately and appropriately be able to plan its projectsand programs given the cuts announced in the budget which, for this year total $24 million ($18.3 millionfrom efficiency dividend [budget paper 1:p3-131] and $13 million), and for next year, are close to $80million?Question 13I refer to Budget Related Paper 1.2, page 26.

This section of the Budget Related Paper refers to the performance forecast for Program 1 (theDepartment of Communications and the Arts) and signals the significance of reviews of broadcastingservicesQuestion 14In relation to the budget cuts generally, as outlines on Budget Paper 1, page 3.16.

Could the Minister inform the Committee whether he has received any letters in support of the ABC?How many have you received?What has happened to those letters?Has he personally signed any of those letters?Have any of those letters called for support for the retention of funding for the ABC?



[if he says no, ask why the minister is disinterested in hearing from his constituents—defendant thelistening and viewing audience of Australia]

What was the content of those letters?Does the Government intend to take into consideration any of the expressions of public concern in its

deliberations over the budget figures in the coming years?Question 15I refer to Budget Paper 1, page 3-16.

Would the Minister kindly inform the Committee why the Government sought to cut $55 million fromthe ABC in one lump sum, rather than giving any consideration to renegotiating a new triennial fundingarrangement, and seeking to bring in a staged budget reduction, in place of this radical, excessive situation.Question 16I refer to Budget Paper 1, page 3-131.

Budget Paper 1 refers to the Government’s proposal to cease the funding for the Unearthed newAustralian music development program. Would the Minister inform the Committee of the number of artistsUnearthed by the Triple J radio network?

Could the Minister inform the Committee of the number of Unearthed CDs which have been sold?[the ABC have actually recorded all the finalists in the Unearthed competition in all centres onto a

series of CDs, called Unearthed. They sell for under $20}How many of these artists have since been awarded music contracts?What impact does the Minister consider this to have on the development of new and emerging

Australian bands?Question 17I refer to Budget Paper 1, page 3-131.

Could the Minister please inform the committee why the Triple J Internet site (JNet) has had its budgetcut?

Was the decision to cease the JNet site the result of an independent and open review which found thatit was not efficient or effective?

Can the Minister inform the Committee of the degree of use of the JNet, particularly by those aged18 to 25?Question 18

Given that Triple J was about to enter into Stage 3 of its expansion into towns of 3000 people or more,what towns will now miss out as a result of the cessation of the regional expansion program?Question 19I refer to the ABC’s policy of no sponsorship or advertising, and refer specifically to issues raised in therecent ‘Coleman’ report.

Could the Minister advise the Committee on the direction he has provided to the ABC to ensure thatthe issues of indirect sponsorship no longer occur on ABC and secondly, what instruction and/or advicehas the Minister provided to the ABC on issues relating to the protection of whistleblowers from publicand departmental vilification?Question 20I refer to Budget Related Paper 1.2, page 10.

The table on page 10 of Budget Related Paper 12, provides figures for outlays and staffing. In thecolumn relating to staffing, the figure for 1996/97 is not provided, and states that the ABC were not ableto provide those figures as the Corporation is in the process of internal restructuring.

Will the Minister please provide the Committee with an explanation for calling the Mansfield Reviewat this time, given that internal restructuring is a long term process, and arose as a result of the 1995



Senate Select Inquiry into the Operations and Management of the ABC, and the implementation of theEnterprise Agreement?Question 21I refer to the establishment of the Mansfield Inquiry, and the formation of the Secretariat to provideresearch an other support services to the Chair of the Review, Mr Bob Mansfield.

Could the Minister please provide the Committee with:1. details of the cost of the establishment of the Secretariat;2. the cost of fitting out the Secretariat;3. expected salary on-costs relating to the payment of overtime and other costs;4. the program or sub-program budget allocation for the Mansfield Inquiry;5. costs associated with appropriate long terms storage and archiving the approximately 11,000

submissions made to the inquiry;6. the date for the report to be furnished to the Minister, and subsequently the Parliament?

Question 22I refer to the Mansfield Inquiry.

Could the Minister please provide the Committee with details of1. the expected number of ABC staff who will be offered redundancy packages this financial year;2. details of the areas from which staff are being reduced;3. the estimated cost of redundancy packages being offered top ABC radio and television network staff.4. Has the costs of redundancy packages been adequately appropriated into the 1996/97 Budget?5. Where does this figure appear in the Budget papers?

[if the Minister declares there is no appropriation]:6. what items are going to be drawn from the ABC’s budget is lieu of this amount?

Question 23This page details a decrease in funding for the ABC’s operating expenses. Will the Minister please

inform the Committee of the places in which the ABC will be forced to either delete entire services, orto significantly downgrade services?Follow-on: if the Minister declares that programming issues are not the province of the Minister’s office,but are up to the management of the ABC, then ask why it is that the Government has taken to intervenein terms of the Mansfield inquiry, which seeks to examine the role and functions of the Broadcaster (maybe defined as programming) and that as a result of the budget cuts, the ABC is now shedding jobs andbroadcasting services. This Government has to take some degree of responsibility.Question 24I refer to Appropriation Bill No.1, schedule 3, page 38.What is the likely impact of the reduction of operating expenses for the ABC on

rural, remote and regional communities;childrens’ programs;news and current affairs programs;information and education programs;radio programs covering local and national issues;sporting programsentertainment programs;ABC produced documentaries and dramasamount of Australian content on the ABC



Question 25I refer to Appropriation Bill No.1, schedule 3, page 38.

At Division 151 part 3, there is a marled decrease in the allocation for payments in respect of technicalservices provided under Part vii of the Australian Broadcasting Corporation Act. Broadly, this sectionrelates to the provision of transmitting stations and technical equipment.

Would the Minister please inform the Committee of the likely impact of this decrease in Budgetallocation on the ABC’s ability to perform its function, in light of the impact of emerging newtechnologies?Question 26I refer to Appropriation Bill No.1, schedule 3, page 38.

At Division 151 part 3, there is a marked decrease in the allocation for payments in respect of technicalservices provided under Part vii of the Australian Broadcasting Corporation Act.

1. Will the minister advise the Committee whether he expects that this decrease will impact on the ABCability to invest in new technologies?

2. What impact will this be likely to have on the ability of the ABC to provide efficient broadcastingservices?

3. Should the ABC not be able to invest in new technologies, what will be the likely impact on theABC ability to provide a comprehensive range of services to rural, regional and remote Australians?Question 27

I wish to raise a question in relation to the reorganisation of the ABC as a result of the reduction inbudget.

What is meant by the phrase "capitalise on the strengths of news and current affairs across both radioand television if we bring them closer together" (One ABC, page 3)? Is this not euphemistic for the endof the separation of the production of news and current affairs programs? Will this not mean, that thetwo program streams will cease to be separate? Will it not mean that specialist staff will be forced towork on both radio and television news programs, and on both news and current affairs?Question 28I refer to Budget Paper 1, page 3-131.

In relation to the reduction in funding to the Youth Network Triple J, will the Minister please informthe Committee whether there is any truth to the rumour that the network is being targeted for privatisation,and provide guarantees that Australian youth will be able to access the innovative, diverse and exceptionalmaterial as currently provided by Triple J.Question 29I refer to Budget Paper 1, page 3-130/131, and the comment by the Chair of the ABC, Mr DonaldMcDonald, in the Australian on 17 September 1996; that in order to survive these cutbacks theCorporation is going to have to seek business support?

Does this not pre-empt the outcomes of the Mansfield Review?Would the Minister not be better placed to await the recommendations of the Mansfield Review before

deciding what parts of the ABC might be more appropriate than others to sell off?Question 30I refer to Budget Paper 1, page 3-131.

With the cutbacks to the ABC, can the Minister provide assurance to the Committee that theGovernment is not going to consider advertisement or sponsorship for the ABC, in accordance with theNational and Liberal Party policy onBetter Broadcasting.Question 31

I ask the Managing Director, Mr Johns whether the current Enterprise Agreement is being honouredin terms of pay and conditions for all staff, in terms of workplace practices and in terms of bringing aboutreforms to management size and structure?



If so, how does this sit in relation to the number of redundancies being offered to staff, the numberwho have taken up the option, and whether the Corporation has considered involuntary redundancies inan effort to meet their budget cutbacks?Question 32In relation to ABC Radio services. What percentage of the ABC listening audience does

1. Triple J broadcast to?2. Radio National broadcast to?3. Classic FM broadcast to?4. AM? PM? broadcast to?5. 2BL broadcast to?

Question 33How much revenue does the ABC make from its ‘ABC shops?

Question 34How is the ABC expected to invest in new equipment, and in new and emerging technologies with

this massive reduction in its budget?Question 35

Will the funding cuts affect the ABC’s statutory advisory body, the National Broadcasting Corporation?Question 36

Was Radio Australia put off the air for more than 50 hours in August 1996 because of the difficultieswith transmission from the Cox Peninsula?

Were those difficulties caused by cost-cutting and the contracting out of services?Will Radio Australia have to cease some of its broadcasts to Asia because of the reduction in

transmission capacity from Darwin by the National Transmission Authority?Do these difficulties mean the Coalition Government has abandoned the Commitment given in their

own policy statementBetter Broadcastingthat "the Coalition is strongly supportive of Radio Australia’sexisting services and will ensure that they are not prejudiced or downgraded in any way".?Question 37

In its deliberations of restructuring the ABC as perOne ABC, would the Managing Director pleaseinform the Committee of the policy of the ABC in dealing with journalists who seek to question fundingallocations for programming, particularly for programs which seek to use external funds?Question 38

I refer to the Coleman report. Would the Managing Director inform the Committee of the cost of theinvestigation carried out by Mr Coleman, including the cost of the provision of legal assistance acquiredby the ABC?

What has happened to the staff named, adversely and generally, in the Coleman inquiry?Is the ABC now re-employing those members of staff who were implicated under the inquiry?What has the ABC done to ensure that the issues of editorial compromise arising from the receipt of

external funds and indirect sponsorship, which resulted in the Coleman inquiry, do not occur again?


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