Senate debates

Tuesday, 26 August 2014



6:03 pm

Photo of Cory BernardiCory Bernardi (SA, Liberal Party) Share this | | Hansard source

I present documents listed on today's Order of Business at item 15 presented since the Senate last met. In accordance with the usual practice and with the concurrence of the Senate, government responses will be incorporated in Hansard.

The list read as follows—

Documents presented out of sitting

COMMITTEE REPORTS (pursuant to Senate standing order 38 (7)).

Joint Standing Committee on the National Disability Insurance Scheme—Progress report—Implementation and administration of the National Disability Insurance Scheme. [Received 29 July 2014]

Rural and Regional Affairs and Transport References Committee—Report—Implications of the restriction on the use of fenthion on Australia’s horticultural industry, including Hansard record of proceedings, documents presented to the committee, additional information and submissions. [Received 31 July 2014]

Community Affairs References Committee—Interim report—Out-of-pocket costs in Australian healthcare. [Received 8 August 2014]

Legal and Constitutional Affairs Legislation Committee—Report—Migration Legislation Amendment Bill (No. 1) 2014 [Provisions]. [Received 21 August 2014]

Community Affairs References Committee—Report—Out-of-pocket costs in Australian healthcare. [Received 22 August 2014]

Rural and Regional Affairs and Transport References Committee—Report—Review of the citrus industry in Australia, dated December 2013. [Received 4 August 2014]

Foreign Affairs, Defence and Trade References Committee—Report—Australia's overseas aid and development assistance program, dated March 2014. [Received 12 August 2014]

National Broadband NetworkSelect Committee—Interim report, dated March 2014. [Received 13 August 2014]

Legal and Constitutional Affairs References Committee—Report—Framework and operation of subclass 457 visas, Enterprise Migration Agreements and Regional Migration Agreements, dated June 2013. [Received 20 August 2014]


Australian Government response to the Senate Rural and Regional Affairs and Transport References Committee report:

Review of the Citrus Industry in Australia August 2014

Review of the citrus industry in Australia

Report of the Senate Rural and Regional Affairs and Transport References Committee

Government Response

The Australian Government welcomes the Committee's report on the Review of the citrus industry in Australia and would like to thank the Committee for the time and effort it has put into the inquiry.

Response to recommendations

The Government notes the recommendation

The government recognises the importance of having representative peak industry bodies that provide effective industry leadership. The structure of peak industry bodies and their regional representation is a matter for industry.

The Government does not agree to the recommendation

The Committee has suggested a compulsory registration scheme and central database of citrus growers would serve a number of purposes. The government considers it would be appropriate for these to be addressed through other means.

Industry planning and policy development are industry responsibilities, therefore, industry representative bodies (IRBs) should be responsible for facilitating communication with citrus growers. It is appropriate that engagement in planning and policy development is voluntary. It is likely that IRBs already hold certain information about growers who are members of the bodies. IRBs undertaking planning and policy development activities can utilise other means, such as industry events or media, to encourage citrus growers to engage in these activities if they choose to do so.

Levy funded research services are provided to the industry by Horticulture Australia Limited (HAL). HAL is able to use research levy funds to facilitate the dissemination, adoption and commercialisation of research outcomes to levy payers. HAL prepares an annual report on its activities for the citrus industry and interested growers can also obtain reports about the outcomes from individual projects.

Communication in biosecurity emergencies can be achieved through existing means such as grower organisations or the media.

The existing citrus levy legislative framework cannot be used to collect or distribute the suggested data. In most instances, levy and other relevant information are collected from an intermediary, such as a market agent or exporter, and there is no direct contact with growers. Levy related information collected by the Department of Agriculture (formerly DAFF) does not include information relating to individual growers. The establishment and maintenance of a compulsory grower database would require new legislation and new funding from appropriate sources. The custody of such a database and its maintenance should be the responsibility of industry. Compulsory registration would increase the regulatory burden on the citrus industry.

The Government notes this recommendation

The government notes the progress that Citrus Australia Limited (CAL) and Horticulture Australia Limited (HAL) have made on this issue including a revised IAC membership structure of nine members, six of whom are not PIB directors, executive officers or employees of CAL, and the appointment of an independent governance officer to the citrus IAC.

The Deed of Agreement 2010–2014 (the Deed) between HAL and the Commonwealth requires an independent review of the performance of HAL. The Deed contains the standard terms of reference for the performance review and provides for additional matters to be included as required. Additional matters that were considered as part of the HAL performance review, which reported on 9 May 2014, include the HAL model of industry service delivery, and the constitution that underpins the model, against the benchmark of good governance under the Deed. The response to Recommendation 4 (see below) details the standard terms of reference and the additional matters that were addressed by the review.

The Government agrees to the recommendation

The independent performance review of HAL considered the structure of the horticulture levy system and the HAL model of industry service delivery. This included HAL's membership structure. The performance review report was released on 9 May 2014. The report contains nine recommendations, including that HAL transition from its current membership structure, in which horticulture peak industry bodies are the company's members, to a new membership structure, in which farmer levy payers are the company's members. The government has received the report the report and acknowledged that it meets the review's terms of reference. The government is considering the review findings and recommendations. The terms of reference for the performance review were:

Standard review

The Performance Review shall cover:

1. The performance of HAL in meeting its obligations under the Deed as the Industry Services Body for the provision of marketing and research and development services to the industry

2. HAL's implementation of strategic, annual operational, risk management, fraud control and intellectual property plans and its effectiveness in meeting the priorities, targets and budgets set out in those plans

3. The efficiency with which HAL carried out those plans

4. The delivery of the benefits to the industry and the community in general as foreshadowed by those plans

Additional matters

In addition, the Performance Review shall cover:

5. The HAL model of industry service delivery and its underpinning in the Constitution against the benchmark of good governance practice under cl 4.1 of the Deed, including but not limited to:

(a) HAL's membership whereby PIBs, rather than individual levy payers, are the members as is the case with other industry-owned RDCs.

(b) The regulation of PIBs and other industry representative bodies under the HAL model; the nature and transparency of their direct and indirect funding arrangements with HAL; and their accountability to their own members and levy payers for their performance in consulting with levy payers and in spending industry and government funds, including the delivery of planned outcomes.

(c) The operation of the IACs, including independence from the PIB/IRB and the extent and effectiveness of control by the HAL Board.

(d) The influence of PIBs/IRBs on decision-making by HAL's Board, management and the IACs.

(e) The capacity of the HAL model to deliver services in an efficient, effective and transparent manner to provide value for money to levy payers and corporate members.

(f) Identifying alternative models to increase the effectiveness and efficiency of HAL's service delivery, transparency and accountability in HAL's funding arrangements.

6. The efficiency of the levy structure for the horticulture sector (in which many individual commodities maintain separate independent levy rates and collection mechanisms) and the process by which levies are conceived, implemented, collected and expensed.

The Government agrees to the recommendation

The Department of Agriculture (formerly DAFF) has been actively pursuing improvements to the consultation arrangements with Australian horticultural industries, particularly in terms of the processes to identify priority projects for market access negotiation.

There have been considerable achievements to date with the movement to more informed (evidence-based) analysis of market access applications and the strengthening of the engagement of industry in the strategies underpinning Australia's approaches, and the subsequent negotiations, to gain, improve or maintain access. The primary forum for advice to the department regarding the horticultural sector's priorities for market access is the Office of Horticultural Market Access, which is an industry project, funded by Horticulture Australia Limited from industry levies and matching Australian Government payments.

In addition, with the formulation of the Horticulture Export Industry Consultative Committee (HEICC), the citrus industry has the opportunity to assist with the establishment of process reforms and standards to further promote efficiencies in the export pathways.

Under HEICC the department has established a program to assist industry evaluate its ambitions for the markets, including those technical and policy hurdles which it faces in both Australia and in their targeted markets. The department encourages the citrus industry through CAL to be an active participant in these processes with its peers.

The previous recommendations that relate to the capacity of CAL to consolidate the views of the sector are also highly relevant to this recommendation. The citrus sector is extremely diverse with differing fruits, production systems, scale, pest health status, market sectors, etc. A well-structured representative system to bring together the competing interests of the sector would allow the industry to more effectively participate in the existing consultation processes on market access.

The Government agrees in principle to the recommendation

The government is committed to securing high-quality, comprehensive trade agreements that produce tangible benefits for agricultural producers and exporters, including the citrus industry.

The government committed at the 2013 federal election to increase resources from within the Department of Foreign Affairs and Trade to fast-track the conclusion of free trade agreements. Senior Australian government ministers and officials intensified discussions with their Chinese, Korean, Japanese and Trans-Pacific Partnership counterparts and achieved significant progress, including the conclusion of bilateral trade agreements with Korea and Japan.

The Korea-Australia free trade agreement, once it comes into force, will deliver many benefits to Australian industries and exporters, including the citrus industry. It is a strong and liberalising agreement for agriculture that protects and promotes our competitive position in the Korean market. It will secure improved market access through elimination of very high tariffs on a wide range of exports, including oranges, lemons, limes, grapefruit and fruit juices. The agreement includes strong outcomes on citrus which will support Australia's competitive position in the Korean market, including for oranges, Australia's largest citrus export. Details of the agreement are available at

The Japan-Australia Economic Partnership Agreement will provide a liberalising outcome for fruits and juices, including citrus, resulting in tariff elimination on the vast majority of Australian horticulture exports to Japan. The agreement is currently undergoing legal verification and will become public once this process has been completed.

The Government notes the recommendation

The Government will provide $15.0 million over four years to support small exporters in sectors where there are specific export certification registration charges.

Funding will be provided in 2014-15 to provide eligible small exporters with a rebate of 50 per cent of their export certification registration costs, up to a maximum of $5,000. From 2015-16, funding will be provided for projects that directly benefit small exporters, particularly projects to improve market access. The Government will consult the small exporter sectors on the projects to be considered. This measure delivers on the Government's election commitment.

In accordance with the Government's cost recovery policy, the Department of Agriculture is obliged to recover the costs of providing export certification and inspection services. The horticulture export program within the department provided services that support the A$197.2 million value of exports from the citrus sector in 2013.

The charges currently paid by registered export establishment enables the department to undertake a number of vital services for citrus exporters including:

management of export conditions, publishing and maintenance of export cases on the Manual of Importing Country Requirements (MICoR), development of operational workplans that outline the requirements to meet importing country protocols;

export accreditation and audit of the export pathway from growers and packhouses through to treatment facilities and registered establishments to ensure compliance with importing country requirements;

facilitate operational audits and inspectors from importing countries;

liaison and communication with peak bodies to facilitate export compliance and process operational changes;

liaison with importing countries to resolve phytosanitary and inspection/certification issues;

contribution to market access negotiations on operational issues, including harmonisation of interstate trade;

assist in the selection of market priorities, with a focus on market readiness;

technical/operational advice to authorised officers; and

secretariat for the HEICC, which has representatives from the major horticulture export industries.

The Government notes the recommendation

The government's election commitments include proposals to strengthen Australia's anti-dumping regime. These commitments are aimed at ensuring Australian industries and businesses have access to a more efficient and more effective anti-dumping regime. Any changes would need to be mindful of Australia's international obligations, including relevant WTO agreements.

The Government agrees in principle to the recommendation

The government has long supported the development and implementation of the National Fruit Fly Strategy (NFFS) and the NFFS Implementation Plan. The government provided both financial and in-kind contributions to develop the NFFS and the Implementation Plan. This includes direct funding towards the 15 key projects identified in the NFFS Implementation Plan that are designed to facilitate an enhanced and sustainable national approach to the management of economically important fruit flies.

Successful implementation of the NFFS is contingent on a commitment from industries that produce fruit fly host goods to identify, fund, and undertake research that contributes to the understanding of fruit fly biology and management relevant to their sector. The government has committed to support these activities, both through matching industry funding for qualifying research and development activities undertaken through Horticulture Australia Limited, and through the provision of technical expertise and experience. The government has also committed funding to support the National Fruit Fly Strategy Advisory Committee, which will involve governments and industry, to oversee the implementation of the National Fruit Fly Strategy.

The Government notes the recommendation

The government agrees that all industries that are affected by, or that contribute to fruit fly pressures through the production of host material should contribute to the national efforts to develop and implement effective management practices.

Many industries already have in place levy arrangements for responses under the Emergency Plant Pest Response Deed (EPPRD), as well as research and development levies. The Australian Government will consider any request by industries to investigate whether these levies could also be applied to broader biosecurity issues, including fruit fly, or whether a specific fruit fly levy is a more appropriate option.

For this approach to be successful, fruit fly affected industries would need to agree to such a levy and set them at a level which ensures sustainable funding.

The Government agrees to the recommendation

As noted in submissions and in evidence provided to the committee by a number of parties, the management of fruit flies as a pest of horticulture has local, regional and national aspects. Factors including local and regional conditions and host crop varieties can influence the strategies required for successful management of fruit fly.

Experience in managing fruit flies as well as research capacity for investigating and developing new management strategies is spread between industries, private enterprises and governments. The state and territory governments also have a key role in managing the regulatory systems that support Australia's favourable fruit fly status. It is because of this that the Australian Government has provided support to the National Fruit Fly Strategy Advisory Committee. The Advisory Committee will bring together industry representatives, researchers, and quarantine regulators to identify key management and research needs, and assist in communicating and implementing a co-ordinated approach with industry and other regional and state government organisations. Strong industry representation on the Advisory Committee will be critical for its success and to ensure that future management strategies for fruit fly include components relevant to all affected industries and regions.

The Government notes the recommendation

The development of contingency plans is a step within the broader industry biosecurity process that includes the development of crop specific Industry Biosecurity Plans, Pest Fact Sheets and Diagnostic Protocols. Recognising that biosecurity is a shared responsibility, these are developed as a primary function of Plant Health Australia, a non-profit company that is a tripartite partnership between the Government, state and territory governments, and potentially affected plant industries.

Plant Health Australia has developed the Australian Emergency Plant Pest Response Plan, PLANTPLAN, which is the current preparedness and response guidelines for any incursion of an exotic pest or disease that would affect a plant industry. PLANTPLAN is constantly reviewed and regularly updated. PLANTPLAN can be applied to any plant pest incursion and is supported by nationally developed and agreed diagnostic protocols and response procedures.

The development of pest-specific contingency plans provides additional information to supplement PLANTPLAN, but does not supersede it. In the case of the pest-specific contingency plan for Huanglongbing and its vectors, it was developed as a specified project using citrus industry levies and funded through Horticulture Australia Limited with matching funding from the Australian Government. Should the citrus industry consider that the current contingency plan requires updating or that any pertinent matters are not sufficiently addressed in the plan or through other resources, the industry should seek to address this through Plant Health Australia. The government would support any necessary efforts to update industry biosecurity plans and contingency plans, including support by matching funding through Horticulture Australia Limited projects and provision of technical expertise where required.

Additional Comments By Nick Xenophon

The Government notes the recommendation which is aligned to recommendation 7 above

The Government notes the recommendation

The government considers it important that Australia's competition laws remain robust and effective into the future. To achieve this, the government has announced a 'root and branch' review of the competition framework.

The review will be an independent examination of how the competition framework is working, whether it is keeping up with emerging trends, and looking beyond the competition framework to identify impediments to competition with the goal of improving the living standards of all Australians.

As part of this, the review will have capacity to consider how key markets, such as groceries, have evolved with a view to promoting efficient, competitive outcomes and fair business dealings.

The Government notes the recommendation

The government is aware that Australian consumers want clear and accurate labelling to help them identify and buy food grown and processed in Australia. The government is also aware that country of origin claims on food labels may be confusing to consumers. However, any changes to current laws would require agreement at the Commonwealth, state and territory levels. As a first step in developing clearer country of origin labelling for food, a government working group is considering activities to improve consumer and industry understanding of country of origin labelling and other actions to develop clearer labelling options.

The Department of Industry and the Treasury co-chair this inter-agency working group. It is tasked with implementing the Council of Australian Governments Legislative and Governance Forum on Food Regulation response to Recommendation 42 of the Review of Food Labelling Law and Policy (2011). That response effectively requested agencies to review and clarify guidance material on country of origin labelling and, if necessary, conduct an education campaign. Members of the working group include the Australian Competition and Consumer Commission (ACCC), Department of Agriculture, Department of Health, Food Standards Australia New Zealand, Department of Foreign Affairs and Trade and Australian Customs and Border Protection Service.

To address possible consumer confusion, the ACCC has released a fact sheet titled 'Where does your food come from'. This factsheet explains to consumers how they can support Australian primary producers and Australian food manufacturing jobs. Revised industry guidelines, 'Country of origin claims and the Australian Consumer Law', were also released by the ACCC on 15 April 2014. These guidelines will help businesses to understand and comply with the Australian Consumer Law provisions relating to country of origin claims.

In addition, the House of Representatives Standing Committee on Agriculture and Industry is undertaking an inquiry into country of origin labelling for food. The Committee is looking into the current system to see if it can identify any gaps or compliance limitations, or any improvements that could be made.

The Government does not agree to the recommendation

The government's election commitments include proposals to strengthen Australia's anti-dumping regime. These commitments are aimed at ensuring Australian industries and businesses have access to a more efficient and more effective anti-dumping regime. Any changes would need to be mindful of Australia's international obligations, including relevant WTO agreements.

The Government does not agree to the recommendation

Food Standards Australia New Zealand assessed the safety of carbendazim residues in orange juice in 2012 and recommended amending the maximum residue limit from 10 mg/kg to 0.2 mg/kg. The Legislative and Governance Forum on Food Regulation subsequently approved the inclusion of this lower MRL in the Australian New Zealand Food Standards Code. Carbendazim is an approved agricultural chemical used safely on a range of food commodities in Australia.

From 18 January 2014, importers are expected to source orange juice and orange juice concentrate that comply with the new requirements. The Department of Agriculture tests imported orange juice for compliance with the food standards code and publicly reports on the results of the testing program. State and territory jurisdictions have responsibility for ensuring that all food, including imported food, meets the requirements of the food standards code at the point of sale.

Australian Government response to the Senate Foreign Affairs, Defence and Trade References Committee report:

Australia's overseas aid and development assistance program

August 2014

Recommendation 1

The committee recommends the Australian Government release an overarching policy framework for Australia's aid program as part of the May 2014 budget process.


The Government's new development policy, Australian aid: promoting prosperity, reducing poverty, enhancing stability, was released on 18 June 2014.

Recommendation 2

The committee recommends the Australian Government undertake a white paper process to refine the long term strategic objectives of Australia's aid program and identify measures to achieve these objectives.

Not agreed.

The Government has established the strategic long term objectives for Australia's aid program in a new development policy, Australian aid: promoting prosperity, reducing poverty, enhancing stability, which was released on 18 June 2014.

The Government's new performance framework, Making Performance Count: enhancing the accountability and effectiveness of Australian aid , was released with the new development policy on 18 June 2014 and provides assurance that the aid program is effective, achieving results and value-for-money. A key principle underlying the framework is that funding at all levels of the aid program will be informed by progress against a rigorous set of targets and performance benchmarks.

Recommendation 3

The committee recommends the Australian Government maintain its commitment to increase the funding by the Consumer Price Index in 2014-15.

Not agreed.

The Government has stabilised the Official Development Assistance (ODA) budget at around $5 billion ($5.032 billion in 2014-15), with projected growth from 2016-17 in line with the Consumer Price Index (CPI).

Recommendation 4

The committee recommends that, in future years, the Australian Government ensures that Australia's ODA/GNI ratio does not fall below 0.33.

Not agreed.

As stated prior to the election, the Government will not commit to a prescriptive, time-bound target for ODA as a percentage of GNI. The Government has stabilised the ODA budget at around $5 billion, with projected growth from 2016-17 in line with the Consumer Price Index (CPI).

Recommendation 5

The committee recommends the Minister for Foreign Affairs and the Shadow Minister for Foreign Affairs develop a bipartisan agreement for the long term funding of Australia's overseas aid and development assistance program to achieve the ODA/GNI target of 0.5 per cent by 2024-25.

Not agreed.

As stated prior to the election, the Government will not commit to a prescriptive, time-bound target for ODA as a percentage of GNI. The Treasury's Submission to the Inquiry examined the problems for budgeting caused by targeting a specific ODA percentage of GNI. The Government is committed to deliver an aid program that is predictable, affordable and effective. Setting an ODA/GNI target to be achieved by a specific date is neither predictable nor necessarily affordable, given significant fluctuations in projected GNI.

Recommendation 6

The committee recommends that the Australian Government promote the interests of developing countries in the Asia Pacific in the post-2015 development agenda discussions.


The geographic focus of Australia's aid program is the Indo-Pacific region. We have many shared interests with the developing countries of that region. We will promote those shared interests in the post-2015 development agenda discussions in accordance with the recently released new development policy, Australian aid: promoting prosperity, reducing poverty, enhancing stability .

Recommendation 7

The committee recommends that the Australian Government reverse funding cuts made to Pacific nations in the 2014-15 budget.

Not agreed.

The Government will maintain flexibility in its budget decisions.

The 2014-15 Budget estimate for total ODA for the Pacific is $1,152.7 million, compared with the estimated outcome for 2013-14 of $1,062.6 million.

Recommendation 8

The committee recommends that the Australian Government reintroduce and support legislation to enable Australia to become a member of the African Development Bank Group.

Not agreed.

The Government has advised the President of the African Development Bank Group that it will not pursue Australian membership of the African Development Bank and the African Development Fund. This decision was taken in the context of a tight fiscal environment and contributes to savings from the aid budget. The geographic focus of the Australia's aid program is the Indo-Pacific region. However, Australia will continue to help sub-Saharan Africa achieve its development priorities, focusing on support for productive sectors which can contribute to economic growth and poverty reduction.

Recommendations 9 and 10

The committee recommends that the Australian Government renew the Medical Research Strategy and expand funding for the program to $50 million per annum.

The committee recommends that the Medical Research Strategy should:

have a broader remit to include all research relevant to the major health challenges in developing countries, including early and product development and operational/field research; and

continue to have priority focus on product development partnerships.

Not agreed.

The Government's new development policy, Australian aid: promoting prosperity, reducing poverty, enhancing stability , provides strategic direction for medical research in the context of the aid program.

In 2014-15, the Government has committed $30 million of the aid program to health and medical research. This is the most we have ever inves

6:04 pm

Photo of Anne RustonAnne Ruston (SA, Liberal Party) Share this | | Hansard source

by leave—I move:

That consideration of those documents be listed on the Notice Paper as separate orders of the day.

Question agreed to.

Photo of Kim CarrKim Carr (Victoria, Australian Labor Party, Shadow Minister Assisting the Leader for Science) Share this | | Hansard source

I seek leave to take note of the return to order regarding the Australian Defence Force boots order.

Leave granted.

On 18 July 2014 the Minister for Defence table a letter in response to an order for the production of documents from Senator Madigan on behalf of Senator Xenophon. Senator Xenophon had asked the government to explain why an Australian manufacturer had not been successful in tendering for a contract worth approximately $15 million to make 100,000 pairs of boots for the Army. That manufacture is Rossi Boots. It is an iconic firm which has been making boots in South Australia since the early 1900s. The minister's letter states that the successful tenderer was also an Australian firm, Amare Safety, which will deliver the boots via an Australian firm operating in Indonesia, and herein lies the problem. I am not critical of Amare Safety but I am critical of the government for failing to recognise the role that Australian government procurement decisions play in maintaining Australian industrial capability and Australian jobs. The minister's letter states that:

Under the Commonwealth's procurement rules Defence is not able to discriminate against a bid based on its country of origin.

This statement is, at best, misleading. The minister must know that governments should always seek to obtain value for money in procurement decisions. That does not mean mandating government procurement for Australian firms but it does mean that governments should apply the right balance in applying rules. Most important of all, obtaining value for money does not simply mean buying at the lowest price. It means assessing the whole of life costs, whether the goods are fit for purpose and whether a potential supplier has the right experience and understanding of local conditions.

That understanding of 'obtaining value for money' was reinforced by the recent report of the Senate Finance and Public Administration References Committee on Commonwealth procurement. So I ask the minister: what whole-of-life considerations were taken into account in awarding the contract to a firm that will make the boots in Indonesia? Will the department regularly send officers to Indonesia to inspect the process and the various facilities? How does the decision to award this contract offshore provide economic benefit to Australia? And did the department make any effort to reach an agreement with an Australian firm on price, delivery, compliance or quality?

I ask a further question: was any attempt made to apply the same process that led to the purchase of the slouch hat from an Australian manufacturer under the same procurement guidelines, which this government now claims preclude the use of Australian firms in this manner?

Let me assure the minister that I will be pursuing these matters further and we are looking forward to the next estimates committee hearings on these questions.

6:08 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I endorse the remarks of Senator Carr in relation to this matter concerning Australian manufacturing and what occurred in respect of Rossi Boots was nothing short of a disgrace. Rossi is a very great Australian company, based in South Australia, and has been making boots for 100 years and for our troops since World War I, World War II and for other conflicts since that time. It missed out on a contract with the Australian Defence Force. Why? Because of this narrow procurement process, which has been the subject of a recent Senate inquiry report and which clearly needs to be fundamentally reformed. The process is too narrow.

It does not take into account the whole-of-life costs. It does not take into account the multiplier effect of having something made locally, made by Australians being paid award or above- award wages, of the highest quality. Instead, Rossi missed out. Interestingly—and I want to make this point clear—I think the defence minister was genuinely concerned when he heard about this. He was not aware of it until it was raised publicly. I think his answer in the chamber expressed that surprise in respect of that. I do not want to single him out; I single out a flawed system that has been in place for many years.

Interestingly, with respect to the documents we got from the defence minister, the offers for part B of the tender by the manufacturer, one offer was 10 to 20 per cent and others ranged from 20 per cent to 30 per cent more expensive than the winning bid. Let us put that figure in perspective.

Studies have been done overseas and work has been done here about spending locally in respect of defence procurement. The Royal United Services Institute in the United Kingdom undertook a study and found a benefit of some 37 per cent in terms of taxes collected by the United Kingdom Exchequer—the Treasury—because that money is actually spent there.

I expect that there would be a similar benefit here in Australia in terms of local taxes, state and federal, that would be collected by virtue of people working and paying their taxes, let alone the multiplier effect of someone being in the community working, earning a wage and spending that money locally. I do not get it. And when you consider the benefit of those jobs and the multiplier effect, then this is a gobsmackingly silly decision.

I commend the work of Victorian DLP senator, John Madigan, who has been passionate about this issue. He was with me on 14 July when we had a press conference with Neville Hayward, CEO of Rossi Boots. These issues will not go away. It is not just about South Australian companies; it is about every Australian company. It is emblematic of a malaise, I think, within the Defence Materiel Organisation in dealing with these issues. In my view, the DMO does not get that whole-of-life cost or the benefit of having something built here. A Senate committee has been looking at the decision by the Australian government to exclude Australian companies in respect of the building of two naval supply ships, worth in the order of $1.5 billion. A restricted tender has been put in place restricting it to Spain and South Korea. I find it extraordinary that Australian companies would be excluded, even from the tendering process.

The lesson to be learnt from the Rossi boots saga is that the procurement process we have in place needs to be fundamentally reformed. It needs to take into account the benefit of local manufacturing. It needs to take into account the whole-of-life cost that Senator Carr was referring to and also the information that I have obtained, that the DMO, as I understand it, has not been to the Indonesian factory where the boots are to be made. They have not followed up the claims made about the manufacturing process and conditions there. These are matters that ought to be undertaken.

I also wish to acknowledge that the CEO of Rossi Boots, Neville Hayward, is very grateful for the interest that Senator Kim Carr has shown in relation to this matter and his very hard work. He also acknowledges the work of a local member of parliament, Matt Williams, for the interest he has shown in this matter. Something has seriously gone wrong here, but it is emblematic of a bigger problem in Defence and a bigger problem with government procurement. There are not too many bootmakers left in this country and decisions like this will force more and more manufacturers to the wall.

Fortunately, the postscript to this story is that, whilst Rossi Boots would have been much better off had they won this contract, this tender, there has been a lot of strong community support. I have bought two extra pairs of Rossi shoes and boots, in addition to my steel-capped Rossi boots that I have had for a few years. A lot of people are giving support. Local businesses and consumers are out there across the country and that indicates that a bit of people power has helped Rossi Boots and other Australian companies. But the Australian government, with its deep budget in procurement, needs to do much better.

Question agreed to.