Rural and Regional Affairs and Transport Legislation Committee
Estimates hearings, 22 May 2012
Department of Agriculture, Fisheries and Forestry, and Meat and Livestock Australia
- Senator Joe Ludwig, Minister for Agriculture, Fisheries and Forestry; Minister Assisting on Queensland Floods Recovery
- Dr Conall O’Connell, Secretary
- Mr Phillip Glyde, Deputy Secretary
- Mr Matt Ryan, Assistant Secretary, Internal Budget and Cost Recovery Branch
- Mr Scott Hansen, Managing Director, Meat and Livestock Australia
Senator RHIANNON: I want to pick up some issues about Meat and Livestock Australia's trainee workers in approved abattoirs. Could you explain how long MLA staff spend in each facility, and do they work one-on-one with abattoir workers?
Mr Glyde: That is probably a question that is best directed to Meat and Livestock Australia, which will be appearing later on this evening.
Senator RHIANNON: Thank you. I want to ask about the restraint boxes too. Will I take that to them or have you got information about that?
Dr O'Connell: We dealt with live animal exports yesterday, and in great detail, if you recall.
Senator RHIANNON: Yes. I just had some more.
Dr O'Connell: If it is the MLA issues, we do not have the people who deal with it in the department here at the moment. If it is Meat and Livestock Australia then they will be coming on shortly.
Senator Ludwig: We follow a program.
Senator RHIANNON: I will see how I go with the other ones. On pig sow stalls, the budget statements provide for an increase in the pig slaughter levy.
Senator Ludwig: The trouble we have is that we are dealing with sow stalls, which is in animal welfare issues, and the department officials who form part of that division are no longer here. We have moved on to another part of the program. I am not trying to stop Senator Rhiannon asking the question. The officials who could assist are no longer available and we are in another part of the program. What I am happy to do is for us to take them on notice.
Senator RHIANNON: I have a more general question. I notice that an amount of approximately $73 million has been allocated for Meat and Livestock Australia and about $24 million has been budgeted for industry research. Can I proceed?
Mr Glyde: It is Meat and Livestock Australia.
Senator RHIANNON: It is about the comparison. I am hoping that the minister can answer this one.
Senator Ludwig: Again—
Senator RHIANNON: We have this contrast.
CHAIR: To save some confusion, why don't you ask your question and if you are in the wrong area the minister or the officers will certainly direct you and we will make some time later tonight, if that is appropriate, and if the officers in the areas you are asking about have not gone already.
Senator RHIANNON: I thought this one might be for the minister. So there is $73 million for the MLA, $24 million for industry research under the act. I noticed across all meat processing sectors there is more money allocated for a marketing plan than for research. Considering there is such growing—
Senator Ludwig: The marketing money, so that you are aware of it, is their money. It is not government money. It is industry money.
Senator RHIANNON: Industry money. That is my point. In terms of the amount of money that you then put up for research it is only coming--
Senator Ludwig: We do matching contributions, which is 50 per cent of industry, for research only, not for marketing.
Senator RHIANNON: Could you repeat that, Minister?
Senator Ludwig: We do matching funding for research and development work across the 15 RDCs in total. There is a formula that we use but it is for research and development, not for marketing.
Mr Glyde: Meat and Livestock Australia levies the members of the industry for marketing and also for research and development. So the government matches the research and development funds raised up to a certain amount—a certain percentage of gross value of production for that particular industry. So in this case the R&D funds are matched but the marketing funds are entirely industry money raised by the beef producers and others.
Senator RHIANNON: Thank you for explaining that. I understood that across the board for marketing the money allocated was well above the money for research. I am happy to be corrected on that. Is that a wrong assessment?
Dr O'Connell: I think that is probably wrong in terms of numbers.
Senator Ludwig: It does not seem to make sense to me. We will need to find the numbers.
Mr Ryan: The total amount available for R&D is similar to the amount that is available for marketing. The industry pays a marketing levy. I think it is in the order of $75 million or $79 million that is forecast to be collected this year. There is in the order of $23 million in statutory levies, $45 million in matching payments, because the matching payments relate to the statutory levies and the voluntary contributions from industry. So that takes it up to about $90 million available for research and development, in the ballpark.
Senator RHIANNON: I will go back and look at the figures. I thought it was more in balance than what you have revealed there, so that is useful.
[Questioning of Meat and Livestock Australia resumed later in the day]
Senator RHIANNON: Thank you, Chair. In relation to the MLA’s training of workers in approved abattoirs, could you provide us with a run-down on the nature of this training.
Mr Hansen: Certainly. Currently MLA, co-funded with LiveCorp as the service provider for the live export industry, has four full-time staff as animal welfare officers based in Indonesia—three local hires and one expat Australian. They oversee a group of between 10 and 15 contractors in the marketplace at any one time. Predominantly these are Australian expats and their skill sets range from veterinarians through to people accredited in animal handling, animal welfare, or trained butchers from Australian processing facilities. The extent and scope of the training we do is really at the request of each of the individual supply chains. For example, some supply chains choose not to involve the socially funded service providers in their training and development in their supply chains. Others will ask us to simply come in and conduct a gap analysis to assist them in identifying what they need to work on. Others will want us to go the whole way through, not only identifying gaps but providing training to their teams and, in some cases, some of the individuals within those teams over a period of three or four nights, depending on what their requirements are. Again, it is at the request of each of those supply chains.
Senator RHIANNON: How do you judge if a trainee has been successful?
Mr Hansen: For us, we continue training until the supply chain tells us they believe they have in place what they need to be able to meet the requirements of the ESCAS system. So, again, some of these supply chains will ask us to come back for repeat training, while others will ask us to finish up the training because their staff have reached the level of competency they require.
Senator RHIANNON: It is on the judgement of the trainers?
Mr Hansen: That is right, and the supply chain, importantly. The trainers at times can be told by the supply chain that the supply chain is happy that the training has been completed and so our staff will then be redeployed to alternative supply chains.
Senator RHIANNON: What follow-up do you do to ensure the workers are implementing the techniques learned? Is it then just up to the supply chain to give you feedback or do you actually follow it up?
Mr Hansen: No, we do not conduct any follow-up unless it is specifically asked for by that supply chain. In terms of feedback, in terms of reporting, that is then a matter between the supply chain, their auditor, their third party auditor, and, obviously, the regulator.
Senator RHIANNON: So if new workers come on board, it is up to the supply chain to ask you to train them, if they wish to?
Mr Hansen: If they wish to, that is right.
Senator RHIANNON: You seem to give emphasis to the fact that, by far and away, they are Australian expats who are employed in this job. Is there any reason why you are not giving employment to the locals?
Mr Hansen: No. In fact, of the four full-time animal welfare staff that we have in the marketplace, three are local and one is an expat, so we do have an even balance across that team. Of the contractors that we use, those that we are using up there in an expat capacity have had long experience and long engagement in the Indonesian marketplace or in South-East Asia. Most speak fluent Bahasa and most understand the culture as well. But we certainly do not have an overemphasis on expats.
Senator RHIANNON: It sounded like you were employing a lot more expats than locals. Did I misunderstand your earlier answer?
Mr Hansen: Yes. Of the four employees we have in this area, only one is an expat and three are locals.
Senator RHIANNON: No, I meant of the contractors. You said by far and away they are expats.
Mr Hansen: Sorry, yes, and again the contractors will range between expats and locals and again it will depend on what skill sets are required at any one point in time.
Senator RHIANNON: I just would like to understand a little bit more about the training. It seems just so variable. How much time do the staff spend in each facility training the workers? Is it one-on-one? How much time is put into it? Is it just a few hours? How long does this training involve?
Mr Hansen: Again, there is no fixed training program that is actually tailored to each of the individual supply chains. We have situations where some supply chains, for example, will ask for simply a presentation on what the new ESCAS requirements are, what the standard operating procedures are, and to give some guidance as to where they should start their process of looking at gaps. That could be purely a two- to three-hour presentation in an office. Other supply chains will then want that followed up by a hands-on gap analysis; so following the whole supply chain through and identifying what work needs to be done. That can be over the course of a week. Then some will go one step further and say, ‘Can you actually find us people who can provide the technical training to help us fill any of the gaps that have been identified?’ Again, the amount of time that takes, the length of training that is delivered—over a day or over a week—depends on what the gaps are, where that training needs to be done; whether it is in the feedlot, in transport or in the abattoir. It really is variable according to the needs of the supply chain and what they feel they need to be able to meet the ESCAS requirements.
Senator RHIANNON: From research by Animals Australia released in March this year on their website, I understand that the MLA has spent some of your multimillion-dollar budget on purchasing web domains including animalsaustralia.com.au, animalsaustralia.net.au, animalsaustralia.info and animalsaustralia.net. Can you explain why you have done this? Is it a strategy used to undermine an organisation that has produced evidence that has given you a lot more work?
Mr Hansen: There is certainly nothing cynical with regard to it. We have occupied quite a few domain words. We certainly feel that as an organisation whose levy payers probably represent the vast majority of animals in this country—in terms of farmed animals, so sheep, cattle, goats, and associated management animals, whether it be dogs, horses—we had as much right to the terminology around ‘Australia’ and ‘animals’ as any organisation did. They were available to be purchased and so we purchased them, not with any sinister intent, but just because our of research of logical domain names that overseas clients and customers of Australian meat would potentially look to for information about cattle and sheep in this country. Terminologies with ‘Australia’ and ‘animals’ were logical combinations.
Senator RHIANNON: So are you saying it was just a coincidence that it happens to be the name of an organisation that has been exposing cruel practices involved in the live export trade? Is it just a coincidence?
Mr Hansen: Again, I do not know of any one organisation that has the sole domain right to the terminology ‘animal’ and ‘Australia’. Certainly, as Meat and Livestock Australia, we look for whatever combination of words, and we have occupied domain names such as ‘australiaandlamb’, ‘australiaandbeef’, ‘australiaandgoat’, ‘aussiebeef’, aussielamb’. We utilise a range of terms, that we have been able to purchase quite cost-effectively, with a view to how we use these in the future to drive international clients—who, more and more, are looking for information about goat, lamb and cattle production in Australia—to appropriate avenues of information.
Senator RHIANNON: You have said it is with a view to driving international interest in meat products from Australia or animals from Australia that can be consumed. That suggests that you are going to use these domain names. That is the intention?
Mr Hansen: Over time we would look to use them. We have not used them to this point in time and at the moment we do not have a strategy in place around that use, but we certainly have interest from a number of the industry peak councils around how those names might be utilised for foreign customers in future years.
Senator RHIANNON: So you are saying you have not used any of them yet?
Mr Hansen: No, we have not yet.
Senator RHIANNON: Can you supply the committee with a list of all the domain names that you have bought up?
Mr Hansen: Sure, yes.
Senator RHIANNON: So, to ask the question again, in using the name ‘animalsaustralia’, it is just a coincidence that it is similar to the name of an animal welfare organisation?
Mr Hansen: That is right. Again, I say ‘aussiebeef’, ‘australianbeef’, ‘australiananimals’, ‘animalsaustralia’, ‘beefaustralia’ are all combinations of domain names that we have been able to purchase.
Senator RHIANNON: You are probably aware that sometimes people register website names and then create a fake website that fraudulently poses as something it is not. Has that been discussed?
Mr Hansen: No, it has not been discussed and those are not the kinds of values our company or our industry operates to.
Senator RHIANNON: When were these domain names purchased?
Mr Hansen: There would be a range of years. We could provide the years in which they were purchased when we provide the list of names.
Senator RHIANNON: When they were purchased and the names of the different websites you have. How many websites do you have at the moment that are active for MLA?
Mr Hansen: Let me take that on notice. It is probably in the vicinity of 12 at the moment. There are our producer focused websites, our red meat recipe focused websites, our specific initiatives such as www.target100.com.au website. For a lot of our initiatives we have stand-alone websites. Off the top of my head, I do not have the number of websites we currently have active and working. We also have our foreign language websites that operate in Japan, Korea, Russia, South-East Asia.
Senator RHIANNON: In December 2010, the Australian Beef Association Inc. in its submission to the Productivity Commission inquiry into the Australian government research and development corporations model was highly critical of the MLA’s research program because of failures in transparency, potential conflicts of interest, a failure to disclose and report outcomes of projects and various other points. Just reading the summary of the submission:
Meat Livestock Australia ... published a partial schedule of R&D completed in the year 2009-10.
The schedule provides selected project titles. It does not show the cost or the beneficiary of each contract. The schedule states it excludes an unspecified number of contracts.
Many of the contracts described as R&D are for administrative and promotional activities, not R&D.
Can you respond to the Australian Beef Association’s criticisms in their submission to the productivity inquiry?
Mr Hansen: Certainly. We have been constantly working on improving how we deliver the outcomes from R&D investments through to Australian producers. For many years our simple methodology was the fact that producers expect the outcomes from R&D investments to be delivered in reports and in ‘Tips & Tools’ that allow them to apply them back on the farm and allow them to make productivity changes. As you would be aware, there could be four or five contracts that roll together from different organisations that culminate in the outcome of a productivity enhancement or a practice change on farm; that is one report.
In the past we have only ever published those final reports that bring together the multiple contracts that have been signed and commissioned as part of the work. However, we are moving now to uploading all final reports onto the website. This has been done in consultation with the industry groups, ensuring full and open transparency around where research dollars are spent. One of the questions that we get around the R&D is whether every R&D contract leads to the completion of a final report. Some of it will be a step process towards further research that then builds to a final report or builds to the release of a program. What we are trying to do now is link more efficiently that investment and those outcomes.
Senator RHIANNON: How many of your research reports have been published in scientific journals?
Mr Hansen: I would have to take that on notice.
Senator RHIANNON: In your answer to the previous question you started off your comments by stating that you are looking at how to improve R&D outcomes, but the essence of the criticism from the Australian Beef Association was that a lot of this work is not even R&D. That is what I would like you to respond to. I understand that the MLA spent almost $2 million of federal R&D funds on corporate services and communicating with stakeholders in 2009-10. The brief description provided suggests that most of these activities were not research and development.
Mr Hansen: The $2 million in corporate services, stakeholder communications and reporting is both the levy funds—so although deemed to be government funds, they are the funds collected from cattle, sheep and goat producers through their transactions levy—and a matching component of the R dollars in a proportion that we agree to with DAFF as an overall percentage of our budget spent, hence the appropriate proportion between our research investment in the company and marketing investment in the company. For most years it is around fifty-fifty, so we normally are spending about the same amount of dollars in marketing as we spend in research within MLA.
We then agree on an overhead costing basis with DAFF, so some of those R dollars are applied to the overheads within the business. Those overheads cover our legals that are responsible for handling our contracting of R&D, our data service, our computers, our accountants. They are all appropriately costed to either the R programs in our business or the marketing programs in our business.
Senator RHIANNON: We will come back to that one. I have one question that I will put on notice. It is also from the submission from the Australian Beef Association—if you could provide an explanation—and the submission states:
$17 million, or about a quarter of MLA’s 2009-10 R&D budget was allocated to organisations associated with nine of the 12 individuals who served as MLA board members in the year 2009-10. Individually and collectively MLA board members had a major conflict of interest every time they considered matters relating to R&D.
Could you take on notice what has been done to clean up that problem and remove the conflict of interest?
Mr Hansen: Rather than take it on notice: we hear these accusations and the Australian Beef Association, since that report in 2010, has tried to raise resolutions to wind up the company. They are a long-term agitator in opposition to the goals and values of Meat and Livestock Australia. Their last endeavour to do so received less than 10 per cent support of eligible votes at an AGM. Their accusations are around conflict of interest between our board members and contracts that we apply. We have a skills based board. We have no qualms about saying that and we look for people who have expertise and skills in areas such as research and development, international marketing, accounting and finance.
The fact that we happen to find expertise in some of the leading R&D agencies in the country—we currently have a board member from the CSIRO; we are significant co-investors with the CSIRO in important research for our industry—is viewed as a significant conflict of interest by those who try to denigrate the industry or the company. We see as a great attribute the fact that we are able to have on our board, providing advice to us, some of the best scientific minds and best R&D managers that the country can provide.
Continuing with the CSIRO example, any time there is a decision in which conflict of a board member is noted, the board has a discussion about the course of action to take. In some cases it might not be a material conflict of interest and they are allowed to continue to participate in the discussions. At times it will be a material interest and they are asked to exclude themselves from the room during the discussion and while the decision is being made. At times it is noted in advance that the conflict of interest is significant and they will not receive the board papers pertaining to that matter or that contract in discussion.
We take our governance around the investment seriously and we are proud of the fact that we are able to attract to our board table the kinds of minds that logically have a significant stake in our industry and do a significant amount of work in our industry.
Senator RHIANNON: In summary, just so I understand, you are not disputing that the money went to those organisations that those board members are associated with, but you are arguing that you have mechanisms in place so there is not a conflict of interest?
Mr Hansen: That is correct.