Inquiry into the Abolition of the Development Import Finance Facility

Chapter 4

The Impact of the Termination of DIFF Within Australia

The Situation in March 1996

4.1 At the time of the change of Government in March 1996, there were seven projects which had received Letters of Formal Offer, with DIFF value of $65.2 million and total contract value of $186.2 million. There were 50 projects for which 85 Letters of Advice had been issued, with a DIFF value of $384.4 million and total contract value of $1,098.3 million. [1]

	Number of projects	DIFF value (35% of contract value) $ million	Total contract value (DIFF plus EFIC funds) $ million
Formal offers
China	2	6.7	19.1
Indonesia	3	48.6	138.9
Philippines	1	7.1	20.3
Vietnam	1	2.8	7.9
Sub-total	7	65.2	186.2
Letters of advice
China	24	121.8	348.0
Indonesia	14	156.1	446.0
Philippines	7	85.7	244.9
Vietnam	5	20.8	59.4
Sub-total	50	384.4	1098.3
Total	57	449.6	1284.5

4.2 Following the change of Government, AusAID obtained advice from the Attorney-General's Department on the legal aspects of commitments under the DIFF scheme. The Department advised that the Letters of Advice were not binding on the Commonwealth, as the Letters made clear that no offer of DIFF funds had been made. The Department also advised that it was debatable whether the Letters of Formal Offer were binding on the Commonwealth. [2]

4.3 The Minister decided that the Government would fund those projects holding Letters of Formal Offer but not those holding Letters of Advice. [3]

4.4 The DIFF scheme operated at varying levels of agreement. At the bilateral level, Australia has formal Memoranda of Understanding (MOUs) with China, Vietnam and the Philippines, which set out the bilateral frameworks in which DIFF operated. Australia also has a general agreement on development co-operation with Indonesia. According to the Department of Foreign Affairs and Trade, the MOUs did not commit the Government to funding any projects. [4]

4.5 Each year, Australia and recipient governments would agree on a list of projects for funding under DIFF at high-level annual consultations on development co-operation. The eventual funding of these projects was subject to a number of conditions. In the case of China, the Agreed List was subsequently endorsed by the Australia-China Joint Ministerial Economic Commission. [5]

4.6 Evidence presented to the Committee suggested that although the Letter of Advice made it clear that it was not a formal offer of funding, there was a view among agencies and officials of recipient governments that a Letter of Advice indicated that subsequent funding depended only on the project passing the feasibility study and appraisal processes. The view commonly held was that once a project had been placed on a list of priority projects agreed between governments, and had received a Letter of Advice, it was simply a matter of successfully passing through various bureaucratic stages before it received a Formal Offer of DIFF funds. [6]

4.7 The consequence of this view was that companies and recipient government agencies which had received Letters of Advice felt encouraged to undertake significant steps in the further development of the relevant project, often involving considerable outlays of financial and human resources:

I think working together with the Indonesian government for two years to put together a project, which has been strongly advocated by them and where we have both spent money, is a commitment ... It might not be a contract, but it is most certainly a commitment. [7]

People in the recipient countries are now well aware of the procedures. When you tell them, 'Yes, we have a Letter of Advice,' ... they expect there is a high possibility that the project is going to go ahead. [8]

4.8 The Committee recognises that DIFF was primarily a development assistance program. The Committee has already noted, in Chapter 2, the statement in AusAID's 1996 review of DIFF, that:

The primary objective of DIFF is to provide aid grants to assist developing countries undertake high priority public sector development programs ... An important and secondary objective of the DIFF scheme is to promote the export of internationally competitive Australian goods and services. In this regard the objectives for DIFF closely mirror those for the total aid program more generally. [9]

4.9 The importance of DIFF as a development assistance program has been considered in Chapter 2 of this report. The present chapter focuses on the important secondary objective referred to above and examines the commercial impact of the decision to terminate DIFF.

4.10 The immediate termination of the DIFF scheme, without any period of phasing out, has had a significant impact on Australian companies. This has included:

• loss of projects for which Letters of Advice had been issued and which appeared to have a high likelihood of proceeding;
• loss of investments already made on the development of those projects;
• loss of credibility in the region and consequent loss of opportunities for future, non-DIFF, business flowing on from those projects; and
• adverse impact, including the loss of jobs, on companies' general operations and viability.

[Contents]

Loss of Projects Which Had Received Letters of Advice

4.11 The loss of projects worth $1.3 billion has clearly had a significant impact on companies expecting to obtain DIFF funding and to proceed with those projects. Mr Ian Berckelman, Executive Director of LABAX International Pty Ltd, summarised the effect of the loss of his company's project in the following way:

LABAX and the University of Queensland will lose their investment to date of $1.2 million; a $37.1 million project will be lost for Australia; six LABAX staff will lose their jobs, with consequent loss of skills to Australian industry; and the creation of between 33 and 43 new jobs in Australia will be lost. Australian suppliers of goods and equipment will lose the opportunity to participate and many who have not yet entered the export market will now not do so. [10]

4.12 LABAX had reached the stage of being advised in August 1995 by AusAID that 'we are in the process of submitting a submission to our Minister, seeking approval to issue a Formal Offer on [the environmental monitoring] project'. [11] AusAID then required the Indonesian Government to undertake some further preparatory work before issuing the Formal Offer. That work was under way, at Indonesian expense, when DIFF was terminated. [12] Mr Berckelman said that the effect of the Government's decision to abolish DIFF was 'like receiving an exocet through the window'. [13]

4.13 Mr Ron Tripp, Managing Director of Relpar Pty Ltd, said that 'In the case of Phase 2 of our [$13 million special education] project, if we cannot offer concessional finance, the project will probably be awarded to Norway.' [14] The presence in the various markets of companies from other donor countries, waiting to take up projects lost to Australian companies through the termination of DIFF, was a common point made in submissions and evidence to the inquiry. [15]

4.14 A similar view has been expressed at official level by at least one recipient government. In a speech given to the Research Institute for Asia and the Pacific, the Ambassador of the Philippines, Her Excellency Delia Domingo Albert, stated that 'The abolition of DIFF will lessen the competitiveness of Australian companies in vying for development projects'. [16]

4.15 Mr Richard Woolcott, former Secretary of the Department of Foreign Affairs and Trade, and former Ambassador to Indonesia and the Philippines, wrote to The Canberra Times on 25 June 1996, stating his concern that the termination of DIFF 'could erode Australia's credibility in some Asian countries [and] damage our competitiveness in a number of Asian markets'. [17]

4.16 Mr Leigh Purnell, Director of the MTIA, said that:

With concessional finance being offered by many of our trade/aid competitors, if we are not offering similar concessional finance we will not be in the race. Asian countries have indicated that if DIFF is abolished the export credits alone offered by EFIC will simply not be concessional enough and will not be competitive. [18]

4.17 A common subject raised in submissions to the inquiry and in evidence given to the Committee was the investment of time and money made by companies during the development phase of projects, particularly after the receipt of a Letter of Advice. Mr Tripp's company had spent about $120,000 on Phase 2 of its project, which he described to the Committee as 'money down the drain' with the termination of DIFF. [19] On Phase 1 the company had spent approximately $200,000 before receiving the Letter of Advice and a further $700,000 before receiving the Formal Offer. [20]

4.18 Such sums represent considerable risks taken by companies, beyond the usual risk associated with commercial ventures. The termination of DIFF, in effect, changed the terms on which risks had been taken, while projects were still being developed. Many submissions to the inquiry and witnesses who gave evidence to the Committee made the point that while the termination of DIFF was disappointing, it was the sudden termination of the scheme, with no phasing out to allow projects to run to completion, that was most disturbing:

We felt that there was no way that there would not be a phasing out of the project; in other words, that it would not be chopped immediately: if it was to end, it would be phased out. [21]

4.19 While witnesses from AusAID and the Department of Foreign Affairs and Trade repeatedly emphasised the DIFF process, and the fact that Letters of Advice indicated that they were not offers of funds, the Committee is concerned to make a distinction between the progress of a DIFF proposal through the normal DIFF sequence, and the sudden removal of the whole DIFF structure while proposals were at different stages in the process:

One of the concerns we had with the abolition of DIFF was that, firstly, it went at all and, secondly, that it went both so quickly and so retrospectively in terms of things that were already in the pipeline and pretty much approved already. [22]

4.20 The risk that companies were encouraged and prepared to take was the risk that their project might or might not meet all DIFF requirements, and whether it would then proceed to a Formal Offer, not the risk that the government supported program within which they were taking that commercial risk might suddenly be terminated. Mr Trevor Kanaley, Director General of AusAID, said that:

There is simply an element of risk in this sort of arrangement for firms on both sides, and I think those firms are fully aware of those risks engaging in these sorts of programs. [23]

4.21 However, the Committee points out that while it accepts the risk in 'this sort of arrangement', the Government's decision to terminate DIFF has meant that companies are no longer operating in 'this sort of arrangement'. Mr Andrew Johnson, Chief Executive of Transfield Defence Systems, said that:

From our point of view we have invested five years work and $1 million into this project. As a company trading into the region we do understand that you get wins and losses and we take that. What we find hard is the fact that this was one where we had formal notification at ministerial level from the Australian government to say that this was an approved project. [24]

4.22 Mr John Chapman, Executive Manager of ABB Engineering Construction Pty Ltd, told the Committee that his company had invested approximately $400,000 on projects for which Letters of Advice had been received. [25] Mr Kevin Pontifex, Executive Director of Energy Equipment Pty Ltd, told the Committee that his company had spent $200,000 on a DIFF project which had now been cancelled. [26]

4.23 Once a Letter of Advice for a particular project had been received, a DIFF applicant was required to carry out a feasibility study according to a number of criteria specified by AusAID. Depending on the nature of the project the cost of undertaking the feasibility study could range from $50,000 to $200,000. [27]

4.24 Such expenditure did not guarantee DIFF funding but, as suggested above, once the Letter of Advice had been received there was a considerable expectation of success if the various formal requirements were met. In reply to a question concerning the encouragement that a Letter of Advice would give to applicants, the Committee was told that with the receipt of the Letter, 'Yes, now you are really spending money'. [28] Another witness described the Letter of Advice as 'the trigger to start spending funds'. [29]

4.25 Not only did Australian companies make considerable investments in the development of projects but recipient government agencies and local companies also spent substantial sums in expectation of projects going ahead. Australian Technical Supply Pty Ltd had spent approximately $1 million over three years preparing its vocational education project, and its Indonesian partners had spent a similar sum. [30]

4.26 LANDMARC International had spent $300,000 to $400,000 developing its land management project in China's Jilin Province and the provincial government approximately $100,000. [31] Smartgas Ltd and the Guangzhou Municipal Government had each spent approximately $200,000 developing an emission control program for five thousand vehicles of its public transport bus fleet. [32]

4.27 The involvement of sub-contractors and the effect on them of the termination of DIFF was a recurring theme in submissions and evidence to the Committee. While there has been some comment in the media, and in evidence given to the Committee, on the fact that two-thirds of all DIFF funds over the full life of the scheme have been awarded to just ten companies, [33] such comment ignores the very different distribution of DIFF funds since the inception of the Helsinki rules in 1992, and also the large number of subcontractors on whom principals in DIFF projects have always depended. Mr Purnell of the MTIA noted in evidence that:

While there are only some 86 companies involved in the current controversy concerning the cancellation of projects receiving Letters of Advice, it is important to stress that there are literally hundreds of companies who are subcontractors to these majors.

... We are talking about a very broad based involvement by many Australian companies that is helping this country as well as - the critical thing - being part of the key developmental priorities of the recipient countries. [34]

4.28 Mr Julian Dinsdale, Chairman of the energy exporters' group Austenergy, referred to the companies in his organisation which had been immediately affected by the termination of DIFF, and went on to say that:

There are other companies which you do not see who have been affected. That ripples right down to the consultants who are the subcontractors and other contractors who perform work for the major companies. [35]

4.29 Mr Tripp of Relpar spoke of the 65 small to medium-sized manufacturers who acted as subcontractors to Relpar on his company's special education project in Indonesia, [36] and Dr Woodthorpe of TIEG referred to 120 small suppliers affected by the loss of two projects. She stated that 'For many of these companies it is the largest order they will ever see in an individual year'. [37] Australian Technical Supply reported to the Committee that the loss of its vocational education project would affect 50 Australian suppliers. [38]

4.30 Mr Ian Berckelman of LABAX said that 56 Australian companies would be involved with his environmental monitoring project, and said:

We have got a goodly number of subcontractors in Australia who have now had their heads kicked in and do not know why. [39]

4.31 The Committee believes that the nature of the DIFF process, and of undertakings given, and the impact that the decision to terminate DIFF has had on many companies which had made significant commitments to projects, are such that the decision not to proceed with projects which had received Letters of Advice cannot be justified.

4.32 AusAID told the Committee that 70 per cent of projects, which had received Letters of Advice, would eventually proceed to 'ultimate fruition'. [40]

4.33 The Committee believes that projects which had reached the Letter of Advice stage should have been allowed to continue through the DIFF process. Those projects which ordinarily would have met all the necessary requirements should have been funded, while those which would have been eliminated before Formal Offer would have been subject to the usual scrutiny and seen to have received a just result.

[Contents]

The Case of Relpar Pty Ltd

4.34 The Committee wishes to note in particular the case of Relpar Pty Ltd's Phase II of the Special Education of Handicapped Children Project in Indonesia. When DIFF was terminated the project had not received a Letter of Advice. While it is difficult to single out individual projects from among so many which would have made a significant contribution to the communities concerned the Committee believes that this project deserves particular consideration.

4.35 The education of handicapped children is a priority for the Indonesian Government under the current five year plan. According to Mr Ron Tripp, Managing Director of Relpar, 'The Indonesian Government should be commended for undertaking as a key strategy the education of handicapped children. It is not common in most developing countries.' [41]

4.36 The Indonesian Minister for Education and Culture, Professor Dr Ing. Wardiman Djojonegoro, personally asked that the special education of handicapped children be added to an MOU signed in 1995 between Australia and Indonesia. The Memorandum of Understanding on Co-operation in Education and Training was signed by the then Minister for Employment, Education and Training, Mr Simon Crean, MP, and Professor Wardiman in January 1995. It formally includes special education as an identified area of co-operation between the two countries.

4.37 Phase I of the Relpar project, funded by a DIFF supported loan, involved the provision of equipment and training to improve the quality of curriculum, develop the knowledge and skills of teachers and provide equipment and resources for ten National Feeder and Provincial Feeder schools for handicapped children throughout Indonesia. The project was completed in May 1995. In the June 1995 issue of AusAID's Business News the project was featured as 'one of the most innovative projects ever funded' under DIFF. [42]

4.38 The Indonesian Government wished to undertake a second phase of the project, valued at $31 million, preferably with a further DIFF supported loan. Relpar has worked closely with the Indonesian Directorate of Special Education in the Ministry of Education and Culture in developing the terms of reference for the project and in completing a preliminary feasibility study, and has so far spent $120,000 on Phase II.

4.39 The company applied to AusAID for DIFF support for the project in July 1995. In December 1995, Relpar was notified by AusAID that the project proposal had been considered at the High Level Consultations between AusAID and BAPPENAS, Indonesia's National Development Planning Agency, on 4 December and that it had been agreed that it would be considered as a priority project for the 1996 DIFF application round. Following the termination of DIFF the Secretary General of the Ministry of Education and Culture, Professor Hasan Walinono, wrote to the Minister for Foreign Affairs, Mr Downer, on 14 May 1996, seeking 'your support for this humanitarian project'. [43]

4.40 Mr Downer has indicated that it may be possible, despite the termination of DIFF, to fund some high priority individual projects. By its very nature the Relpar project has engendered a very significant degree of good will towards Australia in Indonesia. Given the very clear humanitarian focus of the project, and in the light of Mr Downer's statements that he wishes projects considered for possible priority funding to have a clear humanitarian focus, the Committee believes that although the Relpar project had not received a Letter of Advice at the time of the termination of DIFF, it should be considered for possible funding as if it had done so.

4.41 The situation in which Relpar finds itself is typical of that of a number of companies which have undertaken considerable pre-project investment in the expectation of gaining AusAID approval at a later stage. The projects for which these companies are vying are demonstrably consistent with OECD guidelines and are clearly humanitarian in focus but require DIFF-type funding. Mr Downer's decision to terminate DIFF has put these projects outside the reach of these companies. This only serves to underscore the damage which has been inflicted arbitrarily on Australian companies.

[Contents]

Loss of Potential Follow-on Business

4.42 Much of the discussion concerning DIFF, both in the media and in evidence and submissions presented to the Committee, has focussed on the commercial benefits of DIFF, and on the 'aid versus trade' debate. The Committee believes that the commercial benefits of DIFF have been well established by recent studies, and strongly supported by evidence given during the Committee's inquiry. The aid/trade issue is considered in Chapter 2 of this report.In May 1992, the National Institute of Economic and Industry Research (NIEIR) published a study, DIFF: Its trade creation, industry development and current account impacts. Among its conclusions it found:

1. evidence of substantial follow-on business. This follow-on business is not always in the same market in which the initial DIFF-supported project was developed ... DIFF supported projects have been particularly useful for generating changed attitudes in firms which might otherwise depend on the domestic market ... DIFF has provided leverage in helping firms to get established overseas and in building the international business culture needed to operate successfully overseas ...
2. NIEIR's conclusion is [that] there has been a substantial trade creation impact from the use of DIFF funds. So long as the development assistance goals are met, there is commercial justification on trade creation grounds alone for DIFF to comprise a larger proportion of Australia's overseas aid program. [44]

4.44 In 1993 and 1995, AusAID published reviews of commercial benefits from DIFF in China and Indonesia respectively. Both studies found evidence of substantial benefits accruing to Australia from DIFF. In China, $64.7 million of DIFF funds had generated $168.3 million of project expenditure in Australia and $405.3 million of follow-on business. In Indonesia, $242.9 million of DIFF funds had generated $541.5 million of project expenditure in Australia and $383.1 million of follow-on business. [45]

4.45 In January 1996, AusAID published A Review of the Effectiveness of the Development Import Finance Facility, based on a detailed survey of 51 projects, undertaken in 13 developing countries in the period 1988-89 to 1992-93. The review found that DIFF had generated substantial commercial benefits for Australia.

4.46 DIFF expenditure of $285 million, for the 51 projects, had generated $709 million of project expenditure in Australia and $660 million of follow-on business. Total business generated was estimated at $1.37 billion, almost five times the original expenditure. [46] Discounting the automatic three to one flow-on from the expenditure of the loan funds associated with projects, there was still a healthy multiplier of 2.3 from follow-on business alone.

4.47 Mr Robert Trenberth, Deputy Secretary of the Department of Industry, Science and Tourism said that:

the demonstration effect of being able to work in those two markets [Indonesia and the Philippines] with the security of the [DIFF] imprimatur, if you like, was very important ... I would have no reason to question the 5:1 ratio. [47]

4.48 The AusAID review also supported the NIEIR findings regarding the internationalisation effect on companies of involvement in DIFF projects. Such involvement provided important practical experience in working overseas, created greater awareness of market opportunities and encouraged firms to become more export-oriented. [48]

4.49 According to the MTIA:

DIFF has enabled Australian companies to participate in Australia's aid delivery program, which has allowed the companies to demonstrate their project capabilities. From this they have been able to go on and win other non-DIFF related projects. [49]

4.50 Mr John Dougall, Managing Director of AWA Ltd, spoke of a DIFF funded air navigation system in Nepal, undertaken by his company, and went on to say that:

Having won that contract, it gave us credibility to win a $60 million contract in China, funded by the Japanese ... Our credibility in Nepal, helped by the DIFF funding to win it in the first place, gave us the credibility to beat the Japanese using their own untied grant money in China. [50]

4.51 Mr Michael Kerr, General Manager of Alcatel Australia, said that DIFF had been 'a critical component' of the promotion of his company's profile in Asia, and therefore 'a vital part' of his company's success story in winning more than $1 billion of export orders over the last five years. He went on to say that a telephone exchange contract in China, funded by DIFF, and further follow-on commercial work, had established Alcatel's presence in the market and assisted in the promotion of the company's products in other parts of the world. [51]

4.52 According to Mr Kerr, 'The spin-off in China alone has been access to a market of potential value of some $55 million per annum'. Speaking of possible projects elsewhere in the region he said that 'If DIFF funding is removed, Alcatel Australia will lose its seat at the table and two years work will be wasted'. [52]

4.53 Mr John Coulton, Executive Director of Siemens Ltd, told the Committee that his company's export business had risen from approximately $20 million in 1993, when it had first been involved in DIFF projects, to over $45 million two years later, while DIFF supported projects had fallen from 30 per cent of business in 1993 to 10 per cent in 1995. Mr Coulton argued that DIFF had been significant in supporting the increase in export business while being less necessary as a support as time went on. [53]

4.54 Mr Coulton went on to say that DIFF had led to his company establishing a marketing presence in the region, although the half million dollars spent in the last year targeting and promoting particular projects had now been lost. [54] He said that 'We have three projects that were a flow-on from our current Indonesian project which are now, with the cancellation of DIFF, lost to us completely ... They have now been offered to other donor countries and not Australia.' [55]

4.55 Mr Robin Winckworth, Finance Director of Wilson Transformer Company Pty Ltd, spoke in similar terms of DIFF-supported exports falling from approximately 66 per cent of business to 25 per cent over three years, with export growth of 35 per cent for the current year and the expectation of growth continuing in the future without any DIFF support. He said that 'DIFF has enabled our company to become world competitive'. [56]

4.56 In response to a question from the Committee, pointing out the small proportion of overall trade with the relevant countries that DIFF comprised, Mr Purnell of the MTIA commented that 'we are talking about some specific capital projects ... In that way, the only way that we can be party to that type of work is through this highly concessional financing.' [57]

4.57 Mr Alexander Gosman, Executive Director of the Australian Electrical and Electronic Manufacturers Association (AEEMA), said that his organisation believed that over the past five years:

the DIFF program has been responsible for some $600 million worth of direct exports of electrical and electronic products and $1 billion indirectly ... It has led to follow-up business by establishing Australia's credibility in some quite difficult overseas markets, particularly in China. It has encouraged the increased internationalisation of our membership ... if the DIFF program is to be abolished Australia will miss out on some significant export opportunities. There are examples already where Australian companies have not been able to get to the negotiating table, particularly in markets like China. [58]

4.58 Mr Gosman gave the example of two cable companies which had undertaken work in China to the satisfaction of the Chinese and which had been invited to undertake extensions worth $20 million - $30 million each to the two projects concerned. Both companies had had their invitations withdrawn and would not be part of the negotiations for the continuation of the optical fibre links in question. [59] More generally, he said that many of AEEMA's member companies had lost money in marketing expenses and project development, in some cases up to $500,000. [60]

4.59 Mr Michael Lamb, Managing Director of ERG Telecommunications Pty Ltd, told the Committee that:

just being in the China market you learn so much and you make contacts. If you get a project right which is funded by DIFF, then the reputation just spreads very quickly and other provinces that are the wealthy provinces ... will deal with you because you have a reputation already. You are then able to take other products into not only the provinces where you have established networks already but again into the wealthier provinces. So there is very strong flow-on business. [61]

4.60 Mr Dinsdale, of Austenergy, gave the example of a $6 million DIFF project which generated non-DIFF follow-on work in a number of countries, up to seven times the initial investment:

It was quite incredible because of the obvious benefits that could have been shown from Australian technology - apart from the fact that it actually did something in that project in Manila.

... The work was seen by other organisations to have provided some significant benefit to the Philippines government ... That technology was then put into Indonesia and put into Thailand on the basis of organisations coming from those countries to the Philippines so they could see Australian technology working. [62]

4.61 Mr Tripp of Relpar said that the special education project had given the company 'an enormous beachhead, if you like, in Indonesia ... We have used the DIFF scheme and our project as a foothold in Asia,' [63] and Mr Tom Spurling, General Manager of LADS Corporation, said that 'the sale of a system to Indonesia would provide LADS Corporation with a beachhead into South East Asia'. [64]

4.62 In its submission to the inquiry, Advanced Energy Systems stated that:

In the long term the effect of ceasing DIFF will severely limit a large market that Australia is strategically located to supply. This would supply a substantial base of work for Australian workers in a market which is being pushed to supply energy ... in a culturally sound, energy efficient and environmentally responsible manner, using Australian technology.

... Australia would be able to participate in considerable future energy infrastructure projects using environmentally sound practices. Future projects would be expected to be of a commercial nature. [65]

4.63 Mr Berckelman of LABAX said that his company's project was:

an obvious showcase for the environmental industry. People from the other ASEAN states would see Indonesia ... as being a good benchmark. Of course, having the Australian equipment there would lead to the manufacturers in Australia getting further orders. [The flow-on effect] would be absolutely colossal. [66]

4.64 Mr Berckelman also spoke of the likelihood of the project being taken over by a company from another donor country, and all future scientific equipment being standardised on that country's technical specifications, which would close the market completely to Australian companies. [67]

4.65 Mr Johnson from Transfield Defence Systems spoke of his company's DIFF project to build two search and rescue vessels for the Philippines coastguard. He told the Committee that a further four vessels would have been required, on a commercial basis, a total of approximately $200 million worth of shipbuilding business for Australia, with the long-term prospect of a further 44 vessels. He said that the Philippines coastguard had indicated the wish to have an ongoing relationship with a single supplier. [68]

4.66 Mr Peter Dawson, Director of LANDMARC International, told the Committee that once his company's land management system had become established in China's Jilin Province it would have become the model for the whole of China, providing opportunities for $2 billion to $3 billion of business. The DIFF grant required for the initial project was $2.8 million. [69]

4.67 Mr Dawson also referred to two other, non-DIFF, projects, with which his company was involved in China, worth $200 million and $1 billion dollars respectively, and said that if the DIFF project were not supported, 'it is highly likely that these projects will go elsewhere ... It will mean the closing of my Chinese operations if this project is not supported.' [70]

4.68 He quoted a letter from the Jilin Province Foreign Economic Cooperation Bureau, regarding the land management project, which states that:

You certainly know that this project will establish a new standard for my country's land information administration. But the cancellation, if it occurs, cancels not only financing for our carefully chosen projects, but also Australian shares of [the] Chinese market at a crucial moment when Australian businesses seek for an expansion there. [71]

4.69 Mr Xiaowu Wu, Managing Director of Smartgas Ltd, said that his company's project was 'only a very small pilot project, but it will have an impact on the whole of China ... If Guangzhou is going well, other cities will join in.' [72]

4.70 Blackwattle Environmental said that its solid waste disposal project for the city of Haiphong would have been a blueprint for many other solid waste disposal projects of a similar nature in Vietnam, and that considerable follow on business would have been possible, particularly in the area of equipment supply and technology transfer. [73]

4.71 'In summary,' said Mr Kerr of Alcatel,

DIFF funding sends a very positive signal about Australia's commitment to the region. The amount of money spent on DIFF is small compared to the multiplier effect. It establishes an environment where the supplier is welcome in countries around the region ... It is vital that the DIFF scheme is retained. [74]

4.72 The Committee believes that the DIFF scheme offered very significant opportunities for Australian companies to win business in important developing markets. In many cases DIFF was instrumental in establishing a market presence and earning credibility for a company which was then able to win further, fully commercial, contracts. The incidence of such commercial flow-on counters any suggestion that DIFF created a dependency culture in Australian companies.

4.73 The termination of DIFF has been a severe blow to the prospects of companies hoping to gain access to those markets. In the short term it has meant the loss of considerable investment in particular projects and in the long term it has meant a significantly more difficult task ahead in earning contracts in the region. The Committee notes that there is already evidence of business being withdrawn from Australian companies following the Government's decision.

[Contents]

Effect on Companies' Operations and Employment

4.74 AusAID's 1996 review of the effectiveness of 51 DIFF projects stated that:

a conservative estimate of the employment generated by DIFF activities and its direct follow-on business was of the order of 1500 person years for the prime contractors only. This represents a substantial underestimate of the full employment impact because it does not allow for the considerable level of employment through sub-contractors or for any multiplier effect. [75]

4.75 This view of the employment generation effect of DIFF projects was shared by the overwhelming majority of submissions to the inquiry and witnesses who gave evidence to the Committee. According to AWA:

We have 1,000 employees in Australia. Certainly, if $100 million of my exports were at risk, which without DIFF they certainly shall be - I cannot say all, but certainly at least half of it will be at risk - we would not be able to bid for those projects because financing is so critical ... So without DIFF, probably 200 or 300 people on the payroll would not be there. [76]

4.76 In the example given by Mr Gosman of AEEMA, referred to above, the loss of the projects represented 50 to 60 jobs lost to those companies, [77] and Dr Woodthorpe of TIEG suggested that over 400 jobs were under threat as the result of the loss of two projects. [78] Of TIEG companies losing DIFF projects, Dr Woodthorpe said that 'It will not threaten their viability [but] it will make life tougher for them'. [79] She said that:

For a lot of these companies they are particularly large orders and, therefore, would throw their production and so on into disarray, so they had to prepare for that. [80]

4.77 With the loss of the project for two search and rescue vessels, Transfield Defence Systems would lose 165 jobs over four years. With subcontractors taken into account the Western Australian Government calculated a total of 875 jobs lost. The opportunity for commercial contracts for a further 48 vessels would carry very significant employment opportunities. [81]

4.78 Mr Kerr of Alcatel said that:

The loss of this work and the negative message it sends to countries in the Asian region ... undermines the whole strategy for the Australian facility and puts in doubt our ongoing success ... ultimately jobs will be lost. [82]

4.79 Professor Don Watts, Chairman of Advanced Energy Systems Ltd, noted that his company, which employs 25 to 30 staff, had just reached the commercial stage after several years of Commonwealth and state support. The company had been involved in the development of a DIFF funded project to supply energy to remote Indonesian villages. Professor Watts told the Committee that with high-level political support in Indonesia the company had placed all of its efforts into the project:

I cannot emphasise enough how important to the company an order over three years of $23 million is. It is the sort of company of the future ... There is absolutely no doubt that now we will struggle for a much longer time before advancing to the next stage of commerciality. It will be damaging ... it will be an immense kick in the backside. [83]

Professor Watts also said that:

The Commonwealth is about to destroy a significant portion of the capital base of this important small Australian company. This is action which I see as simply an act of political and commercial vandalism. [84]

4.80 'In summary', said Mr Pontifex of Energy Equipment:

if the Government is about the business of helping small companies like ourselves to do work in other countries, without DIFF it is not possible - you would just get laughed at ... There must be many other small companies like mine that want to go into export - must go into export - to survive. But they cannot do it without DIFF. [85]

4.81 The Committee believes that the decision to terminate DIFF has had a severe impact on many Australian companies, most of them small to medium enterprises, which will no longer be able to employ staff as anticipated and which, in some cases, will have to lay off staff. The decision to implement the decision immediately, without any phasing out of the scheme while current projects were implemented, has caused serious disruption to companies' planning and outlays in preparation for anticipated activity.

[Contents]

A Case Study: Solarex Pty Ltd - Indonesian Rural Electrification Program

4.82 In the period July-September 1994, Solarex Pty Ltd proposed a project for photovoltaic rural electrification in the eastern provinces of Indonesia. An estimated 61 per cent of houses in Indonesia are not yet connected to major electrical grid power. The climate and fragmented geography of Indonesia create particular problems for rural electrification, and solar energy is of particular interest because of its flexibility, low environmental impact and freedom from fuel requirements.

4.83 Benefits of the project would include access to a clean, non-polluting renewable energy source, the provision of safe, improved quality lighting for education and other purposes, and reliable power without the inconsistency of supply and dangers of fossil fuels.

4.84 The project was listed in the Agreed List of the Australian-Indonesia DIFF working group meeting and a Letter of Advice for Phase 1 was issued to Solarex on 27 September 1994. The estimated value was $38.7 million, with a DIFF grant of $13.5 million. [86]

4.85 Early in 1995 Solarex and a number of Indonesian parties, including the Agency for Assessment and Application of Technology (BPPT), carried out a feasibility study. An AusAID appraisal team visited Indonesia and reported favourably on the project, concluding that it met OECD requirements for commercial non-viability, contributed to the alleviation of poverty, provided a safe form of energy and contributed to the reduction of greenhouse emissions.

4.86 During May 1995, the Indonesian Minister of State for Research and Technology, Dr Ing. B. J. Habibie, visited Australia to discuss Australia-Indonesia co-operation, especially in the scientific and technical fields. Dr Habibie and the then Minister for Industry, Science and Technology, Senator Peter Cook, announced in a joint statement that they had agreed to give high priority to the implementation of the Solarex project, and the following month the OECD accepted the project as eligible for concessional funding.

4.87 In the period July-September 1995, AusAID advised BAPPENAS, Indonesia's National Development Planning Agency, of the OECD decision and forwarded the appraisal report. A preliminary implementation schedule was drawn up and BPPT began initial mapping surveys at an estimated cost to the Indonesian Government in excess of $300,000. [87]

4.88 In the 17 October 1995 issue of Insight, the magazine of the Department of Foreign Affairs and Trade, the project was highlighted as providing 'priceless benefits' to the people of eastern Indonesia. According to the magazine:

Australia's Solarex Pty Ltd - a world leader in solar technology - will supply solar systems to about 36,000 homes in eastern Indonesia under an Australian Government funded soft loan proposal. [88]

4.89 As a result of price rises a reappraisal was required by AusAID and in early 1996, while preliminary work was under way, the reappraisal was satisfactorily completed. This included full field trials funded by BPPT at a cost of $500,000. The company was advised by telephone that the reappraisal had been completed and that a Letter of Formal Offer had been drafted for the Minister to sign. [89]

4.90 At this point the Australian federal elections were called. Following the election Solarex was advised that because no Letter of Formal Offer had been issued DIFF funding would not be available for the project.

4.91 On 16 April 1996 the Minister for Foreign Affairs, Mr Alexander Downer, met Dr Habibie in Jakarta. At that meeting Dr Habibie expressed a wish to see the Solarex project proceed. During June senior officials of BPPT met the Parliamentary Secretary to the Minister for Foreign Affairs, Mr Andrew Thomson, MP, to outline the position of the Indonesian Government and to express concern at the loss of funding for the project. At the second of these meetings a letter from Dr Habibie to Mr Downer, reiterating his support for the project, was delivered. [90]

4.92 In its submission to the inquiry, Solarex argued that:

the very nature of the DIFF program meant that many of the projects were proceeding based on years of committed resources and clear indication of both recipient and donor government representatives' intent to support the project. [91]

4.93 Implications of the decision not to fund the project include:

• the loss of the world's largest humanitarian based renewable energy project;
• the probable loss of any future opportunities for this scale of project;
• the cessation of investment in capital equipment and in Australian plant expansion and ongoing research activities;
• the loss of significant financial resources committed by the Indonesian Government and Australian companies; and
• the loss of 60 jobs.

4.94 Solarex stated that many officials of a number of Indonesian government departments had been involved with the project for two and a half years, and that BPPT had had a team of eight people dedicated to the project for eighteen months prior to the termination of DIFF. BPPT alone had spent approximately $1.5 million on project development. [92]

4.95 Solarex had spent $1 million. The impact on the company of the loss of the project has been to halt the company's expansion program and the loss of more than 60 new manufacturing and project staff positions. [93]

4.96 Solarex described the decision to terminate DIFF, and not to proceed with projects which had received Letters of Advice, as:

a message of contempt towards Australian industry and its workers, a slap in the face for our regional neighbours and a perfect example of the double standards we are often accused of applying.

... The impact on Asia-Pacific relations is difficult to gauge and unfortunately the full impact will only become apparent after the damage is done ... The arbitrary abolition of a scheme providing humanitarian assistance to those less fortunate undermines every aspect of that mutual trust and respect that has been developed. [94]

4.97 The Committee believes that the decision not to fund this project, and many others, simply because it had not received a Letter of Formal Offer, represents the narrowest possible approach to the DIFF process and to the nature of commitments made.

4.98 The Solarex project had:

• been placed on the Agreed List between government authorities of the two countries;
• been the subject of a joint announcement by senior ministers of the two governments;
• been highlighted in a magazine published by the Department of Foreign Affairs and Trade as a project that would go ahead;
• successfully passed the feasibility study and appraisal process;
• been the subject of a draft Letter of Formal Offer at the time of the federal election;
• incurred expenditure of nearly $2 million from the recipient government; and
• been the subject of successive representations from the recipient government at ministerial level, beginning before the decision on the manner of termination of DIFF.

4.99 While other projects may not have been the subject of such public commitments, many of them had been equally well developed, beyond the point of early marketing expenses and commercial risk, to the point at which all parties considered them as firm projects. The impact on the Australian companies involved, of the decision not to support such projects, and on bilateral relations, considered in the following chapter, has been profound.

[Contents]

The Impact on the Australian Economy of the Termination of DIFF

4.100 It is not only individual companies which have expressed concern at the termination of DIFF. The Committee received submissions from government departments in four states and territories, all of which emphasised the severe blow that the termination of DIFF represented to the particular economy. The Department of Commerce and Trade in Western Australia summarised the effect of the decision in Western Australia:

• the loss of $90 million in three potential contracts with follow-up orders totalling hundreds of millions of dollars;
• a severe setback for export-oriented, emerging technology-based industries in Western Australia;
• the severe setback of Western Australia's internationally competitive shipbuilding sector;
• a loss of reputation in overseas markets;
• a major setback for project development and commercialisation of research undertaken by Australian and international institutions;
• a detrimental effect on science and technology linkages in the Asian region and the 'confidence building' exercises that are a precursor to trade and investment in the Asian region; and
• the undermining of Western Australia's comprehensive Trade Through Aid strategy. [95]

4.101 The NSW Treasurer and Minister for State and Regional Development, Mr Michael Egan, MLC, stated that the effect on New South Wales would include:

• a downsizing of local production;
• a concomitant reduction in employment;
• reduced ability to capitalise on increasing returns to scale;
• a likely reduction in net exports;
• reduced access to overseas markets;
• an increased possibility of NSW and Australian companies being technologically 'locked out' of overseas markets;
• the loss of highly skilled and experienced staff to foreign firms; and
• the undermining of the international competitiveness of NSW and Australian firms. [96]

4.102 In a letter to the Minister for Foreign Affairs, the Minister pointed out that one NSW company alone would lose $110 million of export earnings in order to help the Commonwealth save $120 million by terminating DIFF. [97]

4.103 In responding on behalf of the South Australian Government to questions circulated during the course of the inquiry the South Australian Minister for Industry, Manufacturing, Small Business and Regional Development and Minister for Infrastructure, Mr John Olsen, MP, stated that he would like to see the 're-establishment of DIFF, at least for those projects in progress in respect to negotiations/consultations'. [98]

4.104 The Northern Territory Department of Asian Relations, Trade and Industry stated that:

The Australian economy will be adversely affected by the loss of Australian exporters' ability to access and establish in Asian and Pacific markets ... For the Northern Territory alone, there are at least three projects with an estimated total value of over $70 million, in Indonesia and China. [99]

4.105 While some attention has been drawn to the relatively small industry sector that companies involved in DIFF represent, [100] Mr Trenberth from the Commonwealth Department of Industry, Science and Tourism, said that:

it is also stating the obvious to note that the companies that respond to these opportunities are driven by the nature of the project in the recipient country. If those projects fall into certain categories, then the companies that respond will fall into certain categories. [101]

4.106 The Western Australian Government noted that:

While the contracts affected are in different industries, they all have important common denominators. The industries involve complex manufacturing based on advanced science and technology, they all demonstrate high rates of growth and all have strong potential for export development. [102]

and:

Given that many of Australia's 1200 environmental companies are in niche markets which have a very limited domestic market, aid work offers a low cost access to foreign markets ...

Aid often serves as a policy catalyst in the environmental sector in developing countries. Companies which have been involved in the early stages of the environment sector in a host country are well positioned to gain commercial work as the sector develops in that country. [103]

4.107 Evidence given to the Committee suggested that there will be a huge demand for renewable energy in South East Asia, possibly of the order of $60 billion in the next decade. [104] Australian companies are well positioned to take advantage of this demand. The Committee believes that small, technology-based companies in the energy and environmental sectors are a major element of Australia's export potential, and have the capacity to make significant contributions to the economy as a whole.

4.108 The technology being developed by companies involved in DIFF is at the forefront of international developments:

What is going into Indonesia is leading edge technology. That will flow on into Australia in terms of Telstra's and Optus' requirements and also flow into other markets. Australia has actually been able to grab the mandate for that expertise. [105]

4.109 The termination of DIFF represents a severe blow to those companies' ability to gain access to markets with enormous commercial potential and to make significant contributions to the social infrastructure of developing countries. The decision also represents a serious threat to the viability of some of the companies in question.

4.110 It is not only the loss of particular projects and the consequent effect on related activity and employment in Australian firms that is of concern to the Committee. The loss of follow-on business and the opening of markets to Australian business more generally has been significantly affected. Many of the firms involved in DIFF are small companies, employing between 10 and 30 people, either as principals or as subcontractors. The loss of projects that were being developed and of opportunities for future business puts at risk their commercial viability.

4.111 Ms Hewitt from the Department of Foreign Affairs and Trade commented that 'it is not surprising ... that the major beneficiary companies have been vocal in the media about Australia's decision to terminate the program'. [106] However, the Committee believes that while the companies concerned have certainly not understated the effect of the decision to terminate DIFF, the consistency of response from a wide range of companies, large and small, in written submissions and in evidence to the Committee, clearly confirms the seriousness of the commercial impact of the decision.

4.112 In evidence to the Committee, the Department of Foreign Affairs and Trade pointed out the small proportion of overall trade with the relevant countries that DIFF comprised, citing DIFF funding of $34 million to China in 1995-96 in relation to overall exports of $3.1 billion. [107] However, when large volume exports such as primary produce ($1.6 billion) are discounted and the relevant sectors are examined, such as Elaborately Transformed Manufactures ($471 million), DIFF funding assumes a more significant role, especially when it is viewed as the means of entry into the market for many exporters.

4.113 The Committee believes that in the context of DIFF as it was operating at the time of its termination, and the manner of its termination, the decision to cancel the scheme has already had an impact, and will in the future have a considerable impact, on important and growing sectors of the Australian economy. The viability of a number of companies has been threatened, employment has been reduced and significant export opportunities have been lost. If the scheme had been phased out with current projects being implemented the effect would have been less severe but would still have been enough to cause concern.

Footnotes

[1] AusAID/DFAT, submission, p. 24.

[2] AusAID/DFAT, submission, p. 23.

[3] AusAID/DFAT, submission, p. 24.

[4] AusAID/DFAT, submission, p. 23.

[5] AusAID/DFAT, submission, p. 23.

[6] 'As far as the Philippines is concerned, the issue of that Letter of Advice is an agreement.' Mr Rodney Johansen, Commercial Manager, Transfield Defence Systems, Committee Hansard, p. 402.

[7] Dr Katherine Woodthorpe, Chief Executive Officer, Technology Industries Exporters Group, Committee Hansard, pp 269-70.

[8] Mr Patrick Kilroe, Director, ASEAN Focus Group, Committee Hansard, pp 285-86.

[9] AusAID, A Review of the Effectiveness of the Development Import Finance Facility, p. 31.

[10] Committee Hansard, p. 306.

[11] Fax from AusAID to LABAX, 11 August 1995. LABAX International, supplementary material, 12 August 1996.

[12] Committee Hansard, p. 316.

[13] Committee Hansard, p. 307.

[14] Committee Hansard, p. 233.

[15] 'It will be unquestionably true that other countries and their companies will capitalise on this. They will absolutely make hay while the sun shines. They probably cannot believe their luck.' Dr Katherine Woodthorpe, Chief Executive Officer, Technology Industries Exporters Group, Committee Hansard, p. 272.

[16] Philippine-Australia Relations: Fifty Years of Partnership and Co-operation, address by Her Excellency Delia Domingo Albert to the Research Institute for Asia and the Pacific, 25 July 1996, p. 11.

[17] House of Representatives Hansard, 27 June 1996, p. 3040.

[18] Committee Hansard, p. 69.

[19] Committee Hansard, p. 235.

[20] Committee Hansard, p. 241.

[21] Mr Patrick Kilroe, Director, ASEAN Focus Group, Committee Hansard, p. 288.

[22] Dr Katherine Woodthorpe, Chief Executive Officer, Technology Industries Exporters Group, Committee Hansard, p. 260.

[23] Committee Hansard, p. 166.

[24] Committee Hansard, p. 398.

[25] Committee Hansard, p. 72.

[26] Committee Hansard, p. 74.

[27] Mr Julian Dinsdale, Chairman, Austenergy, Committee Hansard, p. 215.

[28] Mr Julian Dinsdale, Chairman, Austenergy, Committee Hansard, p. 218.

[29] Mr Philip Hawke, VTTC Australia/LABAX International, Committee Hansard, p. 317.

[30] Mr Berloud Surjadi, Managing Director, Australian Technical Supply, Committee Hansard, p. 285.

[31] Mr Peter Dawson, Director, LANDMARC International, Committee Hansard, p. 425.

[32] Mr Xiaowu Wu, Managing Director, Smartgas Ltd, Committee Hansard, pp 433-34.

[33] Ms Joanna Hewitt, Department of Foreign Affairs and Trade, Committee Hansard, p. 5.

[34] Committee Hansard, pp 68, 79.

[35] Committee Hansard, p. 213.

[36] Committee Hansard, p. 232.

[37] Dr Katherine Woodthorpe, Chief Executive Officer, Technology Industries Exporters Group, Committee Hansard, p. 264.

[38] Mr Patrick Kilroe, ASEAN Focus Group/Australian Technical Supply, Committee Hansard, p. 279.

[39] Committee Hansard, p. 310.

[40] 'Seventy per cent of those with a Letter of Advice proceed to ultimate fruition.' Mr Ian Anderson, Assistant Director General, AusAID, Committee Hansard, p. 161.

[41] Committee Hansard, p. 234.

[42] AusAID, Business News, June 1995, p. 7.

[43] Letter from Professor Walinono to Mr Downer, Relpar, submission, Attachment 2.

[44] National Institute of Economic and Industry Research, DIFF: Its trade creation, industry development and current account impacts, pp 18-19.

[45] AIDAB [now AusAID], Commercial benefits from development co-operation with China, p. 59; Commercial Benefits from Development Co-operation with Indonesia, p. 64.

[46] AusAID, A Review of the Effectiveness of the Development Import Finance Facility, pp 8-9.

[47] Committee Hansard, pp 506-507.

[48] AusAID, A Review of the Effectiveness of the Development Import Finance Facility, p. 36.

[49] Mr Leigh Purnell, Director, Metal Trades Industry Association, Committee Hansard, p. 70.

[50] Committee Hansard, p. 71.

[51] Committee Hansard, pp 72-73.

[52] Committee Hansard, p. 73.

[53] Committee Hansard, p. 75.

[54] Committee Hansard, p. 76.

[55] Committee Hansard, p. 88.

[56] Committee Hansard, p. 77.

[57] Committee Hansard, pp 85-86.

[58] Committee Hansard, p. 106.

[59] Committee Hansard, pp 107-108.

[60] Committee Hansard, p. 111.

[61] Committee Hansard, p. 111.

[62] Committee Hansard, pp 219, 224.

[63] Committee Hansard, p. 239.

[64] Committee Hansard, p. 381.

[65] Advanced Energy Systems Ltd, submission, p. 4.

[66] Committee Hansard, p. 314.

[67] Committee Hansard, p. 315.

[68] Committee Hansard, p. 398.

[69] Committee Hansard, p. 417; LANDMARC, submission, Attachment A.

[70] Committee Hansard, pp 418-19.

[71] Letter from Mr Wang Hao, Section Chief, Foreign Government Loan and Assistance Division, Jilin Province Foreign Economic Cooperation Bureau, to Mr Peter Dawson, tabled in evidence to the Committee, 8 August 1996.

[72] Committee Hansard, p. 436.

[73] Blackwattle Environmental, submission, p. 1.

[74] Committee Hansard, p. 73.

[75] AusAID, A Review of the Effectiveness of the Development Import Finance Facility, p. 37.

[76] Mr John Dougall, Committee Hansard, p. 71.

[77] Committee Hansard, p. 108.

[78] Committee Hansard, p. 264.

[79] Committee Hansard, p. 277.

[80] Committee Hansard, p. 263.

[81] Committee Hansard, p. 398.

[82] Committee Hansard, p. 73.

[83] Committee Hansard, p. 248.

[84] Committee Hansard, p. 248.

[85] Committee Hansard, p. 75.

[86] Solarex, submission, pp 4-5.

[87] Solarex, submission, p. 5.

[88] Department of Foreign Affairs and Trade, Insight, Vol. 4, No. 18, 17 October 1995, p. 7.

[89] Solarex, submission, p. 6.

[90] House of Representatives Hansard, 24 June, p. 2592; 26 June, p. 2781; Solarex submission, p. 9.

[91] Solarex, submission, p. 2.

[92] Solarex, submission, p. 7

[93] Solarex, submission, p. 7.

[94] Solarex, submission, pp 1-2.

[95] Department of Commerce and Trade (WA), submission, introduction.

[96] Minister for State and Regional Development (NSW), submission, pp 2-3.

[97] Minister for State and Regional Development (NSW), submission, attachment.

[98] Letter to Committee Chairman and response to questions, 21 August 1996.

[99] Department of Asian Relations, Trade and Industry (NT), submission, p. 3.

[100] 'We need to look beyond those directly affected companies, which do come from just one sector of the Australian economy.' Ms Joanna Hewitt, Department of Foreign Affairs and Trade, Committee Hansard, p. 5.

[101] Committee Hansard, p. 496.

[102] Department of Commerce and Trade (WA), submission, p. 5.

[103] Department of Commerce and Trade (WA), submission, p. 9.

[104] Ms Lee Rhiannon, Director, AID/WATCH, Committee Hansard, p. 97. Also, Mr Julian Dinsdale, Chairman, Austenergy: 'Just in the energy sector, you are talking in many tens of billions of dollars,' Committee Hansard, p. 221.

[105] Mr Alexander Gosman, Executive Director, Australian Electrical and Electronic Manufacturers' Association, Committee Hansard, p. 115.

[106] Committee Hansard, p. 5.

[107] Ms Penny Wensley, Department of Foreign Affairs and Trade, Committee Hansard, p. 8.