The Japan Custody Battle

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I questioned Minister Wong (Department of Foreign Affairs and Trade) and officials regarding the devastating issue of Australian children being abducted to Japan by one parent and entirely cut off from their Australian families due to Japanese domestic law.

While I understand the need for diplomatic language, my priority is getting these kids back to their families.

Transcript

Senator ROBERTS: Chair, can I just use the rest of my time to get into the second bracket? I’ve only done five minutes.  

CHAIR: Well, you’ve been very efficient, so, yes.  

Senator ROBERTS: Thank you. Minister Wong, this goes to something we’ve discussed before and that I think you’re quite supportive of, but I won’t pre-empt it.  

Senator Wong: That worries me!  

Senator ROBERTS: When you’re worried, I’m worried! For those not familiar with this scenario, many Australian children have been taken by one parent to Japan, who’ve refused to return the Australian child to Australia, contrary to the wishes of the other custodial parent or an Australian court order In Japan, the non Japanese parent is often denied access to their child or even contact with that child—a terrible situation. Sometimes contact is limited to a small number of written letters or emails per year. This is because of Japanese domestic law. Minister, what is the current state of negotiations between Australia and Japan to set this situation right?  

Senator Wong: Sorry, I’m just trying to find my brief on this. I’m hoping someone from my office is going to text me on this fairly shortly. I don’t have anything in front of me, and I’m hoping that someone who can talk about Japan, not just consular, might come to the table, please. Ms Adams: I can, but I just want to hear the—  

Senator ROBERTS: I’ll repeat the question. What is the current state of negotiations between Australia and Japan to set this situation right?  

Senator Wong: I want to respond to the word ‘negotiations’. You might recall—I think we had this discussion previously, and I assume Ms McGregor can go to this—that this is a domestic legislation for Japan and that we have been advocating or supporting the changes to their domestic framework and working with them, including through, from memory, the chief justice of the family court, who went to Tokyo to share our experience on joint custody arrangements et cetera. I can’t recall what the legal term is. My recollection is that the legislation has passed. Am I right?  

Ms McGregor: It’s come into effect.  

Senator Wong: That is the legal system changing, which we are supportive of. Then there has also been representations we make on a consular basis for the non-custodial parents. And you should know that I have raised this issue, including the sensitivity and distress of these issues and the distress that many parents feel, with my counterparts over a number of years, because I’m sure they’re in contact with you. There are obviously parents who are very distressed, but Ms McGregor can probably more directly go to the consular issues.  

Ms McGregor: I can confirm that Japan’s joint custody reforms came into effect on 1 April 2026, and we very much welcomed that step. We’re doing a range of things to assist Australian parents who are facing child abduction and custody issues in Japan. We continue to provide consular assistance to affected Australians and—  

Senator ROBERTS: Excuse me, this is wonderful news, but how many Australian children are being held in Japan, contrary to international law, and how many Australian parents have raised this as an issue, if you could include that in your statement?  

Senator Wong: Can we just reframe that for us? I don’t mind you saying that, but, rather than making the assertion ‘contrary to international law’, why don’t we give you whatever we can about how we deal with the people we have dealt with without us being drawn into having to make a legal—  

Senator ROBERTS: Okay, I’ll rephrase it.  

Senator Wong: No, it’s only because obviously we have to make representations, so we use language carefully.  

Senator ROBERTS: I’m not a diplomat.  

Senator Wong: No, you can say what you want, Senator, but I’m just saying—  

Senator ROBERTS: I’m happy for you to rephrase it. I just want these kids back.  

Senator Wong: If you don’t mind, Ms McGregor can assist.  

Ms McGregor: I think we can speak about this in terms of numbers of consular cases involved. DFAT is currently providing consular assistance to 16 parents with respect to 23 children on these issues of parental abduction and child custody. Since 2004, we’ve provided assistance to the parents of 90 children in similar cases. Obviously, we can’t comment on individual cases, but we do a lot of work, particularly to keep parents updated with periodic updates on our advocacy and on developments in Japan. Most recently, we sent out one of those updates in May. Alongside that, we continue to engage Japan to explain the sensitivity of this issue to ensure that they’re aware of the distress of parents and also to encourage progress in this matter. A lot of our work has been focused on supporting the effective implementation of those reforms, and we do that by sharing family law expertise and maintaining regular engagement with Japanese stakeholders, as well as like-minded governments. And the minister mentioned in particular the visit of the Hon. Justice Victoria Bennett of the Federal Circuit and Family Court. She visited Japan. She shared experiences of family law and reform with parliamentarians, judges, bar associations and academics. We’ve had other visits such as that over a number of years.  

Senator ROBERTS: Thank you for that comprehensive answer. Minister, the Japanese Prime Minister recently came to Australia on an official visit. Was this issue raised with the Japanese Prime Minister or did you see no need to because the legislation in Japan is pending?  

Senator Wong: I will check what I can share with you on that. Obviously it’s the Prime Minister’s bilateral, not mine—so, meetings between the leaders—but generally the track for raising this and keeping it— 

Senator ROBERTS: Bubbling?  

Senator Wong: Actually, demonstrating to Japan that this is an important bilateral issue we have interests in and want to keep trying to progress, that has been me to my counterpart. I’ve had a number of Japanese counterparts and it’s one of the issues we make sure we continue—at my level and through our diplomatic track— to make clear to them that this matters to us. I’ll check about Prime Minister Takaichi, but just to be clear with you, it would be me to Minister Motegi—and, previously, Minister Kamikawa et cetera—rather than leader to leader, in general.  

Senator ROBERTS: Thank you. Are you aware that some law firms in Australia have run seminars to show Japanese parents how to take their Australian children permanently out of the care of the other parent? It’s not in the best interests of the child.  

Senator Wong: No, I wasn’t aware of that.  

Senator ROBERTS: This organised child stealing—use whatever diplomatic language you want—is still happening, to some extent, with the financial support of our welfare system. Should a non-custodial Australian parent be forced to pay child support to a Japanese parent where the child is being held in Japan, contrary to the wishes of the Australian parent, other family members and a court order? Are you aware of that? I’ll be asking questions in another committee—  

Senator Wong: This is on a law firm site, is that what we’re—  

Senator ROBERTS: Sorry?  

Senator Wong: Where is this information that you’re quoting?  

Senator ROBERTS: My staffers advised me.  

Senator Wong: I’m not trying to—I’m saying, is this something a law firm in Australia is—  

Senator ROBERTS: Yes.  

Senator Wong: Right.  

Ms Lawson: We’d be interested to have that information so we can have a look at it.  

Senator ROBERTS: Last question—two questions: What can you offer to devastated parents in Australia to end this situation of standing by while child stealers thumb their noses at the other parent? Are you expecting any changes now that the legislation in Japan has changed? Can you do more?  

Ms Adams: We haven’t been standing by. This issue has been—  

Senator ROBERTS: No, I’m not saying you have been.  

Ms Adams: Well, you did. Excuse me, but I thought that’s what you just said in your question just then. But we know we’re not standing by; we’re continuing to advocate on the particular cases and on the systemic issue. It’s been a high priority for the embassy as well as the foreign minister for many years now. We’re continuing to work on effective implementation of the—quite historic, in a Japanese context—legislation that recently passed.  

Senator ROBERTS: Thank you. Last question: how keen do you think the Japanese administration is to resolve this? Will they implement the law fully?  

Ms Adams: The change in the law was carefully debated and very intensely worked through in the Japanese system over many years. It is actually a historic change to introduce shared custody as a new concept in Japanese family law. We have every expectation that it will be fully implemented.  

Senator ROBERTS: Thank you. 

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CSIRO Animal Testing and Biosecurity

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During this estimates hearing, I questioned CSIRO regarding animal experimentation practices and biosecurity measures at the Australian Centre for Disease Preparedness in Geelong.

CSIRO’s response to Question on Notice (SI-173) revealed that in the 2024 calendar year, 248 experiments involved over 1.07 million animals, with a staggering 752,757 humanely killed afterward. Excluding fish, 98,293 animals were destroyed. I requested specific data on these species and the justification for this level of killing.

Dr Taylor defended the research as being vital for border protection, export markets, and human health threats, ranging from observational cattle studies to high-level biocontainment.

I questioned whether this complied with the Australian code for the care and use of animals for scientific purposes. Dr Taylor assured me they comply, claiming that regular independent audits are carried out through a dedicated animal ethics committee.

Holding up aerial photographs of tower structures, I asked if the facility conducts onsite burning for animal disposal or releases exhaust gases. Dr Taylor clarified that they use an international-standard autoclave process to heat-treat all material before release, ensuring no fumes leave the facility and multiple biosecurity redundancies are in place.

I tabled an aerial photo showing two large, blue-green ponds, expressing concern that the colour indicates toxic cyanobacteria and noting pipes leading toward Stingeree Bay. I was told that these are for general stormwater runoff and have “no purpose” in waste handling. They
said all biosecurity water processing happens inside the facility.

Because a water-processing plant is not visible on the aerial shots, I placed multiple questions on notice. I have asked them to provide a full drainage report, clarification on the pond contents, and details on their internal water-processing. Further, I want an absolute assurance that no toxins or bacteria have entered Stingeree Bay.

Transcript

Senator ROBERTS: In the October estimates you took on notice this question: ‘How many times has CSIRO used animals for testing over the last five years and how frequently was the subject destroyed afterwards?’ This is question on notice SI-173. Your response was detailed and came in good time, so thank you very much, it was very prompt. Your answer was as follows: ‘In the 2024 calendar year there were 248 animal experiments involving 1,077,455 animals, and 752,757 were humanely killed afterward. Of these, 645,464 were fish—’ so this leaves 98,293 animals that were not fish— ‘which were killed in animal experimentation by CSIRO in a single year.’ Do you have data on what those animals were and what the experimentation was that justified this level of kill?  

Dr Hilton: I’ll pass that question to Dr Taylor.  

Dr Taylor: We do use animals in our research. Obviously, we adhere to very strict regulations and guidelines, and we’re a signatory to the transparency of use of animals in research, so—  

Senator ROBERTS: Excuse me—is that international or national?  

Dr Taylor: National. The type of work within that research ranges from observational studies, such as the videocapture of cattle and those sorts of things, all the way through to areas where, as you say, animals are humanely killed. We use animals in our biocontainment facility at the Australian Centre for Disease Preparedness. They’re, obviously, very important experiments that we undertake, where we do that for the national benefit and the protection of our borders from biosecurity threats, for the support of our export markets and also for preparedness for any threats to human health.  

Senator ROBERTS: Did this experimentation occur at the Australian Centre for Disease Preparedness, formerly the Australian Animal Health Laboratory?  

Dr Taylor: Some of it does but certainly not all of it. That facility is a highly specialised facility for distinct purposes. Where that work does require that level of biocontainment, then, yes, it does. 

Senator ROBERTS: It seems that CSIRO are running a substantial animal experimentation operation at what was the Australian Animal Health Laboratory. Does it comply with the Australian code for the care and use of animals for scientific purposes, which CSIRO co-wrote?  

Dr Taylor: Yes, it does, and that facility complies with that. It also complies with a dedicated animal ethics committee that is made up of members independent of CSIRO and that undergoes external review on a very regular basis.  

Senator ROBERTS: Is there any independent audit of the procedures?  

Dr Taylor: There is regularly, through the ethics committee that undertakes that, yes. Those reviews are available and are part of our obligations with the experimental use of animals.  

Senator ROBERTS: Is that independent or just within CSIRO?  

Dr Taylor: It’s independent. It’s conducted by a body independent of CSIRO.  

Senator ROBERTS: The international trend in animal testing is to replace and reduce animal use. On notice, can you provide the figure for the number of animal experiments and the number of animals which were not fish that have been euthanised after research over the last five years.  

Dr Taylor: I’m happy to take that on notice.  

Senator ROBERTS: Thank you. Does the facility have chimneys, and are they still in use? If so, for what purpose? We’re looking at pictures of the facility.  

Dr Taylor: Can you define what you mean by ‘chimneys’? It does have towers, I guess. Maybe what you’re asking is how the waste from the facility is dealt with. Is that what you’re asking?  

Senator ROBERTS: I’d like to know whether you burn things onsite and whether the exhaust gases and products go out the chimney.  

Dr Taylor: The Australian Centre for Disease Preparedness is quite a unique facility in that all of the material that is used is treated thoroughly before it leaves the site. What actually happens is an autoclave process, where all material is heated to an internationally recognised temperature that kills everything in it before it is released. So there are no fumes that leave the facility. Everything that leaves that facility has been treated, with multiple redundancies in place.  

Senator ROBERTS: I appreciate what you said in your answer. I’m not after the environmental compliance or the production of carbon dioxide; I’m after knowledge—  

Dr Taylor: This is security compliance, in fact—  

Senator ROBERTS: Yes, that’s right. It’s biosecurity.  

Dr Taylor: and it’s part of what makes the facility unique.  

Senator ROBERTS: That’s what I’ve worked out. Does it include the disposal of euthanised animals?  

Dr Taylor: Yes.  

Senator ROBERTS: I’ve tabled an aerial shot of the photo of the Geelong facility. Can you explain what those two large green areas are?  

Dr Taylor: Yes; they are bodies of water.  

Senator ROBERTS: That’s what we guessed. What is the purpose of these ponds?  

Dr Taylor: There is no purpose.  

Senator ROBERTS: Why have they got what look to be pipes going through the creeks, in drainage channels on each side, and both of them ending out in Stingeree Bay?  

Dr Taylor: I’m not a hydrological engineer, so I am happy to take that on notice. But they are not for the purpose of handling waste from the facility.  

Dr Hilton: They are entirely separate from the containment facility. There is no connection between the effluent and the creeks. We’ll take on notice and perhaps provide you with a report about the drainage from those bodies of water, but they would be treated like run-off from lots of other areas around the facility.  

Senator ROBERTS: Thank you, Dr Hilton. I’m concerned about the colour, the bluey-green colour—it’s typical of cyanobacteria. I would like to know what is in the ponds, what they are used for and how they are treated when they discharge, because they would discharge.  

Dr Hilton: Happy to take that on notice. 

Senator ROBERTS: Thank you. I can’t see a water-processing plant anywhere, so I’d like to know why the ponds have what appear to be pipes connected to the drainage lines, and then to the bay.  

Dr Taylor: The way the facility is constructed, all water processing happens within the facility and within full biosecurity containment.  

Senator ROBERTS: Could you answer on notice what sort of processing and where is the plan?  

Dr Taylor: Yes; I’m happy to do that.  

Senator ROBERTS: And can you assure me that no cyanobacteria or other bacteria or toxins have been released into Stingeree Bay?  

Dr Hilton: We’ll take that question on notice.  

Senator ROBERTS: Thank you. And thank you, Chair. 

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The NDIS Fraud Files

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During this Estimates hearing, I questioned the NDIA regarding an investigative series on NDIS fraud by Pete Zogoulas and Drew Pavlou, asking if the agency had launched any audits, compliance actions, or law enforcement referrals based on their reports.

I specifically tried to ask about any investigations into individuals named Jamal Sabsabi, Josef Yusif, and Marcia De Menezes. Mr Dardo declined to comment on individual cases and defended the agency’s broader enforcement system. He emphasised that the agency has identified and removed thousands of fraudulent providers through both public prosecutions and non-public measures, such as manual payment reviews and search warrants.

Mr Dardo further stated that journalists would have no way of knowing the full scope of the NDIA’s confidential actions, adding that some public matters highlighted in the videos had already been actioned by the agency long before the series was produced.

Transcript

Senator ROBERTS: NDIA, is the agency aware of the investigative series into NDIS fraud produced by independent journalists Pete Zogoulas and Drew Pavlou that has reportedly exceeded two million views on YouTube and more than 100 million views across other platforms? Has the agency reviewed these investigations, and have any audits, compliance actions or referrals to police or the CDPP been commenced as a direct result of the matters they raised?  

Mr Dardo: We clearly cannot comment on individual cases, so I won’t respond at an individual level in relation to that case. What I would say at a broader system level is that, as I’ve previously stated in these hearings, there have been thousands of providers that we’ve identified and removed. In some cases, those providers have been removed through actions that are in the public domain, and you can find them in the public domain because there are administrator reports or there are prosecution outcomes or convictions. Then there are actions where we’ve removed them because we’ve implemented manual payment reviews. When we implement those manual payment reviews, that may not be in the public domain but that’s still thousands of providers that have been treated through those actions where we’ve reduced their ability to claim without us vetting the claims. Then there would be investigations where we’ve executed search warrants which may not be in the public domain. Again, members of the public would not know that we’ve done those warrants. Then there would be cases where investigations are ongoing or prosecutions are imminent or other interventions have occurred that are not in the public domain. So, at a broad level, what I can say is we can’t comment on that case, but there would be no way for any of the people that you’ve referred to to know what we have or have not done in that case, other than the fact that there are some things in the public domain that they have seen or pointed to that we had already actioned well before those videos were produced. 

Senator ROBERTS: Has the NDIS launched any internal investigations in response to this reporting that I specified—in particular, into Jamal Sabsabi, Josef Yusif, Marcia De Menezes—  

ACTING CHAIR: Senator Roberts, the official has already said that he won’t be commenting on individual cases.  

Senator ROBERTS: I’ll put the questions on notice then because they’re replete with specific cases.  

ACTING CHAIR: Fair enough. Do you have anything else, Senator Roberts?  

Senator ROBERTS: No, I don’t. Thank you, Mr Dardo. Thank you for your succinct answers.

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Where is Our Dam?

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The people of Central Queensland deserve clear answers, not continuous delays, when it comes to the Paradise Dam new wall project. The last public update on foundation geological mapping was in late 2024 and it’s time to find out what actual progress has been made.

Mr Darrough from the National Water Gridadmitted that the detailed business case was finalised in July 2025 and evaluated by Infrastructure Australia in September 2025. And here we are in 2026 and still a formal proposal for the revised dam wall hasn’t been submitted.

The estimated cost has skyrocketed to a staggering $4.4 billion because they realised the old wall couldn’t be reinstated, and they would have to build a new one downstream.

The federal government has committed $600 million (with $50 million already spent on early works), and the rest is just sitting in the budget.

The federal department is just sitting on its hands waiting on the Queensland state government to get its act together and put forward a formal funding proposal.

Meanwhile, Queenslanders wait for water security.

— Senate Estimates | February 2026

Transcript

Senator ROBERTS: Thank you all for appearing again today. I have some brief questions about water infrastructure. I’m told this needs to be asked here. Is anyone familiar with Paradise Dam?

Senator Watt: Oh yes!

Senator ROBERTS: It’s about the new dam wall for Paradise Dam. The last update we can find on this project is the conduct of foundation geological mapping conducted by Sunwater in November 2024. Has anything progressed beyond that and, if so, what?

Senator Watt: While the officials are getting ready, I’ll say that this is a Queensland government project. There will be a limit to the role that this department has in that project, but obviously the officials can share whatever they have.

Mr Darrough: The detailed business case was finalised in July 2025 and is being considered by the Queensland government. The Queensland government hasn’t submitted a proposal for the new project with the revised dam wall arrangements. Infrastructure Australia published its evaluation of the detailed business case in September 2025.

Senator ROBERTS: Who’s funding the new dam wall and in what proportions?

Mr Darrough: The Australian government made a commitment of $600 million; $50 million of that is contracted with Queensland to deliver early enabling works and the detailed business case, and the balance of the funding remains available in the budget.

Senator ROBERTS: What do you expect the total cost to be? How much will the Queensland government pay?

Mr Darrough: I think it’s on the record that it’s an estimated $4.4 billion.

Senator ROBERTS: So the vast majority will come from the Queensland government?

Mr Darrough: The Queensland government hasn’t put forward a proposal to the Australian government for funding.

Senator Watt: In case you’re unaware, Senator, the commitment that our government made of $600 million was 50 per cent of the funding for—was it going to be a new dam originally?

Mr Darrough: It was originally to reinstate the old dam wall, but, when the early work was done on that, Sunwater realised that it couldn’t be restored and that they needed to do a new dam wall downstream, so the price has been revisited. That’s also some time ago, so the estimates have gone up through escalation factors in any case.

Senator ROBERTS: So you’re waiting on the Queensland government to get the total cost?

Mr Darrough: Yes.

Senator ROBERTS: Is there any formula for funding of that from federal compared to state?

Mr Darrough: No. The National Water Grid Infrastructure Investment Framework puts in place arrangements whereby states and territories can ask for up to 50 per cent of funding for capital and construction projects, but there is no formulaic base. The level of contribution that the Australian government would make is a matter that’s decided by the government, and it’s informed by the business case evaluation from Infrastructure Australia, the proposal from Queensland and advice from the department.

Senator ROBERTS: So, in summary, you’re waiting on the Queensland government.

Mr Darrough: Yes.

Senator ROBERTS: Let’s move on to Urannah Dam. It was cancelled by the Albanese Labor government in 2022, I understand. We have the preliminary business case, which was released. I don’t have the final business case and environmental impact study, which I’m assuming showed why the project was not feasible. Were these completed?

Mr Darrough: On Urannah Dam, the then Australian government committed $22.65 million to support the business case, environmental approvals and geotech. On 16 December 2022, the delivery agent, Bowen River Utilities, announced it had withdrawn the scheme from environmental assessment processes in Queensland.

Senator ROBERTS: Was any reason given?

Mr Darrough: I’d need to take that on notice. The funding that was actually in the budget for construction of Urannah Dam was within the infrastructure portfolio, not the water elements that transferred to DCCEEW.

Senator ROBERTS: In whose hands is the final business case?

Mr Darrough: I’ll need to take that on notice.

Senator ROBERTS: And also the environmental impact study?

Mr Darrough: Again, I’ll take that on notice. We encourage jurisdictions to publish business cases that the Australian government contributes to, but, ultimately, the Commonwealth-state relations and the funding arrangement that we have puts ownership of those documents in the hands of the jurisdiction. It’s ultimately a matter for them to decide whether or not they publish.

Senator ROBERTS: That’s the state?

Mr Darrough: Yes, but we encourage in all cases that it be published.

Senator ROBERTS: If you have access to it, may we have a copy, please?

Mr Darrough: I’ll need to take it on notice.

Senator ROBERTS: Yes, that’s fine. If the business case says there’s not enough use for the water, then are you aware that there’s a Project Iron Boomerang or, actually, Capricorn Steel, which is a large project—I won’t go into the details—that would involve putting a steel mill at Collinsville?

Mr Darrough: I can talk more broadly about the Burdekin Basin, of which the Urannah area is part. The Commonwealth is partnering with Queensland on the Burdekin Regional Water Assessment, and that process is under way, looking at a basin-wide assessment of demand and supply for water in the catchment.

Senator ROBERTS: I don’t expect you to know this, but I’ll ask it anyway. Are you aware of the potential for a steel mill at Collinsville and other steel mills in Central Queensland? Mr Darrough: Only from newspapers.

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Why QLD Projects Are Going Nowhere

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I wanted a clear update on major projects vital to Queenslanders. As usual, we are seeing a lot of bureaucratic foot-dragging.

First up, I called out the very slow pace on the M1. The Infrastructure Priority List shows we are still stuck at Stage 2 and 3 of the framework, waiting on the Queensland State Government to get its act together on a business case. While a tiny 10-kilometre section was upgraded, the M1 is 80 kilometres long. When I pushed for a timeline on the rest of the highway, the department couldn’t give me a straight answer on the spot and took it on notice.

It was a similar story with the Centenary Highway. Whilst the new bridge in western Brisbane is welcome, the highway is 42 kilometres long. I asked the exact same question: when will the rest of the widening actually happen? The department’s answer? We’re still in the “business case stage.”

We then discussed the Paradise Dam. We support rebuilding the dam wall, however the numbers must make sense. When I asked about the timeline and cooperation from the Crisafulli Government, the department shirked responsibility and passed the buck, claiming it falls under the Department of Climate Change (DCCEEW), not land transport.

The Queensland Inland Freight Route (Mungindi to Charters Towers) is a brilliant project that One Nation has been pushing for a long time. It links vital regional networks from Roma to Longreach and up to Townsville. I wanted to know why it has stalled and when the Minister will use some real leadership to get it moving. The department clarified it’s a road upgrade, not rail, and provided an update on early works, including pavement widening and bridge upgrades on the Carnarvon Highway and Gregory Developmental Road. It’s a massive multi-year project, and it needs to be finished.

Lastly, I wanted to know why the Port of Gladstone land and sea access upgrade has been stuck as an “identified problem” since 2015 with zero progress. I asked if they were considering the major I-PG Global container facility proposal, however the officials could not answer, instead directing me to Infrastructure Australia who handles those assessments.

— February | Senate Estimates

Transcript

CHAIR: Thank you, Senator Canavan. Senator Roberts.

Senator ROBERTS: I’d like an update on the infrastructure plan for the country. My first question is this. Referencing the infrastructure priority list dated 6 February 2026 on the Brisbane to Gold Coast highway it says the next step is: Proponent to develop potential investment options (Stage 2 of Infrastructure Australia’s Assessment Framework), and complete business case development (Stage 3 of the Framework). The proponent is the Queensland state government; is that correct?

Mr Bourne: Yes.

Ms Hall: If that’s what’s on the infrastructure priority list, yes, that would be correct.

Senator ROBERTS: I note that a 10-kilometre section of the highway was upgraded, yet the M1 is 80 kilometres long. When will we see progress on upgrading the rest of the M1?

Ms Hall: We can take you through what programs we have on the M1 currently, but any additional requests for funding would have to come from the Queensland government.

Mr Bourne: Would you like us to go through our projects along the M1?

Senator ROBERTS: Yes, please. Or could you put it on notice, maybe? I’ve got a few other questions. Are they all short answers?

Mr Bourne: There’s quite a bit to them. We can take that on notice if that’s how you’d prefer to do it.

Senator ROBERTS: Thank you. The centenary highway is the next project. The new bridge is welcome, so thank you for that. People in western Brisbane appreciate it. However, the centenary highway is 42 kilometres long, and, on the plans to widen the motorway, let’s talk about what to do next. It’s the same question. When will we see the rest of the widening occur on the centenary highway?

Mr Bourne: Currently, we have a project called the Centenary Motorway upgrade, and that is a business case that is currently underway. That will be subject to the outcomes of that business case.

Senator ROBERTS: So we’re at the business case stage?

Mr Bourne: Yes, if we’re referring to the Centenary Motorway upgrade.

Senator ROBERTS: The next one is Paradise Dam. We don’t disagree with the decision taken to rebuild the wall—let me make that clear. My question, though, is straightforward. Construction on the replacement dam wall was listed at a cost of $4.1 billion. However, the project is still awaiting a business case. What stage is this project at? When is construction likely to start? And what is the level of cooperation from the Crisafulli government to start the rebuild?

Mr Betts: That would be a matter for the Department of Climate Change, Energy, the Environment and Water.

Senator ROBERTS: The department of climate change?

Mr Betts: Yes, DCCEEW.

Senator ROBERTS: So it’s under their purview, not yours?

Mr Betts: Correct. We are responsible for land transport infrastructure.

Senator ROBERTS: We’re excited about this next one. The Queensland inland freight route capacity and safety proposal is to bring Inland Rail over the border at Mungindi and then take it due north to Charters Towers. This would link in with the Brisbane line and the Toowoomba airport from Roma, the existing line to Longreach, the Port of Gladstone with a small missing link across to the Gladstone heavy rail network and to Mount Isa and Townsville along the existing MITEZ route. This is the right alignment for Inland Rail. At last, we’re seeing progress. This proposal appears to have stalled, though, waiting on the Crisafulli government to do something. At what point, Minister, do you use your power to just get these brilliant infrastructure projects moving? We’re delighted to hear of these projects.

Senator Chisholm: Can the department provide any update on where that is at?

Mr Bourne: Senator, if you’re referring to the inland freight route upgrade—because I think you also mentioned the Inland Rail as well—

Senator ROBERTS: The inland freight route capacity and safety—going from Mungindi to Charters Towers.

Mr Bourne: Yes.

Senator ROBERTS: We love the idea! It’s something we’ve been pushing for a while.

Ms Hall: That’s a road upgrade, not a rail upgrade. We can take you through the inland freight route upgrade.

Senator ROBERTS: Yes, if you could, please.

Mr Brummitt: There’s an early works package that’s continuing at the Carnarvon Highway between Injune and Rolleston, the Dawson River Bridge and Gregory Developmental Road, and pavement strengthening and widening of various sections as well. Then, also on the Carnarvon Highway, the Baffle Creek bridge upgrade is proceeding, and the Gregory Developmental Road pavement strengthening and widening in a number of sections there is under construction, as well as a number of major culvert upgrades. The inland freight route is obviously a very large multi-year project.

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The Broken Promise of Inland Rail

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In this session with the Australian Rail Track Corporation (ARTC), I asked questions on the Border-to-Gowrie section of the Inland Rail, a project that continues to look like a horrendous waste of taxpayers’ money.

I asked how much hard-earned taxpayer money has been spent on this 217-kilometre stretch to date and what it will cost before construction even starts. This question was taken on notice. Estimates have been submitted to the federal government, yet the actual cost of building 37 bridges and 3,000 culverts remains up in the air.

We were originally promised a “port-to-port” network from Melbourne to Brisbane. Now, the ARTC admits the actual scope only goes from Beveridge to Kagaru. They’re admitting they cannot get double-stacked, 1.8-kilometre trains into the Brisbane port — and never will. Moving the intermodal terminal to Ebenezer is a flat-out confession of that failure.

They’re stubbornly sticking to a route that goes over a mountain and straight across the Condamine flood plain, which is an engineering nightmare that we’ve warned them about for years. They’re even talking about a “vast new rail tunnel” down the range before they’ve even sorted the basic costs or engineering reality.

I put it to them directly: every single cent being spent on this Queensland route is completely wasted. If you can’t get double-stacked freight to the port, the entire business case goes completely out the window.

While I know the ARTC is just “following orders,” I urge the government to stop throwing good money after bad.

Although they need to finish costing that range tunnel, they must immediately halt the rest and look at alternative routes, such as taking the alignment to the Port of Gladstone, which would actually deliver real logistical and economic benefits for the entire nation.

Once again – this was taken “on notice.”

— February | Senate Estimates

Transcript

CHAIR: Senator Roberts.

Senator ROBERTS: Thank you for appearing tonight, and have a good evening. My questions are on Inland Rail from the Queensland border to Gowrie specifically. This stage is at phase 4 approval. For 2026, ARTC anticipates increased activity, with teams conducting more site investigations, surveys and updates as they work towards securing final environmental approvals. How much money has been spent on the border-to-Gowrie section to date, and how much is expected to be spent before the first construction begins?

Mr Zambelli: I’d have to take that historical data on notice. At the moment we do have a design team engaged—that’s working on that border-to-Gowrie section to get the next refinement of the design—and we’re out there doing site investigations. I’d have to take on notice the total amount that we’ve spent over many years.

Senator ROBERTS: I can understand that—and also the cost of the design.

Mr Zambelli: Yes.

Senator ROBERTS: It appears you’re persevering with a route over a mountain and across the Condamine flood plain, which we’ve talked about many times, to get down to the Brisbane rail network, which will never be able to handle 1.8-kilometre trains or double-stacked trains—never. Why are you persevering with a route that will never get you to port, instead of taking the Inland Rail alignment to the port of Gladstone? There are many logistical benefits for the whole nation.

Mr Zambelli: The scope of Inland Rail is to go to Kagaru, not to Brisbane port, with double-stacked trains to Ebenezer and single-stacked trains to Kagaru. That is the scope. Inland Rail does not go to Brisbane port.

Senator ROBERTS: No, I understand that, but we were originally told it was port to port—Melbourne to Brisbane. That’s what we were originally told was the vision for Inland Rail. It’s not going to do it. It can go to the port of Gladstone.

Mr Zambelli: I’m just telling you the scope, Senator. Inland Rail is Beveridge to Kagaru.

Senator ROBERTS: Yes. You’ve got to follow orders. The border-to-Gowrie section is 217 kilometres of mostly new track, 37 bridges and 3,000 culverts. How much will this cost?

Mr Zambelli: The cost of that section is still being determined. We’ve provided some scope and design, schedule and cost estimates to the federal government, and that’s a matter for the federal government and their assurance verification specialist that’s working with them.

Senator ROBERTS: It’s horrendous. There’s Gowrie to Helidon, including a ‘vast new rail tunnel’—they’re Inland Rail’s words. Surely, taking Inland Rail to Toowoomba shouldn’t be considered until you sort the cost and engineering for taking it down the range. I put it to you that every cent you’re spending on the Queensland route is completely wasted. If you can’t get double-stacked freight to Brisbane, the whole business case is out the window, and your recent update about moving the intermodal from Kagaru to Ebenezer acknowledges you can’t get double-stacked trains to Brisbane itself, which you’ve admitted. Would you please continue work on costing the tunnel down the range but otherwise spend your time, Minister, revisiting alternative routes for Inland Rail? There are so many other fine options that will benefit the country.

Senator McCarthy: I’ll take your question on notice, Senator Roberts.

Senator ROBERTS: Thanks, Minister.

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Endless Studies, Zero Dams

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The Urannah Dam project was cancelled by the Albanese Labor government in 2022. I wanted to see the final business case and environmental impact study (EIS) to see what they’re hiding.

The Commonwealth threw $22.65 million into the business case and approvals, then Bowen River Utilities withdrew the scheme from Queensland’s environmental assessment processes in December 2022.

When I asked why it was withdrawn, where the final business case is, and where the EIS is, the department agreed to provide it on notice. They claimed that because of “Commonwealth-state relations,” the ownership of these taxpayer-funded documents rests with the state, though they “encourage” publication. I’ve requested copies if they have access to them.

I asked if the bureaucrats are looking at the bigger picture regarding future water demand in the Burdekin Basin.

There is massive potential in the Great Australian Infrastructure Project, which would see a major steel mill established at Collinsville, along with other mills in Central Queensland. These visionary projects will have a massive appetite for water.

The department representative admitted he only knows about these vital industrial opportunities from reading the newspapers. They did note they are partnering with Queensland on a broader “Burdekin Regional Water Assessment” to look at basin-wide supply and demand, however it’s clear they are disconnected from real-world economic development.

Whether it’s Paradise Dam or Urannah Dam, we are seeing the same pattern: endless assessments, massive cost escalations, secret reports and a total lack of urgency from state and federal governments to actually build the water infrastructure Australia.

Transcript

Senator ROBERTS: Thank you all for appearing again today. I have some brief questions about water infrastructure. I’m told this needs to be asked here. Is anyone familiar with Paradise Dam?  

Senator Watt: Oh yes!  

Senator ROBERTS: It’s about the new dam wall for Paradise Dam. The last update we can find on this project is the conduct of foundation geological mapping conducted by Sunwater in November 2024. Has anything progressed beyond that and, if so, what?  

Senator Watt: While the officials are getting ready, I’ll say that this is a Queensland government project. There will be a limit to the role that this department has in that project, but obviously the officials can share whatever they have.  

Mr Darrough: The detailed business case was finalised in July 2025 and is being considered by the Queensland government. The Queensland government hasn’t submitted a proposal for the new project with the revised dam wall arrangements. Infrastructure Australia published its evaluation of the detailed business case in September 2025.  

Senator ROBERTS: Who’s funding the new dam wall and in what proportions?  

Mr Darrough: The Australian government made a commitment of $600 million; $50 million of that is contracted with Queensland to deliver early enabling works and the detailed business case, and the balance of the funding remains available in the budget.  

Senator ROBERTS: What do you expect the total cost to be? How much will the Queensland government pay?  

Mr Darrough: I think it’s on the record that it’s an estimated $4.4 billion.  

Senator ROBERTS: So the vast majority will come from the Queensland government?  

Mr Darrough: The Queensland government hasn’t put forward a proposal to the Australian government for funding.  

Senator Watt: In case you’re unaware, Senator, the commitment that our government made of $600 million was 50 per cent of the funding for—was it going to be a new dam originally? 

Mr Darrough: It was originally to reinstate the old dam wall, but, when the early work was done on that, Sunwater realised that it couldn’t be restored and that they needed to do a new dam wall downstream, so the price has been revisited. That’s also some time ago, so the estimates have gone up through escalation factors in any case.  

Senator ROBERTS: So you’re waiting on the Queensland government to get the total cost?  

Mr Darrough: Yes.  

Senator ROBERTS: Is there any formula for funding of that from federal compared to state?  

Mr Darrough: No. The National Water Grid Infrastructure Investment Framework puts in place arrangements whereby states and territories can ask for up to 50 per cent of funding for capital and construction projects, but there is no formulaic base. The level of contribution that the Australian government would make is a matter that’s decided by the government, and it’s informed by the business case evaluation from Infrastructure Australia, the proposal from Queensland and advice from the department.  

Senator ROBERTS: So, in summary, you’re waiting on the Queensland government.  

Mr Darrough: Yes.  

Senator ROBERTS: Let’s move on to Urannah Dam. It was cancelled by the Albanese Labor government in 2022, I understand. We have the preliminary business case, which was released. I don’t have the final business case and environmental impact study, which I’m assuming showed why the project was not feasible. Were these completed?  

Mr Darrough: On Urannah Dam, the then Australian government committed $22.65 million to support the business case, environmental approvals and geotech. On 16 December 2022, the delivery agent, Bowen River Utilities, announced it had withdrawn the scheme from environmental assessment processes in Queensland.  

Senator ROBERTS: Was any reason given?  

Mr Darrough: I’d need to take that on notice. The funding that was actually in the budget for construction of Urannah Dam was within the infrastructure portfolio, not the water elements that transferred to DCCEEW.  

Senator ROBERTS: In whose hands is the final business case?  

Mr Darrough: I’ll need to take that on notice.  

Senator ROBERTS: And also the environmental impact study?  

Mr Darrough: Again, I’ll take that on notice. We encourage jurisdictions to publish business cases that the Australian government contributes to, but, ultimately, the Commonwealth-state relations and the funding arrangement that we have puts ownership of those documents in the hands of the jurisdiction. It’s ultimately a matter for them to decide whether or not they publish.  

Senator ROBERTS: That’s the state?  

Mr Darrough: Yes, but we encourage in all cases that it be published.  

Senator ROBERTS: If you have access to it, may we have a copy, please?  

Mr Darrough: I’ll need to take it on notice.  

Senator ROBERTS: Yes, that’s fine. If the business case says there’s not enough use for the water, then are you aware that there’s a Project Iron Boomerang or, actually, Capricorn Steel, which is a large project—I won’t go into the details—that would involve putting a steel mill at Collinsville?  

Mr Darrough: I can talk more broadly about the Burdekin Basin, of which the Urannah area is part. The Commonwealth is partnering with Queensland on the Burdekin Regional Water Assessment, and that process is under way, looking at a basin-wide assessment of demand and supply for water in the catchment.  

Senator ROBERTS: I don’t expect you to know this, but I’ll ask it anyway. Are you aware of the potential for a steel mill at Collinsville and other steel mills in Central Queensland?  

Mr Darrough: Only from newspapers.  

/1 Comment/by

Who’s Winning the Tobacco War?

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Black market tobacco and vaping in Australia is a real problem. I raised concerns that, while seizures have increased by 38%, there’s no clear data showing whether that’s actually making a dent in the total illicit market.

Even the department couldn’t tell me how much illegal tobacco is getting through compared to what’s being stopped. They admitted that assessment is still pending in a report from the Illicit Tobacco and E‑cigarette
Commissioner.

I asked for clarity on illegal vape consumption, noting that import figures alone don’t tell the story, especially when some products are being made domestically. Again, the answer was that they don’t know how many illegal vapes are actually being used across the country, only how many have been intercepted at the border.

I raised serious concerns about the criminal activity tied to this black market — violence, intimidation and organised crime. Yet no-one present could provide figures on how many violent incidents are linked to illegal tobacco and vaping. I was told that that information sits with law enforcement agencies, not the commissioner.

On the financial side, I asked how much revenue Australians are losing due to illegal tobacco. While officials highlighted that billions in evasion have been prevented through seizures, they still couldn’t provide a clear figure for total revenue lost. I pointed out that estimates suggest the cost could be as high as $8–9 billion annually, which underscores just how massive this black market has become.

What we’re dealing with here is a large, organised criminal enterprise, often driven from overseas, and that we need proper data on the size of the market and the broader social costs. Without that, we’re flying blind.

Finally, I asked Minister Watt directly on whether its excessively high tobacco taxes are driving ordinary Australians into the illegal market by making legal products unaffordable.

True to form, Minister Watt flatly rejected that connection, yet offered no evidence to support that position. I pointed out to him that this approach risks empowering organised crime while reducing government revenue, placing greater burdens on taxpayers.

Transcript

Senator ROBERTS: Mr Reynolds, a constituent says: ‘If the seizures have increased by 38 per cent, what has been the proportion of the total growth in the illicit tobacco market? Has it grown by more than 38 per cent? How do we know that?’ Compliments to you for the seizure, but how do we know if that has had a big impact?

Mr Reynolds: It’s a reasonable assessment that there has been an increase in the amount of illicit tobacco coming into the country. But I’m not in a position to tell you what the delta is. The amount that we get on the
border to the amount that is coming into the country is not a figure that I have for you.

Senator ROBERTS: You don’t have it?

Mr Reynolds: What I’d offer is this: the Illicit Tobacco and E-cigarette Commissioner is working through an assessment of what that delta is, and that will be provided in a report to the government.

Senator ROBERTS: Commissioner, when do we expect that report?

Ms Foster: The commissioner gave evidence earlier that she was just finalising the report at that moment.

Senator ROBERTS: So we should see that soon? Will that report contain an assessment or an estimate of the total illicit tobacco market size?

Ms Shuhyta: It will.

Senator ROBERTS: Thank you. That’s good. How many illegal vapes were consumed in Australia in the last 12 months? I say ‘consumed’ because I understand some are being made here. Importation figures are less relevant than they are for tobacco; is that correct?

Mr Reynolds: I can tell you we allowed 1.2 million legal vapes into Australia and we intercepted six million illegal vapes on the border coming into the country. But I’m not in a position to tell you how many illegal vapes were consumed in Australia during the financial year.

Senator ROBERTS: Thank you. How many acts of violence were committed in Australia that were directly related to illegal tobacco and vapes? I’m talking about murders, fire bombings, assaults and similar acts or threats of violence. We know from tobacconists that they’ve been threatened. Some have been shut down.

Mr Reynolds: I think that’s really a question for, potentially, the Australian Federal Police—or the Australian Criminal Intelligence Commission may have an answer to that question for you.

Senator ROBERTS: Is there someone from the AFP who could answer that—or perhaps the commissioner could.

Ms Foster: The AFP is appearing later this evening.

Senator ROBERTS: Thank you. Does the commissioner have any idea of that? You’re in charge of coordinating stopping this.

Ms Shuhyta: I don’t have the exact numbers in front of me, no.

Senator ROBERTS: Are you able to get them on notice?

Ms Shuhyta: I will do my best to work with law enforcement.

Ms Foster: I think the question is best directed to the law enforcement agencies rather than the ITEC commissioner. They will be here later.

Senator ROBERTS: Isn’t the ITEC commissioner overseeing and coordinating everything?

Ms Foster: She’s coordinating the response, but, where there is a specific function like law enforcement, those questions are best directed to the specific agency.

Senator ROBERTS: Commissioner, how much government revenue has illegal tobacco taken out of the budget?

Mr Reynolds: I don’t have that figure. That may be an inclusion in the ITEC commissioner’s report to the government. What I can tell you is that we have prevented $4.4 billion worth of evasion by intercepting 2.5
billion cigarettes and over 400 tonnes of loose tobacco on the border.

Senator ROBERTS: Thank you for that. Those figures and the number of cigarette sticks you’ve intercepted are pretty impressive, but my understanding is that the government has lost about $8 billion or $9 billion a year on excise due to illegal tobacco coming into the country. We need to understand the size of the overall market, because it’s huge. We also have to understand the costs of the crimes being committed. We’ve got criminal gangs working from overseas, as I’m sure you’re aware, who are taking over tobacco trade in this country.

Mr Reynolds: Indeed. The ITEC commissioner has already given evidence that that report will be provided to government; that’s yet to be forthcoming.

Senator ROBERTS: I must compliment you on your evidence; you’re very direct, which is good. Minister, do you consider the government’s very high tobacco duty is the reason otherwise law-abiding citizens are prepared to buy illegal tobacco for generally a third of the legal price?

Senator Watt: No.

Senator ROBERTS: Any reasons?

Senator Watt: There’s absolutely no evidence to suggest that argument.

Senator ROBERTS: You’re joking?

Senator Watt: No.

Senator ROBERTS: Minister, is this office designed to make it look like you’re doing something to solve a problem your greedy tax grab created—and your predecessor’s?

Senator Watt: No.

Senator ROBERTS: No data, just meetings—empowering organised crime, decreasing revenue that taxpayers have to make up, and you just say ‘no’.

Senator Watt: You asked me a question, and I said ‘no’.

Senator ROBERTS: I’m asking you: are you ignoring the data to just put in meetings, empowering organised crime and decreasing the revenue to the government?

Senator Watt: No.

Senator ROBERTS: Thank you very much.

/1 Comment/by

Government Gambles With Your Money

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I wanted to get some straight answers about the government’s 5% deposit scheme, because to me, it looks like risky lending at the taxpayers’ expense.

APRA have previously said that loans with a 95% value ratio are high-risk. I asked how they reconcile that with a government scheme that encourages this exact behaviour. They admitted that high-ratio lending is “more risky” and they are watching it closely.

I’m worried about what happens if property prices drop by 10 or 20%. If people fall into negative equity, the taxpayer is underwriting a huge chunk of those losses. APRA ducked out of giving a specific answer on the scheme itself, however insisted their “stress tests” for the overall banking system are even more severe than the scenarios raised.

I asked: was the Treasurer warned about the scheme’s risks? They told me they gave some advice to Treasury early on about mortgage insurers, but nothing specifically to the Treasurer. They will provide me with a copy of that advice on notice.

I questioned APRA as to whether this scheme follows their own sound risk management standards. They replied that they don’t “opine” on government policy, however confirmed that they’ll expect banks to hold the same amount of capital against these loans as any other high-risk product.

Finally, I asked if they would publish stress test results specifically for this 5% scheme. They stated that their stress tests are “much broader than any one government policy” and that they are “not aware of a stress test” planned for this specific scheme.

APRA knows these loans are risky and are tiptoeing around the topic.

Transcript

Senator ROBERTS: Thank you for being here. APRA has previously stated that loans with loan-to value ratios above 90 per cent ‘clearly expose an ADI to a higher risk of loss’ and that prudent loan-to-value ratio limits are essential for portfolio risk management. How does APRA reconcile those warnings with the government’s five per cent deposit scheme, which institutionalises 95 per cent loan-to-value ratio lending, backed by taxpayers?  

Mr Lonsdale: Well, it’s something that we’re watching very closely, Senator. I think the premises of your question is correct: high LVR lending, as a general statement, and high debt-to-income lending are at the more risky end. Because of that, we watch that type of lending very closely.  

Senator ROBERTS: Has APRA provided advice to government on the systemic risk and implications of guaranteeing high loan-to-value ratio loans under this scheme? If so, will you table that advice? 

Mr Lonsdale: As I mentioned to Senator Brag, we were asked for our advice on LMI providers for the early design of the scheme, which we provided to Treasury, not the Treasurer. But we’ve not provided any advice to the Treasurer on the systemic effects of the Home Guarantee Scheme as currently implemented.  

Senator ROBERTS: Could we get a copy of that advice that you gave to Treasury, on notice?  

Mr Lonsdale: I’m happy to take it on notice.  

Senator ROBERTS: Borrowers with 95 per cent loan-to-value ratio loans are more likely to fall into negative equity during downturns, and taxpayers are underwriting 15 per cent of these loans. Has APRA modelled fiscal exposure if property prices fall by, say, 10 to 20 per cent?  

Mr Lonsdale: We do very stringent stress tests on the banks and on the system that are more stringent than you just outlined there.  

Senator ROBERTS: So you’ve done what I’ve said?  

Mr Lonsdale: More stringent, I would say, and we publish those results. The outcome is that our banking system, particularly our major banks, are very resilient.  

Senator ROBERTS: Does APRA consider the scheme consistent with Prudential Standard APS 220 and APG 223, guidance of sound risk management?  

Mr Lonsdale: I don’t want to comment directly on the scheme, but what I can say is that that’s a very important standard that you mentioned, and we deal with the banks all the time to make sure that they are resilient and are adhering to our standards, of which that is one.  

Senator ROBERTS: Why can’t you discuss the scheme in relation to that?  

Mr Lonsdale: As I said to Senator Bragg, if we’re looking at the scheme, we want to have a look very closely at the empirics, the loans being used—  

Senator ROBERTS: Once you’ve got experience.  

Mr Lonsdale: After we’ve got experience. We like to base our conclusions on facts.  

Ms McCarthy Hockey: Government schemes at federal level and state level come and go from time to time. We see different structures of ways in which government make their decisions and put in place policies. At all points in time, it is for the bank to determine its risk appetite for the kind of lending that it would extend and then that it adequately capitalises that and puts liquidity against it. So, I think the really key point here is that we don’t opine on any regime put forward by a government. It is their prerogative. However, the banks are to uphold the lending standards and the risk management, and to capitalise it and put liquidity accordingly. What we then do is look at the macroprudential picture that we monitor—you can see us very regularly publishing our view of that— and take our macroprudential measures accordingly, which are within our gift to do. There are different roles that we play, but the key thing is that banks are managing that risk, we are managing the system risk, and governments will make their decisions as they see fit.  

Senator ROBERTS: APRA’s guidance emphasises limiting large volumes of high-risk lending. Does APRA classify the government’s scheme as high-risk lending?  

Mr Lonsdale: Again, I don’t want to comment directly on the scheme, but I’ll make this general point: the higher the LVR, generally, the higher the risk involved, and the higher the probability of default. I think that is true. Because we’ve had a large number of questions on high-LVR lending, can I just make this point: it is part of our normal course that we would seek reporting from the banks on high-LVR lending; because it is high-risk lending, we do that. The other thing that I think is a very important point is that when you look at the capital settings that we apply, the vast bulk of lending that is happening in the country—but also that we’d expect under this scheme—is done by the major banks, the lion’s share. The capital that we are requiring to be held is agnostic to the Home Guarantee Scheme. So, regardless of that guarantee, we are requiring the same amount of capital to be held. 

Senator ROBERTS: So that means that APRA will apply the same supervisory expectations to banks originating these loans as it does to other high loan-to-value ratio products? 

Mr Lonsdale: Yes, we will. 

CHAIR: How are you going, Senator Roberts? 

Senator ROBERTS: Almost. Will APRA commit to publishing stress test results for the five per cent deposit scheme under scenarios of price declines and unemployment shocks? 

Mr Lonsdale: The stress tests that we do are much broader than any one government policy, and we do publish those. I’m not aware of a stress test that we will be doing on the particular scheme. 

Senator ROBERTS: Thank you for your succinct answers. Thanks, Chair. 

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Government Spending is Fuelling the Fire

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There is a massive disconnect between the RBA’s projections and the reality facing Australian families.

Reckless government spending is fuelling inflation, and everyday people are paying the price.

In this session with the RBA in December, I questioned Governor Bullock on her claim that inflation expectations are ‘anchored’ at 2.5%. With CPI at the time sitting at 3.8% (now 4.2%), that ‘anchor’ looks like it’s dragging. I asked her who has lost credibility here — the RBA or the government?

There’s a real risk of cutting rates too early because of political influence and outside pressure. While Ms. Bullock insists the Board isn’t being swayed by politics, I’m still sceptical about what really happens behind the scenes.

One of the biggest risks I raised was the threat of a federal credit rating downgrade. If the government can’t show budget discipline and we lose our AAA rating, bank borrowing costs will shoot up.

And if that happens, mortgage rates will go up, even if the RBA doesn’t touch the cash rate and that’s a rate hike due to government incompetence.

Finally, we touched on the data. I pointed out how absurd it is that the ABS classifies someone as ’employed’ if they work just one hour a week.

While the Governor appears to trust the official statistics, these numbers are masking the true level of underemployment. There are far more Australians struggling to find work than the headline figures suggest.

Transcript

Senator ROBERTS: I’m concerned about government spending, but I’ll ask a few questions before getting on to that directly. In October, you said to me that ‘all the evidence we have is that inflationary expectations have remained reasonably anchored at around 2.5 per cent’. I know you went to this with Senator Hume’s question, and you continued that’s ‘what has made it possible, I think, to bring inflation back down toward the target range so that we’re now under three per cent and heading towards 2.5 per cent and to maintain a relatively healthy labour market’. You couldn’t achieve that without anchored inflation expectations. With the Consumer Price Index headline rate now at 3.8 per cent in the year to October and the trimmed mean up 3.3 per cent, it certainly doesn’t appear that we’re heading to 2.5 per cent anymore. Do you still have no evidence that inflation expectations are above 2.5 per cent?  

Ms Bullock: What we’ve observed is what we usually observe, that the very short-term inflation expectations rise, but at the moment we’re still seeing that the longer term inflation expectations are remaining reasonably anchored. But you raise a very relevant point. It’s a risk and it’s something the board is very focused on. 

Senator ROBERTS: What does it say about the credibility of the Reserve Bank or, more likely, the credibility of government in terms of government spending if inflation rears its head again?  

Ms Bullock: I think credibility is demonstrated by where inflation expectations are. Inflation expectations in the long term remain anchored, which I think says a lot about the credibility of the central bank.  

Senator ROBERTS: In 2026, are more families going to be pushed to the brink and paying more on their mortgages because you cut interest rates too early while this government attempted to jawbone and pressure you into doing it?  

Ms Bullock: We’ve never been under any political pressure. The board has done what the board has thought was the right thing to do. We thought we were moderately restrictive. We made a conscious decision not to go up as high as some other countries. Our projections still see inflation coming back down, but obviously we’re alert to the possibility that there might be inflation pressures building, and the board will respond accordingly.  

Senator ROBERTS: Do you expect under current government strategies and policies to be having to deal with the government again on this?  

Ms Bullock: We take what the government is doing as a given, and that is in our forecasts. 

Senator ROBERTS: I refer to federal budget discipline, to the credit rating and mortgage rates. The banks are implicitly guaranteed by the government’s AAA credit rating, which allows them to borrow cheaply. If the federal government were to suffer a significant credit rating downgrade below its AAA, could that imply higher borrowing costs on the banks and a wider spread between the going mortgage rate and the Reserve Bank cash rate? In other words, could interest rates charged by the banks rise?  

Ms Bullock: The Australian banks aren’t only underpinned by the government, they’re underpinned by the fact that they are very strong, unquestionably strong according to the language. They have strong capital, strong buffers, low arrears rates. They’re rated well because they are very strong financial institutions.  

Senator ROBERTS: I appreciate your clear answers. Nonetheless, if the federal government doesn’t get its spending under control and is given a lower credit rating, what people pay on a mortgage could actually go up without the Reserve Bank raising rates; is that right?  

Ms Bullock: It could possibly tighten financial conditions. Those are the sorts of things that the Monetary Policy Board would take into account in setting the cash rate. Financial conditions can vary for similar cash rates. The cash rate at a particular level now isn’t necessarily the same tightness in financial conditions as the same cash rate in the past. We have to take into account financial conditions.  

Senator ROBERTS: Just a quick question to tidy up my understanding of where you get your figures. The RBA, as I understand it, does a lot of listening right through the community. That’s correct, isn’t it?  

Ms Bullock: We have a very extensive liaison program, yes.  

Senator ROBERTS: What are the sources of your inflation rate and the unemployment rate? Is it many factors—ABS, for example? Whom else would be involved?  

Ms Bullock: The inflation rate is the CPI published by the Australian Bureau of Statistics. The unemployment rate is the same.  

Senator ROBERTS: The unemployment rate is just over 4.4 per cent. How many people does that translate into being unemployed right now in Australia?  

Ms Bullock: I’d have to get back to you on that in terms of the actual numbers.  

Senator ROBERTS: It’s just a straight calculation, right, arithmetic?  

Ms Bullock: It depends on the labour force and who’s in the market. I don’t know what the number is. I’ll have to come back to you.  

Senator ROBERTS: That varies month to month of course. My concern is that the actual number unemployed may be far greater than what is indicated by the unemployment rate. As I understand it, the definition—and I’m looking for guidance here—is that anyone who’s employed or works paid work for one hour or more in a week is counted as employed?  

Ms Bullock: Correct.  

Senator ROBERTS: Is there any consideration of underemployment in your deliberations?  

Ms Bullock: Yes, we consider underemployment. That’s a rate that we calculate. Basically, that captures people who are employed but would like more hours.  

Senator ROBERTS: What is your level of confidence in the accuracy of the unemployment rate and the underemployment rate?  

Ms Bullock: We’re pretty confident that the ABS does a very good job of calculating these numbers.  

Senator ROBERTS: Is one hour per week employed really employed?  

Ms Bullock: That’s the definition, but there are others. As I said earlier, for what it measures, we’re confident they measure it well. But that’s why we take into account a lot of different indicators, including things like vacancies, job ads and how many people actually have a job but would like more hours. These are all things that we consider as well.  

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