Additional Estimates - Wednesday 15 February 2012 - Economics Committee - Australian Nuclear Science and Technology Organisation

CHAIR: I welcome Dr Paterson and officers from ANSTO. Do you have an opening statement to make, Dr Paterson?
Dr Paterson: Chair, thank you. I do not have an opening statement today.
CHAIR: I have received indications from members of the committee that Senators Ludlam, Cameron and Colbeck have questions of the organisation. So I will start with Senator Ludlam.
Senator LUDLAM: Dr Paterson, welcome back. I note that a Department of Health and Aging review was undertaken into ARPANSA's handling of certain safety matters in ANSTO, that there was a report issued last year and that, as a result of that report being produced, an investigation, I believe, has been reopened within ANSTO into an incident that happened five years ago with yttrium-90. Can you tell us why that is?
Dr Paterson: ANSTO has not reopened an investigation into that matter, but we have received notification from ARPANSA that an independent person appointed by ARPANSA is going to undertake a review of whether an incident with yttrium-90 took place on the morning of 3 September 2007.
Senator LUDLAM: Whether it took place?
Dr Paterson: Yes.
Senator LUDLAM: So that is the dispute-as to whether an event occurred at all?
Dr Paterson: It is a matter of record that there were two personal contamination incidents on that day. They are well recorded, according to the evidence we have from swipe records and batch records and other records, and they both took place in the afternoon. I understand that the review of the ARPANSA reports by the Department of Health and Aging that has precipitated a new investigation is in relation to whether there was a personal contamination event during the morning.
Senator LUDLAM: During the morning?
Dr Paterson: Yes.
Senator LUDLAM: In addition to the events that occurred in the afternoon?
Dr Paterson: The two that were reported in the quarterly reports to ARPANSA in 2007.
Senator LUDLAM: All right. For other info relating to that review, should I take my questions to ARPANSA? Do you have any formal involvement, or are you just going to wait for the outcome?
Dr Paterson: I think that is the correct approach.
Senator LUDLAM: Okay. Do you know whether a reviewer has been appointed?
Dr Paterson: A reviewer has been appointed, and my understanding is that that reviewer is on our campus today.
Senator LUDLAM: They are there today. Have they approached you for a discussion?
Dr Paterson: I have not been approached for a discussion.
Senator LUDLAM: To what degree would you be involved in that?
Dr Paterson: I think I will leave that to the review process. We have not specifically requested that I directly interact with that process.
Senator LUDLAM: I will take that up with Dr Larsson a little bit later today. I guess if you had made an opening statement, you would have told us that you have got a vastly improved safety culture. There were four inquiries and investigations into ANSTO last year. In lieu of an opening statement, can you just give us an overview of how things at ANSTO Health are going? If there is anything that you prefer to put on notice if it is too detailed, please do. I am specifically interested in three years: production, sales and staffing levels at ANSTO Health.
Dr Paterson: In respect of those broad areas, or the safety aspects of those broad areas, if I can just clarify?
Senator LUDLAM: Not just safety, but maybe let's start with staffing levels.
Dr Paterson: Yes. I am comfortable with the staffing level at present.
Senator LUDLAM: That is very brief.
Dr Paterson: I am.
Senator LUDLAM: You are?
Dr Paterson: Yes.
Senator LUDLAM: Excellent. That makes me more comfortable too. What can you tell us about sales and production?
Dr Paterson: The production process and the sales are tracking according to our process of monthly evaluations. We have not achieved the export sales level that we anticipated earlier in the year.
Senator LUDLAM: Is that a supply thing or a demand thing?
Dr Paterson: I think it is more to do with the current pricing in the global market.
Senator LUDLAM: What has occurred there?
Dr Paterson: Our view is that the pricing is being influenced by the supply from the Canadian Chalk River reactor, and that was a matter for discussion at the high-level group on medical radioisotopes in Paris earlier this year in January.
Senator LUDLAM: Is there an oversupply? Is that what is happening?
Dr Paterson: At present, I do not think it would be true to say there is an oversupply, but there is a supply that has returned to the levels prior to the reactor outages that happened a couple of years ago. There have been improvements in the utilisation of Mo-99 as a radioisotope, which is a good thing, because the medical community is using it more efficiently and has found some savings in the amount that they can use. But, generally, the supply position changes quite dramatically post 2015 because a number of the reactors that are currently the basis of supply will be removed from service. This is the reason that there is a high-level group composed of all the interested countries that meets in Paris twice a year-to anticipate that development and to see how it develops further over time.
Senator LUDLAM: Is there a particular price below which it is uneconomic to produce and export isotopes in Australia, at least for export purposes?
Dr Paterson: I think it is important that we operate within our rules of competitive neutrality and efficient business operations. The price varies quite considerably during the year. It is a very dynamic marketplace, and it depends which reactors are available and which logistical and supply chains are most efficient at any time. Our view is that the predictability of that marketplace has improved very, very significantly and, therefore, our planning is to have a supply and demand arrangement that is in a good balance. Obviously, one would want to produce and supply at a level that fully recovered all of the costs and allowed us to be an effective player in that market.
Senator LUDLAM: I do not have a copy of your annual report in front of me, but do you actually run at a profit in an average year?
Senator LUDLAM: ANSTO at the level of our commercial businesses seeks to achieve a profit. We have not done that in every year. But the situation this year is very, very good.
Senator LUDLAM: Is good?
Dr Paterson: Yes.
Senator LUDLAM: Despite what you are telling us about the prices.
Dr Paterson: I think that is how you run a business. You cannot just depend on somebody paying you a price. You have to have a whole set of arrangements in place to mitigate any risks in the marketplace. That is a sound approach.
Senator LUDLAM: What can you tell us about the latest Comcare report that has come out on incidents at ANSTO?
Dr Paterson: I am not sure what you would like me to tell you.
Senator LUDLAM: Are there particular recommendations that have fallen out of that that you are taking up?
Dr Paterson: Yes, there is a set of recommendations that were made in the report. We have reviewed those recommendations. We have accepted all of those recommendations and we have met with Comcare to brief them on the actions we are taking to meet those recommendations.
Senator LUDLAM: Is Comcare's file closed, or are they are still taking an active interest?
Dr Paterson: We meet with Comcare on this matter, I would say with a frequency of about once every three weeks at present. There are two aspects of that. One is to ensure that we continue to develop an effective relationship in terms of taking all of these actions and completing them, so we like to brief them frequently to bring them up to date with where we are. Secondly, I can say that Comcare has played an incredibly positive role in assisting ANSTO in understanding the implications of the new work health and safety legislation which came in on 1 January. We have a series of actions that we take with them and use their evaluation systems to support our own actions in that regard, so I regard that as a very positive and effective relationship.
Senator LUDLAM: I do not have a copy of the unredacted report. I have been provided with a redacted version from a whistleblower from a previous incident. Is it the case that the report found that the suspension of two workers was actually based on hearsay and fabricated evidence? Is that a fair summary?
Dr Paterson: I do not think that is a fair summary. I think that it may be a confusion between the basis of the suspension, which was found to be sound and did not constitute a breach in any way, and the subsequent processes, where there was some mention of hearsay.
Senator LUDLAM: But the report was fairly critical, wasn't it?
Dr Paterson: I think the report was actually quite helpful, because the report dealt with the main issue at hand, which was whether the workers were suspended for a sound reason. That turned out to be the case and no breach was found, so we thought that was helpful, and we also thought the recommendations were extremely helpful. The investigator was very thorough and spent time interviewing a larger number of people than were interviewed for the previous Comcare report. So we were very comfortable with the process. The reason that we want to address the recommendations is part of the spirit in which we engage with Comcare-if they raise issues which can lead to improvements, that is how safety improves and that is the reason that we are taking their recommendations very, very seriously.
Senator LUDLAM: If this is complex, perhaps you can table it, but can you provide me with a current timetable and order of works for the decommissioning of the former HIFAR reactor in the site?
Dr Paterson: There is no formal decommissioning plan which has been adopted at the moment. As we indicated, I believe, at a previous estimates, there is a window of time in which we would like to begin that decommissioning process. A will take on notice the current status of how we are thinking about that window and when the works can begin.
Senator LUDLAM: Can I see it if I look in the right spot in the four-year forward estimates, or is it not there?
Dr Paterson: It is not in the four-year.
Senator LUDLAM: Did you want to add something, Mr McIntosh?
Mr McIntosh: No, certainly not in the four-year. Clearly, there will be a number of issues to be taken into account. One of them is obviously funding, but there is also: there is not much point demolishing a reactor if you have got nowhere to put the waste.
Senator LUDLAM: That is what I am going to come to now. Is it too early for me to ask you what the cost is going to be of pulling that facility apart?
Dr Paterson: I think the engineering estimates for the moment can be tabled.
Senator LUDLAM: Can be?
Dr Paterson: But the level of certainty of those estimates improves over time. So there are significant contingencies that are not allocated to specific works at the moment. But we can table that number.
Senator LUDLAM: I would greatly appreciate that, and we will not hold you to it. You have told us that there is obviously a range of latitude there.
Senator CAMERON: Could I just ask something on that point? I am not sure what you mean by 'there are significant contingencies not allocated'. Does that mean in simple terms that the cost could blow out more than you are proposing?
Dr Paterson: No. In our engineering planning, one estimates the scope of the work and the work packages that might be involved in it. But you can only do that at a level of detail that is based on estimates of what things cost in the marketplace at the moment. When one gets closer to putting out particular tenders and scoping the work in more detail, two things can happen. You can get scope changes-and you normally have contingencies to address scope changes, because you know more about the work that you have to do-and the second thing that can happen is that the cost estimates which are based on normative numbers that you can extract from quantity surveyors and others in the marketplace may have changed because the marketplace itself has changed. So there are two bases for having reasonable contingencies in these projects: one is scope changes and the other is cost changes because of market forces.
Senator CAMERON: My last question on this: what is the thinking about your tenders? Are you looking for fixed-price contracts or contracts with contingencies in them?
Mr McIntosh: Just to add to the previous answer, I note that the decommissioning of the Moata reactor, which was completed last year or the year before, came in within budget. So we have a track record, if you like, of doing a decommissioning, setting a budget beforehand and coming in within that budget.
Senator CAMERON: There is an old saying: 'One swallow doesn't make a summer,' but, if that is what you are telling us, that is good.
Dr Paterson: Adding to the comment by Mr McIntosh: I do not want to anticipate the exact structure of the contracts that will be reached, but, in general, the advice that I could give with a decommissioning of that scope and size is that there may well be a number of tenders. The majority of those tenders would fall in with our project management practice, which is to retain a contingency in our project management office rather than to have the contingencies in the budgets of the tenderers. That way we don't have open-ended and unconstrained creep in the contract prices. We like to go for fixed price contracts, in general.
Senator CAMERON: Thanks.
Senator LUDLAM: I will not tie the committee up any longer on that issue, but you have offered to table such material as you are able, and that would be helpful. Over the last couple of years that we have been having these discussions you have had a number of whistleblowers within the organisation who have taken up issues of occupational health and safety in there, with some pretty dangerous materials that that workforce has to deal with. Would you say that those whistleblowers, on balance, have improved the safety culture in the organisation and that on balance it has been a net positive for ANSTO that people have seen fit in some instances to come to my office, to go to the media and to take professional risks, essentially?
Dr Paterson: I would like to answer that question in two parts. First of all, I think that everybody who has a passion for and an interest in safety, is articulate about that and wants to achieve the safety objectives of zero harm and best possible practice in our organisation is always welcome. In that spirit I continue to applaud the people who have come forward and have been serious about safety issues, including Mr Reid, who when I first met him in April of 2009 was passionately committed to safety. So I continue to welcome those types of inputs.
The whistle-blowing process can have benefits for an organisation if there are serious defects in communication and a lack of transparency and a lack of openness to achieve a positive result. The whistle-blowing process for ANSTO, in my view, on a day-to-day basis at the cell face has had net negative effect because people feel that their ability to report in a blame-free culture-a just culture, as we call it-without any sanctions might be affected by the situation of an ongoing debate outside the organisation. So every time we have seen a whistle-blowing event on TV or whatever, we have had to reinforce to staff that this is not an issue which in any way would lead to sanctions on them, that they must continue to do the reporting in an adequate way and that they must make their incident reports as frequently as they do. Over time, certainly over the last two years there has been an improvement in incident reporting and the effectiveness of that incident reporting and in the total number of reports, and I think that that has been a really good benefit.
So I think that whistleblowing is a complex phenomenon in any society, and in general I am a supporter of having good mechanisms by which people can use multiple channels to bring their concerns to the attention of the public and other stakeholders. My great preference, which I think was supported strongly the ministerial review, is that where possible it is far more preferable for people to have confidence in the internal mechanisms and organisations and to use those first and efficiently and to get responses out of them before using external mechanisms. I think that would be the best balance, to be frank. On balance it has been a learning exercise for us, and it is something that we will continue to work with, but the internal reporting mechanisms are working extremely well at the moment.
Senator LUDLAM: I found that answer highly instructive, particularly where you said you believe that at the cell face it has been negative. Do you attribute that to people's experiences of ANSTO's reaction to them making their concerns public? You mentioned Mr Reid. He is in the room, and he lost his job-although I acknowledge that you have said that you appreciated him coming forward in the first instance.
Dr Paterson: Yes, I did.
Senator LUDLAM: Nobody here would disagree that there have been great improvements in the safety culture since those concerns came forward, but is the net negative or people's views of the chilling effect of whistleblowing in response to ANSTO's reaction, which in some instances, in my view, was-
Dr Paterson: I think it was clear that it was not in response-
Senator LUDLAM: I had not quite finished.
Dr Paterson: I beg your pardon.
Senator LUDLAM: In some instances was actually punitive-people were on very long suspensions, and they were basically punted out of the organisation for long periods of time.
Dr Paterson: I think that is the construction that I would have wanted to avoid making. I do not think that there is any merit in my suggesting that that is what happened in ANSTO, because that is not what happened in ANSTO. I think it is very clear that the original Comcare review found that Mr Reid had not been sanctioned for any health-and-safety related matter. The second Comcare review in relation to suspension of employees found that there was no breach in respect of the suspension process and that the suspension process was not in any way associated with health or safety concerns. So I think the record shows that ANSTO's position that the suspensions were for matters other than safety is absolutely validated by both Comcare reports.
Senator LUDLAM: I will move us on, because time is short. I just wanted to ask you about waste-in particular, the waste that is scheduled to return in 2014-15 from overseas from the HIFAR plant. On notice, if there has been any material change, tell me where I can find an accurate estimate of the volume and the activity of the waste that is scheduled to return and how that compares to the volume and the activity of the waste that is already stored-and by that I mean the long-lived, intermediate-level material, not the low-level stuff which is already stored at Lucas Heights. My rule of thumb is that there is roughly 15 times the amount already stored securely at Lucas Heights. That is by activity-I do not know how the volume relates-compared to the amount that is contracted to return from Europe. Is that roughly correct?
Senator Chris Evans: This is similar to a question that I have taken on notice for the senator in relation to the bill we are dealing with currently in the parliament. The full title escapes me, but-
Senator LUDLAM: It is in the committee stage, Minister.
Senator Chris Evans: Yes. I have taken that on notice and will reply when we resume the debate. I think it is more a question of whether someone can help you now with any basic information-
Dr Paterson: I do not think we would provide any additional information at the moment. We would want to make a clear distinction between the different types of wastes and the volumes and activities. Therefore, we will take it on notice and consult with your office.
Senator LUDLAM: Is it still ANSTO's intention to store that material which is contracted to return from Europe temporarily in Sydney while the issue of the remote waste dump is resolved one way or another?
Dr Paterson: That is our current planning.
Senator LUDLAM: Okay.