CHAIR-We will move on to output 1.5, Intelligence capabilities.

Senator LUDLAM-I have just got two outstanding questions: one relating to Pine Gap and another relating to Defence's involvement in the rendition of Mr Mamdouh Habib. I might start with the Pine Gap ones. It was reported this week that a review of the agreement about Pine Gap between the United States and Australia is under way and a new treaty is in the process of being established. Can you just tell us who, if anyone, is participating in this review from Defence?Mr Merchant-That report is not correct.

Senator LUDLAM-Could you just enlighten us as to whether there is any form of review under way?

Mr Merchant-No, there is no review.

Senator LUDLAM-There is no review. That wipes out a couple of questions. The committee recently finalised an inquiry into the government's proposal to strengthen the application of the Defence (Special Undertakings) Act 1952 to protect Pine Gap from, in this case, Christian pacifists who had entered the site. There were some answers provided by Defence to the committee's questions asserting that Pine Gap persists with monitoring and compliance of arms control and disarmament agreements. Can you explain to us exactly how Pine Gap contributes to the compliance of disarmament and arms control agreements? Specifically which agreements?

Mr Merchant-Pine Gap collects intelligence by technical means and that can include intelligence on issues that are relevant to the monitoring of arms control agreements, such as nuclear arms limitation agreements between the US and other countries.

Senator LUDLAM-In what capacity does Pine Gap do that?

Mr Merchant-The sorts of capabilities of Pine Gap are highly classified and the exact means by which it contributes to those agreements is not a matter in which there is public discussion.

Senator LUDLAM-Does Defence know, or is that information held by the Americans?

Mr Merchant-Defence knows. It is a joint facility operated by the Australian and US governments.

Senator LUDLAM-Defence is aware of the ways in which that facility helps track arms control and disarmament measures?

Mr Merchant-Absolutely.

Senator LUDLAM-I will bring you back to where we began. The US Consul General Michael Thurston says a new treaty is in the process of being established. Are you formally contradicting that position? And, if you are, we will go to the Consul General and ask him.

Mr Merchant-I am not aware of any new treaty being negotiated. I am not involved in any of the negotiations that were reported, and I would be if there were such a renegotiation of the treaty. The arrangements around Pine Gap are governed by implementing arrangements; they remain in force. There is no suggestion that I am aware of of any renegotiation being instituted by either side.

Senator LUDLAM-So, in that case, nothing is even foreshadowed and the comments by the Consul General are false?

Mr Merchant-I am not aware of what the Consul General said, but certainly in terms of my involvement, as I said, there is nothing that I have been involved in which would indicate a suggestion of renegotiation of the treaty or implementing arrangements.

Senator Faulkner-Mr Merchant can only respond to your questions on behalf of Defence.

Senator LUDLAM-That is right.

Senator Faulkner-I am sure you appreciate that. It is very difficult to respond to some comments that might have been made by the Consul General. I am not sure which Consul General it is, by the way-

Senator LUDLAM-I think Michael Thurston is his name.

Senator Faulkner-They might well be matters better asked in another portfolio.

Senator LUDLAM-I will forward to you the comments that I am specifically referring to, because I recognise that you do not have them in front of you. Could you check whether negotiations are underway involving Defence-

Senator Faulkner-There is no need for Mr Merchant to do that. Mr Merchant has responsibility for these matters. The CDF and the secretary are here at the table, and they have administrative responsibility for both the ADF and the Department of Defence. The assurances that you have received are clear. This is one where I believe we do not need to go any further.

Senator LUDLAM-I will accept that. Clearly, there is something very strongly amiss, though.