Senator JOYCE—When it becomes apparent that there is a possible diminution in the value of an asset, does it strike a feature on your budget papers? If we see the change in usage of an asset or the mothballing of an asset, does that now get revalued in that asset and is a change reflected in the valuation that is on the books?

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Mr Martine—Those changes would flow through the financial statements. If an asset is written off, for example, you create an expense at the point that it is written off.

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Senator JOYCE—If during the budget process you become aware of substantial change in usage of an asset, do you then go forward and reflect the value of that asset, especially a particular asset that has a certain very specific use in a very specific area? If that asset is changed, would that strike a feature somehow in your budget papers now?

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Mr Martine—The financial statements are actually prepared by the Department of Finance and Deregulation. The way they are prepared is each of the relevant agencies puts together their own financial statements, so the extent that their asset valuations are changing or they have written-off assets would be part of their financial statements, which all get fed through to the department of finance, and they prepare the aggregate statements. In general terms what you said is correct, but we are not the experts to answer that.

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Senator Sherry—I was just going to say that when I was at the department of finance estimates there was some significant discussion around this issue and the earlier issue that Senator Bushby got a response about from Mr Ray.

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Senator JOYCE—The answer is that they advise you that, for instance, we are going to have a significant change in the usage of an asset and, therefore, we will probably have to reflect a change in that that particular asset’s capital base on our books. That is the process and that appears in your budget papers.

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Mr Martine—The process is that the relevant department would, in preparing their financial statements, be advising the department of finance. As the department of finance prepares the aggregate statements and they all get sort of fed up, I imagine there is a constant dialogue between Finance and relevant agencies on the various valuations, et cetera.

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Senator JOYCE—Under the international accountancy standards now, which I suppose we are all following, you have to reflect an asset’s fair market value on your book, don’t you?

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Mr Martine—Yes.

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Senator JOYCE—That being the case, in the change of the use of the asset at Rockhampton held by the CSIRO—a multimillion dollar beef facility—that is a very particular asset. It is the biggest undercover beef facility in the southern hemisphere. Since it is now in moth balls, where is that going to be reflected on your budget papers?

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Mr Martine—You are probably asking a question outside my area of expertise. The CSIRO is a government entity and therefore all its assets, by definition, have to appear somewhere in the aggregated balance sheet. Exactly where these assets sit is probably more a question for either the CSIRO itself or the department of finance, in terms of the aggregate statement.

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Senator JOYCE—I am talking to the competence of the figures. Can you then take that on notice as to the fair market valuation of that asset, its diminution in value and how that is reflected in the figures that have been provided to us?

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Senator Sherry—We will take it on notice in an endeavour to assist you. However, the valuation of a specific asset is not an issue for this department’s estimates. That is an issue for the CSIRO and perhaps the department of finance.

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Senator JOYCE—It is going to end up being filtered back through. It talks to the competency of the books. That is certainly part of the fiscal groups’ oversight, isn’t it?

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Senator Sherry—But can Treasury be reasonably expected to have precise knowledge and understanding of that particular issue? No. The CSIRO and the department of finance would. We will take it on notice and we will endeavour to assist you.

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Senator JOYCE—I hear what you say but they can certainly be expected to have a system in place that deals with such issues. If in this instance we find it has not dealt with that issue then it should lead to further questions in other areas where we would further question the competency of the books.

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Senator Sherry—It is for the CSIRO and the department of finance, which has responsibility for oversighting evaluation of assets, to do that if it has a question or concern, not the Treasury. But we will take it on notice. But I am a little concerned that if you come here and expect the Treasury to give you a precise asset valuation of an individual asset—

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Senator JOYCE—No, I am not. I am looking to the competency of the Treasury’s oversight and whether the mechanisms they have for assessing information are up to speed or whether the information that is delivered to them is not a true reflection of the financial affairs of what is given—

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Senator Sherry—The department—

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Senator JOYCE—Of course, then you base your decisions on it and I want to make sure you can—

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Senator Sherry—The department of finance is responsible for assessing the underlying valuation and if it has a question about the valuation of an asset it will raise it with a particular department. So it is the department of finance. As I have said, there was a discussion about this, in the broad—not as to the particular issue that you have raised—at the department of finance estimates last week.

Senator JOYCE—As you know, emissions trading schemes is an area that a lot of people are truly in the dark about. My questions will try to clarify that ambiguity. Will an emissions trading scheme be put into place?

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Mr Ray—The government has announced that, yes.

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Senator JOYCE—Will that be by 2010?

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Mr Ray—That is correct.

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Senator JOYCE—This is an obvious question, but it has to be asked. In the meantime, what happens if all of a sudden the world starts getting colder and wetter? What do we do?

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Ms Mrakovcic—There are two challenges around climate change. One is that it is actually what we term a global externality in the sense that often the effects of climate change can be felt in a location quite different from where perhaps the emissions that led to increased greenhouse gas concentrations were made.

The second point is that there is quite a significantly long lag between when you have the emissions and the way that they feed through into greenhouse gas concentrations. One would not actually expect there to be an immediate reaction in terms of a fundamental change in the climate by essentially addressing something within a space of six months or a year or two years.

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Senator JOYCE—Not to put myself up as a sceptic, but what I am looking for is whether there is a contingency plan if we find in the future that what we initially thought to be true was not so or it was not so to the degree to which we thought