In its submission to the 2001 Productivity Commission inquiry into Cost Recovery by AGSO outlined the following impacts of the 30 per cent cost recovery Government Agencies, target that applied from 1994: Cost recovery conflicts directly with the objective of encouraging Government’s investment in, and exploitation of, community owned mineral and energy resources and specifically may disadvantage Australia in competing for investment internationally. The pressure to attract funding can lead to distortion of a program away from efficiently meeting long-term strategic objectives to short-term tactical activities with more immediate investment prospects. Pricing of pre-competitive data can disadvantage small and medium enterprises that historically have had a major role in mineral discoveries. Potential for pricing can encourage creation of multiple datasets for any sector/field, reducing inter-operability and creating overall efficiency loss in terms of data management and innovation. The Productivity Commission in its report, noted that: high price of this [geophysical] information has implications for other “The objectives of Government. It is likely to reduce the amount of exploration of mineral and petroleum Australia’s resources”. Anecdotal evidence provided to this Review has also indicated that the cost recovery target pressed the organisation into offering services that many considered to be competing with the private sector or a significant departure from the core activities at the time. agency’s Examples included: use of the AGSO research vessel for commercial work, which was Rig Seismic viewed as unfair competition by the seismic exploration industry; and undertaking of overseas consultancies and mapping projects in countries such as Oman as well as requiring the diversion of very best human resources – AGSO’s from other tasks, it was questionable whether strengthening the quality of the geoscience capability of other competitor countries could be seen as in line with the primary objective of increasing exploration in Australia. agency’s The desire to avoid a repeat of the tensions between government and industry that resulted from foray into commercial services are a factor in current policy of AGSO’s GA’s not providing services that are available from the commercial market. Conclusion Geoscience cost recovery arrangements – Australia’s Overall, the Review has found arrangements for cost recovery to be in alignment GA’s with Government policies. Only a small proportion (typically less than $2 million) of Section 31 revenue GA’s falls within the technical scope of the cost recovery policy. A core concept in Government’s this policy is the definition of a information product being information funded by ‘basic set’ the appropriation. agency’s
In its submission to the 2001 Productivity Commission inquiry into Cost Recovery by Government Agencies, AGSO outlined the following impacts of the 30 per cent cost recovery target that applied from 1994: Cost recovery conflicts directly with the Government’s objective of encouraging investment in, and exploitation of, community owned mineral and energy resources and specifically may disadvantage Australia in competing for investment internationally. The pressure to attract funding can lead to distortion of a program away from efficiently meeting long-term strategic objectives to short-term tactical activities with more immediate investment prospects. Pricing of pre-competitive data can disadvantage small and medium enterprises that historically have had a major role in mineral discoveries. Potential for pricing can encourage creation of multiple datasets for any sector/field, reducing inter-operability and creating overall efficiency loss in terms of data management and innovation. The Productivity Commission in its report, noted that: “The high price of this [geophysical] information has implications for other objectives of Government. It is likely to reduce the amount of exploration of Australia’s mineral and petroleum resources”. Anecdotal evidence provided to this Review has also indicated that the cost recovery target pressed the organisation into offering services that many considered to be competing with the private sector or a significant departure from the agency’s core activities at the time. Examples included: use of the AGSO research vessel Rig Seismic for commercial work, which was viewed as unfair competition by the seismic exploration industry; and undertaking of overseas consultancies and mapping projects in countries such as Oman – as well as requiring the diversion of AGSO’s very best human resources from other tasks, it was questionable whether strengthening the quality of the geoscience capability of other competitor countries could be seen as in line with the agency’s primary objective of increasing exploration in Australia. The desire to avoid a repeat of the tensions between government and industry that resulted from AGSO’s foray into commercial services are a factor in GA’s current policy of not providing services that are available from the commercial market. Conclusion – Geoscience Australia’s cost recovery arrangements Overall, the Review has found GA’s arrangements for cost recovery to be in alignment with Government policies. Only a small proportion (typically less than $2 million) of GA’s Section 31 revenue falls within the technical scope of the Government’s cost recovery policy. A core concept in this policy is the definition of a ‘basic information product set’ being information funded by the agency’s appropriation.
strategic_review_ga.docx