I've noticed that where my dogs like to dig holes are the areas where there are termites in the ground. Discovered it when the dogs left a bit of wood lying there and within a couple of days it had the termite sand built tunnels all over it.

Question is, can anyone recommend a spray or powder for the garden that will kill all the termites,bugs etc without harming the dogs.?

Probably the best idea would be to use termite traps made from PVC sewer pipe (make them your self) with an termite attractant and when the trap is full take it away and exterminate the termites. If you google termite traps you will get more info but it is a good non toxic way of controlling termites ,plus you can use toxic chemicals if you so choose.

One Aussie company selling them is here but will give you the general idea.termite trap - like i said you should be able to make them yourself.

This thread in DIY is worth a look too

Sorry, could not resist!