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Rural and Regional Affairs and Transport Legislation Committee - 19/10/2015 - Estimates - INFRASTRUCTURE AND REGIONAL DEVELOPMENT PORTFOLIO - Airservices Australia

Airservices Australia

[16:50]

Senator GALLACHER: Mr Mrdac, have you ever thought of winding up this crew and rolling them back into the department?

Mr Mrdak : No.

Senator GALLACHER: No study has been done on bringing it back into the department?

Mr Mrdak : No.

Senator GALLACHER: As part of the Airservices Australia Terminal Control Unit, Strategic Business Case May 2014, how many ATCs will be assigned to the Adelaide TCU in Melbourne after integration? So you are integrated, taken to Melbourne; how many ATCs will be in there?

Mr Harfield : Initially on transfer it will be a one-to-one ratio.

Senator GALLACHER: Does that mean 19?

Mr Harfield : Yes.

Senator GALLACHER: How many are in Adelaide at the moment?

Mr Hood : I believe currently it is 18 TCU staff, but it fluctuates, depending on whether it has trainees or not.

Senator GALLACHER: You are taking out 18 in Adelaide and putting 19 in Melbourne?

Mr Hood : As I said, the numbers will fluctuate.

Senator GALLACHER: Between what parameters will they fluctuate?

Mr Hood : On the staff turnover, so it is quite common for staff to be transferred to another approach or another area in which case we—

Senator GALLACHER: I suppose my point is that there will be 18 or 19 required to open the required number of consoles—morning, afternoon and evening shift, with their days off—irrespective of where the service is provided?

Mr Hood : That is correct.

Senator GALLACHER: Where are the efficiencies again?

Mr Hood : So over time, an example in—

Senator GALLACHER: Is it another definition of overtime? For Senator Bullock, overtime means time and a half. Are we talking about a budget year or a number of budget years?[

Mr Harfield : The efficiencies of transferring both Cairns and Adelaide Terminal Control Units to Melbourne and Brisbane respectively is based on the fact that currently the Civil Air Traffic System is coming to an end of life. As a result of it coming to an end of life and just moving to the OneSKY program, it had a look at seeing what is the best footprint under which we could possibly operate, and when we did the sums, there are considerable savings in not having to replace equipment in Adelaide and Cairns.

Senator GALLACHER: Are 30 per cent of ATCs over 55?

Mr Harfield : I will have to take that on notice. However, the demographics of the Operational Air Traffic Controllers is, in my understanding, about 48 or 49.

Senator GALLACHER: Will you need to have some costs incurred in your training costs to address this age profile in the integration?

Mr Harfield : We will have to be continually training air traffic controllers throughout the coming years regardless of whether Adelaide or Cairns Terminal Control Units stayed in situ or moved, just with the replacement of staff.

Senator GALLACHER: Have you included training costs in the integration project?

Mr Harfield : That is my understanding.

Senator GALLACHER: Section 5.1 of the business case attributes $6.5 million to training costs to meet the transition requirements compared to $7.3 million in 4.3 previously.

Mr Harfield : That would be the cost of transitioning and the training resulting in both Cairns and Adelaide Terminal Control Units transferring to Melbourne and Brisbane respectively.

Senator GALLACHER: Do you think those training costs allocated in the project are adequate?

Mr Harfield : That is my understanding. However, as we further refine the planning around the Terminal Control Unit integration, those assumptions will be refined, and as we are going through it, we are refining the business case.

Senator GALLACHER: You are planning on 17 training replacements in the Adelaide TCU in the short term, almost the entire current staffing level, and in section 4.3 of the business case you have budgeted for $7.3 million to replace the ageing workforce which numbered between seven and 14, and in section 5.1 you have only budgeted for $6.5 million. Is there a discrepancy in your business case?

Mr Harfield : I will have to take that on notice. I do not have the detail in front of me.

Senator GALLACHER: What does this project actually cost? Are the direct project costs associated with the recommended option $82.1 million?

Mr Logan : Maybe if I could address those issues? The fundamentals of the business case are really around the avoided cost of replacing the equipment and the infrastructure in those two different locations. As you have observed, the ageing profile of the air traffic controllers means that, regardless of where we put it, given that we are talking about a like-for-like replacement, we will still have to train that number of controllers. The way the business case is presented is showing those in two slightly different locations, as you have observed. There will be a slight increase to actually train and transition that contingent of air traffic controllers to have them then work in the Melbourne environment, which is that difference that you have observed. The major change is in the cost of the facilities and the equipment which, in the business case, we have estimated to be in the order of $33.5 million that we do not expect in a net sense to have to invest in those two locations.

Senator GALLACHER: What is the split between Cairns and Adelaide in that $33 million?

Mr Logan : It is some $19.6 million for Adelaide, and $13.9 million for Cairns.

Senator GALLACHER: Over how many budget years would those savings be realised?

Mr Logan : The business case is set over a period of about 15 years.

Senator GALLACHER: So, over 15 years, you expect to save $19.6 million in Adelaide and $13.9 million in Cairns?

Mr Logan : We would expect to make those savings actually over the next five or so years because we would not need to be upgrading those facilities, which would otherwise be in our plans.

Senator GALLACHER: If you did not redeploy and retrain and left the people in Adelaide, how does that compare with the expenditure? Are you saying that there is a saving in Adelaide of $19.6 million that will be made over five years now?

Mr Logan : That particular saving, yes. We would expect probably that there are also some savings in terms of overall supervision going forward. While the line staff are unaffected, I think there are some benefits in terms of supervision and other aspects across the transition.

Senator GALLACHER: So there is an avoidable cost here, but you are saying that that is outweighed by the savings on the upgrade of equipment in Adelaide and Cairns? So you are going to relocate people; you have to have VRs; you have to hire new people; train new people if people do not go, and all of those things.

Mr Logan : Precisely.

Senator GALLACHER: Are you assuring me that all of those costs, totalled up, have been thoroughly evaluated and are significantly outweighed by the ongoing operational savings in equipment?

Mr Logan : Yes. As we have quoted in the business case, we would expect that our terminal navigation prices at those two locations, if we were to avoid those costs, would result in prices to the industry being in the order of five to 10 per cent lower going forward than if we actually made those investments in those locations.

Senator GALLACHER: You are also assuring me that the ATC operations in Melbourne will not incur upgrades in equipment, facilities, training and costs which outweigh your business cost?

Mr Logan : No, the figures that I quoted are the net savings, so we expect to make some upgrades in Melbourne, but we expect to make significantly more upgrades and investment in effectively new facilities in both Cairns and Adelaide as we are doing in the case of Melbourne and Brisbane in any event.

Senator GALLACHER: So if there is little change in the number of ATCs required to do the Adelaide TCU, how is there a staffing efficiency or a rostering efficiency of $4.2 million as per section C achieved if there is no change in the number of ATCs?

Mr Logan : Primarily we expect to be able to absorb that through savings in supervision rather than in the line staff over time, so over a 15-year period.

Senator GALLACHER: Are you saying there is a saving of $4.2 million in rostering efficiency, mainly in supervision, over a 15-year period?

Mr Logan : Yes.

CHAIR: Is that five per cent? Would you be game to put your job on the line? I bet you it is a balls-up. That is rubbish. To think that over 15 years you will save five per cent; best of luck. Put your job on the line!

Mr Logan : We are out consulting on prices at the moment.

CHAIR: I bet you are.

Mr Logan : Based on the numbers that we have done in this business case, that is the outcome that we are standing by.

CHAIR: I know. It is not your fault.

Senator GALLACHER: How many supervisors does Adelaide TCU currently have in Adelaide? You are going to save $4.2 on supervision; how many supervisors does the Adelaide TCU currently have? The answer is four, providing 12 hours of shift managed coverage.

Mr Logan : I think over a 15-year period, our estimates were based on about the saving of one position over the 15-year period.

Senator GALLACHER: They currently have four in Adelaide with 12 hours of shift managed; how many supervisors would the Adelaide TCU have whilst it is in Melbourne?

Mr Logan : I would need to defer to Mr Hood in terms of the revision.

Mr Hood : We are revising in the stage 2 business case what that looks like and how the TCU will be integrated into the operation in Melbourne.

Senator GALLACHER: Is the argument that Adelaide TCU will share supervision with other groups?

Mr Hood : That is the long term aim. It is the experience we had with Canberra TCU 20 years ago when we took the Canberra approach unit out of Canberra and relocated that to Melbourne. We found that there were some rostering efficiencies in both supervision and in fact in the air traffic control roster over time.

Senator GALLACHER: If there is less supervision or more efficient supervision, does that simply mean that there will be a reduction in service?

Mr Hood : The service will be exactly the same. Supervision in its true definition provides a lot of support services, change in restrict area maps, et cetera, so it is not supervision as per somebody stands over somebody else's shoulder.

Senator GALLACHER: If you have a level of service now which includes four supervisory roles, and we go to Melbourne and we will not have that four, there is a question about whether or not that is a reduction in service.

Mr Harfield : The four people that are providing supervision in Adelaide are providing supervision through a certain period of the day. There are certain hours of coverage, and we require four people to actually cover that, with one morning, one afternoon, one evening and one off. In moving it to Melbourne, we are able to gain efficiencies where the supervision is still provided for the same period of time; however we are able to do rostering efficiencies. For example, at this moment in time, Melbourne Terminal Control Unit, or Melbourne approach, is supervised by the same supervisor as Canberra approach at the same time. So the supervision and the coverage of supervision is exactly the same as it will be in Adelaide.

Senator GALLACHER: Are you buying four new Eurocat consoles to provide Adelaide Approach Services from Melbourne, or are you moving the existing consoles from Adelaide?

Mr Harfield : My understanding is that we are buying four new ones to replace Adelaide, and that is to replace Adelaide and Cairns in Brisbane because when we move one of the terminal control units, those consoles at that particular location will be used for the other location. In other words, it is capacity. However, on top of that is that those four are not four extras specifically for the project. Because of the air traffic growth across the entire operation, we will need those extra four consoles to provide additional services; for example, providing new positions for Melbourne, Perth and Brisbane approach services with the introduction of the director positions.

Senator GALLACHER: How much will those four consoles cost?

Mr Harfield : I do not have that. I will have to take that on notice.

Senator GALLACHER: The four console system reconfiguration and all of the associated hardware and software changes will cost a budgeted $4.1 million; is that correct?

Mr Logan : That sounds correct, but I would need to double-check. When you talk specifically about the consoles, there are pieces of configuration work around some of those sorts of things.

Senator GALLACHER: You will give us on notice how much the consoles will cost, but there are software changes and there is a budgeted figure of $4.3 million in the business case; is that correct?

Mr Logan : Yes.

Senator GALLACHER: Capex, technical, engineering and communication equipment system; the training costs to address the age profile exists regardless of whether the service is provided in Melbourne or Adelaide; there is $7.3 million attributed to it, and that is carried across to the TCU integration project; is that a correct statement?

Mr Logan : Yes.

Senator GALLACHER: There is $6.5 million allocated for training costs to meet with transition requirements?

Mr Logan : That is an overlapping requirement. Rather than train them as initial or ab initio trainees and transfer them to the Adelaide environment, we would be training them in a transition way where we would be progressively transitioning them to Melbourne. Those things cover the same cohort of staff that are required to train in both locations.

Senator GALLACHER: Are you standing by that figure? The opposing information we have is that that is woefully inadequate. But you are saying you can achieve the $6.5 million allocated for training costs?

Mr Logan : That was my understanding at the time of the business case.

Senator GALLACHER: Is there any accounting for the avoidable training costs associated with the retraining of the 10 or so that are not relocating permanently to Melbourne in other ATC roles, for example, Adelaide tower?

Mr Logan : Yes, we have provided within some of those numbers the transition training should those people be reallocated to those roles.

Senator GALLACHER: Are these staffing efficiency gains optimistic?

Mr Logan : I would need to defer to my colleague. My understanding of the development of the business case was that it was based on a view of what was achievable at that point in time, and I think as the planning has progressed over the last period of time, some of those assumptions are proving to be the case, albeit that there will be some changes to some of the particular elements.

Senator GALLACHER: Are you saying that the $7.9 million savings will be achieved? You are the CFO.

Mr Logan : In terms of the savings, and having read the business case, I think there is a mismatch in those two line items. What we are trying to say is if we train in situ, so in the current situation, we would be incurring a certain amount in training costs to be able to manage the age profile that you indicated earlier, and we are balancing that against what we have put into the project. As the project costs, the total training of, in some cases, brand new air traffic controllers, and those two numbers are slightly more expensive in going to Melbourne as opposed to going on site to Adelaide. The offset at large across the project is really about the cost of needing to upgrade the facilities in terms of the CMATS infrastructure and the supporting infrastructure in terms of the facilities and the increased resilience and business continuity that we are trying to achieve as we move forward into the OneSKY program.

Senator GALLACHER: So what is going to be put to you clearly is that the TCU integration project is likely to be in excess of the $16.8 million budgeted for Adelaide, potentially meaning more times that amount, and when weighed against the do-nothing costs net present value of $22.8 million, your argument that integration will present a positive long-term net present value is going to be tested, and Senator Bullock and I and others will be here to make sure it is tested. So you are on notice there that work that has been done that says basically your case does not stack up. Are you putting your neck on the line, so to speak, in respect of this?

Mr Logan : We did the business case at a point in time. My understanding is that the planning that is being done as we progress through the business case is firming up on some of those numbers. We would be happy to keep the committee advised as to how those are progressing.

CHAIR: I am going to go to Senator Xenophon, but before I do that, have you advertised for a new CEO yet?

Mr Mrdak : That is a matter for the board. My understanding is that the board is—

CHAIR: It is such an incestuous set-up that the board will probably say, 'Oh, we will get one of our own little pet cats in there.' Why would you not advertise publicly?

Mr Mrdak : My understanding is that the board is about to publicly advertise the position.

CHAIR: Good.

Senator WILLIAMS: One question, Chair.

CHAIR: No, Senator Xenophon has the call.

Senator WILLIAMS: Why put him before me?

CHAIR: He is better looking.

Senator XENOPHON: I have some questions directly supplementary to Senator Gallacher's questions. Can you advise if there is another airport in Australia with anywhere near the same number of RPT movements that Adelaide airport has that uses a remote terminal control surface to the service of the airport?

Mr Harfield : Just off the top of my head, a comparable airport is Coolangatta, the Gold Coast airport.

Senator XENOPHON: Is that the benchmark?

Mr Harfield : Similar, yes.

Senator XENOPHON: Is there another airport anywhere to your knowledge, even internationally, with anywhere near the same number of RPT movements that Adelaide airport has that uses a terminal control service to the surface of the airport and that terminal control service is carried out from a location more than 100 nautical miles from the airport to which it provides a service?

Mr Harfield : I am not exactly sure of the exact distance, but the London terminal control unit, which covers Heathrow, Stansted, Gatwick and Luton airports, as well as London City—

Senator XENOPHON: But they are a bit busier than Adelaide?

Mr Harfield : No, but that is being done from Southampton.

Senator XENOPHON: Which is how far away?

Mr Harfield : Some 150 kilometres, which is approximately 100 nautical miles.

Senator XENOPHON: Presumably they would have a different system in place.

Mr Harfield : I am not sure what you mean by a different system.

Senator XENOPHON: Presumably the risks would be managed in a particular way.

Mr Harfield : No different to the risks that we would manage normally—

Senator XENOPHON: Are you saying that the Southampton risk management would be the same as the risk management that Airservices has used?

Mr Harfield : Both of them are providing approach control services into aerodromes and, as you pointed out, Heathrow airport is Europe's busiest airport, and it is able to be done remotely.

Senator XENOPHON: In the terminal control unit strategic business case from May 2014, the cost of replacing ageing infrastructure facilities at Adelaide is quoted at $7.8 million. Does that ring a bell?

Mr Logan : That sounds right, from looking at the net figures.

Senator XENOPHON: If these replacement facility in Adelaide is required and it is—and I suggest to you it may be a big if—how can Airservices justify the expense on rescue and fire-fighting facilities at other smaller airports, which I am not begrudging at all, but there are significant costs of funding rescue and fire-fighting which I have no issue with, but in relative terms you are not spending the money on replacing the terminal control unit.

CHAIR: Senator Xenophon, it may assist if you talk to the microphone a bit more.

Senator XENOPHON: Sorry. I am microphone shy, as you know.

Mr Harfield : Can I just clarify the premise of the question?

Senator XENOPHON: Can I go back to the premise of the question? What has been the cost to Airservices and thus the travelling public of rescue and fire-fighting facilities at Karratha, Newman, Gladstone and Ballina which, of course, I have no issue with. Of course, they need to have proper rescue and fire-fighting equipment; what has the cost been approximately for those places?

Mr Logan : The cost of operating an airport at those locations is in the order of $4.5 million per annum, which includes staffing and a depreciation component for the infrastructure in terms of complying with the CASA regulations to meet those service requirements.

Senator XENOPHON: I will put some of these questions on notice. I do have some questions to ask Airservices and then I am out of here. I refer to TASWAM, something Mr Dick Smith has been commenting on in the media. Are you able to provide the original project objectives for TASWAM as well as the project risks register?

Mr Harfield : Yes, we can provide that on notice.

Senator XENOPHON: In particular, could you advise the extent of the regulatory risk identified, including the evolving risk as the project proceeded and the mitigation strategies put in place to avoid what appears to be the current impasse where you say it will do the job, but CASA will not let you use it as intended? That seems to be one of the issues that seems live on this.

Mr Harfield : Can I just make a correction to that? It is not what CASA has said no to what was intended. When we put in the Tasmania Wide Area Multilateration, it was to improve the surveillance in Tasmania, because prior to 2004 there was no surveillance whatsoever in Tasmania. There was a near miss over the head of Launceston in late 2003 that caused us to put a temporary radar into Launceston. Unfortunately the temporary radar in Launceston was not only temporary but also it did not give very much coverage around Hobart. In order to upgrade that, we put in wide area multilateration. Wide area multilateration is not only of the 14 sites; each of those 14 sites are also ADS-B antennas, which means that the coverage in Hobart is the best surveillance coverage there is in Australia. The wide area multilateration is used by the en route controller in Melbourne to provide separation services using radar-like separation services which then hand off to either the Hobart or Launceston tower to manage the aircraft. The cut-off point of where we provide the radar separation service is using TASWAM, which it is certified to by CASA, is where the en route controller hands off to the tower who does not need to use that particular service, because they have a range of other tools to be able to manage the aircraft.

Senator XENOPHON: Will OneSKY solve the problem that Tasmania is experiencing, do you think?

Mr Harfield : What problems are you talking about in Tasmania?

Senator XENOPHON: In terms of the issues that were raised by Mr Dick Smith. Do you think OneSKY will deal with any of the issues about which Mr Smith has been critical of Airservices?

Mr Harfield : OneSKY is not designed to actually solve those particular issues, because the issues that Mr Smith has an opinion on are to do with surveillance coverage, which is actually independent of the OneSKY system.

Senator XENOPHON: Finally, in relation to the issue involving the separation between Essendon and Tullamarine, and also the issue of the double go-around on 5 July this year, can you give us an update as to whether there have been any changes in procedure for both incidents that caused a lot of concern amongst people in the aviation community I speak to?

Mr Harfield : I will pass to Mr Hood to provide some detail on that.

Mr Hood : In relation to the Essendon issue that we discussed, there were changes in the Melbourne terminal area procedures, so we have made some changes in that space.

Senator XENOPHON: Could you provide those details on notice?

Mr Hood : Certainly; we would be delighted to. In relation to LAHSO, we have had a number of meetings in relation to land and hold short operations. I consider that the land and hold short procedure in Melbourne continues to remain safe. However, we are considering further enhancements to the procedure.

Senator XENOPHON: If you can provide details on that as well, that would be very welcome.

Mr Hood : Will do, Senator.

Senator EDWARDS: Chair, I have some Airservices questions.

CHAIR: You are not on the list. Go on. Just so you know, we have allowed half an hour for each section this afternoon, and we are on an hour now with this one. So it is impossible; the person who wrote the note that is in the back room out there last time, get ready to write me another one.

Senator EDWARDS: The point is that this really does have input from senators to say how much time do you need, and then we ask the officials to come for the time. You obviously have not indicated that you want time if there is only half an hour allocated. So to be fair on the chair, he is not out of order.

CHAIR: We expect to get some notice if you want to ask questions. There were two people on this one. I will give you five minutes.

Senator RICE: I have some questions about Melbourne airport, specifically the runway occupancy time program. First of all, when did this program commence?

Mr Hood : The airport capacity enhancement program has been running for almost two years now in Melbourne, Perth and Brisbane. It is called by another name, but it is also running for Sydney airport.

Senator RICE: In terms of when it commenced in Melbourne, can you tell me the date of that?

Mr Hood : I will have to take that on notice.

Senator RICE: That is fine. Who signed off on the program, and what approvals were required before it began?

Mr Hood : The process is that the airport meets with Airservices Australia and its airline customers. It has a look at ways in which the capacity of the airport can be enhanced whilst maintaining the highest levels of aviation safety. A program is then developed and the sign-off is by the CEO of Airservices and the CEO of the airport.

Senator RICE: Was any community consultation involved before it was begun?

Mr Hood : If there were to be items on that work program that may impact the broader community, for example, aircraft noise, we would then undertake a further consultation.

Senator RICE: Has there been community consultation with the program that has been operating in Melbourne?

Mr Hood : I will have to take that on notice in terms of the specific line items of the program for Melbourne.

Senator RICE: I understand the program's main aim is to maximise the efficiency of runway use. Has it done the job so far? Has it been reviewed or evaluated in the two years it has been operating?

Mr Hood : We like not to write our own report cards, so we have invited UK NATS, United Kingdom National Air Traffic System, back at the two-year mark to provide us with a report card. I am happy to table the UK NATS report on the improvements made at those airports.

Senator RICE: So it has been evaluated by UK NATS?

Mr Hood : It has.

Senator RICE: What has the program meant for flight paths around Melbourne airport? Have they changed since it has been in operation?

Mr Harfield : Not to my knowledge. Any flight path changes that have occurred at Melbourne have not been a part of the runway occupancy program that you discussed.

Senator RICE: I have been hearing from local residents raising issues with me about some increased noise from passenger aircraft over the north-west of Melbourne, and also in areas of the inner city. They were wondering whether it was connected with the runway occupancy program. Is there any other reason why there would have been flight path changes?

Mr Harfield : We will have to take that on notice, but it would not be as a result of the runway occupancy program.

Senator RICE: Do you have any other thoughts as to why those flight path changes might have occurred?

Mr Harfield : I am not sure whether there have been actual flight path changes; that is why I need to take it on notice to see what the particular issue may or may not be.

Senator RICE: Thank you.