SENATOR MACGIBBON -Why is there an increase in the T56 engine maintenance for the C130s? This is on page 219.

AIR VICE-MARSHAL O'BRIEN -Senator, T56 engines are fitted to both C130 and P3. There has been a spate of problems and a lack of availability of spares which has been driven by overseas increase in activity, so we have been short on spares, particularly at Qantas, to overhaul the engines. But late in 1991 we were able to put an order in for a large range of engine spares to cover us. The significant items procured were turbine blades, which are always a problem with the T56 engine, thermocouples--

SENATOR MACGIBBON -Briefly, it is a back order being filled; that is why the vote has increased?

AIR VICE-MARSHAL O'BRIEN -Yes. We had a gap and we had to catch up.

SENATOR MACGIBBON -The next one is on page 221, in relation to the tactical fighter FA18. There was something in Australian Aviation, I think, for August which showed 77 Squadron coming back from overseas and it said in the caption underneath that it had aircraft from the ATU and from 3 Squadron as well. Could I ask why aircraft from three different squadrons were deployed on an overseas exercise when the exercise concerned one squadron, 77 Squadron? Is that the usual practice or not?

AIR VICE-MARSHAL O'BRIEN -It was probably Exercise Cape Thunder.

SENATOR MACGIBBON -It could have been. I read it in a hurry. It was down at the bottom of the page and it had a drogue in front of it.

AIR VICE-MARSHAL O'BRIEN -If it was Exercise Cape Thunder it is explainable by the fact that aircrew who participate in Cape Thunder have to meet certain categorisation skill levels and it may have been necessary to go across the three squadrons to have that skill level.

SENATOR MACGIBBON -In that circumstance they would have taken 3 Squadron aircraft up, would they?

AIR VICE-MARSHAL O'BRIEN -Yes. The aircraft are similar except for the paint on the tail.

SENATOR MACGIBBON -I know all that. Can you give the Committee an estimate of what it is costing now in increased maintenance for the ageing C130 fleet? Have you done any economic modelling on this as to the point at which it becomes no longer reasonable to be putting maintenance into them?

AIR VICE-MARSHAL O'BRIEN -We have done some work on that but I do not have the detail. As part of the force structure review the 12 older remodels are to be replaced.

SENATOR MACGIBBON -You have got a promise, have you not?

AIR VICE-MARSHAL O'BRIEN -I hope so.

SENATOR MACGIBBON -Apart from the ESM, what is going to be done about the P3Cs ?

AIR VICE-MARSHAL O'BRIEN -We have only in recent times begun a project definition study for the extension of the life of the P3s.

SENATOR MACGIBBON -What about all that old computer gear and the rest of it that weighs the aircraft down?

AIR VICE-MARSHAL O'BRIEN -Part of that study is the central processing unit, the radar-a number of things such as hydraulics that they will be looking at throughout the aeroplane to make the aeroplane last out into the next century.

SENATOR MACGIBBON -Has the accident inquiry into the one that was lost at Cocos been completed?

AIR VICE-MARSHAL O'BRIEN -It is still subject to coronial cover, but we have a fair idea now what has happened.

SENATOR MACGIBBON -Are you prepared to talk about it tonight?

AIR VICE-MARSHAL O'BRIEN -Just to say that the aircraft was flying at quite high speed but within the flight envelope. On the pull-up three parts of the leading edge collapsed, leaving the pilot with very little lift. He was inside the lagoon at Cocos Island at this stage and he had no choice but to land the aeroplane in the lagoon or run into the trees on the way out, so he ditched the aeroplane. It was just unfortunate that one of the propellers came into the aircraft when it screwed off and hit one of the crew and killed him. Nobody else in the aeroplane has got a mark.

SENATOR MACGIBBON -Will the aircraft be replaced in the fleet?

AIR VICE-MARSHAL O'BRIEN -There is no decision on that at the moment.

SENATOR MACGIBBON -In the logistics section, I would like to raise the matter of the RAAF seventieth anniversary air show. I had an invitation to go to this .

SENATOR ROBERT RAY -I am waiting for mine!

SENATOR MACGIBBON -I might be even more offended than you are, Minister, because they did not ask me to perform at it as an honorary air show performer !

SENATOR ROBERT RAY -Let me issue the invitation right now!

SENATOR MACGIBBON -On a more serious note: I had an inquiry from a group of my constituents who wished to organise an air show in Queensland. They gave me two letters, one from the Minister for Veterans' Affairs and one from you, Minister, about RAAF participation at air shows in 1992. In that letter you say:

I am advised that the RAAF has already reached agreement with the Aerospace Foundation of Australia to run Australian International Air Shows in Australia titled `Airshows Downunder'.

The rest of the letter says basically that it is going to run things for the next two years. I have since been inundated with all sorts of very glossy, very expensive material and I have started to take a bit of interest in it. What I need now is some facts. Is there an agreement between the Commonwealth and this body called Aerospace Foundation of Australia?

SENATOR ROBERT RAY -This has a long history. There is a lot of toing and froing between the RAAF, my office, the Department of Finance, et cetera. I know my colleague from the RAAF here has a fair bit of detail, because he came over to my office for you on it a couple of times. My understanding is that there is an agreement for one more air show, and from then on it will go to public tender. I ask him to comment in some detail.

AIR VICE-MARSHAL O'BRIEN -The Air Force put to the Minister in February of this year a proposal to do what is written in that letter. The Minister agreed in principle that we should go along with it, provided we could get the agreement of the Department of Finance on the financial matters.

SENATOR MACGIBBON -Hang on, let us be precise about this. Was the proposition that came out of the RAAF to run a seventieth anniversary air show?

AIR VICE-MARSHAL O'BRIEN -No. At that stage it was to go into an association for the future of air shows, and run with this group.

SENATOR MACGIBBON -Who developed the idea in Air Force?

AIR VICE-MARSHAL O'BRIEN -The Chief of Air Staff. At that point in time it seemed to be a reasonable idea. When it became a matter of then following through with the Department of Finance to resolve some matters of financial principle-that is the level of cost recovery and the proposal to have a single source of commercial support, if you will-the discussions became tortuous and , perhaps for the people in the Aerospace Foundation, frustrating, I would suggest.

Eventually, we reached agreement on something which was at least satisfactory . Subsequent to that, within three weeks, with the assistance of the Government Solicitor and Contracting Branch, I was able to sign a contract with the Aerospace Foundation of Australia for the seventieth anniversary air show in October at RAAF Base Richmond. There is no commitment between the RAAF and the Aerospace Foundation for any further air shows. That contract is now solid.

SENATOR MACGIBBON -Therefore, the information here that they are running a big air show with Air Force support in Avalon next year is incorrect?

SENATOR ROBERT RAY -That has been overtaken by events. It was not incorrect at the time it was written. That was our expectation. The reason we try to enter these arrangements is that organising air shows puts an enormous strain on the RAAF. To have someone come in to run the safety aspects, the toilets, the catering, et cetera is a good idea.

The central question is whether we should enter into an arrangement with one group or a variety of groups. As I understand it, this group ran the 1988 bicentenary one which was an enormous success. They are not profit making in their own sense, in that they plough the money back, but it also had to be counterbalanced by the question of whether one group or a particular group should get a monopoly. I think it is fair to say the RAAF saw some advantage in a long term arrangement, but it also had to be brought into line with general government policy that these things cannot be given exclusively to one group, it should be tendered out; and that was the eventual decision made between Defence and Finance.

SENATOR MACGIBBON -There is a great deal of money potentially available here through air shows. I will give you an example. A very small operation was put on in September 1989 in Brisbane with very little publicity and I thought quite a small crowd-I was there for it-and they made a profit of either $80, 000 or $120,000 which they gave to charity. They gave it to the Flying Doctor Service or something, but the potential for profits if this is properly handled is very, very high. I think the point is crucial that if someone has the opportunity to organise something like that it ought to go to public tender. The fact that they make a great show out of this, of being a non- profit organisation and all the rest of it, does not mean that some people cannot do very well in consultant or expense categories.

SENATOR ROBERT RAY -I think the sort of argument that you have put forward has prevailed. I suppose the key question is what cost recovery is in terms of the RAAF, because in the past we have put on air shows without any recovery at all and all the expenses. There is a sense of relief in the RAAF to have someone else come in and put the organisation in and put some money in to cover it. But at the end of the day the sort of view you are putting that it should go out to public tender has prevailed.

SENATOR MACGIBBON -There is another point, and that is that by running a show of this magnitude it takes all the Air Force resources for a year or 18 months or something. That is the only exposure the Air Force gets and that necessarily must be in one part of Australia; it cannot be around the States.

SENATOR ROBERT RAY -Not quite only one. There is the Grand Prix and other things, but this will be the biggest.

SENATOR MACGIBBON -The Grand Prix really is not an air show, with the greatest of respect.

CHAIRMAN -I think it is very interesting. I think it is something that you can take up with the Minister and I thank you for it, but could we get back to questions?

SENATOR MACGIBBON -Mr Chairman, there is a matter of public funding involved here. My next question is going to be--

CHAIRMAN -If you wish to ask questions about it, that is fine.

SENATOR MACGIBBON -How do you assess the use of Richmond, for example, the facilities provided, the area, the clean-up afterwards and all the rest of it? How do you come to a figure on that?

SENATOR ROBERT RAY -I expect the base commander to provide a lot of that information.

AIR VICE-MARSHAL O'BRIEN -That was the sticking point in the negotiations with the Department of Finance. The Department of Finance held to the Government policy position of full cost recovery, which carries elements for infrastructure and long term use of aircraft and so on. That was out of the pocket of everybody to do.

SENATOR ROBERT RAY -I might add that if that had been applied absolutely I do not think that you would get any interest. The fact is that we put on air shows anyway, for the reasons we put them on, for the publicity and recruitment benefits. If you went into an absolute full cost recovery, amortised out because you have flown the plane for two hours, et cetera, I do not think any company would come in and do it. It is a middle course that has to be negotiated.

SENATOR MACGIBBON -I accept that.

AIR VICE-MARSHAL O'BRIEN -So we are costing it on an additional cost basis, which is the same way we cost additional costs for any other service we provide from the Air Force to anybody. The Air Force will be involved in Archerfield in February and Townsville for the Coral Sea.

SENATOR MACGIBBON -I just think that this ought to have a fair bit more public exposure before the system is developed much further.

SENATOR ROBERT RAY -I think the final closing comment on that, Senator, is that I agree that it should go to public tender; I agree that there is a fair bit of money that can be made out of it. I also caution anyone who thinks that total cost recovery is absolutely possible. But there is a middle course from which we can both derive a fair bit of pleasure.

SENATOR NEWMAN -On page 223 there is an item on the tactical fighter: the FA18 engine forward compressor case will be replaced to prevent in-flight fires. First of all, who will pick up the cost for that? Is that the Air Force's cost ? Is it a design fault?

AIR VICE-MARSHAL O'BRIEN -We are picking up the cost. I do not know whether I could directly say it is a design fault. The engine does what it was supposed to do.

AIR VICE-MARSHAL GRAF -That is one of the warranty items that over a period of time have been identified for support of the FA18. We pick up some costs, but the majority of costs are picked up by the manufacturer.

SENATOR NEWMAN -I presume that the actual part is picked up by the manufacturer?

AIR VICE-MARSHAL GRAF -Yes.

SENATOR NEWMAN -And what about the cost of stripping down and replacing?

AIR VICE-MARSHAL GRAF -We pick up part of that. There is a negotiation, which is picked up by us and which is picked up by them. In the main, they provide the material and we provide the equipment and manpower.

SENATOR NEWMAN -What sort of man-hours are we talking about to do each engine?

AIR VICE-MARSHAL GRAF -I cannot answer that, but I can find out.

SENATOR NEWMAN -Can you give us an indication of what the Air Force will be up for?

AIR VICE-MARSHAL GRAF -Yes.

SENATOR NEWMAN -You do not have that here tonight?

AIR VICE-MARSHAL GRAF -No.

CHAIRMAN -Is the replacement compression case identical to the original or is it improved?

AIR VICE-MARSHAL GRAF -In terms of engine performance, it is identical.

SENATOR NEWMAN -Are we talking about big money here for the Air Force? What sort of money are we talking about?

AIR VICE-MARSHAL GRAF -I am not sure.

AIR VICE-MARSHAL O'BRIEN -I have that number. The expected expenditure for 1991-92 is going to be slightly less than $4m.

SENATOR NEWMAN -And will that cover the entire number of aircraft?

AIR VICE-MARSHAL O'BRIEN -I do not believe so. I do not have figures for 1992- 93.

SENATOR NEWMAN -So that is only part of the exercise?

AIR VICE-MARSHAL O'BRIEN -Yes, that is part of it.

SENATOR NEWMAN -And for how long will each aircraft be out of service? Is it a long process?

AIR VICE-MARSHAL GRAF -I do not think so. I can find out that as well.

SENATOR NEWMAN -Do all aircraft have to be done?

AIR VICE-MARSHAL GRAF -All the engines in aircraft have to be done.

SENATOR NEWMAN -You could pick up the details there, thank you.