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Parliamentary Standing Committee on Public Works - 16/02/2015 - Hamilton Island Replacement Fire Station Project

CLARK, Mr Andrew, Chief Financial Officer, Airservices Australia

MARCELJA, Mr Andreas, Manager, Government Affairs and Issues Management, Airservices Australia

RODWELL, Mr Mark, Executive General Manager, Projects and Engineering, Airservices Australia

STAIB, Ms Margaret, Chief Executive Officer, Airservices Australia

WOOD, Mr Glenn, Chief Fire Officer, Airservices Australia

WOODS, Mr Darryl, General Manager, Projects, Airservices Australia

Committee met at 10:29

ACTING CHAIR ( Mr Goodenough ): I declare open this public hearing of the Parliamentary Standing Committee on Public Works inquiry into the Hamilton Island replacement fire station project. Before the meeting commences, I call upon a member to move that this committee receives as evidence the confidential supplementary submission No. 1.2 from Airservices Australia. It is so moved by Ms Ryan.

I welcome representatives of Airservices Australia. Although the committee does not require you to give evidence under oath, I should advise you that these hearings are formal proceedings of the parliament. Consequently, they warrant the same respect as proceedings of the parliament itself. I remind witnesses that giving false or misleading evidence is a serious matter and may be regarded as a contempt of the parliament. Ms Staib, would you care to make some brief introductory remarks before we proceed to questions?

Ms Staib : Yes, I would; thank you, Chair. Firstly, I thank you all for attending our site this morning. We hope the visit was informative and provided some context for the proposed works that we are seeking approval for. We are seeking approval from the committee for our proposal to replace the temporary aviation rescue and firefighting, or ARFF—I shall use that acronym now—station here on Hamilton Island. In my very brief statement to the committee, I would like to give some context of the role of aviation rescue and fire services and our regulatory obligations. I will also briefly summarise the key objectives of the project and the benefits we believe we will derive from that.

Airservices is wholly owned by the Commonwealth and responsible under the Air Services Act 1995 for the provision of a range of services to the aviation industry. These include air traffic control, airport rescue and firefighting, aeronautical information, aeronautical navigation and aeronautical telecommunications. Airservices operates commercially on a fee-for service basis and receives no funding via government appropriation. In establishing our funding arrangements, we consult very closely with our airline customers through a pricing consultative committee and establish formal pricing agreements with industry. Our current pricing five-year agreement expires in 2016 and work has already commenced to establish the next agreement.

Our prices are regulated by the Australian Competition and Consumer Commission under the prices surveillance sections of the Trade Practices Act 1974. Under this regulatory arrangement, the ACCC also consults with our customers and stakeholders to assess whether our capital expenditure is at an optimum level—that is, whether it is fit for purpose with no excess—and will only allow prices that reflect this level of expenditure. The revenue received from our customers funds our investment in the infrastructure we need to deliver the services we provided to the aviation industry and the travelling public. Each year we are also obliged to return a dividend to government.

In terms of our regulatory obligations, section 9 of our enabling legislation, the Air Services Act 1995, requires us to regard the safety of air navigation as the most important consideration in exercising our powers and performing our functions. The specific requirement to provide an aviation rescue and firefighting service at airports stems from the Convention on International Civil Aviation, known as the Chicago convention, to which Australia is a signatory. Annex 14 of the convention outlines the standards and recommended practices that relate to aerodromes. Australia's civil aviation safety regulations, through part 139H, require that an aviation rescue and fire service is established once the annual passenger numbers travelling through that airport exceed 350,000. Air traffic movements at Hamilton Island have consistently remained above that threshold in recent years. In the 12 months to June 2014, Hamilton Island Airport averaged 14 aircraft movements per day with over 482,000 passengers recorded as travelling on regular public transport flights.

Airservices currently provides fire and rescue services to Hamilton Island Airport from a temporary facility constructed in 2006, primarily made of shipping containers. This temporary facility has reached the end of its useful life. Over the years, our needs have outgrown the temporary structure, which has limited storage and maintenance facilities for the significant firefighting vehicles and equipment needed to provide our fire and rescue services. It has also been significantly affected by corrosion caused by the coastal environment.

Safety is our No. 1 priority and that requires us to continue to invest and renew our significant infrastructure to ensure Australia has world-class aviation facilities to support safety and growth. Given the condition of the existing facility, we have undertaken preliminary planning for a permanent station to be constructed which would be fit for purpose as an emergency facility and compliant with all our required standards. Our key objective with this project is to provide a fit-for-purpose aviation rescue and firefighting station for Hamilton Island that meets all our regulatory requirements.

We are also committed to achieving value for money and intend to deliver the project by utilising a standardised modular design that we have used for other recent stations. This delivers facilities that are relocatable and reusable should that be necessary. It will minimise construction risk and also the risk of creating a stranded asset in the event that passenger numbers should drop below their disestablishment threshold in the future. We are committed to constructing a facility that is fit for purpose, achieves value for money and delivers improved safety for passengers flying to and from Hamilton Island. We seek your approval to proceed with the project. My colleagues and I would be pleased to answer any questions.

ACTING CHAIR: We will now move on to questions.

Senator GALLACHER: PFOS is not included in your acronym table. What is that about?

Ms Staib : That is the substance that is inside our foam that we use for firefighting.

Senator GALLACHER: PFOS?

Ms Staib : Yes.

Mr Wood : Perflouro—

Senator GALLACHER: When I look in the acronyms box, PFOS treatment and remediation is not there.

Ms Staib : Can we get that for you, Senator? It is one of the parts that make up the foam that we use for putting out fires.

Senator GALLACHER: You have built similar types of facilities around the nation on similar numbers. Do you have a fire station that has been built before and can be easily adapted to this place, or is every one a unique event?

Mr Woods : They are based on a standard design. We do have to alter it occasionally given the specific airport conditions—for example, in Coffs Harbour we had to flatten the structure for tower line of sight. But they are a standard design and contain the same areas and they are modular.

Senator GALLACHER: Do you have standard contractors who have done this work before elsewhere for you? I suppose there are only a limited number of people who would be providing fire stations for you. Do you have people who have tendered before?

Mr Woods : In the initial tender we went out to build four stations. In Hamilton Island we have gone back to the market again. In the modular design we have incorporated lessons learnt in Western Australia. The last four fire stations were built on the Gold Coast and shipped to site and assembled, and we have asked for that with these modules. That is particularly useful when you get into labour constraint areas, such as in the west where we built a number of fire stations, and it has worked well for us.

Senator GALLACHER: So you have a basic design that you have had someone prefabricate?

Mr Woods : Yes.

Senator GALLACHER: And that is what is happening here?

Mr Woods : Yes, that is what is happening here—the same thing.

Senator GALLACHER: So why did you go back out to the market again?

Mr Woods : Because with the original tender we informed the market that we were going to build four fire stations off that tender. So we have gone back to the market on this one.

Ms Staib : I would add that we want to also test the market up this way to make sure that our estimates are within the estimation that we have put forward.

Ms RYAN: So not the Gold Coast?

Mr Woods : I think there are three prefabricated suppliers on the Gold Coast and they are all more or less doing something on the same road. Those prefabs do not have to be built on the Gold Coast, but that is generally where those prefabricators are.

Senator GALLACHER: You have engaged Rider Levett Bucknall and, without going to the confidential aspects of that, there is some discrepancy between what you are putting before us and what they say.

Mr Woods : From a structural point of view, the numbers, I think, align. There are some Airservices works that we undertake to ensure that the facilities are commissioned—and you will see those additional numbers in there as we go through and commission the facility—and for the planning of the facility and our negotiations with the councils on the island in getting the lease established and all the planning aspects sorted out.

ACTING CHAIR: Perhaps you could talk us through the US report and the cost schedule in the in camera session.

Ms Staib : We have that answer re PFOS and what that stands for.

Mr Wood : I will do my best to pronounce it. It is a perfluorooctane sulfonate.

Senator GALLACHER: Is that part of your build or is that part of what you do business with?

Mr Wood : It is an element within the type of foam that we used to use some time ago that is harmful to the environment.

Senator GALLACHER: We are looking at the provision of a fire station. Is that a consumable?

Ms Staib : It is a consumable. The actual foam is a consumable. Is that what you are asking?

Senator GALLACHER: Yes. I could not find it in your table of acronyms.

Ms Staib : I apologise for that.

Senator GALLACHER: Is it part of the building?

Ms RYAN: No. I gather it is for treatment and remediation. So it is [figure removed] to remediate the site we just saw. So that substance has been used in readiness. What area of the site we just saw needs to be remediated?

Mr Wood : It would be where the training activities were conducted around the existing training facility.

Ms RYAN: So with the new build planned, you will change the practise area?

Mr Wood : That is right. We have changed the type of firefighting foam that we use and also the training activities where foam application is required. The staff at Hamilton Island travel to an alternative location.

Ms RYAN: So there will not be any more training using the foam there?

Mr Wood : That is correct.

Senator GALLACHER: Your fire garages—for want of a better word—are facing away from the strip. Is that because of the existing roads, is it?

Mr Wood : That was to do with the infrastructure at the time, where the new facility, as we have demonstrated, will face the runway with an access road immediately onto the runway to assist with response times.

Senator GALLACHER: So that is why there is that additional amount—because you are building directly from the fire station facing the runway? You are getting a thoroughfare there, are you?

Mr Woods : Yes. There is an access way being built from the front of the fire station out to the runway.

Senator GALLACHER: That is an existing facility. You say that it is at the end of its usable life. Is that an architectural standard? How do you determine that?

Mr Rodwell : There are two elements to that. There is the actual condition of the building itself and the corrosion that has occurred on that particular building and then there are the operational aspects, which Mr Wood might be able to expand on. A lot of the equipment that is there is stored in other shipping containers and there is a limited amount of space there for the firefighters to actually be able to conduct their duties.

Senator GALLACHER: You put it in 2006 and it is now 2015. So it is written-off, is it?

Mr Rodwell : As to any possible reuse of those containers, we were in fact talking to Hamilton Island Enterprises last night in regard to that. Failing that, we will need to see what any market conditions may be to get any sort of resale on that. But any book value left on those would be zero.

Senator GALLACHER: You mentioned the corrosion issue. I imagine that is a problem for all buildings on this island. What happens with the new one? Is there a design feature that makes it last longer, or are we going to be back here in nine years' time looking for a new building because of the corrosion?

Mr Woods : It is a different structure altogether. You can see that those containers were actually welded together and when they constructed the carport they were welded up against the containers. There was corrosion evident where a couple of those welds had pulled out. The new construction is a fibrous cement. So it will not be prone to the type of corrosion that we see there. Also, all those steel structural elements are actually contained within the building and they are not exposed to those elements. So it will be fibrous cement with a steel structure inside.

Senator GALLACHER: What is the life of the new facility going to be?

Mr Woods : It will be 25 years. That is what we have built those for.

Senator GALLACHER: Is that on par with what you have done around Australia?

Mr Woods : Yes, it is. We anticipate that the structure would last longer, but the 25 years is the fit-out et cetera.

Senator GALLACHER: Do you actually write it off over the 25 years?

Mr Woods : Yes, we do write it down.

Senator GALLACHER: You still have an asset at the end of that, but—

Mr Woods : That is correct.

ACTING CHAIR: The current proposal, which you mentioned in the briefing, is to provide a category 6 service with the potential that a category 7 service may be required in the future. Have you allowed in your design for a future upgrade to meet those requirements?

Ms Staib : We have. I will ask Mr Wood, the Chief Fire Officer, to elaborate on what that really means for us and the difference between category 6 and category 7.

Mr Wood : For category 6 and category 7, the resources required in terms of vehicles and equipment and the size of the station remain the same. So this facility will accommodate a category 7 level of service. The only difference between the two service levels is a staffing issue, and the new facility will accommodate the additional staff required.

ACTING CHAIR: Thank you.

Senator GALLACHER: You are at 439 or 440 really? Why has it taken so long for the permanent station to be developed and approved? Were you happy with the existing facility?

Ms Staib : I will answer that and then I might get the Chief Financial Officer to amplify. It was established in 2006. We were not exactly sure of the way the passenger numbers would go and whether or not they would fall below the threshold—in which case we would not have a requirement. Clearly, over the years, that has not been the case. The other issue for us is that we have had to make our capital budget stretch in response to increases in the traffic growth and the requirement to establish fire stations in other locations. If we had had our choice, without those constraints, we would have constructed a permanent facility sooner, but we had those competing requirements. Andrew, I do not know whether you want to add anything to that.

Mr Clark : In terms of capital rationing, we agreed with the industry that we would spend in the order of $200 million a year, and under the existing long-term pricing agreement we had agreed and committed to a program of around $957 million. As the chief executive has pointed out, we have certainly had a number of competing priorities within the ARFF space—vis-a-vis the construction of five new fire stations in fairly rapid order over the last two years—and that has caused us to prioritise our developments. Obviously when we have an asset here that was built seven years ago and we have sweated it for as long as we possibly can, the point now is how we replace it and when we replace it, which is what we are about today.

ACTING CHAIR: Section 4.5 of your submission states that all zoning and development planning procedures will be managed by Hamilton Island Enterprises on behalf of Airservices. Have the necessary zoning and development planning procedures been approved?

Mr Rodwell : No, that is what we had intended to do with regard to the approach, based on some preliminary discussions we had with Hamilton Island Enterprises. They have since come back and said to us that they are very happy to assist with all of those processes and to provide the necessary introductions, but they will require us to obtain the relevant approvals. We will do that as soon as we have got a response from the market, and will do all of those things prior to entering into the construction phase. We have particular obligations on the supplier to go through that planning process with us as well.

Senator GALLACHER: It has been mentioned that you are providing fire services off-airport in conjunction with the local authority, for want of a better word. Is that a formal agreement?

Mr Wood : We do have arrangements across the country at all locations with local emergency services to provide assistance both in terms of emergency services coming to assist at the ARFF service on an airport and the ARFF service assisting local emergency services in what we would call a 'mutual aid response'.

Ms Staib : But the way we do that is through a memorandum of understanding or memorandum of cooperation.

Senator GALLACHER: You have 9,000-odd incidents around Australia; are any of those off-airport incidents?

Mr Wood : Yes. Each year nationally there are probably 20 to 30 responses where we provide assistance to a local fire service off an aerodrome.

Senator GALLACHER: I think Ms Ryan asked you this question earlier, but I will ask it again so it is on the record. You have three services here; what happens if you have got someone offsite? How do you keep your core requirement available for the airport?

Mr Wood : Our priority is obviously to do the job we need to do on an airport—protecting aircraft and responding to emergencies on the aerodrome. Each time we receive a request for assistance it is considered on a case-by-case basis, and we will only deploy resources based on what we are required to do on the aerodrome.

Senator GALLACHER: Wouldn't you fly in and fly out of here? You would not really have much option outside of maintaining the scheduled service you have, would you?

Mr Wood : Yes, we do. There are some gaps in aircraft activity, and also if there are smaller aircraft flying we may be able to release one of the two vehicles that are online to assist with an emergency response on the aerodrome. But, as I said, it is on a case-by-case basis each time a request comes in.

Senator RYAN: Could you go through the way the shifts work. If we are flying from 6.30 am until 5.30 pm and we are on a fly-in fly-out basis, is the length of the shift 6.30 am to 5.30 pm for people on the ground?

Mr Wood : Not for all the crew. They do work a 38-hour week roster, like all our firefighters around the country. We reduce the service level at some time in the afternoon down to category 5 from category 6, and that allows a broader spread of staff over that 14-day period. As I said this morning, the rosters do change from time to time as we tailor that service delivery around aircraft activity.

Senator RYAN: What is the category 5 staffing ratio?

Mr Wood : At category 5 it would be one fire officer and two firefighters and one of the two vehicles that are online at the fire station.

Ms Staib : That is possible in the afternoon because we know what the scheduled aircraft are. Do you want to explain? I think the last flight out this afternoon is at two o'clock.

Mr Wood : That is right. When the major ATO or RPT-type aircraft, or the large jets—commercial traffic—cease, there may be some smaller operators operating smaller aircraft that require a lower level of service. The minimum service we would provide is category 5.

Senator RYAN: For what percentage across a regular week—Sunday to Sunday—are we in category 5 mode?

Mr Wood : Almost every afternoon from 15:30—from 3.30 in the afternoon until 5.30.

Senator GALLACHER: So all your planning and development and all that is all in hand? You have done that and it is all approved with Hamilton Island Enterprises?

Mr Woods : The approval will be sought by the constructor, so once we get that back—

Senator GALLACHER: So it has not been approved?

Mr Woods : The initial planning has been approved, but we require the contractor to obtain their licenses so we have that initial approval.

Mr Rodwell : In addition, we have reached an agreement with Hamilton Island Enterprises on the actual location, and we have a lease in place for that area that you saw marked out with the pegs this morning.

Senator GALLACHER: So is it right or wrong that 'The necessary zoning and development planning procedures have been approved'?

Mr Rodwell : No, Senator. As I said previously, they are the plans that will be going through once we get the response from the market. So it is a correction to the submission. We put that in our submission at the time we put the submission in, based on the discussions we had with Hamilton Island Enterprises. They were going to be conducting those for us. It has since been clarified that they will provide the assistance to us, but we, with our supplier, will go through to obtain the necessary approvals. What we do have in place though is the agreement with Hamilton Island Enterprises on the actual site and we have a lease in place for where the new station would be built.

Senator GALLACHER: Is it correct that the site used to be a shooting range?

Mr Rodwell : In the very distant past.

Senator GALLACHER: So you have checked all that out and there are no problems there?

Mr Woods : That is right.

Senator GALLACHER: So you have investigated that there is no contamination or issues?

Mr Rodwell : To the best of our knowledge. We have had an environmental survey done on the site.

ACTING CHAIR: Will there be any issue with the temporary facility remaining open and operational until the new facility is completed?

Mr Wood : From an operational point of view there will not be. The service will be provided from the contemporary facility, as it is at the moment, while the new facility is being constructed. Then there will be a transition phase when the new facility is completed to transition the service from the existing to the new facility.

Senator GALLACHER: Some of the issues that arise around airports usually involve construction or lengthening the runway or work on the apron or whatever. Do you have a plan on all of that?

Mr Wood : We have designated a dedicated safety-change process within our fire service. All changes that do impact, or have the potential to impact, on service delivery will be managed, with the crew fully briefed at all times.

Senator GALLACHER: Will the construction be able to proceed unabated through the normal operation of the airport?

Mr Rodwell : The actual construction area of the station itself will not inhibit the activities of the runway. When the link is put across from the station to the runway so that there is a roadway connection between the station and the runway, there will be a period time where the works need to be coordinated in and around the operations. Normally, in those types of situations where works are occurring on an airport, we try to minimise the operations as best as possible. One of the advantages here is that the large jet movements are quite separated throughout the day and then primarily in the morning period and not in the late afternoon. So there are windows of activity and the work will be staged to minimise the interruption. There is a notice which will go out to all potential users of the aerodrome making them aware of the works that are in place. We will work with the island and its safety team here on the island to make sure all the necessary safety measures are put in place in and around the work site, and on a daily basis we go through all of the necessary safety briefings before work actually commences on site to make sure that the operations are not adversely impacted.

Senator GALLACHER: So you envisage the whole job proceeding without any undue delay, because the airport has to stay open? There are no additional—

Mr Rodwell : We do not anticipate any delays to the project as a result of that. Any delays that might come may be purely throughout the wet weather period.

ACTING CHAIR: Could you please outline the construction time frame for the project?

Mr Woods : It is approximately 12 months. We have built the other stations of this nature within that time period and delivered—

Senator GALLACHER: Could you repeat that please?

Mr Woods : A 12 months construction periods is the allowance we have made to get the stations complete. That is typical of the time frame in which we have built the other stations. As Mark said, we are currently in the wet season and we have to do those in-site works. There may be some delays through the wet season, but we have handled the schedules in other coastal areas or tropical areas such as this.

Senator GALLACHER: What is the length of the project?

Mr Woods : It is 12 months.

Senator GALLACHER: And that will span a wet season? So if you get a cyclone warning or whatever—

Mr Woods : Yes.

Ms RYAN: In terms of the works to the temporary facility, on one line you have demolition and remediation at [figure removed] and then you have the PFOS—

ACTING CHAIR: Perhaps that could be done in camera.

Ms RYAN: Okay.

ACTING CHAIR: As there are no further questions, do the witnesses have anything to add before we close?

Ms Staib : No, thank you.

ACTING CHAIR: I declare the public hearing closed.

Resolved that these proceedings be published.

Committee adjourned at 11:00