SENATOR DURACK -Is there going to be any salvage of the Chinooks, or have they gone forever?

SENATOR ROBERT RAY -As you know, Senator, I have advised some negotiators of the Defence Department to look at disposing of five or six of them and thereby getting five or six back into service down the track. We have had a team go round and enter into negotiations. I am not sure how far I can take that. I will just take a bit of advice on how much I can put on the public record on that. Negotiations have been proceeding. Without identifying specifically, the proposal is that we would negotiate the 11 Chinooks and I think a lot of the engines to go to a particular area and, down the track, in two or three years time, we would get four to six, probably six, D class Chinooks back. That is the way we are currently negotiating. There are a few impediments because of other countries' laws which are involved in that. Negotiations continue.

SENATOR MACGIBBON -How do we do the accounting for that, Minister, because we are going presumably to get rid of 11 Chinooks, a whole swag of spares, which is said to be around $140m worth, with that-and I presume that includes some of the upgraded engines. How do we do the bookkeeping if it is all in the never-never part of the future?

MR PODGER -The basis of the deal is, in fact, like a trade-in but, in essence, it will be a loan that we will be making of our machines and engines and we will get in return a loan of the other countries' new machines. It would not involve any exchange of cash as such. Nonetheless, in the nature of such a trade, we will need the suitable approvals from government for the gross amount involved effectively in the interchange.

SENATOR MACGIBBON -Thank you for that, but I am very much in the dark. Just looking at it in its crudest terms, we have got 11 operational CH47Cs plus about $140m worth of spares and the upgrading costs are said to be somewhere between $8m to $12m per airframe. So if we trade in 11 aircraft plus $140m worth of spares and we get four to six back at a figure of somewhere between $ 8m to $12m per unit to transfer, it does not seem to me that the books balance .

MR PODGER -Obviously, the negotiations will require us to be satisfied that we are getting value for money. That is a clear requirement under any Finance Directions and we will have to satisfy ourselves on that. Part of the negotiations is not only the number we might get but the logistic support that might come with the demodelled machines that we get in return. I also should mention that in looking to other countries which might buy the Chinooks, the real price and value are a matter of what you can get on the market rather than something you can look at entirely independently.

SENATOR MACGIBBON -I understand that very well, but we are paying top dollar for everything we buy.

SENATOR DURACK -If we are reduced to only four Chinooks, for how much operational time will they be available? How many of them will be operational at any one time?

BRIG. MACINNIS -If the aircraft do become available, we envisage their being based in Townsville for operations with 5 Aviation Regiment, that is, the Black Hawk unit. We would see them being funded for 1,000 hours flying per year, principally in support of the Black Hawk aircraft.

SENATOR ROBERT RAY -Quite obviously, having six would be better than four, because you have training time and maintenance time as well. So I have always looked at the six end rather than the four end, if that is feasible.

SENATOR DURACK -So you are really trying to negotiate for six?

SENATOR ROBERT RAY -Yes.

BRIG. MACINNIS -Indeed we would need between five and six aircraft to ensure we had three on line for that work.

SENATOR MACGIBBON -I take it that they will automatically go to Army to operate and maintain?

SENATOR ROBERT RAY -Yes.

SENATOR MACGIBBON -How many Black Hawks have you got serviceable today?

SENATOR ROBERT RAY -More than your press release, I suspect, but let me check that.

BRIG. MACINNIS -Obviously, I am unable to give you a figure of Black Hawk serviceability today. It is true, as lies behind your question, that we are experiencing difficulties with the maintenance and therefore the availability of Black Hawks on a day-to-day basis. Typically, Black Hawk availability has been as low as 40 per cent. This is a cause for concern within Army and a lot of work is being put into remedying that situation. It is largely a factor of where we stand on the learning curve with a very new and a very complex piece of equipment. Army is confident that that availability will improve dramatically. Bear in mind that the milestone operational requirement of the aircraft is not yet upon us. It is some time before we have to produce the full company group lift. At that time, we will produce that lift and we will have largely solved the maintenance problems.

SENATOR MACGIBBON -Would it be true that there would be 17 unserviceable Black Hawks in Townsville tonight?

BRIG. MACINNIS -I am sorry, I simply have no basis on which to answer your question.

SENATOR MACGIBBON -What steps are you taking then to overcome your maintenance problems?

BRIG. MACINNIS -I cannot answer your question directly. Perhaps if I talk to you about the areas of our concern we may then be able to develop the answer you are seeking. We believe that there are four areas of concern surrounding Black Hawk. The first concern is that, as I have mentioned, it is a new and a very complex piece of equipment. Secondly, we have low experience levels amongst the Army maintenance tradesmen. There are periodic shortages of some critical spare parts, and we had some teething problems in the report and repair modification system resulting in the transfer of the capability from Air Force to Army. As a minor aspect, there is a lack of some publications for some ground support equipment. Clearly, each of those gives us an avenue for improvement, and we are progressing on all of those avenues.

MAJOR-GEN. GREY -I might ask Air Vice-Marshal Graf to add something to the answer.

AIR VICE-MARSHAL GRAF -From the Air Force point of view, as the managers of this project, there are some delays in the introduction of the full support for the Black Hawk. I will go through a few of them for your information. The establishment of the full intermediate maintenance capability for Townsville has not been completed. Some of the ground support equipment, particularly for the avionics, has yet to arrive and to be put into service. This means that some items have got to go back to the United States for repair, and there are quite considerable extended lead times in the turnaround of some of those items. That is one element that does contribute to the current shortfall in availability.

While I will stop short of saying that the depot level maintenance capability is almost non-existent, it is still being established. That also affects the availability, because those items must go back to the United States as well. The arisings of those, of course, are much fewer because of the fact that the aeroplanes are relatively young.

One other aspect is that quite a few items go back under warranty, and our estimate for the time of returning items under warranty was much shorter than it actually has turned out to be. The average turnaround time for warranty items is something like 200 days, because the items go back firstly to Sikorsky and then to the relevant subcontractor who supplied the item. We have done the best we can to hurry that up, but that is another delay point.

These teething problems, as I would call them, are not unusual in the introduction of a new type. Possibly the shortfall in the intermediate level maintenance support is the most significant element at the moment. There have been some technical problems as well, and that is fairly typical of new aircraft being introduced. They require a bit longer to resolve. There have also been some components that have to be returned to the United States for upgrading in modification status, and that has also taken some items out of the pipeline. So the combination of those four or five elements has actually impacted the availability from the project point of view and putting the support into place. $$P

SENATOR MACGIBBON -We have introduced a number of aircraft into Australia in the last 70-odd years. We have never had these problems before in introduction , have we?

MAJOR-GEN. GREY -Yes. We have had them every time, Senator.

SENATOR MACGIBBON -Over as extended a period of time, with low availability?

MAJOR-GEN. GREY -It has varied quite considerably. We had similar problems with the FA18. In fact, some items we still send back to America because of problems in fully establishing the depot level capability for that. It has not had as significant an impact, I must confess, in that particular area. For most of the aircraft we have introduced we have had these teething problems. In many cases assessments which were made some years before in purchasing, say , the number of spares or the number of rateable items, making assessments of what the turnaround times would be and expecting in-country support to be in place earlier than it actually has turned out to be have impacted on availability in the early years. I am not suggesting that these items account for the total of the problems there, but they are contributing, and we are actively managing to overcome each of these.

SENATOR MACGIBBON -Is the RAN availability parallel with the Army experience or has it been higher? Has the availability of the Seahawk, which is essentially the same airframe with a little bit of difference, matched the Army experience?

MAJOR-GEN. GREY -I cannot say, I am sorry.

REAR ADM. HUNT -The Seahawk at this moment probably cannot be compared. While somewhat paradoxically we have been operating the aircraft in the Gulf, they have not been accepted into service. While we might compare the airframe availability, the aircraft is quite different, as you would appreciate, in its weapons system and internal electronics. We are still in a trials phase for that aircraft, so we do not actually have on-line information that can be compared with Black Hawk, which is in service.

SENATOR MACGIBBON -I certainly get the impression that Navy has more Seahawks available on the line than the Army has, on a percentage basis.

REAR ADM. HUNT -Accepting that the number of Seahawks that has been operating is principally the small number that has been out in the Gulf, yes, we have realised very high physical capability. In terms of the discussion, our advantage in this sphere has been that in operating a very small number of our inventory we have been able to put the best of our highly qualified technicians to the line and we are not yet in the business of training for the whole operation.

SENATOR MACGIBBON -Is it true, Brigadier, that the Army maintenance practices limit the productivity of the Army engineering services, in so far as they rotate people through on a short period of time rather than leaving them in a maintenance squadron for years and years?

BRIG. MACINNIS -There are certainly perceptions that Army practices do contribute to the problem. The one most commonly put forward is that the availability of skilled workers is reduced by Army's requirement for those people to be soldiers first and maintainers second. In other words, we require them to undertake a certain amount of field training to fit them for their fundamental role of being soldiers. I would accept that the other issue you put is a parallel matter. It is simply a matter of how valid you see Army's requirements as being.

SENATOR MACGIBBON -Another question on Black Hawks: I was in Rockhampton through the floods in January and I noticed that the Black Hawk up there was flying with accessory tanks on the sponsons. Are they 200-gallon tanks? What is the size? They look like very large tanks.

AIR VICE-MARSHAL GRAF -I cannot answer that. It is a triple S tank. The maximum they can carry is three on each side.

SENATOR MACGIBBON -They can carry three of those?

AIR VICE-MARSHAL GREY -Three on each side is the maximum carriage, yes. I do not know if you saw the three. That is the maximum load that it can carry but I am not sure what the capacity is.

SENATOR MACGIBBON -What does that do to the payload?

AIR VICE-MARSHAL GRAF -If the three are fitted either side it gives the maximum range capability, obviously, but very little payload inside. That is virtually a ferry configuration.

SENATOR MACGIBBON -They were working on flood relief with two tanks fitted.

AIR VICE-MARSHAL GRAF -That would certainly reduce the payload but obviously not sufficiently to be a hazard to the operations that they were conducting. I am not sure exactly how much is reduced for each tank that is put on, but we could find that out, if you wish.

SENATOR MACGIBBON -Thank you.