COMMONWEALTH OF AUSTRALIA

PARLIAMENTARY DEBATES

SENATE

Official Committee Hansard

RURAL AND REGIONAL AFFAIRS AND TRANSPORT LEGISLATION COMMITTEE

(Consideration of Estimates)

TUESDAY, 17 SEPTEMBER 1996

BY AUTHORITY OF THE SENATE CANBERRA 1996 Tuesday, 17 September 1996 SENATE—Legislation RRA&T 1

SENATE Tuesday, 17 September 1996

RURAL AND REGIONAL AFFAIRS AND TRANSPORT LEGISLATION COMMITTEE

Portfolios: Primary Industries and Energy; Transport and Regional Development Members: Senator Crane (Chair), Senator Conroy (Deputy Chair), Senators Calvert, Bob Collins, McGauran and Woodley Substitute members: Senator West to substitute for Senator Bob Collins on 13 September 1996. Senator Panizza to substitute for Senator Calvert for the period 16 to 20 September 1996 Participating members: Senators Abetz, Boswell, Brown, Brownhill, Chapman, Cook, Eggleston, Ferris, Forshaw, Gibbs, Harradine, Kemp, Ian Macdonald, Sandy Macdonald, Mackay, Margetts, Murray, Schacht, Tambling, Tierney and West

The committee met at 4.16 p.m. CHAIR—I declare open this public hearing of the Senate Rural and Regional Affairs and Transport Legislation Committee. On 22 August 1996, the Senate referred to the committee the particulars of proposed expenditure in respect of the year ending 30 June 1997, and particulars of certain proposed expenditure in respect of the year ending 30 June 1997 of the following portfolio areas: primary industries and energy, and transport and regional development. The committee will consider the proposed expenditure at hearings today and on Thursday, and is required to report to the Senate on or before 10 October 1996. The committee has resolved to hear the estimates in the following order: the Department of Transport and Regional Development today, Tuesday 17 September, and the Department of Primary Industries and Energy on Thursday 19 September. It is not at this stage intended to hold further estimates hearings of this committee during next week. Committee members and participating members have been provided with portfolio budget statements for each of the portfolio areas to be considered, and I propose to call on the estimates by program and subprogram as they appear in these statements. I draw the committee’s attention to the tight timetable for these estimates and foreshadow to departments and agencies that it is likely that the committee will nominate Monday 14 October 1996 as the date for submission of written answers and additional information. I should also indicate that the committee has authorised the recording and rebroadcasting of its proceedings in accordance with rules contained in the order of the Senate of 23 August 1990. To assist the committee and Hansard, could officers identify themselves before answering a series of questions. DEPARTMENT OF TRANSPORT AND REGIONAL DEVELOPMENT Proposed expenditure, $258,248,000 (Document A). Proposed provision, $209,626,000 (Document B).

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In Attendance Senator Alston, Minister for Communications and the Arts Department of Transport and Regional Development— Executive Mr John Bowdler, Deputy Secretary Program 1—Aviation Subprogram 1.1—Aviation Policy Mr Peter Harris, First Assistant Secretary Mr Tony Wheelens, Assistant Secretary, International Relations Mr Joc White, Assistant Secretary, Airport Regulation Mr Jim Wolfe, Acting Assistant Secretary, Aviation Industry Subprogram 1.2—Aviation Operations Mr Paul Merner, First Assistant Secretary Mr Ray Turner, Assistant Secretary, Aviation Security Branch Dr Hugh Milloy, Assistant Secretary, Sydney West Airport Taskforce Mr Ray Warren, Acting Assistant Secretary, Aviation Environment Branch Subprogram 1.3—Bureau of Air Safety Investigation Dr Rob Lee, Director Mr Ian McCallum, Deputy Director, Investigations Subprogram 1.4—International Air Services Commission Mr Danny Scorpecci, Executive Director Subprogram 1.5—Civil Aviation Safety Authority Mr Leroy A. Keith, Director of Aviation Safety Mr John Pike, Deputy Director Ms Sue-Ellen Bickford, General Manager, Finance Ms Marcia Kimball, General Manager, Human Resources Management Mr Rob Elder, General Manager, Corporate Relations Subprogram 1.6—Federal Airports Corporation Mr Peter Snelling, General Manager, Network Airports Subprogram 1.7—Airservices Australia Mr Bill Pollard, Chief Executive Officer Mr Peter Evans, General Manager, Air Traffic Services Mr Tom Grant, General Manager, Corporate and Employee Relations Mr Brian Kendal, Manager, Operational Policy Mr Colin Dahl, Manager, Environment Mr Graham Beer, Manager, Financial Strategy Mr Ian Rischbieth, Manager, Government Relations

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Program 2—Land Transport Subprogram 2.1—Road and Rail Policy Mr Bruce Gemmell, First Assistant Secretary Mr Andy Hrast, Acting Assistant Secretary, Roads Mr Warwick McNamara, Director, Roads Program Mr Daryl Quinlivan, Assistant Secretary, Rail Mr Stan Marks, Acting Director, Rail Enterprise Subprogram 2.2—Federal Office of Road Safety Mr Peter Makeham, First Assistant Secretary Mr Tony Ockwell, Assistant Secretary, Road User Subprogram 2.3—Australian National Mr Andrew Neal, Acting Managing Director Mr Alistair Powell, Chief Finance Officer Program 3—Maritime Subprogram 3.1—Maritime Mr Kym Bills, First Assistant Secretary Dr Greg Feeney, Assistant Secretary, National Shipping and Infrastructure Captain Kit Filor, Chief Investigator, Marine Incidents Mr David Holmes, Director, Marine Personnel and Administration Subprogram 3.2—Australian Maritime Safety Authority Mr Paul McGrath, Executive Officer Mr Brian Munro, General Manager, Corporate and Commercial Services Program 4—Regional Development Subprogram 4.1—Regional Development Mr Stephen Hunter, formerly First Assistant Secretary, Regional Development Ms Robyn Beetham, Assistant Secretary, Regional Development Ms Rosemary Cousin, Assistant Secretary, Regional Development Mr Steve Garlick, Assistant Secretary, Regional Development Mr John Okely, Assistant Secretary, Regional Development Ms Pieta-Rae Laut, formerly Director, Regional Development Mr Simon Murnane, Director, Regional Development Program 5—Corporate Direction and Support Subprogram 5.2—Management Support and Advice Mr Bill Ellis, First Assistant Secretary Mr John Elliott, Assistant Secretary, Finance and Services Subprogram 5.3—Research Mr Stephen Hunter, Director Ms Sue Elderton, Research Manager

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Dr Leo Dobes, Research Manager Mr David Luck, Research Manager Mr Les Hegedus, Manager, Corporate Services Department of Finance— Ms Anne Burhop Mr Steven Hall Mr Stephen Hoult Ms Dianne Rimington CHAIR—The first portfolio to be considered is transport and regional development with a proposed expenditure of $258,248,000 in Appropriation Bill (No. 1) 1996-97 (document A); and $209,626,000 in Appropriation Bill (No. 2) 1996-97 (document B). I welcome Senator Richard Alston, Senate ministerial representative, and officers of the Department of Transport and Regional Development and associated authorities. Minister, do you wish to make an opening statement? Senator Alston—No. [4.18 p.m.] Program 1—Aviation Subprogram 1.1—Aviation policy CHAIR—I think we can go straight to program 1. Who would like to open the batting? Senator BOB COLLINS—Mr Chairman, I have many questions. Just for your advice, in the absence at the moment of too many other senators, I will just box on. But if other senators feel they want to have a crack, jump in. CHAIR—That is fine. We have put together a proposed timetable. It is not a rigid timetable, but it is something we would like to try and work to. This means that we are all going to have to be pretty precise in our questions and our answers as we work through it. Notice has been given that a little more time is required for regional development, which we will accommodate when we get to that particular time. Over to you, Senator Collins. Senator BOB COLLINS—Minister, the first set of questions that I have relates specifically to Adelaide airport—for the advice of officers at the table—so if there are any other officers that have a particular input into that matter, that is fine. The budget papers allowed for $28 million as a contribution to the extension of a runway at Adelaide airport. Can you advise the committee on how much the extension to the runway will cost in total? Mr Harris—I have with me Joc White, who works on airports regulation related matters, and Jim Wolfe, who works on aviation industry matters. In terms of the anticipated cost of the runway extension and associated works, the current estimate that we are working on is $48 million. Senator BOB COLLINS—Thank you. In that case, who will be paying the additional amount of money? Mr Harris—The government’s decision relates to an allocation of $28 million in 1996-97 for the purposes of the Federal Airports Corporation’s potential expenditure on the runway and some state works. The remaining $20 million is an amount yet to be allocated to come from the proceeds of the sale of airport leases.

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Senator BOB COLLINS—Can you provide the committee with detail—not precise detail— but some detail of the actual work to be done? What I am getting at here is: will the extension of the runway involve any ancillary work that will have to be done, for example, to the terminal building, the aprons, the parking bays or whatever? Mr Harris—I might just ask Mr White if he has any details on that. Mr White—The works comprise on-airport works which will involve the extension of the main runway by 572 metres to the south-west to a total length of 3,100 metres which will allow the airport to be used by fully loaded 747 aircraft. So that is an extension of the runway. There is also an extension of the taxiway associated with that on-airport and there are landfill and compaction works to be done as well. The runway extension project itself does not involve any work on the terminals or any terminal expansion. There is a separate proposal around in respect of that. The off-airport works associated with the runway extension include work associated with Patawalonga Creek, a diversion of some road works and the shifting of some sporting facilities and so on, which will be work that will be undertaken by the state. Senator BOB COLLINS—Have they actually given a formal commitment to that in terms of an agreement with the Commonwealth? Mr White—A formal agreement has not been entered into at this stage. The history of the project, as you may be aware, included some proposals under the previous government for work to be undertaken and there was a draft agreement prepared at that stage. But the proposal now is that there be new agreements drawn up which relate to this government’s decision to provide funding in this way. Senator BOB COLLINS—How close is the existing runway to residences? I can tell you that I would not want to live in those houses at the end of the Adelaide runway. People complain about Sydney but— Mr White—I would have to take that question on notice. I do not know the precise answer— Senator SCHACHT—Close. Mr White—But I do know that the impact associated with the runway extension is currently subject to a draft environmental impact statement, and that has been out for some time. Submissions have been called for and have closed, and the submissions are under consideration. My understanding is that the response in respect of noise impacts has not been very great, and the understanding is that the noise aspects are ones that can be addressed. Senator SCHACHT—They are a hell of a lot closer to the northern end of the runway which is the non-sea side. When the extension goes at the other end, how close is that to— Mr White—Again, I would have to take that on notice. I do not have the exact details. Senator SCHACHT—Okay. Senator BOB COLLINS—I am sorry, Mr White, I did not hear that answer. CHAIR—It was taken on notice. Senator BOB COLLINS—In a general sense, the question was: what difference will the extension make in broad terms to that question of proximity of the houses? Mr White—What difference will the extension make? Senator BOB COLLINS—Yes.

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Mr White—There are two factors at work: one is the prospect that there may be some increased usage and the other is that the aircraft that are likely to be using the airport will in time be less noisy. The advice, as I recall it, from the draft EIS was that there will not be a significant increase in the number of properties affected by noise using the standard definitions. Senator BOB COLLINS—Has there been any degree of consultation with the community living around the airport to this point in time about the extension? Mr White—My understanding is that there has been considerable consultation. Part of the EIS process involved not only that material being made available to communities living in the vicinity of the airport but also public and open days, which the community was invited to attend to take the opportunity to raise matters of interest with people from the project. Could I just clarify one matter, Senator, and that is that the EIS that is being done is being done with the state as the proponent. It is being done in accordance with state and Commonwealth EIS agreements, but the state is the proponent for that process. Senator BOB COLLINS—The budget statement refers to an additional $20 million to be provided to the South Australian government to cover its development costs. What is referred to in that development? What development costs? Mr White—The same development costs off airport that I explained before. There are a number of quite significant works to be undertaken, including diverting a road on the western side of the runway and diverting the waterways around that area. There is some landfill work and there is— Senator BOB COLLINS—That is okay. That is enough. The reason I asked the question is that I would assume that is the case—that these development costs do not refer at all to the proposal, of which I am sure you are aware, by the Australian government for an integrated international domestic terminal, with all the bells and the whistles, at Adelaide. Mr White—No, they do not. That is an entirely different proposal, which is being considered in a different way. The proposal that you are talking about is a proposal that originated with the state government for the development of an integrated domestic and international terminal at Adelaide. It was a proposal that the state raised with the airlines and then, with a degree of support, raised with other parties, including the Commonwealth and the FAC. The proposal, since then, has been given some further consideration, and my understanding is that the FAC is currently undertaking a feasibility study of the prospects of an integrated terminal at Adelaide airport. Senator BOB COLLINS—Which the FAC itself is paying for? Mr White—The feasibility study, yes. Senator SCHACHT—How much? Mr White—I do not have the figure. I understand that it was being done under a managing director’s delegation, which could mean the cost would be under a million dollars. Senator SCHACHT—Under a million? Mr White—Yes. That is the limit of the delegation, as I understand it, so the cost would be somewhat below that. But I do not know the exact amount. Senator SCHACHT—Can I ask some more questions about the diversion? Senator BOB COLLINS—I cannot stop you. It is your airport, mate.

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Senator SCHACHT—It is my airport. Twenty million dollars has been given to South Australia for development costs, and that is for the diversion. Does that include relocating the Patawalonga golf course? Mr White—The state works certainly include that, yes. Senator SCHACHT—Does it include any work at the Glenelg sewerage works, which planes fly right over the top of. If ever there is a bad accident, not only will the plane go down in a spectacular heap; it will classically be up you know where without a paddle. Is there any work to be done on the sewerage works in relation to relocation? Mr White—I would prefer to take that on notice to give you a clear answer on that. Senator SCHACHT—I was astonished at the publicity that, when they were initially looking at putting a road under the runway so the road did not have to be diverted around, like at Sydney airport, there was an extraordinary suggestion, to my mind, a layman’s mind, that it would cost something like $20 million extra to put the road under the runway. How does that compare with the cost of diverting the road right around? It must be a gold-plated brick bridge for the runway if it is to cost $20 million. Is this the sort of cost that Sydney airport was up for when they built the third runway and the bridge over the road? Mr White—I cannot give you an answer on what Sydney airport was up for at that time. My recollection of the additional costs that would be involved in having an underpass at Adelaide were of that order. Mr Harris—It is probably worth clarifying, Senator, that the funding that the Common- wealth is prepared to provide to the state is a limited amount of money and thus, for state works of this order, effectively the proposition would have to be tailored to ensure that it is streamlined. Senator SCHACHT—If the road was meant to be diverted and just went underneath, would that mean that there would be less relocation work at the golf course and the Patawalonga Creek itself? Mr Harris—The way we would look at it is that that decision in the end would tend to be a matter for the state. Senator SCHACHT—So you accept their figure that it is $20 million plus to build it? Mr Harris—No. That is not correct. The amount of money that is allocated for that purpose would be capped at $20 million. But we would expect, in the normal process, an accountability mechanism to be put in place to ensure that funds that were allocated for this purpose were spent on the project. Senator SCHACHT—Does the relocation work account therefore for having to do any work on relocating the Patawalonga Creek, the waterway? Mr Harris—Yes, it does, Senator. Senator SCHACHT—Does that in any way affect the very large amount of money that we have just been spending on the better cities program, which is coming to a conclusion, to clean up the Patawalonga and make it now safe again to be used for swimming and waterskiing and so on? Are we about to rip up part of what we have just already cleansed and made more environmentally friendly via this process of redevelopment for the extension of the runway? Mr White—I think that seems to be a matter that the state would have better information on. Senator SCHACHT—It is our money.

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Mr White—Yes. My understanding is that some of the relocation works for the Patawalonga would affect works that have been done, but I would have to get the details of that and take it on notice. Senator SCHACHT—Could you take that on notice because it seems to me they may be double-dipping on our money. It would be stupid if we have just spent what I think runs into tens of millions of dollars of federal and state money on the turning up of the Patawalonga. I have driven past it on several occasions and there is an enormous amount of earthworks which overwhelmingly cost the better cities money. As they were just finishing, we were sending the bulldozers back in to fill it in, redo it all, which may affect again the environmental flushing of the Patawalonga. I raise it because, in the end, we are getting bitten for the money at the federal taxpayer level. Just because the state gets it wrong, I am not sure that we ought to be totally benign about how they spend our money. Mr White—Senator, my understanding is that there may be some minor overlap but not very significant. We will certainly get the figures and the information and get back to you. Senator SCHACHT—I know we have capped it at $20 million. Could you give me the figures of how the $20 million breaks down into the cost of relocation of the road, the Patawalonga and the golf course, and also any indication of that overlap figure between the better cities program? I want to ask another question about the retention of the runway. How much lower will a plane be, when it goes across what will be the golf course and the sewerage works, before it heads out over the sea when it takes off to the south-west on the flight path? Mr White—If it is taking off to the south-west? Senator SCHACHT—If it is taking off to the south-west over the sea and it is a fully-laden 747 using the full length of the runway or close to it. Mr White—We would need to check with Airservices and get back to you on that. Senator SCHACHT—On that, can you assure me that, as a plane takes off, it will not go over any of the houses of what is called Glenelg North, between the sea and the Patawalonga and that narrow peninsula? Have those people living in that area—this is following up Senator Bob Collins—been consulted about the extension and the environmental impact study? Mr White—They have. Senator SCHACHT—Do you know the result of that? Are they satisfied with what they have seen? Mr White—Whether the community around are satisfied? Senator SCHACHT—Yes, that Glenelg north area as I described. Mr White—As I said earlier, my understanding from the advice the states have provided is that the responses to the project overall have been quite supportive and quite favourable. The advice was that there do not appear to be impacts that cannot be addressed in a reasonably satisfactory way. So my understanding based on advice from the state is that the impacts associated with the proposal appear manageable. They are continuing to work through the details of the responses and that will be dealt with in the final impact statement when that is released. Senator SCHACHT—Have any issues been raised so far, such as with Sydney airport, about soundproofing people’s homes? Mr White—I would have to take that on notice.

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Senator SCHACHT—I have a question on the Adelaide terminal, which you say the FAC is doing the feasibility study on, which is under $1 million for a fully integrated, all flying, all bells and whistles, integrated terminal. We do not have a deadline or a date yet as to when the airport is to be privatised. In the meantime, will the project to build the new integrated terminal wait until the airport is sold or can it take place after the feasibility study, and would the FAC have to make some contribution as well as the airlines to the building of the new integrated terminal? Mr Harris—Decisions on the timing of the sale will be effectively made by Mr Fahey. I do not think we have any information on exactly when the sale might take place, thus to try to put the timing of the development in line with the timing of the sale would be rather difficult. Senator SCHACHT—Is the feasibility study by the FAC taking into account what some could call the uncertainty of the ownership of the airport before you can make a decision about building a new integrated terminal? Mr Harris—It is a relevant issue to consider. I do not know whether I can take it much further than that. Senator SCHACHT—Most of us in South Australia would actually like a new terminal. I do not know how many times I have complained to Ansett and to Qantas about the lack of aerobridges. Adelaide is the only mainland capital city without aerobridges, and it has been for a long time. They keep blaming each other or the FAC and the FAC blames them, that it is not their job to build aerobridges. Obviously I hope a new terminal would have aerobridges. Would the FAC be willing to make some commitment to putting a contribution into building the integrated terminal, knowing that when it was sold they would get their money back—it would be in the price; or are you going to charge the full cost of the terminal, or will it be borne by the airlines? Mr Harris—It becomes a fairly complicated issue when you get into the development of the terminal arrangements at an airport because the specific contributions that are made by the airlines are under domestic terminal lease arrangements for funding particular developments. The airlines effectively have the right—and I will save this subject for further elaboration by Mr White—to trigger development proposals which the FAC then has to contribute to on the air side. So the airlines will have particular interests in the terminal development themselves, the FAC will have particular interest in the on-airport development and the overall arrangement will be a matter, I guess, of commercial discussion and negotiation between them. The nature of your question is whether the FAC will make some contribution. The answer is that, certainly, I believe there will be a financial contribution made by the FAC to the overall development. But the nature of that will probably be determined as a result of the feasibility study and the discussions between the parties concerned. Senator SCHACHT—When is the feasibility study due to be completed? Mr White—I believe around February next year. Senator SCHACHT—So there is no light at the end of the tunnel until February next year for Adelaide air travellers getting a decent terminal with aerobridges et cetera? Mr White—I think most people would recognise that a terminal of the type that is under consideration is a major development and there would need to be appropriate consideration

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 10 SENATE—Legislation Tuesday, 17 September 1996 given to the planning of that. As in all the other terminal developments the FAC has undertaken, that planning would take time. If I can just pick up one point, the previous question was about whether the FAC would contribute. I think it is fair to say that the airport operator—whoever the airport operator is at the time with the airport terminals being developed—would, of course, be taking a significant risk and would need to put in significant resources to develop a terminal of the nature that is under consideration. Senator SCHACHT—That just basically means to me that you are not going to put your money into, you will not want to be in it because the airport is going to be sold at some stage in the intermediate future. So this whole issue of the terminal is just going to be delayed until a new owner turns up for the airport. Mr Harris—Not necessarily. It really does depend on the nature of the commercial negotiations. For example, if the terminal building itself is seen—I can only necessarily give a sort of speculative answer—as a net positive addition to the airport for the purposes of sale of the lease, it may be you would want to go ahead with the terminal building first and then dispose of the lease afterwards. On the other hand, if it is seen as a matter that should be left for a new airport operator to make the commitment to and to determine the final outcome on, then you might dispose of the lease first. Those are the judgment questions that, effectively, I think I was trying to imply earlier belong to the Minister for Finance. Senator SCHACHT—I suppose we will go to the Minister for Finance and ask him when that time comes around. Do you have a rough ballpark figure of what an integrated domestic- international terminal would cost in an airport the size of Adelaide? Mr White—The South Australian department which first developed the proposal, as I recall, indicated that the cost could be in the order of $120 million. Senator SCHACHT—On your previous practice at the FAC, looking at your share of such an airport—I do not now want you to give away your bargaining position with the airlines which are notoriously tough on these things—is there any sort of ballpark figure of what sort of proportion the FAC would be expected to contribute if you maintain ownership of the airport? Mr Harris—I have seen some figures, Senator, some little time ago. But I also must say that, at the time, I do not think those figures were indicated with any reliability. If we were to look for some advice for you, we would probably have to take that on notice as well. Senator SCHACHT—I would appreciate that, if you could. Did the South Australian state government, like most other state governments, seek exemption under the recent bill going through the parliament that Adelaide could not be owned by somebody who owned Sydney or Melbourne? Mr White—That question was dealt with both in the Senate and in the minister’s answer in the House. The position was that, at the time that consideration was given to the extension of cross ownership to include Perth, there were consultations with the state Premier in South Australia and also the Acting Premier in Tasmania at that time. They were comfortable with the outcome. Senator SCHACHT—So anybody can own Adelaide and any other airport. Mr White—There would be no cross ownership provisions which would prevent an operator who owned Adelaide owning another airport. But there is also scope for a different level of diversity, if you like, to be achieved through the sales process.

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CHAIR—Just a further point: would the answer to that question actually be that there was nothing to prevent under the cross ownership rules—nor was there a request to do so—the owner of Sydney from owning more than 15 per cent in either Adelaide or Hobart? Mr Harris—I think that is correct. Senator SCHACHT—Can you say that again? CHAIR—The situation which exists is that the owner of Sydney is allowed to own the total of either Adelaide or Hobart. There was no request from either of those governments at the time for it to be otherwise. Senator SCHACHT—Yes, that is the point I was trying to make sure— CHAIR—I just wanted to get it clear. Senator SCHACHT—Does the FAC believe that an integrated terminal at Adelaide airport is going to be a goer? I mean, the feasibility study is not just looking at the design and the layout, does the feasibility study actually go to the economics of an integrated terminal? Mr Harris—We have a representative here from the FAC. We have probably gone so far towards the specific nature of the question. Senator SCHACHT—Mr Snelling, I do not know whether you heard my question, because you were down in the third row. Is the feasibility study looking at not only the design and the cost et cetera but also some sort of cost benefit analysis—that the $120 million, I think that was the sort of ballpark figure the state government might have looked at, is justifiable and an economic investment? Mr Snelling—That is correct. The initial proposal had contributions by state government, the FAC and airlines and had a passenger movement charge. The corporation really wants to look at that and see whether that is feasible, keeping in mind that under the domestic terminal leases we have an obligation to meet terminal infrastructure costs of the airlines. So there is an ongoing obligation on the corporation to spend money at Adelaide domestic terminals. What we are really looking at is whether the integrated terminal will allow us to avoid spending those funds or put them into an integrated terminal. Senator SCHACHT—I asked the officers of the department a question earlier and they took it on notice, but maybe you can answer it. On previous experience do you know what sort of percentage the FAC would be expected to contribute if the go-ahead was given to such an integrated terminal? Mr Snelling—No, that is essentially part of the study; that is something we have to look at. Senator SCHACHT—So there is no sort of fixed formula by comparison with what has happened at other airports? Mr Snelling—No, there is not. Senator BOB COLLINS—Will the government and therefore the taxpayer recoup through the sales process the cost of the contributions to the runway and its development, or is that simply a gift? Mr Harris—I guess the best way of looking at that is that the runway will presumably be a fait accompli or at least a project in process at the time of disposal, in which case the price received for the airport will reflect the value of the runway. Senator BOB COLLINS—So we should get it back?

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Mr Harris—The expectation is that, yes, the price would reflect the value of the runway. Senator BOB COLLINS—I was interested to hear you talk about the passenger movement component. You are talking about a levy on the ticket through Adelaide? Mr Snelling—We are not; the South Australian government— Senator BOB COLLINS—No, I am sorry; did you say the government is proposing that? Mr Snelling—Yes. Part of the initial proposal was, in essence, to top up with a passenger movement charge. Senator BOB COLLINS—No reflection on Adelaide: that sort of thing works very well in Cairns, but I think it would be stupid to do it in Adelaide. I imagine that would have a potential impact if that were imposed on the price that you would get for the airport, wouldn’t it? Mr Harris—It could if such a charge was accepted and in place at the time. Senator BOB COLLINS—Have the assets sales task force been formally consulted on the issue of the extension? If so, have they expressed a view on it? Mr Harris—The runway extension? Senator BOB COLLINS—Yes, and associated works. Mr Harris—I am quite sure that the ASTF is aware of the runway extension in full detail. I certainly have spoken to people in the ASTF about this through the budget process, for example. For the normal purposes of government, that counts as consultation. I am not sure whether you are looking for anything more formal than that. I have not seen, for example, an assessment by them of the runway proposal, but I do not think we were ever looking for one. Senator BOB COLLINS—Fair enough. To your knowledge, have there been any expressions of interest in purchasing Adelaide airport? Mr Harris—I have certainly seen and heard from parties who have expressed an interest in investing in Adelaide airport. Mr White and Mr Snelling have probably heard from more parties than I have. Senator BOB COLLINS—Does either of those gentlemen wish to add to that? Mr White—The understanding we have is that there have been discussions between the state government and some interested parties, but there have not been any calls for expressions of interest in that sense for Adelaide. There has been a request for expressions of interest in relation to the first phase airports, but Adelaide is not one of those. It is the Perth, Melbourne and Brisbane group which is currently being progressed. Senator BOB COLLINS—Are you aware of any proposals that involve the South Australian government as a party to the purchase of the airport as distinct from involvement in the terminal construction? Mr Harris—I am not aware of any proposals of that sort. Senator BOB COLLINS—I am happy for you to take this on notice. Can you provide me with details of passenger movements, both domestic and international, at the Adelaide airport over the last five years. I do not expect you to have that information now. Would I be correct in coming to the conclusion—and I ask this purely from my own observations as a frequent user of that airport and many others—that the movements from that airport would have been relatively flat over the last five years?

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Mr Snelling—I will take the question on notice. I am not sure of the actual figures, but I think your guess that they have been reasonably flat would probably be very close to the mark. Senator BOB COLLINS—I thought it might have been. It is no reflection on you, by the way. Senator SCHACHT—Have any local groups or local government organisations in South Australia shown any interest in being part of a bidding consortium for the Adelaide airport? There were rumours around Adelaide a year or so ago that some may be interested? Mr Harris—Again, not to my knowledge, but perhaps Mr White might have some more information. Mr White—The department did have some discussions in Adelaide about a year and a half ago. At that stage—and this was very early days—a couple of the councils did start to explore whether they might take an interest in the airport. I am not aware if that has been continued. Senator SCHACHT—Are local government bodies prohibited by government policy from being part of a consortium? Mr White—Not by Commonwealth government policy, no. Senator SCHACHT—Is the state government prohibited from being a major or significant part of a consortium to bid for the airport? Mr Harris—There is no restriction of that kind that I am aware of or that I have heard of. Again, the closer we get to questions about who gets involved in this— Senator SCHACHT—Was there not some press publicity at one stage where Mr Kennett indicated that, to make sure that Victoria Inc. got control of its airport, he would be quite happy to have the state government involved and the federal government said that it is not in its policy to have state governments involved in owning or managing airports and they were ruled out of Tullamarine. Mr Harris—Mr Fahey, the Minister for Finance, will determine those sorts of issues. To my knowledge, there is no policy. Senator SCHACHT—So there is no consistent policy? Mr Harris—There is no policy restriction to my knowledge. Senator SCHACHT—What happened to Mr Kennett? Mr Harris—My understanding of the press report was that Mr Kennett said that he had reconsidered the idea. Senator SCHACHT—So he reconsidered it of his own volition? Mr Harris—That is my recollection of the press reports. Senator SCHACHT—If the only way a consortium, with reasonable financial backing, could be formed to buy the airport was with the state as a major player, would that be a policy matter for the federal government to consider? Mr Harris—Yes, as I understand it. Senator SCHACHT—And they would consider the merits of that particular case? Mr Harris—The nature of the consortiums that lodge expressions of interest and then proceed through the remainder of the tender process would be a matter which would be considered by Mr Fahey in the context of those bids put forward.

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Senator SCHACHT—Is the government’s policy of putting a levy on passengers going through in order to help pay off the cost of the terminal and the infrastructure available to any consortium? Mr Harris—No. The pricing policies to be applied at airports will come under scrutiny from the Australian Competition and Consumer Commission. Therefore, anybody who wishes to undertake a charging activity for aeronautical related charges, as will be defined in the government’s pricing policy, will have to meet that set of charges under a CPI minus X cap which will be administered by the ACCC. I think there is a reasonable prospect of any direct aeronautical related charge—presumably that meets the definition of ‘aeronautical related charge’—being scrutinised in what is quite an open and transparent public process where there will be a lot of contribution from public interest. Senator SCHACHT—But in the end, once it goes through the transparency with the ACCC—once they were satisfied—you could put an extra $2, $5 or $10 on every ticket of every passenger going through Adelaide airport. Senator BOB COLLINS—You might be cutting your own throat, Senator. Senator SCHACHT—Let’s keep these things in balance. Mr Harris—If the ACCC was satisfied and it met the requirements of the pricing policy, which I should emphasise the government has yet finally to establish—we have a consultation document out on the pricing policy to applied airports, but it is yet to be finalised—and it managed to pass all those tests, then it could be applied. I am not sure I would be as sanguine about it passing those tests. Senator SCHACHT—My colleague has pointed out, slightly cruelly, that Adelaide has been pretty flat in passenger numbers over recent years. The demand in the airport—throughput and so on—might make Adelaide airport a less attractive proposition in the marketplace. They may actually say they will reduce the landing rate charges to get the planes to land, but then recoup from the passengers—once they get them there—some of the costs of building the infrastructure. So long as that meets the ACCC’s test in a transparent way, there is nothing in government policy to stop it occurring and they take the commercial risk whichever way they judge it. Mr Harris—That is one possible scenario. Senator BOB COLLINS—Leaving aside the aerobridges—which I agree with Senator Schacht is a clear problem at Adelaide airport—would I be correct in assuming, simply from observation, that the current airport is still acting within its capacity in passenger movements in the existing infrastructure in the domestic terminal, as I suspect it is? Mr Snelling—I believe it is. If the airlines, under the domestic terminal lease, choose to extend the terminal—and that is their call—we are obligated to provide infrastructure. In the absence of the airlines wishing to extend the domestic terminal, then they must be satisfied that it is meeting their needs. Senator SCHACHT—But will the passengers be satisfied that it is meeting their needs? Mr Snelling—It is not my call. Senator BOB COLLINS—Can I pause at this point for a commercial for the FAC—I have done this in the Senate and I will certainly do it here. I identify myself as a heretic in that I did not actually want to sell the FAC at all. I am speaking personally. I actually do believe— and I want to take an opportunity to say it—that the Federal Airports Corporation has been a textbook example of a successful public enterprise. The FAC has been very entrepreneurial—

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Tuesday, 17 September 1996 SENATE—Legislation RRA&T 15 as I know it is—between the various managements of the airports in the system; it has turned in a spectacular bottom line, if I might say so; and it has created billions of dollars worth of invaluable infrastructure. Speaking as a Territorian, you cannot overstate the benefit that those two new terminals at Alice Springs and Darwin have had. The Northern Territory has just been overwhelmed: all of it, off the budget. So I was not all that enthusiastic about selling it. But, having said that, in respect of the quite legitimate desires of the people of Adelaide for a new terminal, which is why I want the figures, the government is obviously in a position after the sale if they choose to do so—if they did they would be turning on the Northern Territory—to intervene in the process and provide a cutdown price for an airport to make the bottom line to come in. That does not apply after the sale. After the sale, from your perspective as a commercial operator—and that is what you are—the question of whether you get a new terminal at Adelaide surely will depend purely and simply on the return that an operator will assess they will get from the additional capital, depending on the projected number of passengers they will have through the terminal. Mr Snelling—That is correct, Senator. I think, from the pure operator’s point of view, the existing terminal structure of divided international and domestic could well suffice in a way. Senator BOB COLLINS—That is what I suspected. Mr Snelling—But really the reason we are doing the review is to see if an integrated terminal does make sense, does stack up financially and really is a goer. Senator BOB COLLINS—Can the committee have details, again on notice, of the so far publicly known expressions of interest in the purchase of airports in general? Can we have information as to the current state of play with any firm expressions of interest, without disclosing any commercial-in-confidence matters, any commercial interests that have been expressed in any of the airports to this point for purchase, airport by airport? I noted, I must say with some interest last week, the understandable comments of the Western Australian Minister for Transport, Mr Charlton, that the Western Australian government planned to vet candidates who wish to purchase Perth airport. I have no doubt he has as understandably keen an interest in what happens to the airport as Senator Schacht has with Adelaide, and as I have with Darwin and Alice Springs, and as Senator Crane has with Perth as well. Can you provide the committee, following that comment, with what will be the role of the state governments in the sales process itself as far as the Commonwealth is concerned? Mr Harris—Senator, I had a recollection, but it is subject to confirmation, that a spokesman for the Minister for Finance rejected as impractical the approach outlined by the Australian Minister for Transport. Obviously, it is very difficult for us to get into the kinds of issues that you are now moving towards because this department does not have control of sales process. Obviously, we would need to consult on the question that preceded this that you have asked on notice—and on this question—with the assets sales task force, and they with their minister, to obtain some kind of answer for you. But my understanding is that the approach that you outlined has been rejected. Senator BOB COLLINS—Rejected. Just from my own experience with the assets sales task force, I could not imagine them embracing it. Mr Harris—I thank you for answering the question.

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Senator BOB COLLINS—I am sure that senators here at the table realise the extreme relevance of the question that I have just asked, because I know that there is a perception well and truly abroad that, in some way, South Australians will get to protect their own patch in terms of government intervention where, of course, that would be totally at odds with a commercial tender process. So I am not surprised to hear that that process has been rejected and I am sure everyone else will be interested to hear that too. I know this is a matter for the relevant department and I will put it to them. But, in so far as you are able to assist the committee, do you know in broad terms the criteria against which the bids will be tested? Mr Harris—We have seen a proposal in relation to the sales criteria. I understand that matter will be treated as commercial-in-confidence by the parties who are involved in developing sales criteria. I do not believe the department is likely to be at liberty to provide those details. Senator BOB COLLINS—No, which is why I was fascinated to hear at least some of this detail provided in the debate in the Senate by Senator Tambling, the Parliamentary Secretary to the Minister for Transport and Regional Development when he said, in response to a question I asked him, that if you got to a situation where you had equal bids for an airport, then the government will give preference to that bid which contains better local content. I think you were in the advisers box at the time, Mr White. Mr White—Yes, Senator, I was. That comment was made in respect of Hobart and Launceston airports, and it reflected an election commitment that the government made at the time. Senator BOB COLLINS—It was not an economic or rational proposal that was being talked about then. Mr Harris—That is surely not something that you would expect Mr White to comment on, Senator. Senator BOB COLLINS—Absolutely not. I was interested by that answer. In respect of that commitment and how it is going actually to be exercised what will you assess as an equal bid—to the last $10, $1,000 or $10,000? Mr Harris—We will not assess, Senator. Senator BOB COLLINS—Who will? Mr Harris—The Minister for Finance has charge of the sales process. Senator BOB COLLINS—Oh dear. What then will constitute the definition of ‘local content’? Mr Harris—That is undoubtedly a matter that the minister will give deep consideration to. CHAIR—This is a matter for Finance. Senator BOB COLLINS—With respect and living in the real world, Mr Chair, it is joint. Mr Harris, you would not express yourself and the department of transport as being completely disinterested in the sales of the airports, would you? Mr Harris—Not completely disinterested, Senator. CHAIR—I am not suggesting that. It is a technical question, and I think it is one that should be delivered to Finance. That is all I am saying. I am not saying do not ask it. Senator BOB COLLINS—Good. Have any discussions taken place with Mr Charlton about the sale of Perth airport?

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Mr Harris—I am not aware of any discussions with Mr Charlton. Senator BOB COLLINS—Mr Snelling, whilst you are giving me the movements over the last five years in respect of Adelaide, could I have the same information in respect to the other FAC airports? I know it is readily available. If you could just take that on notice. Mr Snelling—Certainly. Senator BOB COLLINS—Could you also provide me on notice with a list of the international airlines authorised to operate in Australia in the last financial year and also the details of the international passenger and air freight capacity available in Australia over the last three years. The reason I want that—I’ll tell you now because there might be someone here who can just give me some broad detail about it—is that I noted in the budget papers there was a reference to a welcome increase, a positive movement, in this direction over the last few years. Mr Harris—I can give you some information, Senator, although we will take on notice your questions and provide you with further details. Perhaps if I can read out the following statements from our department’s annual report: During 1995-96, 21 bilateral aviation consultations were held with 18 countries... The number of international airlines authorised to operate scheduled passenger or freight services to and from Australia increased to 54. Total passenger capacity available to Australian and foreign carriers negotiated under air services arrangements increased to 31.8 million seats a year. This compares with traffic of around 13.5 million passengers. Seats negotiated increased by 150 per cent from the previous year compared with an 110 per cent increase in passengers carried. . . . Passenger charter flights increased by 18 per cent . . . and freight charter flights increased by 20 per cent. This is in the last year. It goes on further: Air services arrangements continued to facilitate inbound tourism and consumer choice, with negotiated seat entitlements exceeding seats occupied by a factor of 2.3, both in total and on the key Asia-Pacific routes. Three-quarters of Australia’s international aviation agreements are now multiple designation agreements. The liberal air freight charter policy announced by the government earlier this year is currently being implemented. I can advise you that substantial increases in dedicated freight capacity have already been provided for key markets under that policy. Senator BOB COLLINS—Thank you; that is very encouraging information. In respect of the last-minute addition of Perth to the legislation in the Senate the other day, am I correct in assuming that the government is now happy with the cross-ownership arrangements in the Airports Bill and sees no further immediate need to legislate any further changes now? Mr Harris—I am not aware of any requirements to be sought by the government on cross- ownership provisions. I am not sure that we can provide you with information to a greater extent than that. Senator BOB COLLINS—The reason I asked the question is that it was reported on Channel 10 news in Adelaide last night that the South Australian infrastructure minister, Mr Olsen, a former distinguished senator, said that South Australia will lobby Canberra over the legislation concerning Tullamarine. In relation to the answer you have just given me, is there any intention of bringing forward legislation on Tullamarine in light of the statement made last night by Mr Olsen?

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Mr Harris—None that I am aware of. Senator BOB COLLINS—Has the government received any representation—Senator Schacht asked some of these questions earlier—from the South Australian government on the cross-ownership of Adelaide and Tullamarine in respect of Mr Olsen’s statements last night? Senator Alston—Do you mean did he fax a letter in first thing this morning? Senator BOB COLLINS—Yes. Mr Harris—Not to the knowledge of the officials at the table. Senator SCHACHT—Has anyone expressed a view, as far as South Australia is concerned, that Mr Kennett might try to buy Adelaide airport? Senator BOB COLLINS—Mr Kennett might try to buy Adelaide! Senator SCHACHT—If he does, it is too late, in policy terms. Mr Harris—I cannot add anything further to the answers I have already given. Senator BOB COLLINS—What airports do the Airports Bill and Airports (Transitional) Bill relate to? Mr White—The Airports Bill and the Airports (Transitional) Bill relate to those airports currently owned and operated by the FAC. There are 22 of those. There is also reference to Sydney West airport as a development site. They are the principal airports that the bills relate to. There are some provisions in the Airports Bill which could extend to airports other than FAC airports. One of those provisions is the protection of airspace provision, which could be applied to an airport outside the FAC group. Senator BOB COLLINS—Do the bills include, for example, Adelaide airport? Is that included in the airports referred to? Mr White—Yes, they do. Senator BOB COLLINS—In that case, when the minister for infrastructure in South Australia, the former distinguished senator, Mr Olsen, said last night, as he did on Channel 10, ‘This legislation handled by the Commonwealth government has been specifically related to Sydney airport,’ he was wrong? Mr Harris—I would guess that Mr Olsen may have been referring to the public concentration on Sydney airport. Senator BOB COLLINS—So, when he was then asked by the interviewer after he made that statement, ‘Then this legislation just relates to Sydney,’ and Mr Olsen answered, ‘Correct,’ that was wrong? Mr Harris—The facts tend to support that statement. Senator BOB COLLINS—Oh, well done, Mr Harris! Can you provide the committee with advice as to when the all-important pricing regulations, which we are all interested in, for the airports will be finalised? Will this be before or after the tenders for the sale of the airports have been called? Mr Harris—The intention is to finalise the basic pricing regime fairly shortly. We plan— and I cannot give you a categorical assurance—to have that information available for the commencement of the sales process and at the time the information memorandum is put out. Obviously, bidders would have a great deal of interest in the pricing regime. We have put out, and I think you would be aware of it, a paper consulting all parties who expressed interest

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Tuesday, 17 September 1996 SENATE—Legislation RRA&T 19 in the nature of the airport process and airlines and related consumer organisations on our pricing proposals. A finalised proposal should go to the minister reasonably shortly. Senator BOB COLLINS—Can you advise the committee as to why the regulations will only apply for five years? Mr Harris—They will not necessarily only apply for a period of five years. The basic proposition is that there will be a CPI minus X cap on aeronautical charges for a period of five years. In the fourth year, the proposal is that the ACCC will review the progress that has been made on pricing matters, the opportunities that have arisen and the experience generally of the parties concerned. It will look at the possibility of developing a regime which focuses on the monopoly power that airport operators might actually achieve. The idea is—and this obviously will be reviewed so I cannot say that the ACCC will go down this path—that the ACCC will examine the value in developing a focus on those prices and charges which are substantially dependent on an airports operator’s monopoly power rather than something which simply says, ‘Here is a box of charges, here is a cap on it and other than that you can work pretty much according to commercial dictate.’ We tend to think that that will allow a settling down period for relationships that develop between airport operators and airlines and other customers at the airport and time for the ACCC to review the settling period and the development of effective behaviours between airlines and airport operators. With the benefit of that experience they will be able to recommend to the government a regime to apply after the fifth year. There is no certainty that CPI minus X will disappear after five years, but obviously the intent is to see whether we cannot come up with a more effective arrangement which focuses on that key aspect of monopoly power at airports. Senator BOB COLLINS—When does the clock start? I assume there will not be common start up? Does the five years start airport by airport? Mr Harris—It starts when each airport operator takes over a lease. Senator BOB COLLINS—So far as the legal framework that is going to underpin the price regulation is concerned, has the government taken a decision as to whether the regulations that provide for this will be disallowable instruments? Mr Harris—The intention on pricing operations at airports is to move towards the kind of regime which applies in most other parts of the economy—that is, contracts. This will not be a regulatory process. The incentive will be established under these arrangements for airport operators, airlines and other users at airports to develop contractual arrangements between the operator and customer so that the government is no longer being brought in constantly to mediate disputes between the parties. Senator BOB COLLINS—Can you provide the committee with some broad advice as to how the pricing regulation regime works in Great Britain? When I say that I mean how the British regime compares with the regime that is being proposed here in Australia. Mr White—In the UK the arrangements involve several parties. The BAA is regulated and oversighted by the Civil Aviation Authority. When there is to be a review of the arrangements that apply for a five-year period, the Monopolies and Mergers Commission undertakes that review and makes proposals which are considered by the Civil Aviation Authority. The arrangements that are in place at the moment provide for price caps to be set for a five- year period and for those price caps to be developed having regard to both the revenues

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 20 SENATE—Legislation Tuesday, 17 September 1996 and the costs of airport’s operations. In deciding on the level of the RPI minus X that will apply for a five-year period, the UK pays particular attention to the level of infrastructure investment and also has regard to such matters as the rate of return that they consider to be reasonable. All of that operates within a single till framework. The proposed arrangements in Australia are different in a number of respects. The proposals have a price cap applying to aeronautical charges, and that is to be independent of single till assessments of airport operations. That means that, if airport operators choose to continue with single till arrangements, that is their choice to be made following consultations with the major users. The government’s position is that the aeronautical charges that come out of whatever arrangements are arrived at must be within the price cap on aeronautical charges that has been agreed. So there are some significant differences in the way that the two systems work. I guess it goes without saying that we think that the arrangements proposed for here are more suited to Australian circumstances. Senator BOB COLLINS—Again in broad terms for the advice of the committee—and I know this question will be difficult to answer in the sense that it is hypothetical, but it is of some interest, I have to say, to people on the ground—what is the perception of the department and/or government at this stage as to what future role, if any, there is for the FAC in this brave new world? Mr Harris—I think that is probably a matter that we would have to get some guidance from the minister on effectively. Obviously in the current circumstances the government has three airports which it is looking to provide long-term leases over. The FAC continues, therefore, to manage all airports until the time of leasing has got a substantial contribution to make in relation to the due diligence process and the continued management of those facilities. A lot will depend on the timing of the sales process beyond that. So, as you can see, it involves matters that we would effectively have to consult with the Minister for Finance on. We can endeavour to get you some advice on that, but I have given you the best outline I think I can. Senator BOB COLLINS—Sure. I assume that was all you could say, but I would appreciate any further advice you could get for the committee. CHAIR—It is a question of policy which you would refer to the appropriate minister, is it? Senator BOB COLLINS—I am sure Senator Alston is quick enough and smart enough to do what is usually done and say that for himself. I think I might pass on to the next question while he is working it out. Still on subprogram 1.1, page 18 of the PBS states under the heading ‘Strategies’: 2. Work with competition and other economic agencies to ensure domestic airport and aviation markets (including under the new airports regulatory regime) operate consistently with consumer interests, while meeting national social and community needs. I note that this strategy is to be implemented this financial year, so I assume that there is a detailed strategy in place. Is there? Mr Harris—Senator, we were on the phone this afternoon, prior to coming up here, to the ACCC on key aspects of the nature of the pricing regime to be applied. The outline that I gave you broadly— Senator BOB COLLINS—What did Professor Fels say to you? Mr Harris—It is a very difficult matter for me to answer. I am sure an answer will be provided reasonably soon in the minister’s pricing strategy paper.

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Senator SCHACHT—You are not saying that Mr Fels is a difficult person, are you? Mr Harris—My division has an exceptionally good working relationship with the ACCC. Senator BOB COLLINS—Obviously I would be interested to have that when it is available for the committee. Mr Harris—Certainly. Senator BOB COLLINS—I would specifically like to know—and maybe you can answer this now—what agencies, apart from the competition council, are involved in this exercise. Mr Harris—The Treasury has a key role to play. The assets sales task force and their advisers have an interest in this matter. Obviously, the final policy outcome is channelled through the minister, and we have consulted cabinet on the issues that are covered here as well. So that means the range of departments that would normally be consulted in the cabinet submission. Senator BOB COLLINS—Did the Department of Transport, by the way, get a cut in running costs? Mr Bowdler—Yes, we did receive cuts in running costs in the budget. Mr Harris—But not in the ABS report. Senator BOB COLLINS—Do you appreciate that the Treasury got an across-the-board increase in running costs of 10 per cent? I just thought I would let you know if you did not know. Mr Bowdler—I did not realise it was that bad. Senator BOB COLLINS—The same amount as was said at estimates last night. Senator SCHACHT—I can assure you, Senator Bob Collins and I went down fighting to defend the rest of you against the evils of Treasury. CHAIR—Be careful, Senator Schacht. I was there too. Senator SCHACHT—I know. I thought you were on our side, Mr Harris. It is us versus Treasury, you always have to remember. CHAIR—Some things never change, governments might. Senator BOB COLLINS—What are the criteria in general terms that you would be using to assess whether or not consumer needs are fully met? Mr Harris—It is a very broad question, Senator. Can I say in the first instance that a strategy like this obviously requires direct consultation with consumer interests and, aside from the ACCC itself, we sent the paper to the consumer association for comment and received valuable input back from them. My officers have subsequently spoken to people in the consumer association. Senator BOB COLLINS—That fundamentally answers my question. I think that is all you can do really. Mr Harris—We do have a strong interest in ensuring that this turns into being a workable regime, Senator. Senator BOB COLLINS—To what extent, if any, will the parties that might be involved in purchasing the airport be involved in this process? Mr Harris—The parties that might be interested in purchasing the airport have also received copies of the draft pricing paper that we put out. If necessary, I can give you a list.

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Senator BOB COLLINS—Cutting to the chase, the reason I ask the question is that, in terms of prospects, we have already canvassed things like levies with the obvious potential impact those might have. In terms of determining what these ‘consumer social and community’—I am quoting from here—‘safeguards’ are, they could also to a minor extent potentially impact on the price when they are finally determined, couldn’t they? Mr Harris—That is quite possible. Obviously, it depends on the expectations of potential bidders for airports. But there is no doubt, Senator, that in the process of consulting bidders we have received some propositions which would not be consistent with our view of how airport pricing should be managed. Thus, if those bidders factored that in, they will presumably be factoring in different views now. Senator BOB COLLINS—Can you also provide the committee with a little bit of an expansion on point 3 of the strategy section in program 1.1 which says: Scrutinise and reassess agency and business enterprise working relationships and performance. That reads sort of like gibberish to me, but I am sure you can explain it to me. Mr Harris—Senator, that strategy is particularly in relation to our government business enterprise oversight role. The division for which I am responsible has Airservices Australia, CASA and the Federal Airports Corporation as parties to it. The key aspect behind that, that you have already alluded to, is the ongoing role of the Federal Airports Corporation in the leasing process. But there are other working relationships that require continued management and consideration and oversight, I guess. Senator BOB COLLINS—You will do the scrutinising, will you? Mr Harris—We have to take responsibility for the oversight role, Senator. Senator BOB COLLINS—All right. Under the next heading, 1.1: Outlook, the paper states: Improving consumer information on, and public confidence in, the aviation safety environment in Australia. Can you provide the committee with details of how this strategy is going to be developed and implemented? Mr Harris—I can. The basic intent behind that particular statement is that the division has been involved in consultation over a period of the last six months, or thereabouts, with airlines on the provision of information to consumers which identifies the nature of flights they are required to undertake. One particular area is code sharing. It has been of concern to us that if you are a consumer you need to know that when you buy a ticket from a particular agency you are not required to be able to interpret the flight code yourself and be able to work out what flight it is on. We are expecting that there be a level of information, in one form or another, provided to you at the point of sale. The minister is considering right now propositions to enable code sharing to be managed by airlines in a manner which ensures that their customers are a bit better informed on these issues. There is also the matter of information about the aviation safety aspects of the different levels of aircraft operator which might be providing services to passengers. That is a matter on which we have had ongoing discussions with CASA. We are attempting to develop what might be considered a simple proposition for consumers which says that these are the levels of safety you have the right to expect if you purchase a ticket on a particular operator. That is not at all an easy proposition, as you might imagine. CASA has particular interests in this process but, obviously, the department takes the interest a bit beyond CASA in terms of the

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Tuesday, 17 September 1996 SENATE—Legislation RRA&T 23 consumer information requirement. This matters flows from issues that were raised in the Plane safe report. Senator BOB COLLINS—How much has been budgeted for this exercise? Mr Harris—It is carried out in the context of the normal operations of the division. Senator BOB COLLINS—Under the same heading, the paper refers to a matter that I have got a very intense interest in as will have, I think, Senator Crane, Senator Schacht and all the rest of us. It says: Analysing location-specific pricing options for air navigation services. I can translate that into English I can tell you. It is an important issue, as you know, for regional airports and the communities that in some cases utterly rely on them. Is it possible to provide the committee, on notice, with a list of the affected airports. Mr Harris—I think that might be a little premature at this point. The affected airports obviously covered by location specific pricing would be virtually any airport of which services are provided by Air Services Australia. I say that subject to further supplementary advice from Air Services Australia. Senator BOB COLLINS—In broad terms, you could just give the committee some advice on where this analysis is at and where it is going. Mr Wolfe—I can inform you that Air Services Australia—I think you will be able to question them later—has recently put for comment a paper on location specific costing, and we can certainly make that available to the committee. Senator BOB COLLINS—One of the matters that is of obvious concern to communities, especially small communities, is the airport’s need for replacement equipment—lighting, for example—which can cost an absolute poultice. It is a matter of some concern. I think that paper will satisfy my question on that. In general terms, what are the proposals in terms of the negotiations that might take place with affected communities some way down the track? Mr Wolfe—The paper has obviously been widely distributed amongst the industry and to other interested parties, which I think you might be leading to, Senator. The intention is that it will a be a paper that certainly is distributed for widespread comment. The issues it raises are well-known ones about what is an appropriate level of service vis-a-vis what is actually required by users of those particular aerodromes. I suspect that there will be a range of comments received of that nature. Senator BOB COLLINS—Is it going to be in general terms, a similar sort of operation to the ALOP—I might say that that was a significant achievement of the transport department which is widely unacknowledged? Mr Wolfe—I think this is probably a slightly different issue because it goes to the actual nature of the services that should be provided at those locations. Various members of the aviation industry believe that a lot of those smaller aerodromes do not require the level of services they currently enjoy. Speaking to members of those particular communities— Senator BOB COLLINS—Some of those spokespeople are more prominent than others, are they not? Mr Wolfe—That is correct. There is no doubt that there is an expectation that a certain level of service will be provided. There is also the issue of the views of the Civil Aviation Safety Authority in terms of the actual level of service required to meet safety requirements. There are certainly a number of complex issues involved.

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Senator BOB COLLINS—Under the same heading there is a reference to the development of options for the introduction of demand management at Kingsford Smith. Could you tell us what that means? Mr Harris—The minister announced, I believe in June, the intention to form a couple of working groups with industry to consider options in relation to the introduction of demand management at Kingsford Smith airport. Those working groups have functioned pretty effectively over the last couple of months to the point now where papers are available within the working group context which can go back to the minister in the time frame that he foreshadowed in his press release, which, if I recall rightly, was some time in the next month or so. Those papers give an overview of the sorts of issues which might apply there and an attempt to synthesise within the industry, which might be affected by demand management, if not a single clear view an agreement on the basic nature of the points that might be involved in a demand management scheme at Sydney airport. The papers look at both what might be considered to be committee based structures for the allocation of capacity at an airport and economic instrument based structures. We have had a fairly useful level of cooperation and support from industry in the process of doing this. Senator BOB COLLINS—That is encouraging to hear. I would like to ask a few questions about the inclusion of Perth airport in the cross-ownership structure of the airports legislation. I come back to this just to throw you so that you do not get too comfortable with the line of questioning. Senator Tambling advised the Senate that the inclusion of Perth in the cross- ownership structure would not have a significant impact on the sales process. I asked him whether that was an off the top of the head assurance or whether that was based on something that he had mentioned to the task force. I know you are not involved in the task force, but do you understand on what basis the task force reached the conclusion that that matter would not have an impact on the sales process? Mr Harris—I do not think that we are privy to basis on which they determined that matter. Senator BOB COLLINS—So I would have to ask the task force that? Mr Harris—Yes. Senator BOB COLLINS—Did the government seek advice from the task force before it reintroduced the cross-ownership rules governing Sydney, Melbourne and Brisbane? Mr Harris—I certainly believe that the Minister for Finance was involved in the decision. He has the responsibility for the task force thus the consultation link is certainly there. Senator BOB COLLINS—Are you aware, in general terms, of the nature of the advice that the government received in respect of the financial impact of the cross-ownership rules in relation to the sale of those airports? Mr Harris—I am not aware of any advice. I might just ask Mr White. Senator BOB COLLINS—I think it was Senator Crane who mentioned in that debate that three—I think I am right, Senator Crane; you can correct me if I am not—consortia had expressed an interest in Perth. Are you aware of those three consortia that have expressed an interest in buying Perth airport? Mr Harris—I have myself only met with one consortium which has expressed an interest in Perth but I have not certainly met with as wide a range of consortia as Mr White has.

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Mr White—The press that I have seen has talked about three locally based consortia being interested in Perth. Senator BOB COLLINS—Mr Chairman, I have finished with subprogram 1.1. CHAIR—I just want to raise one point arising out of the questions asked by Senator Collins with regard to Mr Charlton and vetting applicants for Perth airport. I think Senator Collins was referring to a request by the Western Australian government for them to have an individual on the selection panel. I understand—and you can correct me if I am wrong—that that is being considered by the government at this present moment. Is that correct? Mr Harris—I am not aware if that is the case. I think my answer to Senator Collins said that I had seen a press report which quoted a spokesman for the minister as saying— Senator BOB COLLINS—It certainly did. Mr Harris—as saying that that approach was impractical. The only answer I can give to the committee is the information I have seen. CHAIR—Thank you. Senator ALSTON—It might be an opportunity while the officers are changing over perhaps to explore what the likely timetable will be. I see we have listed seven categories in a 3¼-hour period, and we have now covered one of those in about an hour and a half. We are largely in Senator Collins’s hands, but I think it would be helpful to the officers and those who are waiting to have some indication of whether you expect to be able to complete program 1 before the dinner break and, if not, whether you can give any indication of where we are likely to be going. Senator BOB COLLINS—Yes, Mr Chairman, I think it is unlikely that we will finish program 1 before the dinner break. I have many questions. As the minister may have noted, I am in fact progressively putting as many of them on notice as is practical to do so. But I have a number of questions on noise, as you would expect, as well as under aviation operations. In fact, I have about 100 questions on noise. I also have questions on the location of the second airport, as you would imagine I would have. I have a large number of questions. I will attempt, for the benefit of the committee and the officers, to place as many of these on notice as I can but I have a fair way to go yet, Mr Chairman. Senator Alston—Will that mean that you make a reasonable calculation that we would not get beyond subprogram 1.4 by 7.15 p.m.? Senator BOB COLLINS—Yes. Senator Alston—I can think we can let those officials who are relevant to 1.5 through to 1.7 go until at least 8.15 p.m. Senator BOB COLLINS—Mr Chairman, I have no particular advice at this stage. It is a matter for the committee and, in the first instance, for the chairman. I am always conscious— and I was in government—of the situation with the officers. These questions are all important; they are all relevant. Senator Alston—It is more a matter of it being entirely in your province to make a judgment about what is realistic and what is not. I do not think anyone else can do it. Senator BOB COLLINS—No, that is correct, Minister. I do not question that. All I am saying is that, from my experience on that side of the table—which was seven years of it—the usual procedure was that the committee decided either to box on into the wee small hours or to come back on another day. I do not ever recall a situation where the questioner was simply

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 26 SENATE—Legislation Tuesday, 17 September 1996 asked to go away. I do not think it would be appropriate or possible at this stage to indicate before the dinner break whom we do not need tonight, because I do not know what the intentions of the chairman or the minister are in terms of boxing on. Senator Alston—I was not suggesting that. People concerned with subprograms 1.5, 1.6 and 1.7 would not be required until 8.15 p.m. I was simply asking you to indicate that. Senator BOB COLLINS—Yes, that is what I am saying. I do not know what the chairman’s intentions are, Minister, nor indeed yours in respect of your availability this evening. CHAIR—Our intention, within reason, is to finish tonight if we can. We are obviously going to have to assess that. I think we should suggest to those officers concerned with subprograms 1.5 to 1.7 to take a break. If we happen to finish a bit earlier on subprogram 1.4 we can get up at 7 o’clock and come back at 8 o’clock. Do you want to have that degree of flexibility or would you prefer to keep the officers concerned with subprogram 1.5 here as well? Senator BOB COLLINS—I have questions involving the civil aviation authority, so those officers will have to stay. I did want basically to get an overview of where the International Air Services Commission was at, but there is no need to keep those officers around for that. I can put that on notice. So, as far as I am concerned, if officers of the International Air Services Commission want to go home, they can. CHAIR—For now, we will keep here the officers concerned with subprograms up to 1.4 and ask those officers concerned with subprograms 1.5 on to be back here after dinner. They will have to keep in touch with where we are at in terms of the timetable. Are you happy with that? Senator BOB COLLINS—Yes. I also have questions relating to BASI, but—and I will check this—I may be able to organise those questions to be answered without retaining the BASI officers here either. CHAIR—The only problem is that we cannot at this stage agree to have people go away and not come back, because some of the other members or participating members of the committee may come in. That is the problem we have. Senator BOB COLLINS—Correct. CHAIR—So we will proceed on the basis that those officers concerned with subprograms up to 1.4 are to stay here before dinner. Subprogram 1.2—Aviation operations Senator BOB COLLINS—Mr Merner, if you want to take these questions of detail on notice, that is fine. I want some details of the government’s noise amelioration program— always a matter of great topical interest. Can you provide the committee with details of the number of houses and buildings requiring treatment by cost, category and location? If you are in a position to provide the information quickly now, I think it would be a good idea to do so, because it saves piling up questions on notice afterwards. Mr Merner—The major elements of the program are, firstly, the insulation of houses inside the 30 ANEF year 2010 contour. As it stands at the moment, there are in the order of 4,300 to 4,400 in the area to the north of the airport. A commencement has been made on a smaller area under the line of the east-west runway flight path to the west of the airport. That involves 350 houses at this stage. That will be reviewed when the review of airspace management has been completed in December.

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In other categories there are 16 schools and two TAFE colleges being insulated. There are 21 child-care centres. There are 24 churches, or places of worship. There are nine hospitals and nursing homes currently encompassed by the contours and, finally, there are 151 residences in the area that is the subject of offers of voluntary acquisition. That is the 40 ANEF zone immediately to the north of the airport. Senator BOB COLLINS—Thank you; that is what I wanted. There appears to have been a change in the level of funding for this program; is that correct? Mr Merner—Yes, that is correct. The program has now been increased in total—this is 1996-97 prices—to $395 million. That is the full span of the program. That variation occurs as a result of two main factors, the first of which is the introduction of an initial program of insulation in relation to the east-west runway, for which a notional provision has been made at this stage. Secondly, there has been an adjustment to the previous estimates to reflect the cost of residential insulation, which, since the last budget, has gone into the marketplace and the adjustment has been made to reflect the actual costs which are emerging from the tendering of the insulation of residences. So they are the two principal reasons for the increase in the all-up scale of the program. Senator BOB COLLINS—Thank you. Mr Merner, you may have just mentioned this but can you just remind me of the actual level of noise that attracts assistance under this program at Sydney? Mr Merner—It is based on the location of buildings within ANEF contours. Of course, the ANEF contours represent a way of describing aggregate noise, a composite of individual overflight noise, numbers of occurrence plus the time of day—there is a weighting for night- time flights. The voluntary acquisition program is based on the 40 ANEF contour calculated for the year 2010. Residential insulation eligibility is based on the 30 ANEF contour again for the year 2010. The balance of eligible public buildings—that is, schools, child-care centres, health facilities, places of worship—are all based on the 25 ANEF contour based on the ultimate capacity of the airport. Senator BOB COLLINS—Mr Merner, can you advise the committee as to the current position of the government on the issue of noise amelioration measures at airports other than Sydney? Mr Merner—There is no provision in the budget for noise amelioration at airports other than Sydney. Senator BOB COLLINS—Minister, I am happy for you to take this question if you wish: is any consideration currently being given by the government, or is it proposed that consideration will be given, to the issue of noise amelioration at airports other than Sydney? Mr Merner—The government has not stated any intention to do that at this point, but that is obviously a matter that the minister would consider. Senator BOB COLLINS—I place that question on notice—that the minister indicates to the committee whether he has any intention. Thank you. Have there been any substantial requests, not just an occasional letter, from particularly organisations, peak groups, affected communities, local authorities or state governments, for example, in relation to noise impacts at airports other than Sydney? Mr Merner—The issue is raised from time to time, but perhaps more in the context of local airport environment committees. I am not aware of any substantial volume of representations on that issue.

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Senator BOB COLLINS—Can you provide the committee with advice as to the extent of the expansion of the program to cover the east-west runway? Mr Merner—The government gave an undertaking pre-election that the program was to be expanded to encompass areas under the east-west runway flight path as a consequence of the increased usage of the east-west runway. The extent to which the east-west runway will be used in the longer term is a matter that is under review in a review of airport operations and associated airspace management that the minister has requested Airservices Australia to undertake. It will report by 16 December. Senator BOB COLLINS—The government has given a firm commitment, has it not, that the east-west runway will be reopened? Mr Merner—Yes, and it is happening, but the extent to which that will occur in the longer term is a matter for consideration in the context of that review. At the end of that review—it is due to report to the minister by 6 December—we will be in a position to have a look at the contours reflecting what that long-term level of usage is. At that point, we will be in a better position to determine the full extent of the areas under the east-west runway flight path. What the government has done in this budget is commence work on an area that is immediately adjacent to the airport and directly under the flight path. It encompasses about 350 homes at the western end. It has done this on the basis that there is little doubt that they will qualify for assistance in the longer term. Senator BOB COLLINS—I have got just a few questions for BASI. Could we interrupt this subprogram and have 10 minutes with BASI and then come back to this later? That would mean that the BASI officers could leave at 7.15 p.m. CHAIR—I am quite happy to agree to that provided it is understood that if some of your colleagues come in and we have altered the flow of the program— Senator BOB COLLINS—That is out of my hands. Senator Alston—It is a good idea if you get in before they arrive. Subprogram 1.3—Investigating for Safety Senator BOB COLLINS—Because of the pro-active role of investigating for air safety and the important role that plays in preventing future accidents, what impact have cuts to running costs to BASI had on these operations? Dr Lee—Mr Chairman, I can answer that. As a result of the various inquiries last year, the Bureau of Air Safety Investigations was given some additional funding which enabled us to recruit some additional staff to handle the workload arising from more complicated systemic investigations together with the demands on the bureau of the legal aspects of our work, our coronial inquiries and so on. We were able to take on a number of extra staff to do this. The reduction in running costs that we have had this year will not affect our operations because last financial year we had a large one-off expenditure in computing and we have made some other changes in the way that, for example, our information technology support is handled. So there will not be any need to reduce our investigation resources in that capacity at all. Senator BOB COLLINS—Good. I am testing my memory here. Dr Lee, there was a proposal that there be a formal MOU, wasn’t there, between BASI and CASA and Airservices? Could someone tell me where that is at. Dr Lee—Yes, Senator Collins. A memorandum of understanding with both CASA and Airservices was signed around the end of last year and the beginning of this year. We have a working agreement with both agencies now.

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Senator BOB COLLINS—Under the heading, Outlook, in the budget papers, the paper states that: Upgrading the Bureau’s analysis capacity into aviation safety Can you provide some detail of how the bureau intends to do that? Dr Lee—There are a number of dimensions to that. We have a fairly large computerised database on which we have information on accidents and incidents going back to the late 1960s. However, as the world has changed and people have started looking at accidents and incidents in a more comprehensive fashion to address the underlying factors in the reorganisation as well as what happens in, say, the cockpit or the control tower, there has been a need to upgrade the capability of the information system to support that kind of analysis. What we have done most recently, and we are still in the process of doing it although it is just about completed, is to restructure the way we look at, for example, incidents so as not only to record what happened in terms of the facts of the matter but also to look at what defences in the system have failed, enabling that incident to take place. We have a new computer program, which had been used on our existing system, so that when—what we call category five—the lesser categories of incidents are recorded, we also add some value to that by addressing those systemic issues as part of the investigation of those kinds of incidents. That goes into the database and in aggregate we are able to look at a whole range of issues which we simply did not have that information recorded on before. We are also working in very close partnership with the industry on a number of projects which are listed in our annual report on human factors in aircraft maintenance, safety issues of advanced technology aircraft where we are working with the Orient Airlines Association, which has the 16 biggest carriers coming into Australia. We have a project underway at the moment looking at human factor issues in advanced technology aircraft and we have the cooperation of those companies. We have already received well over a thousand responses to our questionnaire survey of human error factors in advanced technology aircraft. On the regional airlines side, we have upgraded our work there. We are working very closely with Kendall Airlines in developing a prototype pro-active safety program for a regional airline. That project is very well advanced. We have had nothing but cooperation from the company and we have had one of our own people working with the company in developing the program which is trying to identify weaknesses in their systems which, if they are not corrected, could lead to accidents. That is involving operational cabin crew, flight crew, maintenance people and so on. That is very well advanced. We have also started issuing a newsletter to regional airlines as well to try and increase the flow of communication between ourselves and that area of the industry which, as you know, has been a major area of concern. We have issued our first regional airlines safety newsletter. That coupled with a survey which we are doing of regional airline personnel, which is going out, is also increasing our capability to try and get a handle on what really is happening out there. Senator BOB COLLINS—Is that a cost recovery exercise, or are you just doing that from within your budget? Dr Lee—We are doing that as part of our normal running costs and absorbing that. Senator BOB COLLINS—I can get details of incidences and so on from the annual report, so I will not bother you with that now. I just wanted to ask in conclusion some general questions about those incidents—and I must say that I am delighted to hear the initiatives in

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 30 SENATE—Legislation Tuesday, 17 September 1996 respect of regional airlines. Has there been any discernible pattern in the frequency of accidents, particularly in the light aircraft area, which I know is still a continuing problem and always will be, that is of concern to BASI in terms of action that needs to be taken? Again, rather than asking detailed questions, Dr Lee, can you to tell me what the major safety issues are that are of concern to BASI at the moment and that you as an organisation consider need further attention paid to by the airlines, regulatory authorities and whomever? Dr Lee—I think the issues that we see are of major concern are the sorts of things we raise in our proactive safety programs. They cover things like human factors, aircraft maintenance and regional airlines. Within the airlines, the bureau is a technical adviser to flight operations and the safety working group of the Orient Airlines Association. Through that and the safety committee of IATA, the International Air Transport Association, we have a window into the key issues of concern within the industry. I may take it in two areas. First of all, in the regular public transport area—the higher level end of the market, if you like—areas of concern to us relate to I guess the kinds of pressures, not only commercial pressures but resource pressures, that are on companies which may in fact manifest themselves in problems in the cockpit, in the flight line. Through the safety committee of IATA, we have become aware of a number of issues which are basically being addressed in our own projects—for example, with advanced technology aircraft, how they interact with the existing air traffic control system, how pilots function with one level of technology in the cockpit and perhaps another level of technology outside and those kinds of areas. Our confidential program is bringing us a fairly rich mine of information on those sorts of issues, including fatigue and judgment being possibly clouded by commercial pressures, right from the top end of the market down to the middle area. Within the general aviation industry, I am on record as saying I guess on a number of occasions there are really no new causes of accidents. The pattern in Australia—that is, most of our accidents in that area—has been fairly static for a number of years now. We do not need to keep investigating accidents to find out the same old factors are coming up—pilot judgment, poor pre-flight planning, decision making. Those kinds of things are major issues for us. Senator BOB COLLINS—Before you go past that, Dr Lee, because this is a perennial problem, can you tell me what is happening, if anything, in respect of private pilot training in particular to even attempt to deal with those problems? Dr Lee—That is something you might like to address to CASA. There has been a review of the flying training industry within Australia with the cooperation of quite a number of people within the industry. I guess the main area of concern to us is to try to disseminate information in a more effective fashion to the GA industry. To that end, we have started working with agencies like AOPA, the Aircraft Owners and Pilots Association, to publish more of our safety information in their own magazines as well as in our own material to get at the general aviation sector I guess with more immediacy. We are participating in flight safety forums and education programs within the GA industry, and of course talking to CASA and making recommendations arising from our investigations and from our safety analysis work, to try to promote, for example, crew resource management training within the general aviation industry and promote a better awareness of things like human factors within the GA industry. We are well aware of changes to regulations overseas which are increasing the level of knowledge of human factors required by, for example, private pilots in their training.

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The Australian aviation underwriters pool—the insurance industry—is also working on the GA safety side, and there are proposals to set up an Australian flight safety foundation which we have supported. The insurance industry is running some course for general aviation pilots as well. It is a strategy in the GA sector to try to increase the level of education and also the standard of training to bring in new areas which have not been there before but which keep on showing up year after year. Senator BOB COLLINS—I have only two questions remaining on two specific items. I want to ask about an issue that was given some publicity recently. I know it is not specifically your area, Dr Lee—and I will be asking CASA about it later—but I would like to know whether BASI had any involvement in it. A press report referred to the huge backlog of paperwork that Qantas had in respect of its engineering and maintenance. Even accepting the fact, as I did, that you would always expect some sort of backlog with these things, the level of backlog that was reported seemed a bit startling—particularly for an airline of that reputation. Did BASI have any involvement at all in that issue? Dr Lee—We have no involvement in that. That is a question to put to CASA. Senator BOB COLLINS—Fine. My last question is about the highly charged—as it turned out—question of ELTs and what sort should be fitted, whether fixed to the aircraft or portable at the discretion of the pilot. I will be asking CASA a whole raft of questions about that later. Did BASI have any formal view to express—I would hope they did—considering the impact this has on search and rescue and the safety of the people involved and, I might also say, the practical questions of the costs involved in search and rescue? Dr Lee—If I can answer that this way: we have increased the level of information we collect routinely on ELTs and have included that in our preliminary reports, so we are providing the information. As you know, there have been incidents where ELTs have been shielded by bits of the wreckage and the satellite has not received the signal and so on. We have been providing that information to CASA and to AOPA, which has also asked for the same information. Again, the problem is that there are not enough accidents to give you a statistical trend— Senator BOB COLLINS—Oh, dear! Dr Lee—Which is a very fine thing, but often you find that there may be specific circumstances where it is a bit like the old seat belt argument: sometimes it may be better to be thrown out; other times it is better to stay with the car. Senator BOB COLLINS—Most times it is better to stay with the car. Dr Lee—The probability may be in one direction, but we simply do not have the data. We have been fishing it out case by case and then supplying that information to CASA. Senator BOB COLLINS—Accepting that there is no perfect system—they all have their problems—BASI does not have at this point, purely from an air safety point of view, a conclusive position on which would be better fitted. Dr Lee—Again, it gets back to what evidence there is available. On a purely personal view, I would prefer to carry both. Senator BOB COLLINS—I would have thought belt and braces would have been the ideal arrangement. CHAIR—I thank the officers from program 1.3

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Subprogram 1.2—Aviation Operations Senator BOB COLLINS—Under the previous arrangements in respect of noise and amelioration of noise, I understood there was a framework where houses requiring significant expenditure—there was a bit to be treated—would be referred by DAS to the department of transport for consideration by the minister for transport. Is that correct? Mr Merner—The question of eligibility was set down in ministerial directions made by the previous minister. They set down eligibility criteria and entitlements. The only issue where there was to be a question of reference was if a householder wanted to appeal a technical decision made by the Department of Administrative Services. It was not a question of appealing something that fell outside the policy but, if they wanted to appeal it, a technical decision would have been made. There was to be reference to a panel. Those were the arrangements that previously applied under the ministerial directions made by Minister Brereton about 12 months ago. Senator BOB COLLINS—Thank you. Has there been any change in the arrangements since the previous government? Mr Merner—In relation to eligibility for housing insulation, the previous ministerial directions set down a limit of $45,000 as being the normal maximum for value of works to which a householder would be entitled. There was provision in the ministerial directions for that amount to be exceeded to the extent that it was necessary to insulate all inhabited bedrooms and two living rooms, but not the totality of the house. It was not envisaged that that would come into play very frequently. Review by the government and initial experience in relation to the administration of the scheme has led to a change whereby the $45,000 is an absolute limit. It became apparent that there would be some— Senator BOB COLLINS—Why did that happen? Mr Merner—I think it is fair to say that there were concerns that the notion of determining normally occupied bedrooms was somewhat problematic. Senator BOB COLLINS—How? Mr Merner—So in terms of making the administration cleaner, the $45,000 now applies on an absolute basis. Senator BOB COLLINS—Mr Merner, are you aware of the number of houses that actually exceeded the $45,000? Mr Merner—Yes. Senator BOB COLLINS—What were they? What was the amount? Mr Merner—I might ask Mr Warren. I will take it. I will get the precise amount. That certainly is a fact— Senator BOB COLLINS—Fine, if you could take that on notice. A weatherboard house was insulated during the pilot study at 63 Clarendon Road, Stanmore. This is not one of my questions, Mr Merner, I have to tell you. Mr Merner—I think I visited it, Senator Collins, as I recall. Senator BOB COLLINS—Oh, did you? How close did this house come to meeting the noise reduction standards set out in Australian standard 2021? Mr Merner—We will take that on notice, Senator. Senator BOB COLLINS—I thought you might. Can you include the overall cost?

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Mr Merner—Yes. Senator Bob COLLINS—I have been advised that other options were considered for the insulation of weatherboard houses, including a scheme of buying them as difficult houses to insulate, insulating them and then reselling them. Is that so? Mr Merner—It is an option that has been considered but the government has chosen not to take it up, as indeed the previous government had not taken that up. Senator BOB COLLINS—In respect of this next question also, Mr Merner, do you wish to take the easy option on this one? Please do. I understand that a semi-detached house at 59 George St, Sydenham—I have not been to that house, unlike you, Senator—remains uninsulated, while the adjourning house, No. 57, which is identical, has in fact been insulated. Are you right across the details of this, Mr Merner? Mr Merner—I am partially across them, but I think it is best if I take it on notice, Senator. Senator BOB COLLINS—All right. Can you provide the committee with advice as to the cost of insulating No. 57 and provide us with advice about when No. 59 will be insulated? Mr Merner—Yes. Senator BOB COLLINS—Can you provide the committee with advice as to how much revenue is expected to be raised from the aircraft noise levy in 1996-97, 1997-98, 1998-99 and 1999-2000? Mr Merner—It is $37 million for this year, but we will take the rest on notice. Senator BOB COLLINS—Thank you, Mr Merner. Senator FORSHAW—Can I just jump in on Senator Bob Collins’s questions about insulation? Mr Merner—Yes. Senator FORSHAW—I recall that at least during the Senate inquiry, there were some concerns raised regarding the suitability of the insulation material that was being used in the pilot study. Firstly, could you comment about those concerns? Has that problem, if there was problem and I am not sure there was, been resolved? Mr Merner—My recollection, Senator, was that at about that time there was an issue in relation to the safety of— Senator FORSHAW—It was alleged that it could catch on fire. Mr Merner—Correct. That issue has been subsequently laid to rest. The Department of Administrative Services commissioned a range of tests under simulated conditions conducted by the CSIRO, as I recall it. The results of those tests concluded that the combination of materials being used in the ceiling insulation was safe. Senator FORSHAW—Yes, I seem to recall it. The tests were conducted about the time the Senate committee was inquiring into this. I do recall it was one of those issues that I do not think we had a final answer to. But you are saying that that is okay. The other issue is in respect of the airconditioning units. There were some issues raised. I cannot remember the street name of the houses. Senator Bob Collins might have it written down somewhere. Particularly in the older houses, the units were noisy, unsightly, et cetera. I am sure you are aware of these issues. Can you comment upon what came out of the pilot study in that regard and whether or not you are still getting those sorts of complaints?

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Mr Warren—Yes, there are still complaints about the noisiness of the airconditioning units, Senator. But more recent developments have seen about 90 per cent of the units being installed in attics where the noise is not a problem. The NSW EPA has assessed the external noise for units located in backyard areas in relation to the adjourning neighbours, and it is determined that there should be no noise problems from the units that are being installed in terms of state requirements. Senator BOB COLLINS—They would not want to live in Darwin. They would be in dead trouble. Senator FORSHAW—One other question: you mentioned the $45,000 limit. My vivid recollection is of visiting a couple of houses, one of which was in excess of 100 years old, and others of which—we may not have inspected them in that study—had stained-glass windows or particular architectural features which clearly posed design problems which could be quite expensive to fix. In the light of your comment, I am wondering whether or not that issue still remains, where you have a house which, because of its particular design and features, could exceed that limit and those people would not be able to get the full benefit because of the limit imposed. Are you happy that that is sufficient to cover all circumstances? I suppose that is the question. Mr Merner—No. I think we would have to say that we recognise that there are houses, as I have indicated to Senator Collins, that are already known to be a difficulty in relation to that $45,000 limit, and it would be unrealistic of us to suggest that it will not arise again as the program progresses. The issue has been considered by the government in the context of the current budget. There has been recognition that the average cost of insulating a house is considerably more than what had been envisaged at the commencement of the program, but the government has taken the view that $45,000 should be the limit on its contribution. That leaves the householder with the option of insulating and making a contribution to a cost that is in excess of $45,000 or having the Department of Administrative Services come in and look at how $45,000 can be most effectively spent in that house. In a couple of cases— certainly one, and I think there are others that may be in contemplation by people—there is the possibility that, if they wanted to rebuild in that particular location, there would be a contribution of $45,000 towards some reconstruction. It is not a commonly adopted option but it is available, and some people have shown interest in that. So they are the three possibilities. Senator FORSHAW—I have two other questions on this issue of noise amelioration. CHAIR—May I interrupt? Minister, we have just established between us that we have only one question, and that is from me, on subprogram 1.4. I can put that question on notice. If I do it now, then the officers for 1.4 can leave. There is no need to call them up. The question is: has the International Air Services Commission allocated air rights to Australian airlines other than Qantas and Ansett? If so, to which carriers and on which routes? I put that on notice so that the officers for 1.4 can be excused. Thank you. Senator FORSHAW—I think you may have already had a a series of questions from Senator Collins in respect to the noise abatement program as it might apply with respect to houses under the east-west flight path since it has been opened—I am not sure what the flight path is any more. It is everywhere. How many houses were you talking about? Where is the program at in respect to assessing those houses and commencing work? I apologise if it has already been asked, but I have been in another committee meeting.

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Mr Merner—A start will be made on the program in this financial year. I think I indicated in an answer to an earlier question that it will not be possible to define the total eligibility area until the review of airspace management has been completed. For present purposes, in this particular year, there is a block of 350 houses that has been defined to enable a start to be made. Those houses are in Banksia in the area closest to and most directly under the direct flight path of the western end of the east-west runway. That program has effectively commenced as of the budget announcement and letters of invitation to participate in the program have been sent to the first batch of people in that area. They are invited by the Department of Administrative Services in for a briefing program and then, if people are interested in proceeding, a team from the Department of Administrative Services will visit the houses and define the requirements for the houses. It is in the very early stages at this point. Senator FORSHAW—Thank you. My concern ultimately is that, if we have too much of this equitable distribution of aircraft noise over Sydney, I think you will be insulating every house. Senator BOB COLLINS—I have had a number of phone calls from people in Sydney demanding their fair share of the noise and wanting to know why it is not being provided! Senator FORSHAW—From Bundeena to a few Liberal electorates on the North Shore! In very recent days, the minister has announced that the new runway, commonly known as the third runway, would now be utilised for take-offs to the north— Senator BOB COLLINS—And the east. Senator FORSHAW—That is right. What implications does that have for new areas that otherwise were not within the footprint, the ANEF band, whatever we want to talk about in terms of qualifying for the noise amelioration policy? Had you looked at this before the announcement was made? Mr Merner—As part of a broader picture, I think it is fair to say, what we would propose to do would be to reassess the situation when the report by Airservices Australia on the reconfiguration of airport usage and flight paths, which is due with the minister on 16 December, has been considered by the government and decisions are taken on a longer term set of operating arrangements with the airport, and at that point we will review the contours. Senator BOB COLLINS—Is it going to lead to a discount at the penthouse suite at the Airport Sheraton? Senator FORSHAW—But you would anticipate that it could broaden the area that may qualify. Mr Merner—What we have done is that small area in Banksia. We would anticipate would be exceeded at the western end and there would be houses and public buildings included at the eastern end when we redo the contours on the basis of the expected long-term pattern of usage of the east-west runway. Senator BOB COLLINS—If the levy that is collected turns out to be greater than the amount of money required to provide the insulation, what is it proposed to do with the excess money? Mr Merner—My recollection is that the legislation provides that, once the money to offset the cost of the program at the airport has been reached, the tax ceases to apply. Senator BOB COLLINS—At that point.

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Mr Merner—Yes. Senator FORSHAW—We may not know the answer to that because the program seems to be extending somewhat as we come up with new approvals for flight path arrangements. Mr Merner—That we will have to look at. We have made a notional provision for a larger program under the east-west runway and, taking that into account, the estimate at the moment is that the cost would be recovered over somewhere between 11 and 12 years at the current rate of tax. Senator BOB COLLINS—This is all to provide an equitable distribution of insulation to go along with the equitable distribution of noise, presumably. Mr Merner—It is certainly to assist the people who are worst affected. Senator BOB COLLINS—I understand there are going to be random noise audits conducted on houses in the insulation zone. Can you tell me if that has started already? Mr Merner—Yes, that has commenced. The intention and I understand the practice is to take before and after measurements of 10 per cent of the houses that are being insulated. We will review that as we go along. Senator BOB COLLINS—Have you got any results back as yet? Mr Merner—Yes, we have got some results. Senator BOB COLLINS—Are you in a position to provide detail of that on notice to the committee? Mr Merner—Yes, we can. Senator BOB COLLINS—In a general sense, Mr Merner, and I do not want you to go into the detail now, but are you in a position to tell the committee now just how effective these early testing results have indicated the insulation is? Mr Merner—Early days and pretty broad brush, but I suppose two things: a variation between houses through a significant range; an average attenuation improvement of about nine to 10 DbAs, which again, put very broadly, is an effective halving of the noise. Senator BOB COLLINS—Are you in a position to provide the committee with details of the expenditure for the Sydney airport community forum and in particular the details of all payments made for travel and hospitality? Mr Merner—Yes, on notice. Senator BOB COLLINS—Thank you. We have received a number of complaints from residents and community groups from areas around KSA who require information. The general nature of the complaints is they find it impossible to get it. Are you in a position to comment on that? Have you received similar complaints? Mr Merner—That is pretty general—I am in some difficulty commenting on that without knowing exactly what sort of information they are looking for and from whom, Senator. Senator BOB COLLINS—I am happy for you to take all this on notice, Mr Merner. People were complaining about their inability to get weather information on a daily basis—and you would realise the significance of this—and arrival and departure information for jets and non- jet aircraft. The wind, of course, was the principal piece of information they wanted as it related to the actual patterns of arrival and departure at the airport and what runways the aircraft were using. I just want to know what general arrangement there is for the provision

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Tuesday, 17 September 1996 SENATE—Legislation RRA&T 37 of information for residents living around the airport who do request information of this type and what is available? Mr Merner—Can I suggest to you that that is rather more an issue for Airservices Australia. Senator BOB COLLINS—You can suggest that to me, Mr Merner. I will ask them. And they cannot go home! There was financial support provided previously, as you know, to community groups to assist in their representation on the third runway EIS process. Are you aware of why financial support has been denied to such groups in participating in the Sydney air traffic management task force to develop the long-term operating plan for Sydney airport? Was that a government decision? Mr Merner—I have to say that, personally, I am not aware of that issue being raised with government. That is not to say it has not been, but I am not personally aware of it. Senator BOB COLLINS—Mr Merner, I am happy for that question to be taken by the minister or yourself on notice. Have any financial provisions been made for the changed noise management plans that will result in the new traffic management regime that will flow from the work of the task force? Mr Merner—That question probably refers to the insulation program, does it? Senator BOB COLLINS—Correct. Mr Merner—I think I have covered that in my earlier answer in saying that the contours will be reviewed when decisions have been taken on the outcome of that work. Senator BOB COLLINS—Thanks. I have a number of other questions for Airservices Australia on air traffic controllers, and so on, in terms of these new arrangements, which I will save until then. Can you tell me the status currently of the Commonwealth’s claim for legal expenses as a result of Marrickville Council’s challenge to the construction of the third runway? Do you know where that is at? Mr Merner—The case related to the initial operation of the third runway. The council sought an interlocutory injunction, which was not successful, in that application to the court. There is a substantive issue still to be taken by the court— Senator Alston—They would not determine costs until the proceedings are completed, I think. Mr Merner—If I could just add to what the minister has indicated, the Australian government solicitor has written to the solicitors for the Marrickville Council with a proposition that the case be dropped and that costs be awarded to the Commonwealth. I am not aware of a response from the council’s solicitors. Senator BOB COLLINS—When you say ‘awarded to the Commonwealth’, you mean Marrickville paying the costs? Mr Merner—Correct. Senator Alston—We should not be canvassing what I would presume to be without prejudice negotiations. Senator BOB COLLINS—Sounds like a good deal for the Commonwealth. Thank you, Mr Merner. I have a number of questions, Mr Merner, on the second Sydney airport and the whole question of the location and so on of Sydney and Sydney West. Is it appropriate that I direct these to—

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Senator Alston—Dr Milloy will assist. Senator BOB COLLINS—The government has made a decision to defer the sale of Sydney and Sydney West. Has the government sought or received advice as to the financial impact, if any, of delaying these sales? Mr Merner—I cannot answer that. Perhaps we should take that on notice. Senator BOB COLLINS—The program statement indicates a reduction of around $73.6 million in expenditure on Sydney’s second airport in 1996-97 but the statement says there is $21 million to cover both the environment and other studies at Holsworthy and Badgerys Creek and land acquisition and site management at Badgerys Creek. Budget statement No. 1 states that the effect of the EIS on the 1996-97 outlays is a reduction of $23.6 million. I just wonder if you could explain that? Mr Merner—If I could explain it in broad terms, essentially the difference is that the previous forward estimate contained a provision for work on the airport. That is not included in the 1996-97 estimate as it now stands. That estimate encompasses the costs of the EIS and related studies, a continuation of land acquisition at Badgerys Creek and some site management costs. Senator FORSHAW—You said ‘continuation of land acquisition’? Mr Merner—At Badgerys Creek, yes. Senator BOB COLLINS—Again in broad terms, how will that money be spent at both locations? Mr Merner—As I say, there is a provision of $12 million that will encompass the environmental impact assessment, a planning and design study which will embrace both airports and a financial feasibility study that was announced by the government. Senator BOB COLLINS—What about land acquisition? Mr Merner—Land acquisition is purely Badgerys Creek. Senator BOB COLLINS—That is right. Mr Merner—There are two elements of it. Firstly, there is a provision of $4.1 million to cover expected settlements on properties which have been acquired but where negotiations on compensation are still proceeding, and there is a further provision of $3.9 million to enable a continuation of the offer of voluntary acquisition to properties outside the airport site but within the 35 ANEF contour, and that is a continuation of an arrangement. Senator BOB COLLINS—Again in broad terms, Mr Merner, where currently is the land acquisition program at Badgerys Creek at? Mr Merner—All of the properties on the airport site have been acquired. As I say, there are 11 properties where there are still negotiations proceeding on the compensation. Senator BOB COLLINS—What eventually happened with the dairy, by the way, and the bit at the end? Do you know that? Mr Milczarek—The settlement of that compensation claim is currently still before the courts. It is an ongoing matter. Senator BOB COLLINS—I thought it might have been. Is there any sort of light at the end of that particular tunnel? No?

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Mr Milczarek—It seems to be fairly distant. There are quite a number of issues that need to be resolved. We have had judgments by a judge on the issue. There have been appeals against that and it is ongoing. Senator BOB COLLINS—It is still before the courts, is it? Mr Milczarek—It is still before the courts. Senator FORSHAW—I will ask you a related question. Of the $73 million that was in the forward estimates and that has now been removed, how much was earmarked for land acquisition? Mr Merner—I think the answer to that is none, Senator. Senator FORSHAW—I thought you said earlier that it encompassed a range of matters including land acquisition but there was no longer— Mr Merner—I think I made the comment that the $21 million encompassed a range of matters including land acquisition, but perhaps I will ask Dr Milloy to elaborate on that. Dr Milloy—The forward estimate in the previous budget for this year was $87.344 million. Of that, $8.15 million was allocated to second Sydney airport land acquisition and works. Senator FORSHAW—And that is still there? Dr Milloy—That program is continuing, yes. Senator FORSHAW—To borrow Senator Collins’s phrase in broad terms, can you give us an estimate of the value of the site, including the land that has been acquired? I appreciate that there may be a range of methods of valuation, but let us say it was to be sold off for housing estate development. How much is it worth? Do you know, or do you have an estimate of that? Mr Milczarek—We have not had a recent valuation of the site for alternative uses. The only valuation we have had is as an airport site. Senator FORSHAW—Do you think it would be a good idea to get one done? Dr Milloy—That issue would be picked up in the financial feasibility study which we are undertaking and partly with the EIS process and the planning and design work. Senator FORSHAW—Who actually purchases the land? Dr Milloy—The Commonwealth purchased it. Senator FORSHAW—Yes, but under what particular entity? Mr Milczarek—The last batch of acquisitions was on a compulsory basis under the Commonwealth Lands Acquisition Act. The administration of that on a day-to-day basis is carried out by the Australian Property Group of the Department of Administrative Services. Senator BOB COLLINS—Mr Merner, I want to ask about the opening of the east-west runway at Sydney airport and specifically, of course, take-offs to the north, which were specifically excluded from the original EIS. Was it the department of transport that sought the exemption from the EIS process from the Minister for the Environment? Mr Merner—I should know this but I do not. Senator BOB COLLINS—There was an exemption. Mr Merner—The third runway, I am sorry. Senator BOB COLLINS—There was an exemption given, as I understand it, from the need to carry out an EIS.

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Mr Merner—Yes. Senator BOB COLLINS—That is something that I have to say, on the face of it, puzzled me as someone familiar with the original EIS, which cost, I think, $7 million, and which specifically excluded these operations. Only a fool would argue with a straight face that these changes to the original terms of reference do not have a significant impact in varying the effect of these operations on the residents of Sydney. Who was it that sought the exemption from the EIS process? Mr Merner—The minister sought the exemption. The Minister for Transport and Regional Development sought the exemption. Senator BOB COLLINS—It was not the department. You would not have done anything as crass as that, would you, Mr Merner? Mr Merner—I do not think it is fair to draw that distinction, Senator. Senator BOB COLLINS—Oh I see— Mr Merner—But can I say— Senator BOB COLLINS—But in a formal sense—that was the question. In a formal sense, Mr Merner, it was the minister that sought the exemption from the EIS, not the department? Mr Merner—That is correct, yes. Senator BOB COLLINS—Thereby saving countless millions of dollars of course. Mr Merner—I think it should be indicated that an assessment was done in so far as the minister previously requested Airservices Australia by way of direction to examine the feasibility of take-offs to the north from the new runway, with easterly turns— Senator BOB COLLINS—Perfectly feasible— Senator FORSHAW—But that is not in the EIS. Mr Merner—No, it is not in the EIS, that is quite correct. Senator BOB COLLINS—That was simply an inquiry as to whether, if aircraft were pointed north instead of south and went down the runway with their engines at full power, they could get across the top of the Airport Sheraton. And it is technically possible, there is no question about it. Mr Merner—The report that Airservices Australia did prepare did examine the noise impact of the operation of the runway in that mode. It is not as if the question of noise impacts has not been looked at. Senator BOB COLLINS—Was it considered? Mr Merner—No. Senator BOB COLLINS—Heaven forbid. And that was a ‘No correspondence will be entered into’ arrangement, wasn’t it. Air Services Australia just did that. They did not call for any submissions, or a public inquiry? Mr Merner—No. Senator BOB COLLINS—In other words, the entire requirements of the Commonwealth government’s environmental law were met by a single piece of paper, basically. Mr Merner—By a report— Senator BOB COLLINS—Sorry, several pieces of paper.

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Mr Merner—Yes. The basis on which the exemption was sought has been made publicly available by the minister in conjunction with his media release. Senator BOB COLLINS—Yes, after the event. Mr Merner—Yes. Senator BOB COLLINS—Yes. Are you aware as to whether the government is proposing to seek any further exemptions from completing EISs in respect of any major developments in the aviation sector? Mr Merner—I am not aware of any such intentions. Senator BOB COLLINS—Thank you. When you were talking about land acquisition at Badgerys Creek, you indicated that the acquisition program was complete on the site itself. Did you give advice as to whether the total acquisition program was complete? Mr Merner—Yes. There are claims to be settled. Senator BOB COLLINS—Right. I am sorry. That is what you said. Thank you. What will be the cost of site management of Badgerys Creek this financial year? Looking after the place? Mr Merner—About $1 million. Senator BOB COLLINS—$1 million. The Minister for Transport and Regional Development said that if Holsworthy was to be the site for the second Sydney airport, it would be mainly semi-rural areas that would be affected. Was that based on any advice from the department that can be made available to the committee? Minister Sharp said that, if Holsworthy was selected, rather than Badgerys Creek, as the site of the second Sydney Airport, and I quote, ‘It would be mainly semi-rural areas that would be affected by that decision.’ What I am asking you is ‘Was that statement by the Minister based on advice provided to him by the department that can be made available to the committee?’ Mr Merner—I have to say I do not recall the precise context of such a statement. Obviously from that I am unable to identify any basis of advice from the department on the use of that phraseology. I would need to understand the context in which the minister uses those— Senator BOB COLLINS—I thought it was a blindingly stupid statement so, on the basis of that advice, you would probably be best to say that it was not based on any advice that the department provided. Senator Alston—He just said he is not even aware of the statement being made. Senator BOB COLLINS—The statement was made. Senator Alston—But he is saying he does not know. Senator BOB COLLINS—Minister, I do not know why you are having an argument. That is a perfectly satisfactory answer as far as I am concerned. CHAIR—Can you source us? Senator BOB COLLINS—Yes, the federal minister for transport. CHAIR—Yes, but where or when? Senator FORSHAW—It does not make any difference but you wanted to know. Senator BOB COLLINS—That is right and they were well aware of it. Is there any advice that can be made available to the committee now as to how many people would be affected potentially by a decision to locate the airport at Holsworthy rather than Badgerys Creek? I know you have got some questions on this too, Senator.

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Mr Merner—The short answer to that is no. The issue would be obviously addressed in the environmental impact statement that has been commissioned but perhaps I should say, more fundamentally than that, the studies that the department is commissioning will encompass an examination of potential sites and runway configurations on the Holsworthy site. It is 20,000 hectares. Senator BOB COLLINS—In respect of that EIS, Mr Merner, does the government propose to—in a similar way to the way it did it in Sydney—provide interested parties with proper standing and, I might add, a genuine interest in the EIS process with assistance to ensure that they are not disadvantaged in a meaningful involvement in the process through a lack of resources? Mr Merner—I think I have to say that issue is still before the government for decision. Senator FORSHAW—I have a number of questions in respect of Holsworthy. I think you were planning on adjourning at 7.15. Senator COLLINS—Let me bat on then. I am happy to go now but I do not know whether I would finish. CHAIR—We were aiming to finish 1.2 by 7.15. Senator BOB COLLINS—Mr Chairman, I can advise you at this point here as I have advised you privately that we certainly will not be in a position to finish. I think I have responded positively to the minister’s suggestion by already allowing officers to leave who could, but I have got a number of questions for the remaining areas in 1.7. CHAIR—On 1.2? Senator BOB COLLINS—All the way through to 1.7. What I have indicated to you I am happy to do is when we adjourn at 7.15— CHAIR—We disposed of 1.4. We are still on— Senator BOB COLLINS—Has 1.4 has gone already? CHAIR—One or the other of you continue on 1.2. Senator BOB COLLINS—When did the government decide to increase the capacity of the Sydney West airport? Mr Merner—That decision was made when the matter was considered by the government in May. Senator BOB COLLINS—Was that decision based on detailed advice that was provided? Dr Milloy—The nature of the decision is to explore the possibility of expanding the capacity of the second airport. At this stage I think it is unfair to say that a final definite decision has been made to expand it. Senator BOB COLLINS—A final decision has been— Dr Milloy—But the EIS proposal is based on a capacity which is significantly larger than the previous plans for Badgerys Creek to the extent that we are looking at an option which would enable the airport to cater for 30 million where the master plan for the previous proposal was 13 million. But these numbers and the way in which this capacity might be achieved is something which is under the ambit of the studies. Senator BOB COLLINS—But was the actual decision itself a decision of the government? Dr Milloy—Yes. There was a government decision which was announced in May.

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Senator BOB COLLINS—The question has not got a hook in it. It was not based on any initiatives of the department, in the sense that there was a departmental view that this was something that was worthy of consideration and so on? It was a political decision, in that sense, taken by the government? Senator Alston—You are entitled to ask whether it was based on advice. You are not entitled to ask the nature of the advice. Senator BOB COLLINS—I did not, Minister. Senator Alston—You are saying that it is a political decision. Senator BOB COLLINS—I do not regard that as a derogatory expression, Minister. Senator Alston—If you establish that there was no advice at all, that may lead you somewhere. But, if you establish that there was some advice, you cannot comment on the quality of it and say that it was a political decision. Senator BOB COLLINS—Only if you accept the word ‘political’ as somehow pejorative. I do not. It was not a government decision, Dr Milloy, or was it in fact based on advice—I am not interested in the nature of the advice—that was provided by your department or any other department to the government? Senator Alston—You cannot ask what it was based on. You can ask whether advice was given prior to— Senator BOB COLLINS—That is what I just asked. Was it based on advice given by the department? Senator Alston—You cannot ask that. You cannot ask what the decision was based on. That is asking what was in the mind of the decision maker. You can ask whether advice was provided by the department. Senator BOB COLLINS—I am asking that, Dr Milloy. The minister says it is okay for you to answer that. Dr Milloy—It was a government decision reached through the normal government processes. Senator BOB COLLINS—Thank you. Did the EIS for Holsworthy specifically exclude issues such as the relocation of military facilities and the effect on the airspace of Bankstown airport? Mr Merner—At this stage the terms of reference, I guess, or the guidelines for the EIS have not been finalised. Some draft guidelines were circulated by the Commonwealth Environment Protection Agency on 22 July. Senator BOB COLLINS—To the best of your knowledge at this point in time, are you aware of whether it is proposed to exclude the issues that I have raised; that is, the relocation of military facilities and the effect of this location on airspace at Bankstown? Would you like to take that on notice, Mr Merner? Mr Merner—Perhaps we can. Certainly at this point we cannot be definitive about what the final guidelines are going to be. Senator BOB COLLINS—An obvious question is: if Holsworthy should be the site that is finally selected after these processes are concluded, are there any proposals for what will happen then to Badgerys Creek? Senator Alston—If.

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Senator BOB COLLINS—Yes. The government has indicated that there are two live sites now available in consideration, and Mr Merner has provided advice to the committee that the process for establishing the terms of reference for the EIS on Holsworthy has begun. What I am asking is: at this point in time, should Holsworthy be the choice rather than Badgerys Creek at the end of all of these processes? Are there any proposals currently on foot for what would then happen to the Badgerys Creek site? Mr Merner—There are no proposals currently on foot, but it has been indicated that there will be a financial feasibility study conducted. The minister announced that in his May announcement of the decision. That is an issue that would realistically warrant some attention in that context. But there are certainly no proposals on foot at the moment. Dr Milloy—The government’s statement on the financial feasibility study says specifically that we will need to address relevant defence issues. Senator BOB COLLINS—At this point, and this is off the top of the head because it suddenly occurred to me, are you aware of any private expenditure as distinct from public expenditure that has been committed at Badgerys Creek, based on the expectation that there will be an airport there? Mr Merner—I am sorry, I— Senator BOB COLLINS—Is the department aware of any investment or any expenditure of private funds in the Badgerys Creek area that has been made on the basis that there will be an airport there? If the answer is no, or you do not know, that is fine. Mr Merner—We are not aware of that. Senator BOB COLLINS—What has been the total direct expenditure of money, in broad terms, on the development of Badgerys Creek to this point? Dr Milloy—It is $155 million. Senator BOB COLLINS—Has the government sought legal advice as to any action that might be taken by individuals or organisations who have invested or committed funds to developments on the basis that the Badgerys Creek site will be developed as an airport? Mr Merner—No. Senator BOB COLLINS—Have any discussions taken place at either government or departmental level with the New South Wales government of the need for and cost of public infrastructure? I am well aware, of course, that many discussions have taken place in respect of Badgerys Creek. What I am asking is: have similar discussions taken place with the New South Wales government, should Holsworthy be selected as the site for the airport? Mr Merner—No, there have not been. Senator BOB COLLINS—Are you aware of any indication from the New South Wales government as to what its view is on the prospect of Holsworthy being the site for the airport rather than Badgerys Creek? Mr Merner—I am certainly aware of media reports of state government ministers that are critical of the proposal. Senator BOB COLLINS—Yes. I think parliament has passed a resolution in respect of it as well. I will make the question more precise. Are you formally aware, as a department, of any indication in a formal sense, rather than through press reports, from the New South Wales government as to what their attitude is?

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Mr Merner—I think all we can say is that there are discussions between ministers in prospect on that issue. Senator BOB COLLINS—Has any work been undertaken within the department on this question of infrastructure needs? Again, the reason I ask the question is that I am aware of what needed to be done way back with Badgerys Creek, in terms of long-term proposals and infrastructure requirements for Badgerys Creek that were engaged in at a departmental level. Has anything similar occurred in respect of Holsworthy? Mr Merner—No. There is nothing on the scale of work that has been done over a number of years in relation to Badgerys Creek. Senator BOB COLLINS—Are you aware that it has been reported that the Defence Housing Authority was selling land in Wattle Grove up to two weeks prior to the announcement that Holsworthy is a potential site for the second airport? Mr Merner—Again, we are aware of that more by way of media report and perhaps— Senator BOB COLLINS—I am aware that there has been a letter and, in fact, I will fill this out and you can give me a complete answer. I am advised that there has been a letter from the Minister for Defence Industry, Science and Personnel which states that the Defence Housing Authority is in competition with private sector developers and it would not have been appropriate, therefore, to advise the DHA because of that, prior to the public announcement, that the site was going to be considered. Are you aware of that? Mr Merner—That letter is to whom? Senator BOB COLLINS—The letter was from the Minister for Defence Industry, Science and Personnel and it was in response to an inquiry as to why the government’s right hand did not let the government’s left hand know what the government was doing. The response was— and on the face of it I have to say it is not unreasonable—that because the DHA, as it does, competes in the marketplace with the private sector, it would not have been appropriate to have advised the DHA in advance privately of the decision. The question was: was your department aware of such a letter? Are you aware of it? Mr Merner—I have not sighted that letter. CHAIR—I think that is a good point to break at. We are programmed to come back at 8.15. How do people feel about coming back at 8.00? Minister, do you need the hour break? Senator Alston—I could split the difference between 8.00 and 8.15. Senator BOB COLLINS—I am made of sterner stuff; I can box on forever. My reserves are greater than yours, Minister. Senator Alston—They are indeed. CHAIR—What time can you come back? Senator Alston—I can be back by about 8.10. CHAIR—Thanks very much. Sitting suspended from 7.17 to 8.10 p.m. CHAIR—I understand the minister is on the way, so I think we will start. In the meantime, could I just say that we have had discussions with Senator Collins during the break and we intend to proceed on the following basis: we will finish 1.2; we will then move to 2.2, then to 3.1, 3.2, 3.3, 5.1, 5.2, 5.3; we will then go to 1.5, 1.6, 1.7, 2.1 2.3 and then 4.1. We have done that on the basis that, with the early ones, there are a limited number of questions and,

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 46 SENATE—Legislation Tuesday, 17 September 1996 rather than having people sitting around here all night to wait till the end, it would assist proceedings if we move through that. I thank Senator Collins for coming to that arrangement. I welcome the minister back. Senator BOB COLLINS—Subprogram 1.4 can go. If I could just clarify the question that I was asking on 2.1 prior to the break, the letter I referred to was, I am advised, a letter from the office of the Minister for Defence Industry, Science and Personnel to an aggrieved party, who had bought land in Wattle Grove, not appreciating this. He was angry about the fact that the government, having made a decision that it was going to progress Holsworthy as at least a potential airport, could allow one of its agencies to sell land to people on the basis that there would not be an airport built in their backyard. I will not pursue that any further. The other questions that I have got on Holsworthy, which relate to the DHA, I will refer to another committee. Under the heading of ‘Performance outcomes 1995-1996’, the budget paper states that the subprogram has commenced a process of environmental assessment of the Badgerys Creek and Holsworthy sites. You said earlier that preliminary work has begun on the terms of reference. Has the successful company yet been selected to do the EIS? Mr Merner—No, but we are very close to finalising something. Senator BOB COLLINS—In deference to my desire to assist the chairman, I am actually just mentioning some of these, so just bear with me and it will save a lot of time. One thing in which I do have an interest is the current position in respect of Essendon airport. What does the government have planned for that? Mr Bowdler—We might have to ask another division back to answer that one. Senator BOB COLLINS—Is there anyone here who can answer the question? Mr Bowdler—We are a little thin in our numbers for that subprogram now, but Mr Harris may be able to assist. Senator BOB COLLINS—Mr Bowdler, I am quite happy to have that question put on notice. Can you provide the committee with written advice as to what the current position is in regard to Essendon airport? Mr Bowdler—Yes. Senator BOB COLLINS—Thank you. Has the department had any involvement at all with the proponents of the Lawrence Hargrave project? I know there has been some political contact from time to time—I might add, with the Labor Party in office and I think since—but has there been any departmental contact? Mr Merner—A consortium—a group of people, I suppose I should say—came to the government with a preliminary proposal for a commercial study. As departmental officials, we had some contact with that group. There was one meeting that I was involved in with colleagues. That proposal was subsequently rejected by the government and there has been no further contact since then. Senator BOB COLLINS—Did the department actually proceed to the point where you carried out any kind of formal assessment of the project? Mr Merner—Of the proposal? Senator BOB COLLINS—Of the proposal; I am sorry. Mr Merner—No. I think it is fair to say that the decision not to take up the proposal overtook any need for that.

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Senator BOB COLLINS—I asked some questions earlier about Launceston and Hobart and was advised that the decision that had to be taken in respect of those two airports was, I think, an election commitment—or a government commitment, in any case. We have canvassed all that, and I do not want to go back over all that. Were there any formal discussions between the Commonwealth and the government of Tasmania about the future of airports in that state and, in particular, in regard to cross-ownership rules? Mr Bowdler—Mr Chairman, I could either take that on notice or bring one of the other subprograms back. That is really 1.1. Senator BOB COLLINS—Yes. I think we can have Mr Harris back. He is obviously keen to answer the question. Subprogram 1.1—Aviation policy Mr Harris—There have been discussions—I do not know whether you would characterise them as being formal or informal—which involved state government officials and officials of the department, where the matter of the future of Tasmania’s two airports has been raised. I am not myself aware of discussions at ministerial level, but there may well have been some. Senator BOB COLLINS—Thank you. Senator Tambling stated in the Senate that the Minister for Transport and Regional Development had written to the Minister for Finance asking the minister to consider the early leasing of the Tasmanian airports. Have you got any idea at this stage when this is likely to happen? Mr Harris—No, I am afraid not. Senator BOB COLLINS—He also said that the airports would be sold separately. I assumed—and I just want this clarified now—that that meant separate ownership. Does that mean, in fact, separate ownership in respect of Launceston and Hobart, not just separate sales? Mr Harris—Again, that is my understanding of the intention and I also believe it was an election commitment along the lines that it was outlined to you earlier. Senator BOB COLLINS—Thank you. The reason I asked the question is that if this was the case, and my understanding is the same as yours, that it was an election commitment, and hopefully for Tasmania a core promise rather than a non-core promise—not that I would expect you to comment on that—if it was an election commitment, and thereby, of course, provided for cross ownership rules, certainly in a de facto way, do you have any idea as to why it was not simply included in the Airports Bill along with the other matters, considering that the commitment had, indeed, been long standing? Mr Harris—I think Mr White drew attention to the fact earlier that there are different ways of obviously managing a sale process. You can have formal cross ownership rules between Sydney and selected airports. I guess you can potentially have other cross ownership rules. In this particular case, it seems to me most likely that the government is going to pursue this approach by marketing the two airports as separate entities and thus not being a legislatively mandated arrangement but rather one that is achieved through the sales process itself. Senator BOB COLLINS—Can I ask a similar question in regard to Queensland. Were there any formal or informal discussions between the Queensland and the Commonwealth government on the same question of cross ownership? Might I just say that the particular airports that have been raised with me in this regard were the future of Coolangatta, Mount Isa and Townsville. Mr Harris—I am not aware of any such discussions.

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Senator BOB COLLINS—Are you aware of what the government position is in regard to cross ownership of those airports in Queensland—the ones I have named? Mr Harris—I think, in the Senate debate, Senator Tambling has made reference in passing to both airports in the Northern Territory and, I believe, also to Townsville in the sense of commenting on the desirability of, as far as possible, addressing the issue of local ownership. Senator BOB COLLINS—Yes, local ownership. Mr Harris—That is the only comment I am aware of that I can bring to mind now. Senator BOB COLLINS—Again, it begs the question, of course, and it is a reasonable concern, as to what benchmark or test is going to be used to determine what local ownership means. Mr Harris—Precisely. I expect that, again, there is more than one way to skin a cat here. Although it has not been done in the legislative process, that is not to say that it could not be in the future. On the other hand, it seems to me just as practical, potentially, for the government to address that in the sales process. So there are options still available, I guess, that could be used to address that issue. Senator BOB COLLINS—The other issue I want to canvass in respect to airports I did pursue in the Senate without having then the benefit of your advice, that is in respect to the airports in the Northern Territory. Again, I would ask the same question. Are you aware of any discussions, formal or informal, that have taken place between the Northern Territory government or relevant departments and the Commonwealth in respect of Alice Springs and Darwin? Mr Harris—I am not aware of any discussions involving the Northern Territory at officials level or at the ministerial level. Senator BOB COLLINS—Again, in regard to potential concerns about the same entity owning Alice Springs and Darwin. Mr Bowdler—I am sorry, I should add for the record, that in the context of discussing the Committee on Darwin report, there has been some discussion with the NT government officials about Darwin airport together with the other 76 recommendations in that report. That is still in process. Senator BOB COLLINS—What about if we relocated down the track? Mr Bowdler—Yes, that is one of the recommendations. Senator BOB COLLINS—Do you have any plans for funding that proposal in the immediate future? Mr Bowdler—No. Senator BOB COLLINS—Sorry. I did not think you would. And again, what is the position in respect of the ownership of Alice Springs and Darwin? Mr Harris—I think Senator Tambling has made some comments in the Senate which we were able to give him advice on, Senator, and I think those probably reflect the position. The government recognises, obviously, that there is a value in having local ownership, but it is a question of, I would say, investigating that through the sales process rather than through any other specific mechanism. Senator BOB COLLINS—What about the cross ownership of those two airports?

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Mr Harris—I am not aware of any discussion which relates to cross ownership between Darwin and Alice Springs. Senator BOB COLLINS—But at the moment there would be no bar currently to the same operator buying both would there? Mr Harris—There is nothing in legislation which would restrict that. Senator BOB COLLINS—No. And again, it is a perfectly reasonable parochial concern that there would be no question. And the only reason I raise it again is that it is a complex problem in terms of getting the best commercial deal. It might surprise you to hear that, along with a lot of other people, in terms of the real impact that these entities have on the economic life of the community, people who live adjacent to those airports do not have the same legitimate view of finance and treasury in respect of the best tendering process and so on. There are other issues as far as we are concerned. Mr Harris—Could I note perhaps that cross ownership does not necessarily serve the purpose of the aspirations of those local communities. The more that you potentially break down the airports into little stand alone units, the less potentially viable they might be. That is obviously an aspect that you are aware of since, as you noted previously, the FAC’s network based arrangements have allowed Alice Springs, for example I guess, to enjoy terminal facilities that it might not otherwise have enjoyed. So I am not sure myself that cross ownership, pursued to its total extent, is necessarily consistent with the aspirations of local communities. On the one hand, yes, I would like to own my airport. On the other hand, do I have the resources to keep managing it? Senator BOB COLLINS—Even though I am a member of the right wing of the Labor Party I still feel a lot more comfortable about public monopolies than private monopolies, if that is the only choice I have got. I really have done with the airports in terms of the sale now. I have some questions relating to airport leases, Mr Chairman. I appreciate, as you know, that the question of ex-gratia payments was canvassed at some length and, I might add, with a fair bit of what I thought was unnecessary confusion, which is why I inadvertently referred to, I think, Senator Kernot as minister on one occasion. But could I just have, for the advice of the committee, the position in respect of ex-gratia payments? What I would like to know, and I think the FAC is here, is what ex-gratia payments were actually made by the FAC to local authorities in lieu of rates on general airport land and improvements in 1995/96. I am perfectly happy for that question to be taken on notice. Mr Harris—Can we take that on notice please. Senator BOB COLLINS—And I would like the information, obviously, on an airport by airport basis. I would like advice, obviously, on what level of payment would have been made, and it may well be the same amount, if normal rates had been payable on the property. All of this can be taken on notice. Mr Harris—Could I note on that, Senator, that in some areas where there has not been a rating assessment made, the answer would necessarily be speculative. Senator BOB COLLINS—Absolutely. Senator Tambling advised the Senate that there would be a problem with the application of state laws imposing taxes on airports operating under long-term leases from the Commonwealth. If you have available advice that you could provide to the committee on this matter, I would appreciate it, as to the extent of the problem and its implications. Again, I am happy for that to be taken on notice.

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Mr White—Perhaps it would be worth reading from the advice that Senator Tambling was referring to in relation to taxes generally. Senator BOB COLLINS—Yes. Mr White—The first point is that under the FAC Act 1986 the corporation is subject to Commonwealth income and wholesale sales tax and state payroll tax. The FAC also makes ex gratia payments to local authorities in lieu of rates, in respect of leasehold improvements on airports for which it re-bills its clients. The FAC does not pay rates in respect of general airport land. While the airports bill does not address the issue, operators of leased airports will be required to make payments in lieu of rates as the FAC currently does. These obligations will be imposed by provisions in the airport leases. The additional points were, more generally, that the application of state laws imposing taxation to the airports when operated under long- term leases from the Commonwealth is unclear; and that application of state taxation laws to the airports will be addressed shortly by the High Court. And that reference is in fact a reference to an appeal to the High Court from the decision of the Victorian Supreme Court in the Allders International v. Commissioner of State Revenue case. There has been a judgment in the Supreme Court about the extent to which state stamp duty could apply, which is subject to appeal. So that is the matter that was referred to in that advice. Senator BOB COLLINS—Thank you. Mr Chairman, I have placed a whole lot of these on notice now, and we have already disposed of subprogram 1.3. I have just got some general questions left in 1.2, which I will dispose of now, and as far as I am concerned that is then out of the way. This is a question I am sure that you would have been expecting—it is a matter of great interest, particularly now that Holsworthy has reared its head in the way that it has. I guess this question is particularly relevant in respect of the negative press that was flowing from Atlanta in respect of transportation. I particularly noted the transport problems in Atlanta; and, of course, the desire of every single Australian, I have got no doubt, to ensure that we do not have the same complaints about the Olympics in 2000. Could I ask you, Mr Merner, and indeed anyone else that wants to take the question, in respect of the delay now that has occurred—and this is what is of particular concern—in getting a single airport decision taken in respect of Badgerys Creek, and in particular the equally difficult problem of the infrastructure required to then link that airport, which is just as important, if not more so, than the airport itself: are you absolutely confident, on the current proposals, that the airport needs of the Sydney 2000 Olympics will be properly met without any shambles of passengers at Sydney airport? Mr Merner—Sorry to create another musical chair situation, but I think that is one for Mr Harris. Mr Bowdler—I think, again, that is for Mr Harris. Senator BOB COLLINS—Absolutely. I would not want to answer that question myself. Mr Harris would be delighted to come back and answer it—and be personally held responsible in the year 2000 for anything that goes wrong as a result! Mr Harris—I only caught half of your question, Senator. I know it had a long introductory statement. Is it possible for you to repeat it? Senator BOB COLLINS—You know what it is about. There is a particular sensitivity obviously to the negative press that came out of Atlanta in regard to transport problems. There is a concern around now, and you are aware of it I know, about the delay that has now

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Tuesday, 17 September 1996 SENATE—Legislation RRA&T 51 occurred in even deciding where the second airport is going to go because of the huge problems. It is the end of 1996 now. It is an incredibly short time in terms of the associated infrastructure to link the airport to the city. Are you confident that the proposals that are around will ensure that there will not be a transport problem in respect of air travellers in 2000? Mr Harris—It is probably a little difficult for me to say one way or the other in terms of confidence, given where we actually stand in the planning process. Perhaps if I underline the process that is currently under way, it might give you some confidence in what we are actually doing. There is a planning process under way within the Federal Airports Corporation itself to consider the impact of the 2000 Games on Sydney airport. I know that the Federal Airports Corporation and the Sydney airport people had representatives at Atlanta to view first hand the activity. At the same time, there is an interdepartmental committee which I chair in the Department of Transport which has brought together most of the agencies which will be involved in activity related to Olympics planning for the purposes of Sydney airport. That group right now is preparing effectively updates of forecasts from the House of Representatives Standing Committee on Transport which did a review of a possible impact of the Games on Sydney airport within the last 18 months, I think. The intention is to synthesise both, if you like, the Canberra level planning focus, which is the activity that I am managing, and Sydney airport’s own planning efforts into advice for the minister by the end of the year. Certainly it would be fair to say we have no reason to lack any confidence in the ability of these processes to ensure that Sydney gets the best service possible out of the airport for its Olympic Games. Senator BOB COLLINS—Which is a mile away from saying that you have got confidence that there will not be a problem. Mr Harris—It is reasonably difficult without the government and the FAC, for that matter, having actually taken specific decisions on doing this to the international terminal building and doing— Senator BOB COLLINS—Can I ask a few specific questions in terms of previous advice that I know was given on this issue, which is now sadly dated and has been overtaken by actual movements that exceed the projected movements at the time. If the FAC is here, I am happy for them to answer it. Is it the view that Kingsford Smith alone would effectively cater—and I use that term deliberately, meaning not just cater and just manage to scrape through—for the year 2000 Olympics, failing the construction of the second airport? Mr Harris—I think that Sydney airport and any supplementary activity that might be required from Brisbane and Melbourne, for example—a lot of people focus on Sydney as if all the international flights might arrive there, but potentially Brisbane, Melbourne and domestic airports would be involved—will function adequately— Senator BOB COLLINS—On its own? Mr Harris—Yes. Senator BOB COLLINS—That was the initial advice that I was given some time ago. So, what you are saying is that, effectively, that has not changed?

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Mr Harris—I can say that the advice that we have given quite recently, in fact, as a result of this process, is pretty much the same, based on an updated review of the same information that went to the House of Representatives committee, which you are probably referring to. Senator BOB COLLINS—Again, do not die in a ditch or go to any extraordinary lengths to produce this; but, because it is topical now, I would like to have another look at it. I recall at the time advice, which I must say interested me, that actually examined the airport requirements, that had the actual demand at various other venues of the Olympics. Do you know whether that is still around, or would it be possible to retrieve it? I think it would come as a surprise to some people to actually see the real situation, rather than the imagined situation of 5,000 jumbos arriving all at once. Mr Harris—Yes, and that information has been updated quite recently. We can seek the ability to release that. To my knowledge, it has not been released publicly. Senator BOB COLLINS—It certainly never was. I saw it. Could you take that on notice. If the information is available to the committee, I would appreciate it if you could make it available. I now want to canvass a related issue—again, I certainly do not expect any detail on this— and that is the question of security and, in particular, airport security. You have told the committee that the current position is that the existing airport at Sydney will be able to adequately look after the Sydney Olympics without the second Sydney airport, no matter where it goes. Has there been an assessment made, even in monetary terms—which is, frankly, what I am interested in at the moment, rather than the detail, which I do not want—of the expected security regime that might have to operate in respect of the airport, come the Olympics? Mr Turner—The short answer is no. There has not been such an assessment. There is, however, a process under way of evaluating what might be required for security at the games. A number of people on the security side of the industry were at Atlanta, at the games. We will be having workshops with those people and there will be a gradual process of evolving precisely what would be required for the Sydney games. It is early days yet, and we do not have any details and certainly not any actual figures. Senator BOB COLLINS—While you are at the table, could you provide the committee with advice as to the number of security audits of airports that were carried out, or will be carried out, in Australia in this current financial year? Mr Turner—I can give you the figures for last year. That may be an indication. We actually had audits of about 58 airports throughout the year. Some of those airports were audited more than once; but, in a formal sense, there were some 58 audits. That is, of course, supplementing the ongoing audit system of staff who, in some cases, are based at the airport. Senator BOB COLLINS—What about the security audits of the airlines themselves in the same year? Mr Turner—All the airlines were audited once a year at each location where they operate. I think there are something like 63 international airlines. An audit was undertaken, as I said, at each airport where they operated. Senator BOB COLLINS—Is it proposed to extend the security audits to registered cargo agents? Mr Turner—Yes, indeed it is. In fact, that process is already under way. New requirements for cargo security came in in February and we are now embarking on audits of the regulated agents under that—

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Senator BOB COLLINS—Is that a cost recovery operation? Mr Turner—No. Senator BOB COLLINS—It will be dealt with in the same way as— Mr Turner—As our other audits at airports and airlines, yes. Senator BOB COLLINS—This is my last question on this matter, Mr Chairman. This may be a more appropriate question for the FAC, but I am just curious. I just noticed that the security personnel where I come from are all wearing brand new uniforms and they now inform me that their own boss is somebody that lives in Omaha, Nebraska or somewhere. Is the security contract done locally, is it an autonomous thing that each airport management carries out, or is there a system-wide decision taken in respect of FAC airports for security? Mr Turner—I think those people you saw were probably the screening staff at the airport, which are actually contracted by the airlines. Senator BOB COLLINS—By the airlines themselves. Mr Turner—And it varies from location to location. Senator BOB COLLINS—Fine. I thought it might. I was told it was just an entirely overseas company that had actually got that contract. Senator FORSHAW—If I could return to the issue of Holsworthy: you indicated earlier, Mr Merner, that advice had been provided by the department to the minister with respect to including Holsworthy in the EIS that was then under way with respect to Badgerys Creek. When was that advice first given to the minister? Mr Merner—The department provided some information to the minister about a range of options as a prelude to the matter being developed into a cabinet submission and going on to cabinet. Senator FORSHAW—What do you mean by a range of options? Mr Merner—Without wanting to get into the detail of the advice— Senator FORSHAW—I would not mind if you did, actually, but you answer the question and we may have some more questions. Senator BOB COLLINS—Don’t hold your breath. Mr Merner—What the department did was to, I suppose, bring to the attention of the minister the range of options that had been considered previously in the context of the 1985 EIS study. Senator FORSHAW—Why did it do that? Was it at the request of the minister or was it at the initiative of the department? Mr Merner—I think it is fair to say that the government had made a commitment pre- election to proceed with the consideration of the Sydney West Airport issue. Having come to government, there was a need for them to deal with the issue as to how that was to be progressed. We engaged in an interaction with the minister to assist him to take the issue forward in the way that departments and ministers normally interact in these matters. Senator FORSHAW—Yes, I appreciate that, in the context of a new government and a new minister and a department providing briefing material and bringing the minister up to date; but what we had here was a position where both political parties had gone to the election with a policy which was to build Badgerys Creek. There was no mention ever of Holsworthy. In that context, we do not have the situation—as has been pointed out, I might say, in other

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 54 SENATE—Legislation Tuesday, 17 September 1996 committees and with respect to other matters—that the brief or the information or the advice was provided to the minister in response to a request, because it was related to an election commitment. In this situation, was there a request by the minister for advice or a submission or whatever on alternative sites—and, in particular, Holsworthy—to Badgerys Creek? If so, when was that request made and when was the advice provided? Mr Merner—If I can just go back, in the government’s pre-election statement, Putting People First, they said that the coalition was committed to building a second major airport in the Sydney region. It was against that background that we interacted with the minister to see how he wanted that commitment carried forward. Senator FORSHAW—The Prime Minister was on record as saying that he was committed to the building of Badgerys Creek. The Prime Minister and the minister are on record since the election, and it is contained within the proposal, as saying that Badgerys Creek is still the primary position. Mr Merner—Yes. Senator FORSHAW—I just ask again: was there a specific request for information as to Holsworthy, or was it an initiative of the department to the minister? Mr Merner—What the department did was provide a brief that canvassed the range of sites that had been dealt with in the 1985 EIS site selection exercise as well as existing airports. On the basis of that brief—and that would have been in April—the department had a discussion with the minister as to how he wanted the matter carried forward. On the basis of that discussion, the department prepared for the minister a cabinet submission to go forward for consideration. Senator FORSHAW—Would it be possible for the committee to be provided with that advice? Mr Merner—That is something that I would have to refer to the minister. Mr Bowdler—We would definitely have to take that up with the minister. Senator FORSHAW—I expected that answer, but I thought I would ask it anyway. Senator BOB COLLINS—You will take it on notice, will you not, Mr Merner? Mr Merner—Yes. Senator BOB COLLINS—You will ask the minister. Can you say—yes or no—whether or not the minister for transport requested the department to provide him with advice on the potential siting of Sydney’s second airport at Holsworthy? Mr Merner—I think it is probably a bit unfair to characterise it that narrowly. We gave him advice on Holsworthy and a range of other options that had previously been considered and asked him how he wanted to proceed from there. Mr Bowdler—From the public consultation process on the draft EIS guidelines for the revised Badgerys Creek process, there was a lot of community interest in alternate sites and that was another factor which drove us back to re-assess that. It is only a proper briefing that public servants should do. Senator FORSHAW—Thank you for raising that because I was coming to that. In the EIS document—the draft guidelines published by the Environmental Protection Agency—it refers to that interest in alternative sites that you have just mentioned. As I understand, from reading the document put out by the EPA, which was a summary of the comments on the draft guidelines with respect to Sydney West Airport, there were some 224 submissions. A number

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Tuesday, 17 September 1996 SENATE—Legislation RRA&T 55 of them, and I calculate around 50 to 60 because there was a bit of doubling up, raised the possibility of an alternative site. You can correct me if my counting is wrong. What we have ended up with is a new set of draft guidelines which includes Holsworthy and no other site. Indeed, the draft guidelines specifically preclude any consideration of any other site other than Badgerys Creek, which was already in the EIS, and Holsworthy. Mr Bowdler has just stated that one of the reasons that Holsworthy got on the agenda was as a result of these submissions raised by the residents and others with respect to the Badgerys Creek EIS. How is it that it came down to only Holsworthy being added and no other sites? Mr Merner has said that you put to the minister a range of options which go back to the 1984 exercise, and probably earlier. There might have been eight, nine or 10 sites then. Mr Bowdler—There were 10 sites. I think we also looked at Richmond again. There was still interest in Richmond so we added that. I do not know whether there were any others. Mr Merner—No, I do not think so. There may have been Williamtown. These draft guidelines have been prepared to reflect the decision that was taken by the government in May. That decision was to proceed with the examination of Badgerys Creek as the preferred site and Holsworthy as an alternative. I think the reasons for that decision have been articulated by the minister in his address. Senator FORSHAW—I am trying to follow that through, because one of the key reasons it is raised—and it is in the public document that some 50,000 people or more have responded to—is that, maybe in large part, Holsworthy got on the agenda because of requests from people, with respect to the Badgerys Creek EIS, that alternative sites be looked at. What I am asking is: can you indicate to me why Holsworthy was the only one of those other eight, nine or 10 sites that got added in? Was it on the advice of the department? Mr Merner—The fact that it is added in flows from a collective government decision. Not being a direct party to that decision, I am not in a position to say what were the critical factors that informed it, other than, of course, those that have been indicated by the minister in his announcement of the decision and in subsequent answers to questions in the House. Senator FORSHAW—I will ask the question and maybe the minister representing the minister for transport can reflect on it, answer it or take it back. The question is: can he tell the committee whether or not the minister for transport specifically sought advice from the department with respect to the Holsworthy site alone or any other sites as alternatives to Badgerys Creek? Mr Merner—I think we will take that on notice. CHAIR—It is the fourth time you have been asked the same question but in different ways; so take it on notice. Senator FORSHAW—You were asked a question by Senator Collins with respect to the Lawrence Hargrave project and you indicated that there had been one meeting between the department, the minister and the developers— Mr Merner—It was the department and the people who had come to the government. I am not sure that they would necessarily characterise themselves as Lawrence Hargrave, but I have taken a fairly general— Senator FORSHAW—Can you tell me when that meeting was? Mr Merner—The meeting that I and departmental colleagues were involved in with them was in April, but I will take it on notice to give you a precise date. Senator FORSHAW—It was in April?

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Mr Merner—Yes. I think it was around Easter. Senator FORSHAW—Would you take that on notice. Was the minister for transport in attendance at that meeting? Mr Merner—Not at the meeting that I and my colleagues here at the table attended, no. Senator FORSHAW—Have any other groups besides the Lawrence Hargrave group—which is also known as LH Project Pty Ltd and which at one stage was also known as Bonpara Pty Ltd, before it went into liquidation—had meetings or brought proposals to the department or the government, that you are aware of, since the election? Mr Merner—Not since the election. Mr Bowdler—There have been a lot of suggestions made, Senator, such as floating airports and all sorts of proposals; but you mean a real, hard proposal. Senator FORSHAW—I am aware of some of the suggestions. I was on the Senate select committee that looked at some of these things. The LH project could be characterised as being in the nature of a bit more than just a suggestion, and I am wondering whether there were any other similar groups of developers that had a formal proposal or a somewhat detailed proposal about Holsworthy. Mr Merner—No. Senator FORSHAW—There is not; okay. Can you indicate what the current size of the Badgerys Creek site is? Dr Milloy—It is approximately 1,700 hectares. Senator FORSHAW—Is it feasible that it could be expanded, presumably through further acquisition, to accommodate an airport handling 360,000 aircraft movements and 30 million passengers a year? Dr Milloy—That is something that is currently under study by our consultants—the feasibility of expanding either site to incorporate a larger airport. Senator FORSHAW—Expanding either site—so Holsworthy would have to be expanded as well, would it? Dr Milloy—Both sites are being examined as to the possibility of building a larger airport than currently proposed for EIS purposes. Senator FORSHAW—Were there any discussions between the department of transport and the Department of Defence prior to the announcement by the minister on 20 May? Mr Merner—The best way to describe it is that the Department of Defence contributed to the paper that went forward to cabinet—not in a principal sense, but in the normal way that other interested departments have the opportunity to comment on proposals that are going forward. Senator FORSHAW—I only have a couple more questions. This may be more appropriate for the environment department but I will ask it anyway as I think you could have some response on it. One of the proposals that the Senate Select Committee on Aircraft Noise put forward was for the appointment of an independent auditor. The minister for transport indicated in the parliament on 28 May, in answer to a question, that the study—that is, the EIS—would follow the guidelines established by the Senate Select Committee on Aircraft Noise which involve full public consultation, full industry consultation and its being a transparent process. Are you able to indicate why, to date, there has been no independent auditor appointed?

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Mr Merner—No, I am not. I can say that the matter is under active consideration by the minister for environment’s department at the moment. Senator FORSHAW—Is that something that the department of transport or the minister for transport has an input into, or is it completely hands-off for them? Mr Merner—The way that we are proposing that it be handled is that the appointment of an independent auditor would be organised in a contractual sense by the environment ministry so that it is separate from, and seen to be separate from, our department, which has the primary carriage of the EIS process. Senator FORSHAW—Could you indicate what the current time line is for the completion of the EIS? I ask that because I am aware of the tentative time line, if you like, but there has been a fair amount of debate in the community and elsewhere about just how quickly or how slowly or thoroughly this process can be done and how long it will take. Dr Milloy—The plan is to issue a draft environmental impact statement for public comment early in 1997. After that the process would be for the public to be given an opportunity to comment on the draft. Then it would be the responsibility of our department as proponent to incorporate public comments and respond to them in the final EIS, which would then be submitted to the Environment Protection Agency. Then the Environment Protection Agency would assess the EIS against the guidelines which they set for the process. Senator FORSHAW—What time frame are we looking at? Dr Milloy—The period of time for which the draft would be available for public comment is a matter for the government. But the government has indicated that it wishes to consider the second airport development as soon as possible after the EIS process has been completed. Senator FORSHAW—With respect to the meeting that was held with Lawrence Hargrave project developers, were there any other departments represented? Dr Milloy—No. Senator FORSHAW—It was just the Department of Transport. Program 3—Maritime Subprogram 3.1—Maritime CHAIR—I welcome the officers for subprogram 3.1, maritime. Are there any questions on 3.1? Senator BOB COLLINS—I will attempt to get some of these taken on notice. I am happy for you to take all of this on notice. Can you provide the committee with some information on the ships capital grants scheme generally? For example, the information should include the details of the companies that successfully applied for the assistance and obviously the value of that assistance. Mr Bills—Actually we have the information here, but it was reported in,I think, the House of Representatives Hansard. Senator BOB COLLINS—That is right, yes. Mr Bills—Did you want an update from that? Senator BOB COLLINS—No. I knew you had it in digestible form. Rather than have you read it out, could you just provide the committee with a copy of that. Could you advise the committee about where else in the world schemes similar to the international seafarers grant operate?

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Mr Bills—Off the top of my head, I cannot give you a complete list, but certainly we have been doing a lot of work. Senator BOB COLLINS—Would you mind taking that on notice as well? Mr Bills—That is fine. Senator BOB COLLINS—Is this the right spot to ask about the Tasmanian freight equalisation scheme? CHAIR—Yes. Senator BOB COLLINS—The funding for the scheme has in fact been cut. Could you advise the committee from your perspective as to what effect the cuts will have on the operation of the scheme? Mr Bills—Certainly. If I may begin, my colleague Dr Feeney might flesh that out. There has not been a review of the TFES since 1986 and shipping rates across the Bass Strait have fallen significantly in that time. Given that it is an equalisation scheme, that naturally has a major bearing. In addition, there are some commodities where rates may be out of line with other commodities, for example, in the paper area. Essentially, the budget estimate is our estimate of the likely saving once a review of the TFES is conducted. This is currently under way by the review authority and there is not going to be any impact on the integrity of the scheme. It is purely a matter of looking at rates compared with movements and actual costs of shipping across Bass Strait and making sure those commodity peculiarities are attended to. Senator BOB COLLINS—I know that you have placed public ads advertising the review. Can you provide the committee with a copy of the terms of reference for the review and have you produced a discussion paper for the review? Mr Bills—The Bureau of Transport and Communications Economics has done quite a lot of background work on this. The paper that they have helped to produce is expected to be released next week, but the minister and his office have yet to clear that. So at this stage there is nothing publicly available, but we expect there will be in the very near future. Senator BOB COLLINS—Could you undertake to provide that information to the committee, if it is possible to do so at that time? Mr Bills—Certainly. Senator BOB COLLINS—The next question relates to the Bass Strait passenger vehicle equalisation scheme. Could you explain to the committee how this scheme is going to work and perhaps you could do it with a straight face, too? It failed on the first jump. CHAIR—You should have asked the question with a straight face. Senator BOB COLLINS—I am sure that the officer would agree that this is an entirely appropriate and rational way to spend money. Mr Bills—I would defer to my colleague Dr Feeney, who has been instrumental in providing advice on the details of this scheme. I will let him outline it. Dr Feeney—The way that the scheme works is that passengers, when they take their vehicle across Bass Strait, will receive a rebate of $300 for a round trip in the peak holiday season, that is, $150 each way. Senator BOB COLLINS—From consolidated revenue? Dr Feeney—Yes. It is $240 in the shoulder season and $200 in the low season.

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Senator BOB COLLINS—For every car. Dr Feeney—For every accompanying vehicle. The ferry operator will deduct the rebate when the person books the trip and they will then invoice the department each month and we will make a payment based on that claim. Senator BOB COLLINS—Do you know if the government is proposing—or has under consideration—any plans to subsidise passenger vehicles or caravans, for example, that come to the Northern Territory, on the basis of the extremely long distance they have to drive for their holiday? Dr Feeney—No, there are no plans that I am aware of. Senator BOB COLLINS—Oh dear, I am devastated by that news. Let me tell you, I want to really press you on this because I want this document. Can you provide the committee with any economic analysis that was done on the rationale of the scheme by the department or any other agency? Dr Feeney—The Bass Strait scheme— Senator BOB COLLINS—The Flat Earth Society, for example. Dr Feeney—The Bass Strait scheme was obviously considered by government in the budget process, so any analysis was provided in that context and I do not think it would be available for release. The consideration of the government was done in the budget context and the standard practice would be that that consideration is not available for public release. Mr Bills—But, picking up the senator’s point, I think the question was whether we can provide you with any information as to the rationale that may have been produced by anybody, including the Flat Earth Society, which I do not recall has done any analysis, but certainly we will search our files and check to see whatever we can provide. Senator BOB COLLINS—Don’t spend too much time doing it. What impact will the scheme have on the financial viability of the ferry operators? Has there been some analysis done on this? Mr Bills—How will that have an effect on the operators? Senator BOB COLLINS—Yes. Mr Bills—To the extent that demand has increased, if they do not generate an increase in cost then there should be beneficial effects on the current operator. Senator BOB COLLINS—You would think so, wouldn’t you? Mr Bills—Perhaps I can just add to that. Since the scheme was commenced on 1 September the operator of the Spirit of Tasmania has reported more than 31,000 ticket inquiries by telephone. The average number of phone inquiries per week since the announcement is up by 55 per cent compared with inquiries in the lead-up to the announcement and as at 15 September TT-Line reports that bookings for the month of September are up by around 15 per cent on last year’s bookings for September. So, clearly that will have a positive impact but we cannot give you a dollar figure. Senator BOB COLLINS—Thanks very much. How much did you say the subsidy was again per vehicle? Dr Feeney—Three hundred dollars round trip in the peak season; $240 in the shoulder period and $200 in the low season.

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Senator BOB COLLINS—Do you have any idea as to why you stopped at $300 and simply did not provide them with free travel across the Bass Strait? Dr Feeney—The policy announced in the election said that it was up to $150 one way and that was the limit. Senator BOB COLLINS—Do you anticipate that this is going to result in an increase in competition in the normal commercial sense of the word on this route. Dr Feeney—It is designed to increase demand for the services. To the extent that there is an increase in demand there is an incentive to provide increased capacity and therefore there is an opportunity for another operator to bring in a service. Mr Bills—On the previous question as to why $300 for the round trip is the cap, that goes back to the rationale of the scheme as an equalisation scheme vis-a-vis the same highway distance so, clearly, there is an upper limit on the amount of rebate in terms of equalising the equivalent road distance. Senator BOB COLLINS—You could have related it to the cost of a space shuttle, I suppose. Mr Bills—Well, that was not the rationale of the scheme. It was based on the equivalent road distance. Senator BOB COLLINS—In respect of the point you have just made about the increased demand leading to increased competition—I am no economist, I am not even close—is there not a potential problem in that scenario that develops in terms of additional operators? By the way, is demand capped in this proposal? Is it demand driven? Mr Bills—It is totally demand driven. Senator BOB COLLINS—That is when I really thought that it had been developed by the Flat Earth Society. It is actually demand driven, isn’t it? Mr Bills—It is demand driven. Senator BOB COLLINS—The taxpayers will be paying out $300 per car, round trip. One of the problems that I foresee—I assume you are an economist, aren’t you? Dr Feeney—Actually, I am originally trained as a statistician. Senator BOB COLLINS—Even better. I am a complete mug at this. Is one of the problems potentially on a demand driven scheme such as this, that provides such a huge subsidy from public money for people who want to go to Tasmania as distinct from anywhere else in the country, that if demand does increase, which I assume it will and people will get into it, at some future time somebody somewhere in the government will wakes up and withdraw the subsidy? Senator Alston—It is an interesting debate, Bob, but I am not sure if it is a question. Senator BOB COLLINS—No, it is a question. Senator Alston—I know it is a question but I am not sure that it is one that really should be explored. Senator BOB COLLINS—Well, the question related to the previous answer I got on the likely impact of the scheme increasing demand and further operators on the route, Minister. Senator Alston—I think you have made your point. Dr Feeney—If there is increased demand and there is another operator on the route—

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Senator BOB COLLINS—All operating on the basis of a $300 subsidy. Dr Feeney—They will be operating in an environment in which the subsidy applies. Whether they are actually dependent on the subsidy for their viability is a commercial decision for them to make. Senator BOB COLLINS—Indeed. Has there been any analysis done on the expected shift in demand from air transport to sea transport as a result of this subsidy? Dr Feeney—By our department? Senator BOB COLLINS—By anybody. Dr Feeney—We have not looked at the substitution effect. Senator BOB COLLINS—Well, let us have this information then, because I am not personally familiar with the cost, having never travelled by sea across Bass Strait with my vehicle. With the subsidy built in, what is the comparison with an economy air fare? Dr Feeney—We can provide that comparison. I noticed that after the scheme was announced one of the marketers of the fly drive packages claimed that fly drive packages would still be cheaper and I think the day after Nick Evers, the Chairman of TT-Line, claimed that that was not an apples for apples comparison and claimed that the package that TT-Line was providing would still be cost-effective for families. We can provide that comparison. Senator BOB COLLINS—The government’s election policy, where I saw this proposal, promised, I think, just under $50 million for the scheme over the next three years but the forward estimates provide for about half this amount. Is there a reason for that difference? Dr Feeney—The election commitment in terms of the concept of the scheme was said to provide a rebate of up to $150 one way. The calculations in the election commitment document had envisaged a higher base and a higher rate of increase in the demand projections but when we worked it out we worked from the concept and applied the current demand estimates and allowed for an increase in demand to reflect the reduced cost of travelling. Senator BOB COLLINS—So there has been an analysis done on it at least to that extent? Dr Feeney—To assess the demand? Senator BOB COLLINS—Yes. Mr Bills—Yes. We have done the analysis on this scheme but we have not specifically compared it with air in terms of substitution because this was a government election policy that we were asked to implement rather than debate. Senator BOB COLLINS—You were not asked to debate. Can the committee have a copy of that analysis? It would be simple enough I would imagine. Dr Feeney—That analysis of the basis for the projections was included in budget documentation. I think we will just have to take it on notice, subject to clearance. Senator BOB COLLINS—That is fine, thank you. Again I am happy for this to be taken on notice. Can you provide the committee with details of the number of SVPs issued over the last three years? Dr Feeney—Yes, we have that here. I have got the last two years here, but, yes, we can provide that. Senator BOB COLLINS—Has there been any change in how the program—I might add either with CVPs or SVPs—has been administered since the election?

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Dr Feeney—There has been no change in the ministerial directions. The only change is the cruise shipping arrangements for a single-voyage permit. It can be applied for two years in advance and that was announced—that is the only change in the cruise shipping industry. Senator BOB COLLINS—Okay. Mr Bills—There has been a change in the composition of SVPs because of the ending of the drought. A lot of the SVPs during 1995 were the result of moving cargos because of the drought. Senator BOB COLLINS—Thank you. Does the department anticipate any further changes to the scheme in the near future? Mr Bills—The minister has announced the formation of a shipping reform group which is looking at the twin issues of whether a second register or something analogous is appropriate and also how best industry would like to see changes to the cabotage regime. Clearly the findings of that industry group may have an impact on government policy when the government considers them and that obviously cabotage SVPs are involved. Senator BOB COLLINS—What is the current status with that review? When do you expect it to be concluded? Mr Bills—We expect it will be concluded before Christmas. That is certainly the hope but the issues are very complex and while both we and some of the participants such as BHP have done a lot of work—we are meeting about fortnightly—we will just have to see. Certainly we are making every effort and the group is making every effort to report to the minister in December. Senator BOB COLLINS—Who is actually doing it? Who is conducting the review? Mr Bills—It is a group of industry people. Greg will just find the full list as I start off, but Mr Lance Hockeridge from BHP, Dr Ken Moss from Howard Smith, the chairman is Mr Julian Manser from Perkins Shipping— Senator BOB COLLINS—Julian Manser? Mr Bills—Yes, he is the chairman. Senator BOB COLLINS—A Territorian is chairing it—very good. Senator Alston—Captain Andy Brooking of Mobil is on the committee; John Hurlstone, the Chairman of the Australian Shipowners Association; Mr Bob Hutchinson, the Chairman of the National Bulk Commodities Group; and Ms Sarah Lunam, who is the New Zealand Manager of BHP Transport. Senator BOB COLLINS—Can someone provide me with some advice as to the status of the review that is being conducted into AMSA? What are you doing these days, Captain Filor? Capt. Filor—Listening and learning. Senator BOB COLLINS—Ten out of 10 for that. What is your position in the bureaucracy these days? Capt. Filor—Inspector of marine accidents. Senator BOB COLLINS—Fine, thank you. CHAIR—Are you still on subprogram 3.1? Senator BOB COLLINS—No, I believe we have moved to 3.2, Mr Chair—there’s progress for you.

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Mr Bills—Actually, senator, it is still 3.1 to some extent. Senator BOB COLLINS—Whatever—we are all friends here. Mr Bills—There is actually a review of the AMSA and shipping registration acts. It is a portfolio evaluation and planned review of the AMSA Act which is to consider the effectiveness and impact of the changes to AMSA when it was changed from a GBE, as of July 1995, to a safety authority with a purely safety focus rather than a business focus. In addition to that, there is a regulation review of the AMSA Act so we are operating both reviews together. The regulation review of the AMSA Act is under the Commonwealth legislation review schedule, which is designed to fulfil requirements under the national competition policy agreements. Essentially, the hard yakka of the review is going to be done by one of the senior officers from my subprogram. In addition, there will be an officer from AMSA, an officer from the BTCE and there will be an external steering committee. I am not sure if the appointments have actually been made yet so I will not mention the two names, but an eminent lawyer and an eminent former bureaucrat from a state jurisdiction will oversight the review. Senator BOB COLLINS—That is very tantalising information. CHAIR—It is dot point 5 on page 51. Senator BOB COLLINS—I think this question is right under subprogram 3.2. We took some evidence on a committee relating to the ships capital grants scheme to the effect that, over the last few years, detentions of ships by AMSA have significantly increased. Is that correct? Mr Bills—I will quickly open up the batting and then defer to my colleague the CEO of AMSA. The detentions figures that I have—and Paul will correct me if I am wrong—are rising from 72 in 1993 to 153 in l994, 244 in l995 and we are already looking at 184 up to 12 September 1996. So pro rata you would expect it to be around about 262—certainly a significant increase. Senator BOB COLLINS—Do the defects that have been discovered by AMSA inspectors fall into any major categories? For example, have they been associated with lifesaving equipment, or what? Mr McGrath—Yes, Senator. The defects are mainly related to safety and fire fighting equipment. In the main there tends to be a heavy predominance of defects in fire fighting equipment, followed relatively closely by safety life boats and other evacuation-type equipment. Senator PANIZZA—On page 49 of the PBS there is reference to the Tasmanian wheat subsidy of $500,000. You say: Modifications to the Tasmanian Wheat Freight Subsidy Scheme are expected to result in increased volumes of wheat and wheat products being shipped in non-bulk form. Could you give us a brief rundown of the change in the Tasmanian wheat freight subsidy scheme if, indeed, it comes under this portfolio? Perhaps you could give us just a thumbnail sketch. Mr Bills—Certainly, Senator. In fact, the Tasmanian wheat freight subsidy scheme comes under the Department of Primary Industries and Energy. Senator PANIZZA—Yes, but can you tell me about it though?

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Mr Bills—Our understanding is that proposed payments under the scheme are to be reduced by about $1 million per annum and therefore we are forecasting, in terms of the freight equalisation scheme which we do administer, that some wheat that would have been eligible for the wheat freight subsidy administered by our sister department will now be transported and eligible for a TFES payment. Given that they are expecting to save $1 million per annum, we are expecting that the additional cost through the TFES will be about $500,000. So from a whole-of-government perspective there is probably a saving of half a million dollars per annum. CHAIR—Has anyone else any questions on 3.1? Well 3.1 is finished and if there are any officers who wish to leave we will go on to 3.2. [9.41 p.m] Subprogram 3.2—Australia Maritime Safety Authority Senator BOB COLLINS—Mr McGrath, I want to return to those major categories of deficiencies in fire fighting and safety, in respect of the crews’ equipment. Over the same period of time has any discernible problem been envisaged in terms of the particular registers of those ships, or is it simply an across-the-board problem? Mr McGrath—No, Senator. The performance against registries is quite spotty. It depends on the shipping itself. I think the other point that we would make is that AMSA concentrates on the ships that are most likely to cause trouble and for that reason we tend to concentrate on the bulk commodity carriers because they are the ones that historically— Senator BOB COLLINS—Are they still causing problems? Mr McGrath—Yes, they still account for the bulk of the defects that we have, Senator. I do have the figures for the break-up over each flag and each classification society if that would help you. Senator BOB COLLINS—I am happy for you to take that on notice if you do not mind providing the committee with that advice at some later stage. Mr McGrath—Certainly. Senator BOB COLLINS—On the question of bulk carriage: what is the current incidence of the actual break-up and loss at sea of these vessels? Is that still going on as well? Mr McGrath—It is still going on, Senator, but 1995 was a better year than previous years. Senator BOB COLLINS—Better, meaning what? Mr McGrath—Not as many were lost. At the moment, there has been a substantial concentration internationally on the safety of both passenger ferries and bulk carriers. The statistics show that the total loss of shipping in 1995 was less than in the previous years, but the trends are not consistent and there has been nothing to suggest that this is a continuing trend; it tends to move up and down, year on year. At this stage we would still say that there needs to be a firm concentration on this class of vessels as being the major cause of concern, both in terms of potential pollution and loss of life. Mr Bills—Senator, I might just ask Captain Filor to answer that. Senator BOB COLLINS—Yes, please. Mr Filor—It is no great consolation, but the accident scene—or the breaking up of ships— has tended to drift off to the South Atlantic Ocean. Accidents do still occur from time to time but, as Mr McGrath said, there has been an improvement over the last year, and there is a major concentration on these vessels. Class societies, too, with their enhanced surveys, are

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Tuesday, 17 September 1996 SENATE—Legislation RRA&T 65 targeting them. So, hopefully for the safety of seafarers, the position will improve and continue to improve. Senator BOB COLLINS—Captain Filor, in terms of what you just said, I assume that the associated loss of life that has been a consistent feature of these incidents in the past is still occurring, not just the loss of the ship. Mr Filor—When bulk carriers sink rapidly, they do tend to take their crew with them. Senator BOB COLLINS—Also, while you are here, I might mention MV Peacock which ran aground, despite the fact that it was carrying a pilot at the time. Were you involved in any investigation of that incident? Mr Filor—Yes, we are actually the unit that is investigating that incident at the moment. The report will be out in due course. Senator BOB COLLINS—So it is not available yet? Mr Filor—Not yet, no. Senator BOB COLLINS—Okay. Mr McGrath, a minute ago you spoke about AMSA sensibly concentrating on the problem of certain shipping. A cooperative effort was developing—and, no doubt, is still developing—about the sharing of information via databases. Is that still an active scheme? Mr McGrath—Yes. I think the major initiatives over the last couple of years have been the creation of what we call the Asia Pacific Region Cooperative Port State Control, which means that there is better sharing between the countries in the Asia Pacific area. But we also link in via Canada to the European system, so that we are getting better information internationally. As well as that, there are other regional areas developing cooperative schemes and, while they are not as advanced on their computer link-ups, we are confident that in the not too far distant future we will have much better information on the quality of shipping. Of itself, that initiative really requires a continuing commitment from the countries involved. It is not something of itself that will help, because countries like Australia already have a very strong reputation for policing the port state aspects very well, and we need to convince other countries in the region to do the same. Senator BOB COLLINS—Sure, but the reason I ask the question—and I would appreciate your advice—is this: have you been actively pursuing this matter long enough to be able to detect a real value for AMSA in assisting to target problem ships? Mr McGrath—At this stage I think the answer is no. But, as I said, the real target at the present moment is to get a higher level of commitment from all the nations in the region than that which we currently have. Much of the effort in the initial stages has been focused on trying to develop that commitment and the training and associated activities that relate to inspections and consistency of inspections. Senator BOB COLLINS—Thank you very much. Has AMSA had any role in the assessment of the operation of the PAD system? Mr McGrath—No, not as such. The PAD system was assessed totally by Airservices Australia. Senator BOB COLLINS—I have actually finished with 3.2. CHAIR—Do you need different officers for 3.2?

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Senator BOB COLLINS—No. I will be putting a reservation on this afterwards for this reason, that I do not want to proceed with that at this time because we currently do not have the annual report available. Really the only information that I want at this point in time is, when will it be available? Mr Bills—I cannot give you a definitive answer on that. There have been so many abnormal years recently for this company, but we are expecting that this year will be normal year. I am certainly hopeful that we will have something towards the end of October or early November. I cannot give you an exact date. CHAIR—Any further questions on 3.3? I will call the officers of 2.2 to the table and thank the officers from program 3.1, 3.2 and 3.3. [9.49 p.m.] Subprogram 2.2—Federal Office of Road Safety Senator BOB COLLINS—I would just like to start with the parish pump. I have been somewhat encouraged over the past few years at what needed to be a distinct improvement in the statistics in the Northern Territory. As I am sure you are aware, this year has been an absolutely appalling year. There has been absolute carnage in terms of the sudden downturn in death and injury in the Northern Territory. The bad old days have returned with a rush. Has FORS been involved at all in discussions with the Northern Territory authorities about the problems that are being experienced at the moment? Mr Makeham—We have had discussions with the Northern Territory and other states through what is known as the task force under the national road safety strategy. One of the items we have been working on through most of this year is a rural and remote road safety strategy. We are working with them to develop that document. That was recently endorsed by the transport ministers’ conference and the Australian Transport Council and it is now in the process of adoption by the states and territories. Some of the items in that are things for us, but in most part they are things for the territories and states. Yes, we are in contact with them. Senator CONROY—What about the 50 per cent cut to the FORS public education program? Mr Makeham—The public education program is one of the ways in which we seek to influence behaviour. It is one of a range of public education programs which we integrate very closely with the states. In terms of the total national effort, it obviously reduces the amount that can be done. Our approach to that matter is to focus more on scene setting and things of a national importance, and to concentrate more on print media and specific targets that we see as national priorities. With the previous question one of the areas I was discussing was rural road safety. That is an area that we have set ourselves. We are targeting more on things where we can add value. Senator CONROY—I was wondering if you could outline what the program does, just in general way, apart from the ones you have already mentioned. Mr Makeham—There is a range of activities—television advertising, print advertising and print materials for young riders and young drivers, and support materials for motorcycle rider training. We have a spectrum of materials, from television advertising aimed at specific things, like alcohol and information on how much it is safe to drink and drive—the so-called rethink your third drink campaign which is aimed at learning about how much you can drink and

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Tuesday, 17 September 1996 SENATE—Legislation RRA&T 67 drive—and a program coming up on speed. So we have a range of programs with television, print and other publications. Senator CONROY—Who are the client groups that you work with? Mr Makeham—The client groups we work with are, firstly, the general public. Obviously, the television advertisements are aimed at the general public. We do target. We are a research based organisation, so we use our research to identify particular groups in the community. Young males in the country would be one, with a higher risk of drinking alcohol, a higher risk of speeding, a higher risk of not wearing their seat belts. That is one area of target. Speed is one our current priorities. That is a general campaign, trying to raise the perception of speed and the consequences of speed. That is a very broad program. Other client groups we work with are the motorcycle riders. We have a series of family videos which are used by rider trainers. We have Bike Kids, which is aimed at the 12- to 13- year-old school children, which is a resource material on safe cycling. We use our research to identify particular target groups and then tailor our public education programs flowing from that research. Senator CONROY—What evaluation has been undertaken into the effectiveness of the program over recent years? Mr Makeham—All public education programs that we do are evaluated at two levels. In the pilot stage we use an extensive contact group to make sure that the messages that we think are right are the ones that react to the group. After programs go on air we evaluate all programs for effectiveness or at least recognition. I have been discussing specific activities related to particular programs. The program overall was subject to a portfolio of evaluation, which is one of the series of portfolio evaluations of major programs. That evaluation was done, which was a total evaluation of the public education research program, was completed about 12 months ago, or something of that order. Senator CONROY—Specifically, what impact on the national road toll has the program had? Mr Makeham—It is often very difficult to relate broadbrush things, such as public education, to the road toll. There have been some specific areas where we have been able to measure it. For instance, with our program aimed at young males in the country on seatbelt wearing, there was measurable—of the order of 10 per cent, my recollection is, but I would have to take the actual percentage on notice—improvement in seatbelt wearing after the program was shown. That is a nice easy one in one sense because you can see if someone is wearing a seatbelt or not. We believe that the program has had a good effect in terms of the understanding of alcohol and things of that nature because we keep getting good impact on that. The overall evaluation of the program found that the program was effective but did not quantify it in specific detail. Senator CONROY—Are there any similar programs operating overseas that provide additional information on how effective such programs are? Mr Makeham—We do monitor research. We believe that our effort is as sound as any. Nationally, we coordinate it with our state colleagues. By comparison with that, we do very well there too. Overall, we compare quite well. Senator CONROY—Can you advise the committee of the role of the independent steering committee reviewing the national road transport law?

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Mr Makeham—We have the convenor of that committee right here. Mr Bowdler—That steering committee came from a decision by the Australian transport ministers in June that the overall review process of the national road transport law have an independent steering committee looking at it. The NRTC, the National Road Transport Commission, has in its legislation a requirement to report to heads of government on its continuation or otherwise because there is a sunset of mid-January 1998. So there is a review process in train through that. The ministers decided that an independent steering committee should oversee that review process, and there have been advertisements in the paper seeking submissions and a review consultant has been appointed. Senator CONROY—How much will all this review cost? Mr Bowdler—I cannot give you details on that at this stage. The main part of the consultant’s costs and so on are actually being funded by the NRTC. At least two consultants are being employed. The members of the steering committee are essentially putting in their own costs at this stage. I could give you some ballpark estimates on notice if you would like it. Senator CONROY—Will you take it on notice? Mr Bowdler—Yes. Senator CONROY—How much has been spent so far? You can take that on notice too. Mr Bowdler—Yes. The study is really just starting to get under way so not a great deal. Senator CONROY—Okay. Mr Bowdler—But I will take that on notice. Senator CONROY—Could you just outline what that has been spent on so far? You have to take that on notice? Mr Bowdler—Yes. Senator CONROY—Sure. Can you provide the committee with details of the consultancy being undertaken by Mr Hicks? Mr Bowdler—There is an arrangement whereby he is the consultant under a contract with the NRTC but the steering committee is using him to do the review work. He is working, essentially, for the committee. I would have to take that on notice. Senator CONROY—When did he start work? Mr Bowdler—The steering committee has only been moving since around 20 August. I think that is the date it had its first meeting. Mr Hicks had been lined up doing some preliminary work before that. So I would say some time late July, early August. Senator CONROY—Would you be able to take that on notice? Mr Bowdler—Yes. Senator CONROY—Did the consultancy go to tender? Mr Bowdler—Not to my knowledge. Again, the NRTC took on Mr Hicks. We will have to take that on notice too. Senator CONROY—Would you also include who ran the tender. I assume there would have been a recommendation to the minister from the agency who managed the tender? You can take it on notice advise whether that was the case. If there were no tender process, against what criteria for possible candidates was the job assessed?

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Mr Ockwell—We will take that on notice. Senator CONROY—How many candidates were considered? Mr Ockwell—We will take that on notice. Senator CONROY—Would you also take on notice: who drew up this list; and when was the decision made to appoint Mr Hicks? CHAIR—A good Western Australian. Senator CONROY—Also: when did he formally resign from the Western Australian Department of Transport; and did the appointment go to cabinet for endorsement? Mr Bowdler—I think the answer on that last one is no. Senator CONROY—Was anyone in Western Australia consulted about Mr Hick’s appointment before he was appointed? Mr Ockwell—Again, I will take it on notice. Senator CONROY—If so, who? Could you take that on notice. Could you provide a breakdown of the black spots program by state and territory for 1996-97 and the out years? Mr Makeham—Unfortunately, I cannot do that at the present time. There is a range of recommendations currently being considered by the minister. The minister is expected to make a decision on that fairly shortly. The overall figures are those in the budget papers but the distribution amongst the states is a matter for consideration by the minister, and he has not yet made a decision on that. CHAIR—There will be a public announcement, I would imagine? Mr Makeham—I imagine so, yes. Senator CONROY—I guess the following question is will get the same answer then: how many projects have been approved, what are they— Mr Makeham—No projects have been approved. Senator PANIZZA—I have a question on budget measures, the Australian Motorcycle Council grant. I see that you have eliminated it. Does that mean they do not go to advisory committee meetings anymore, or do attend at their own expense? Mr Makeham—They do attend the advisory committee meeting. I will be chairing such a meeting next Monday. The grant was to the Australian Motorcycle Council— Senator PANIZZA—Yes, I remember that. Mr Makeham—During the course of the last year, other motorcycle associations made representation to the former government. The basis of the representations was that the AMC did not have comprehensive coverage of all the motorcyclists. A decision was taken at that time, rather than giving the grant to one of the organisations, to fund their attendance at these representative committee meetings. Now the department funds the attendance of a range of motorcycle associations, including the Australian Motorcycle Council, to attend these committee meetings. The funding is economy airfares and accommodation, where appropriate. So, yes, we do fund them, but we fund all the associations which are relevant, not just the AMC. Senator PANIZZA—So, tell me, has Mr Codnogotto ridden off into the sunset or is he still around?

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Mr Makeham—Mr Codnogotto is a member of the motorcycle committee and, I hope, will be attending next Monday. I have not had any word to the contrary yet. Mr McGAURAN—I have five questions that I will put on notice, if I can, please. The first one is: what is the timetable for the abolition of ADR19, which mandates the lights in motorcycles, and why is the ADR being abolished? The second question is: what new government initiatives are under way to demonstrate to the public the benefits of vehicle safety equipment, such as air bags? The third question is: what initiatives has the government taken since coming to office to come to grips with the question of vehicle emissions? The fourth question is: how is the government proposing to make organisations such as FORS and BTCE more responsive to the needs of our society? The final question is: what is the present level and cost to the community of vehicle trauma, and what has the federal government done about it since it has come to office? I put those questions on notice, thank you. CHAIR—If there is nothing further on subprogram 2.2, we will stay with our timetable. Could I call those from subprogram 5.1 to the table, please. [10.06 p.m.] Subprogram 5.1—Executive CHAIR—Are there any questions on subprogram 5.1? Senator BOB COLLINS—I have one question which I am happy to place on notice. You do not have to worry about it but just deal with it in due course. I wanted to ask in general terms about the restructure. Can you give the committee an overview of what was involved: the cost; how many people will be made redundant from the regional development function; how much this will cost; and how will it be funded? That will do for a start, if you could just respond generally to that. Mr Ellis—If you are agreeable, I think that is probably better left until we have the people from regional development at the table here. We can handle those questions then if that is okay. Senator BOB COLLINS—That is fine by me. CHAIR—If that is all on 5.1, are there any questions on 5.2? Senator BOB COLLINS—I have covered that, Mr Chairman. [10.09 p.m.] Subprogram 5.3—Research Senator MURRAY—I have a quick question on subprogram 5.3. I notice that you put something in there about the costs of measures to reduce greenhouse gas emissions. Mr Ellis—Dr Dobes, who leads that work, is just coming to the table. CHAIR—Dr Dobes, did you hear the question? Dr Dobes—I did not catch the last bit. Senator MURRAY—I notice you have an item in subprogram 5.3, the cost of measures to reduce greenhouse gas emissions. Can you quickly outline for the committee what that involves? Dr Dobes—Yes, Senator, that is a study which has just been completed. The report is actually at the printers at the moment. It involves looking at 16 different measures, in other words, different options and the costs of implementing those. When we talk about costs we

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Tuesday, 17 September 1996 SENATE—Legislation RRA&T 71 talk about social costs, in other words, costs to the whole society. The point of this whole report, I think, is that it is quite innovative—nobody has ever done anything like this before that we know of, so we are hoping it will contribute to public debate and to policy formulation by various bodies. Senator MURRAY—Did the report cover the benefits of introducing measures to reduce greenhouse gas emissions? Dr Dobes—No, because that is very difficult to do. So, essentially, what this study does is look at the cost-effectiveness of various measures. It is very difficult to measure the benefits of reducing greenhouse gases because of the uncertainties of the science and because one does not know what the effects are locally. That is very difficult to work out. Senator MURRAY—Would you agree that it would be normal practice to do what is colloquially known as a cost-benefit analysis rather than just a benefit analysis or just a cost analysis. Normally you would try and do both. Dr Dobes—Absolutely. This is just one area where it is just not possible to do it. It is a problem which is faced by all international researchers. There have been many minds all around the world that have applied themselves to this problem, but nobody has come up with a solution. I think the best estimates were made in America by an academic called Nordhaus, but he is the only one who has ever tried it, and he did it on an American only basis and those figures have been used by some people but really subjected to a lot of criticism by others. Senator MURRAY—Thank you, Dr Dobes. I would appreciate a copy of that report when the sitting is over. Dr Dobes—Yes. I think that report will be probably available some time early in October. That is the plan, I think. CHAIR—Thank you, Senator Murray. Could I now call program 1.5. Will the officers come to the table for that, please. Program 1—Aviation Subprogram 1.5—Civil Aviation Safety Authority CHAIR—The Civil Aviation Safety Authority is a very important body. Are all the officers here? Mr Bowdler—There is still the Director of Civil Aviation Safety Authority, Mr Leroy Keith. He is not too far away at this point? Mr Pike—He has been taken mildly ill. He is getting a bit of attention. We are expecting him here in about five minutes or so. CHAIR—The Director of the Civil Aviation Safety Authority has been taken mildly ill and he will be about five minutes away. Do you wish to go to the FAC first, or does that not make any difference? Mr Bowdler—I think we could do the FAC if the committee is happy. CHAIR—All right. Well, let us do the FAC and give the gentleman time to get here. Subprogram 1.6—Federal Airports Corporation Mr Bowdler—I wonder if we are moving too quickly, Chairman, for some of our participants. Senator BOB COLLINS—Moving too quickly, that is not a common problem in estimates.

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Mr Bowdler—Well at this stage, Senator. CHAIR—Can the officers from the FAC come to the table please. Senator McGauran, I believe you have a question. Senator McGAURAN—Minister, in relation to Essendon airport, when will the final decision be made in regard to its future? Senator Alston—I do not think I can give you a precise— Senator BOB COLLINS—I have left them in over a long time— Senator Alston—You know the answer. Senator BOB COLLINS—With respect, Mr Chairman, the question has in fact been asked and answered. Senator McGAURAN—Tonight? Senator BOB COLLINS—Yes, it has. Senator Alston—Seeing you know the question, you might give him the answer. Senator BOB COLLINS—Minister, the officers have in fact undertaken on notice to provide the committee with a full written report on precisely where the question of Essendon is at. It has already been asked and answered. CHAIR—Senator Collins or Senator Murray? Senator MURRAY—Mr Snelling, your FAC will be responsible for handling the sale or lease of the airports, will it? Mr Snelling—No, that is not correct. The asset sales task force is responsible for the sale of long-term leases on airports. Senator MURRAY—Will you have any participation in that matter? Mr Snelling—No. Senator MURRAY—Are you familiar with that— Senator BOB COLLINS—Only with participation similar to that of a chook getting its head cut off, in the sense that the chicken participates in the— Senator MURRAY—We have heard a lot about mad chooks disease today. Are you familiar with that audit report? It is the Commonwealth guarantees, indemnities and letters of comfort booklet. Mr Snelling—No, I am not familiar with it, Senator. Senator MURRAY—They have produced a report which says that the Commonwealth is up for $222 billion worth of contingent liabilities. As you know, when you sell anything, you want to always be sure that you leave as little debt and liability with the seller and put as much across to the buyer as you can. The reason I put that to you is that you currently have responsibility for the airports that are going to be sold or leased. I think it is vital that you assure the committee and advise us as to how many letters of indemnity or guarantees, letters of comfort, may be hanging around our necks when that process gets under way. In the history of government sales from the Commonwealth the results have been to leave large amounts of liabilities with the taxpayer and I, for one, would like to be satisfied that that is not going to happen this time around. I would appreciate that is something you have to take on notice, but I would appreciate your coming back to us with remarks on the liabilities in that area.

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Mr Snelling—Senator, we may be able to get an answer— Mr Harris—This matter was raised in the committee when the airports bill was going through—somewhat indirectly—but nevertheless the same sort issue in relation to what happens to debt and other, if you like, supporting financial infrastructure associated with the airports at the time of the airport sale. It is a matter for the sales task force and the Minister for Finance principally. Nevertheless, as I recall the answer that was given in the committee by the representatives of the task force at that time, they did indicate that the matter was likely to be resolved by the minister along the lines that the Commonwealth would retain for itself the liabilities that you have indeed discussed. So that airports would be sold, as I think some state representatives certainly had been seeking, without debt attached to them because of a concern that states had that their local airports could end up holding assets which were substantially encumbered. My understanding, but subject to clarification, effectively, which would have to be taken from Department of Finance officials, is that the matter is likely to be resolved by the Commonwealth retaining the liabilities that you referred to. Senator MURRAY—I would like to know how much that liability would be, and I do not think that figure was explored during debates on the bill. Mr Harris—No, you are right. I do not think the figure was explored. Although we could take that on notice, as I say, the more likely outcome is that you would have to get that figure from the Department of Finance. I am happy to take it for ourselves, but— Senator MURRAY—I think so, because in view of the fact that the airports are currently under your authority, under the FAC’s authority, I think we would like to know—and differently classified, if we may, in terms of what kind of guarantees, indemnities, letters of comfort or any other instrument is affected—just what liability might be left with the taxpayer when this exercise is undertaken. Mr Harris—Certainly, we can take that on notice for you. Senator MURRAY—And the second part of the question concerns a risk analysis relative to those indemnities and guarantees. The Commission of Audit uses a rather broad brushstroke of ‘less likely’ or ‘more likely’, and I would like to see a more precise indication of how serious the contingent liability would be in each of the categories. Mr Harris—That is definitely a matter that the Department of Transport could not comment on. Risk analysis would be definitely a matter for the Department of Finance. Senator MURRAY—But you may have existing liabilities which would flow over, and you could certainly comment on what you have got in existing terms. Mr Harris—We can state what the liabilities are, but the analysis of whether it is better for them to go in the sales process or be retained by the Commonwealth is not an issue that the Department of Transport is likely to be privy to, frankly. I note your intention in both cases, and we will do what we can to provide you with a thorough answer, yes. CHAIR—This matter was raised at the Senate committee hearings, and we have got the Department of Finance tomorrow, so maybe you should pursue that question then. Senator MURRAY—But I am after the dollar value, really. Senator BOB COLLINS—Is the annual report available yet for 1996 Mr Snelling—No, it is very close. It will be out within six weeks to a month.

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Senator BOB COLLINS—Thanks, Mr Snelling. Can I just advise you, Mr Chairman, that I will need to have a reservation on this section in case there are issues raised by the annual report when it is produced that might need further questions. Thank you. Mr Snelling, I am happy for you to take these on notice. The real reason I want this is if it is not going to be available in time for the completion of estimates in the annual report. If the annual report contains this information, obviously we do not need to have it duplicated, but I would like it before the end of estimates. Can you provide the committee with a detailed breakdown of the financial performance of each of the airports, the value of the assets at each airport and the basis of that valuation, in particular with regard to the land. The reason I ask that question, of course, is that you would be aware of suggestions that have been made that these assets are undervalued. So if you could provide that, that would be great. And, as I say, if it is going to be in the annual report, do not worry about duplicating it. Are the assets, in fact, going to be revalued? Mr Snelling—The land, buildings, runways, taxiways and aprons were revalued at June 30 of this current year. Senator BOB COLLINS—And is any information available to the committee on the results of that revaluation? Mr Snelling—I do not believe that information is public yet. Senator BOB COLLINS—Again, can you take that on notice and, if appropriate, provide it to the committee. Mr Harris—Senator, I could note on Mr Snelling’s behalf that the FAC is involved in the due diligence process obviously involving the sale of the airports. You are probably going to get a due diligence stamp on some of these matters you have asked for obviously because the information could become quite commercially sensitive. Nevertheless, I am sure the FAC will do all that it can to provide you with it. Senator BOB COLLINS—Yes, within those constraints, I am happy to accept that. I understand that in answer to a question—in the other place, I think—which sought details of capital works programs for FAC airports, the answer that the minister gave was that it was not possible to provide that at the moment—again because of the pending sale. But I imagine it would be possible to provide that information on capital works programs for airports that are not going to be sold in this financial year, would it not? Mr Snelling—Are we actually talking about past capital works programs or current year or forthcoming or what? Senator BOB COLLINS—In particular, what is currently under way or projected in the next 12 months. Mr Snelling—For the airports not being sold? Senator BOB COLLINS—Yes. Mr Snelling—We will get you that. Senator BOB COLLINS—I have read press reports that the FAC is seeking to increase its charges. Is that correct? Mr Snelling—That is correct. You mean aeronautical charges, landing charges? Senator BOB COLLINS—Yes.

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Mr Snelling—That is correct. We actually have a determination with the minister at the moment. Senator BOB COLLINS—Is it still the case, Mr Snelling, that, in world comparison terms and with the obvious countries that we compete with in the aviation market, we are still bumping around the bottom of a list in terms of charges? Mr Snelling—Yes. I think in the last survey that was carried out some 40 countries were surveyed and FAC charges came in at about No. 12 on the low side of that. Senator BOB COLLINS—You are not seeking to have us as world leaders, are you, by any chance? Mr Snelling—No, we certainly do not want to be world leaders in that particular regard. Senator BOB COLLINS—You have actually made formal submissions in respect of the increase of charges? Mr Snelling—That is correct. CHAIR—I have a question on this issue, either on notice or whatever. The FAC has proposed an average 13.8 per cent increase in landing charges but the Australian Competition and Consumer Commission has recommended a slightly smaller increase of an average 10.8 per cent, I understand? What is the FAC’s response? When was the last time the FAC increased landing charges, and what was the justification for this increase in the landing charges? You may need to take that on notice. If it is going to take a long time, please do. Mr Harris—We can probably answer at least part of the question. CHAIR—Why not take the whole thing on notice? Mr Harris—If you are happy to do that, we will certainly do that. Senator BOB COLLINS—I am just checking whether, in fact, these questions are covered by the question you have just put on notice because it is on the same issue of charges. I think this was covered but I will ask it anyway. The current situation in respect of your proposed increases and the ACCC: where is that at? Mr Snelling—The draft determination, as I mentioned before, was given to the minister and a copy of that was also provided to ACCC. ACCC has since responded and indicated a 10.8 per cent increase. The ACCC make a recommendation to the minister, not to the corporation. So it is for the minister to consider the ACCC’s recommendation when he is considering our draft determination. Mr Harris—The minister has a deadline for a response which effectively means he will be responding to the FAC shortly. Senator BOB COLLINS—Again, I know this could be covered in the annual report that we do not have. What was the rate of return target for the FAC for the last financial year, and did you meet it? Mr Snelling—Yes, I do not believe there was a rate of return target for the last financial year. But we do have an economic rate of return of around 11.9 per cent. That varies because it is based on the current bond rate, and that applies for 1996-97. Senator BOB COLLINS—And that was met? Mr Snelling—Substantially, yes. Senator BOB COLLINS—Did you want to add something to that?

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Mr Harris—I guess the nature of the economic rate of return target used by the government in assessing FAC’s performance is just that: firstly, it is a target and, secondly, it is one of a number of measures that the government would use to measure performance. There has been quite a lot of focus in the debate on pricing, the issues that you have mentioned already, on economic rate of return—perhaps an undue focus on rate of return as such, which is not the way the government tends to view performance of its assets. It is not solely a matter of earning a rate of return. Senator BOB COLLINS—One of the things that impressed me about the FAC, as I have said before, is its successfully constructed world-class facilities. Speaking from regional Australia—it is nice to have a voice from regional Australia heard every now and again—I really do believe, as the minister that was involved directly and enthusiastically, let me tell you, in selling the airlines because I could see no rationale for continued government involved in that, I do believe there is a real national benefit still to Australia at the moment, considering the nature of air travel, in having around Australia a series of high quality ports in all of our major cities and in major regional centres. I think there is a real national benefit to the entire tourism industry from that. The FAC has done all that whilst maintaining at the same time, as I have just discovered again, some of the lowest landing charges in the world, which is, I have to say, a fair effort. I guess I am just taking the opportunity, Mr Snelling, as this will be the last occasion probably that I will have the opportunity of doing it, of at least putting my appreciation on the public record for the outstanding job that the FAC has done for the aviation industry and particularly for places in Australia like mine that benefit enormously from the asset that we have got from the FAC, for which we are duly grateful. Senator MURRAY—Hear, hear. CHAIR—That is 1.6 dealt with. I have a couple of other questions which are actually complementary to the questions that Senator Collins asked on 1.2 with regard to whether Sydney’s Kingsford Smith could handle the Olympic Games. They are not quite the same so I will put them on notice. I do not want an answer now. I think you also told Senator Collins you would get further information on these, but I could be wrong. And my questions are: what examination has the FAC made of the ability of Sydney airport to handle the Olympics? The second one is: how did Atlanta airport cope with the Olympics, and did the experience of Atlanta suggest the real challenge is in ensuring people can get to and from the games venues during the Olympics. So I put those on notice, please. Senator BOB COLLINS—You do agree, by the way, do you, Mr Snelling, with the observations that Mr Harris made earlier on the same issue, do you? Mr Snelling—Yes, I do, sir. Senator BOB COLLINS—Good. Mr Snelling—In fact, I might just add to that the corporation intends holding a workshop later this year bringing out key airport personnel from Atlanta so that we can learn from their experience. And I think you made the comment a little earlier in the evening that the main problem with the Olympic Games is not essentially getting in and out of the airport; it is moving around the road system outside the airport. Senator BOB COLLINS—That is right. Thank you. CHAIR—That question has been raised with me a number of times, so anything you can add to that I would appreciate. Thanks very much.

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Subprogram 1.5—Civil Aviation Safety Authority CHAIR—Senator Collins, when the officers are ready. Senator BOB COLLINS—Thanks very much for your courtesy, Mr Keith, in being here. The government has set up an inquiry, as I understand it, into civil aviation regulations. Is that correct? Mr Keith—The government has set up an inquiry into the civil aviation regulations: is that the question? Senator BOB COLLINS—I am asking you if that is correct. Mr Keith—I was making sure I understood the question. Senator BOB COLLINS—Yes, I am sorry. Mr Keith—There is a regulatory review program that has been initiated, that is correct. On 28 June of this year, the minister announced that. Senator BOB COLLINS—Without going into any unnecessary detail, can you explain to the committee what the broad structure and timing of the review is? Mr Keith—The broad structure and timing? Senator BOB COLLINS—Yes, how the review is going to be conducted and how long it will take. Mr Keith—Sure. This is going back and looking fundamentally at the entire regulatory structure of the safety sector regulations in the country. We are planning on using intensive consultation with the industry—in fact, involvement of the industry—a fairly intensive resource involvement from the industry and ourselves to rewrite the regulations, using the International Civil Aviation Organisation standards as a starting point. The timing is that we would like to have it completed by December of 1998. Personally, based on my experience, that is a very ambitious schedule. Senator BOB COLLINS—It is indeed. Is there a budget for the inquiry? Mr Keith—We are taking it out of the existing budget. Senator BOB COLLINS—Is it correct that the president of AOPA is going to chair one of the working groups? Mr Keith—Yes, he is the chairman of the regulatory subcommittee. Senator BOB COLLINS—Is that a remunerated position? Mr Keith—No. Senator BOB COLLINS—No, I assumed he would be doing it on that basis—not that he needs the money, of course. Mr Keith—In fact the authority will not be funding any of the industry’s participation—any of it. Senator BOB COLLINS—I have got some questions about the interesting matter of ELT regulations, but could you firstly advise the committee generally of our obligations under the Chicago Convention? I understand that they are in fact set out in the Civil Aviation Act, but would you mind just— Mr Keith—Sure. The Chicago Convention in 1945 basically just established the International Civil Aviation Organisation. We were one of the original signatories to that and— Senator BOB COLLINS—Australia?

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Mr Keith—Yes, Australia. We are a committee member and we have been for a number of years. Basically, the International Civil Aviation Organisation establishes international standards and recommended practices. They are not regulatory; they have no enforcement capability, but there are standards and recommended practices. If the nations that sign up—and there are some 187 nations plus or minus; I cannot keep up with them—do not follow the standards, they file a difference with ICAO, And the recommended practices basically are just that: recommended. Senator BOB COLLINS—Thank you. The regulations on the ELTs were originally due to come into effect—and you can check my memory on this as this evidence was given in earlier committees—on 5 December 1996. Is that correct? Mr Keith—I have been here a year and a half and there was a long and involved history with ELTs before I even got here, but I— Senator BOB COLLINS—Is there any officer who can answer that question? Mr Pike—The original regulation, which was 252A, was due to come into effect on 1 July this year. Senator BOB COLLINS—July, I am sorry. Mr Pike—The government decision has now put that back 12 months, but your reference to December of this year is a reference to the fact that after that date none of the old technology beacons are approved for fitment in aircraft. Senator BOB COLLINS—Thank you. In respect of the date, I am sorry, it was July—I got confused with that other date—July this year, which originally, I have to say, I welcomed as a result of the long debate in the Senate on this matter. It was July 1996. I am testing my memory because evidence was given on this at a previous committee. That original date was in fact the board’s recommendation, was it not? The CASA board recommended that that is when the regulation should have effect. Mr Keith—The CASA board, I believe, recommended that we would defer that a year to allow more time for purchase and installation of the fixed beacons. Senator BOB COLLINS—Mr Pike mentioned that there was a government decision to defer the thing by 12 months. Mr Pike—If I again just take you back, that implementation date of July 1996 was the CAA board. CASA, of course, did not come existence until July 1995. Senator BOB COLLINS—Again, that is why my memory is far from being reliable. No, that is right, I am correct. I am glad I am not suffering from Alzheimer’s just yet. It was the original CAA board’s recommendation. Mr Pike has just said that it was altered and I know this is correct as a result of the government’s decision to defer this matter by 12 months. Can you advise the committee, from a safety regulator’s perspective, which is what you are— fiercely independent of the government to that extent—as to the basis for the deferral of the enactment of that regulation. Mr Keith—It was very practical, quite honestly. There was a number of aeroplanes—and I think it was in the order of 2,000 in the country—that did not have beacons of any kind installed and it was a supply problem and an installation problem to get them in. At the time, we had promulgated the proposed legislation in January of this year. It was a very small time frame to complete the installation so it had been faced in July of this year with a large number of aeroplanes either flying not in compliance or on the ground. So it was a practical problem to allow them time to purchase and install the equipment.

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Senator BOB COLLINS—Well I think Mr Pike is correct, is he not, in saying that the decision to defer until 31 July next year was in fact a government decision. Mr Keith—We will take that on notice. Senator BOB COLLINS—Thank you. Did the board recommend that the regulation require the fitting of a permanently fitted C91A ELT? Mr Keith—The CASA board in January of 1996, yes, did recommend it. Senator BOB COLLINS—Thank you. I know this has been canvassed before but it is important for this committee where it has not been canvassed to have it on the record. Mr Keith—Sure. Senator BOB COLLINS—Could you provide the committee, and again without going into any gory detail, with a lay person’s description of a C91A ELT—the reason being that I think there is a C91 ELT and perhaps you could explain to the committee the difference between the two, if I am correct and there is one. Mr Keith—Yes, there is certainly a difference. The C91 is old technology that is no longer produced, it is no longer allowed to be produced and it has not for several years. Under the technical standard order that was cancelled it had a lower crash resistance, it had a different power supply system and a different frequency spectrum that it used in sending out the homing beacon. The C91A is more crash resistant, has a more reliable power supply system and has more frequencies that it uses for homing. Senator BOB COLLINS—Thank you. Again, I am dredging my memory here, but the international practices in respect of the use of these ELTs, and BASI—you may not have been here; I put this question to BASI earlier—BASI gave me the advice I expected them to give me, which is that they would prefer to have both and I agree. I would have one strapped to each arm and leg and one hanging around my neck as well. But BASI indicated that their preferred position—and I can understand it—would be to have both a fixed ELT and a portable ELT in respect of the problems of course than can occur when you consider the circumstances in which these things are likely to be triggered. But assuming that this, of course, is not possible and you have got to make a choice between them, again, without going into gory detail, in respect of the use that is made of ELTs around the world, what is the basic situation internationally in regard to the use of fixed as distinct from portable ELTs? Now, again, the reason that I am interested in this is that at the time this was canvassed before, which was a year or so ago, I think the advice to the committee then was that the FAA—I think the practice in the United States then was that it was portable ELTs but I think I can recall being told then that there was a strong move on or even a proposal on that this was, in fact, going to move to fixed ELTs rather than portable ELTs. Is that correct? Mr Keith—No, I believe the FAA has a requirement for a fixed automatically activated beacon. Senator BOB COLLINS—Fixed— Mr Keith—Right. Now, you can have a portable installation but it has got to be automatically activated that you can carry from— Senator BOB COLLINS—So that is already in place in the United States? Mr Keith—Yes.

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Senator BOB COLLINS—Yes, thank you. Are you aware of who manufactures them, or is gearing up to manufacture them, in Australia? Mr Keith—No, I am not. Senator BOB COLLINS—Thank you. The standards applying to portable ELTs: are they the same in Australia and New Zealand? Mr Keith—For portable ELTs I believe there is an Australian/New Zealand, or Australian/AS/NZ standard, yes. Senator BOB COLLINS—Thank you. In general terms, we talked specifically about the United States and—thanks for clarifying that—I recall that is the position: they already require automatic triggering ELTs. How many countries generally—and I do not want the gory detail—allow for the portable ELTs? That is the proposal that we are currently talking about in Australia, so how many countries require the fixed ELTs or ELTs that are automatically triggered by the incident? Mr Keith—Based on the research that we did, we were not able to identify any country that allowed portable ELTs in lieu of fixed. I cannot tell you the number of countries that do require ELTs. I know for a fact, of course, that the United States, Canada, Brazil, New Zealand and here do require them. They are not so much required in Europe and ICAO certainly has standards and recommended practices for it. Senator BOB COLLINS—Mr Keith, I would make the obvious point, and I am sure you would not disagree with it, that the United States and Canada, again in my view, in terms of the circumstances in which these things are required, are properly comparable countries to Australia. But, of course, in Europe the difficulty of finding a downed aircraft is not quite so great. Mr Keith—Yes, it is usually in somebody’s backyard. Senator BOB COLLINS—Yes, they notice it on the autobahns and all that sort of stuff. Mr Keith—Right. Senator BOB COLLINS—So the situation is that in general, around the world—well, in fact, you said without exception—there is no country which allows a portable ELT in complete replacement of a fixed ELT. Mr Keith—We were not able to identify any countries that allowed that in lieu of— Senator BOB COLLINS—No. Well, what approach—and this, again, is from evidence given at previous committees—is being adopted by the Australian defence forces in relation to ELTs? Mr Keith—The Australian defence forces have several—in our research again, and I am going back to my memory banks a little bit on this—but they do have several different beacons that they have allowed, including portable for the ejection seat equipment type aircraft, but they are, in fact, going to the similar standards to the TSOC 91A. Senator BOB COLLINS—That is what I thought. In that case then, again, one of the points that I think was made—and not unreasonably—was that because of the highly trained nature of their crews and their degree of fitness, and all the rest of it, they found some value in the personnel also carrying the portable ELT—a mile in front of the average airline passenger in terms of how to use it, and so on. But they are, in fact, going to the fixed ELTs as well. Mr Keith—We would have to go back and look at our analysis on a lot of their applications, their transport aircraft and that sort of thing.

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Senator BOB COLLINS—Having said all of that, and I find it compelling, can you please explain why we are doing what we are doing? Mr Keith—The research that we did and the cost benefit and the decision we reached, and the CASA board reached, in January of this year was based on the best international standards, the best technical and legal advice and regulation that we could come up with. The government policy was different and it did not meet the government policy. And so it is simple; we were asked to give some options that would meet government policy, which we provided. Senator BOB COLLINS—How is that government policy communicated to CASA? Mr Keith—Well, I guess it was from the minister. Senator BOB COLLINS—How? It is an important question, let me assure you. Do you know how the government directive overriding the safety regulator—and let me tell you, as somebody who is a frequent flier, I am utterly appalled at this situation, Mr Keith; and you have been here 18 months, and might I commend you on the job that you are doing, I get a lot of good feedback around the traps, but for those of us who have been here longer—I am personally not aware of any other example that I can recall in the 20 years I have been in this business where this has happened. You would agree, would you not, and particularly because of our demography—I mean 17 million people, lots of spare country and mountains and all the rest of it—and all of the examples which BASI and CASA have canvassed and it has been debated in the parliament in terms of accidents: would you agree, and clearly the research shows this, that fixed the automatically triggered ELT has the potential in Australia not only potentially to be more effective in saving lives but also the mundane but important matter of cutting down the huge costs, potentially, of search and rescue operations? Mr Keith—Well, let me just back up one step. The fact is that we provided four options to the government to make the decision: one was what we had originally proposed in January and three that would meet the government policy. If I had my druthers on this issue I would require both because if you describe the crash scenario, each could have an advantage and so I think both could be a requirement, as far as I am concerned. From a cost standpoint, that would be extremely costly to the operators, to do something like that. Senator BOB COLLINS—But from a safety regulator’s perspective? Mr Keith—From a safety regulator’s perspective, I guess this is one of the things—we spend our time trying to prevent accidents, number one—that is the first priority. This is an after the fact and that is quite honestly why I did not feel this was an issue that was worth any more debate. There was a lot of concern out there about fixed automatically activated, and there were specific—we have a small, a statistically small, database here and there was a number of accidents where the portable, in fact, had helped the search and rescue. With a small statistical database you cannot really say one is better than the other. Senator BOB COLLINS—No, and in fact the sensible thing to do in that situation, is it not, is to have regard to comparable international practice where the database is larger and the situations are truly comparable. Senator Alston—Can I say that this is a very interesting discussion but it is really not appropriate to be pursuing Mr Keith’s personal preferences or views any more than it is appropriate for your personal views to be part of the exploration of the estimates process. In other words, you can ask about the advice that he gave, you can ask about various things that

RURAL AND REGIONAL AFFAIRS AND TRANSPORT RRA&T 82 SENATE—Legislation Tuesday, 17 September 1996 led up to the government’s decision, but you should not be debating the merits of an issue with a public servant. Senator BOB COLLINS—Mr Chairman, with respect, the Minister has not been following this debate. This is more— Senator Alston—You will always use every technique to say that you are right but I am simply saying to you I do not— Senator BOB COLLINS—Can I just respond? If you give me an opportunity I will do so. I think in fact, with respect, I have more than cooperated with your wishes tonight. Senator Alston—I am not being critical of you— Senator BOB COLLINS—Mr Chairman, can I just say this is not an interesting matter. This is a matter, and no one at this table would argue it— Senator Alston—It is a debate on policy. Senator BOB COLLINS—With a direct reference to the budget and we have already covered that, with respect, Minister. It is a debate of vital concern about an extremely important piece of safety equipment— Senator Alston—That may well be so, but you cannot ask public servants for their personal views on policy issues. Senator BOB COLLINS—It is not Mr Keith’s personal views I am seeking. I do not know whether you have caught up with the fact that Mr Keith is the chief executive officer of australian safety regulation in aviation safety. It is his views in that capacity I am seeking, and to suggest that I should not is a nonsense, Minister. Senator Alston—You are not entitled to ask him in any official capacity for his views. Senator BOB COLLINS—I beg your pardon? Senator Alston—You are entitled to ask him for the advice that he might give to government and then for government—you can debate government policy but you cannot ask him to effectively debate the merits of a government decision. Senator BOB COLLINS—I beg your pardon? Senator Alston—You cannot. Senator BOB COLLINS—Is it a fact, Mr Keith, as per the view you have just advised in respect of the emergency beacons—which are triggered in the event of an aircraft accident in this country; assist in getting quick help to the injured people if they are still alive; and save significant costs to the purse in terms of search and rescue—and I know that you have already put this on the record: that it is international practice, without exception, to use beacons which are automatically triggered in the case of an accident and it is not international practice to replace those beacons with portable beacons which have to be manually activated by survival? Mr Keith—We were not be able to identify the countries. Senator BOB COLLINS—Thank you. And it is in fact the official position of the Safety Regulator that that situation should apply in Australia? Senator ALSTON—You should not be asking him that. You are entitled to ask him about international practice but you are not entitled to ask him to debate the merits of government policy.

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Senator BOB COLLINS—Mr Chairman, I am happy to have this moved as a special reference to a senate committee. The nonsensical position the minister is putting is absolutely a laid down misere. Senator ALSTON—You are entitled to debate the merits of these issues till the cows come home, but you cannot ask a public servant to take a position that is at odds with the government. Senator BOB COLLINS—Minister, are you telling me seriously that it is the government, with all of its strengths and expertise, which should be technically controlling aviation safety in Australia? Senator ALSTON—You are not entitled to debate the merits of a decision made by government. Senator BOB COLLINS—Minister, these are matters of public record and I will continue this line of questioning, even if we are here until 6 o’clock. Anyone who travels by air— Senator ALSTON—Hang on, you can ask him the information that he provides to government. But you cannot then ask him to comment on whether he agrees that the government decision is or is not one that he would have taken or whether he believes there is a different conclusion— Senator BOB COLLINS—Mr Chair, the minister seems to be way off the wavelength on this matter. This is not a question of political policy, Minister. This is the Australian Safety Regulator that makes decisions on air safety, independent of the government. Minister, can you not get that through your head? We are in diabolical trouble in this country, if this is the official view of the government. Senator ALSTON—Do not resort to that. Let us get back to the question and keep moving. Senator BOB COLLINS—The Safety Regulator determined that automatically triggered beacons were in fact the appropriate beacons to use in international practice. We have established that. You, Mr Keith, provided us with the advice that this did not happen because the government took a decision that instead portable ELTs were to be used in Australia— uniquely in the world. What I asked you—and it was a proper question—was how this policy decision of the government, supported by Senator Alston, was communicated to the Safety Regulator. Mr Keith—We were asked to provide some options that would meet the government policy, which was that fixed or portable would be allowed. We went back and did our work and we provided options. Senator BOB COLLINS—Let me get right down to tin tacks. Is it a fact that the direction from the government that Australian aviation—unique in the world—would use portable, manually triggered beacons communicated to CASA by the senior adviser in the Minister’s office, Mr Sharp. Mr Keith—I read government aviation policy early on—before the election even—and knew what— Senator BOB COLLINS—It was in fact, in the AOPA editorials as you recall— Mr Keith—Right. I knew what the policy was. As to how was it actually communicated, I am not sure whether I got a letter or it came up at a meeting. I would have to go back and take that question on notice.

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Senator BOB COLLINS—Could I ask you specifically, Mr Keith, to please confirm whether the direction from the minister was in fact communicated to the Safety Regulator by the senior adviser—that is, a non-departmental officer, Mr Wallis, who has been with the minister for some years now? Was it communicated to CASA by John Wallis who works for the Minister for Transport? Will you check that? Mr Keith—Okay. Senator BOB COLLINS—Thankyou. I say again for the record: I am amazed that, on an issue this vital to the safety of everyone using the aviation system—which is why I am astonished, Minister, at the attitude you have taken to this—the technically expert and independent safety regulator responsible for aviation safety has been directed by the political arm of the organisation, as effective as it might be in other regards, in respect of the fitting of a particular piece of equipment for crashed aircraft. The amendment was not only in respect of the type of equipment fitted, but also as to when the equipment would be fitted. The original decision taken this year—as a result of the great concern, canvassed at length in the House and the Senate, as to the accidents that had occurred and with all the debate around the beacons not going off, and so on—is to be deferred until next year. We have had advice that this was a matter that the government had an involvement in. We know that the time was changed—correct me if I am wrong—to 30 June or 31 July next year. Mr Pike—It is 31 July. Senator BOB COLLINS—Mr Keith, I am asking you whether you are aware that the minister’s office, as well as being directly involved in directing the safety regulator to use a piece of equipment that in fact it did not want to use—the answer that you have given as head of the organisation is one with which I agree and is consistent with the Bureau of Air Safety Investigation’s position, as they would like to have both—was directly involved in communication with an Australian company in respect of the delay of this matter to enable this company to commercially take advantage of the deferment? Mr Keith—No, I am not aware of that. I have taken a question on notice about what the original date was. We had recognised that by the time we came up with our recommendation in January of the July date this year it was going to be awfully short. So I have to go back and look because— Senator BOB COLLINS—I have accepted your taking that on notice, but this is a different question. Mr Keith—Yes. Senator BOB COLLINS—I have asked you to confirm the advice I have that the government’s political or policy directive, whatever you want to call it, that our aviation safety should not be protected in the same way as it is everywhere else in the world—with automatically-triggered beacons—be changed. Was that delivered to the organisation via the minister’s senior political adviser? I would like to table, for the benefit of the committee members, a copy of a facsimile transmission that was sent to Mr John Sharp in the minister’s office from a company known as Kinetic Technology International. Senator Alston—To whom? Senator BOB COLLINS—To the minister himself, on 2 May this year, from a Mr Mark Knowles. The company is Kinetic Technology International, a company which—I have not checked on this today because I have not had time—I believe has as one of its principals a

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Tuesday, 17 September 1996 SENATE—Legislation RRA&T 85 very prominent individual in AOPA. The facsimile, addressed to the minister personally and dated 2 May 1996, says: Dear Sir, Regarding the supply of personal EPIRBs to the aviation industry: Kinetic Technology International Pty Ltd is able to design and manufacture bulk quantities of a personal EPIRB to the Australian/New Zealand Standard "AS/NZS 1330:1995 by the end of June 1997. This device could also be fully approved for use by that time assuming the cooperation of relevant authorities. If regulations were to be published in May 1996 approving the use of this type of device in aircraft then we would be prepared to take advance orders for delivery prior to 1st July 1997. Yours Faithfully, Mark Knowles. Can you advise when the regulations were published that these pieces of equipment would be required on, amazingly, the same date of 1 July 1997. Mr Pike—The legislation was gazetted on the 5 June 1996 and the commencement date is 31 July 1997. Senator BOB COLLINS—So the regulations were promulgated about a month after this facsimile message was sent to the minister directly; is that correct? This is dated 2 May. Mr Pike—We obviously have not seen— Senator BOB COLLINS—I will table it now. Senator Alston—Just the date. Senator BOB COLLINS—I am sorry; I did not catch the date in June. Mr Pike—It was 5 June that it was— Senator BOB COLLINS—Early in June; so it was about a month after this facsimile message was sent direct to the minister from this company that they could get cranked up and ready to go, as long as we waited a year to do it. CHAIR—Do you want that to be tabled? Senator Alston—Yes. Senator BOB COLLINS—I have some more questions. CHAIR—We are just tying this up. There is a request for it to be tabled but it has been read into the record, so it is a double kill. Senator BOB COLLINS—Probably an unfortunate choice of words in relation to this issues, but never mind. CHAIR—Right; we agree that it be tabled. Senator BOB COLLINS—Are you, or anyone else from the safety regulator, aware of any other occasion where, in respect of the technical specifications of a piece of equipment determined by the experts in the aviation safety branch, CASA, the decision of the safety regulator to fit that equipment to Australian aircraft was directly countermanded by a ministerial decision, a decision of the government, that recommended instead another piece of equipment? In the time you have been in the organisation, are you aware of any occasion where that has occurred? I have been doing these estimates for 10 years but I cannot remember any such occasion occurring in the last decade. Can you?

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Mr Pike—Speaking personally, I cannot, but I am prepared to claim Alzheimers. Senator BOB COLLINS—Sure, but not while you have been with the organisation? Mr Pike—More so since I have been with the organisation. Senator BOB COLLINS—The minister will be pleased to know I have not much longer to go on this. CHAIR—Are you winding up? Senator BOB COLLINS—I will be shortly. This is a matter of public not private knowledge. It could not be much more public. You do not have to guess too hard, considering the amount I fly, where this comes from. Are you aware that direct countermanding of a technical safety decision by the regulator has substantially demoralised, angered and affected employees within your organisation? These people are well aware that this happened. These are people I have known for an extremely long time. These are real professionals in your organisation, who take their jobs very seriously. Are you aware that they cannot understand why they bothered getting their engineering qualifications and working for a safety regulator when the final determination on an automatic beacon—that saves lives and so on in the case of a crash—is actually determined by the minister’s office rather than by the regulator being unfettered in the technical decision on what should be fitted. Senator Alston—When you say it is a matter of public notoriety, you may be right, but it is simply not appropriate to ask bureaucrats to comment on the level of morale of their subordinates. That has nothing to do with— Senator BOB COLLINS—This is an astonishing— Senator Alston—I know that you want to disregard the point that I am making. You are entitled about facts, you are entitled to ask about opinions but you are not entitled to ask about some presumably secondhand assessment of how others reacted to a decision. Senator BOB COLLINS—Mr Keith is the chief executive of the organisation— Senator Alston—They might employ manic-depressives. It tell you nothing about whether— Senator BOB COLLINS—Minister, you are not actually distinguishing an already pretty sorry tale— Senator Alston—I hope you are understanding the point I am making, that the reaction of individual employees to a particular decision tells us nothing about the merits of the argument or the processes involved. It is simply not relevant to the exercise. Senator BOB COLLINS—Mr Chairman, I will repeat the question because it is—as I am sure you know—completely relevant. Mr Keith, as the chief executive of the organisation, are you aware, as the chief executive of your organisation, of a degree of disaffection within the ranks? I will repeat, Minister, for your benefit, that this is not a secret; it is out there in the public domain. Senator Alston—If it is a matter of notoriety it does not need to be asked. You are not entitled to ask him to tell us what he thinks might be the emotional reaction of some of his employees. It simply has nothing to do with public policy, it has nothing to do with the estimates process, and he should not answer those questions. Senator BOB COLLINS—Mr Chairman, I would just like to explore that. I want this on the record.

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CHAIR—Let’s get on with it. Senator BOB COLLINS—BASI will be fascinated to hear this. Are you saying, Minister, that as far as this new government is concerned, the opinion of the chief executive of CASA on the level of morale inside his organisation is not relevant to the issue of aviation safety in Australia? Senator Alston—You are asking him to comment on how some of his employees might have reacted to a government decision. That cannot, in any shape or form, assist us in debating the merits of the decision or the facts that are involved. Senator BOB COLLINS—Could I ask you the first question— Senator Alston—I might as well ask you whether some of your staff are upset on occasions. Does that make your actions any less right? Of course it doesn’t. Senator BOB COLLINS—No, only it is relevant— Senator Alston—It would be very unfair to judge you on that basis, wouldn’t it? Senator BOB COLLINS—I have to say it would be a very relevant question to ask me if I was making decisions about what sort of safety beacons were fitted to aircraft in Australia—but I am not. And I never as aviation minister— Senator Alston—You understand the point I am making, Bob. You can debate that as much as you like, quite meritoriously. You say it is a matter of public notoriety, so I do not know why you need to ask if that is the case, but— Senator BOB COLLINS—Of, yes, you do. Senator Alston—But many of— Senator BOB COLLINS—Mr Chairman, I have asked the minister the question I have been asking all night. I will ask you the question again, minister: is it a matter of any concern to you, as a minister of the government—although you are representing the minister for transport here you have no reason to be up with the detail of this particular issue—is it of no concern to you at all that, for what appears to be the first time ever, a political policy decision has been taken which overrides the position of the aviation safety regulator in Australia in respect of a vital piece of emergency equipment to be fitted to Australian aircraft? Senator Alston—I do not mind you debating the merits of that issue; it is not a matter for me. Senator BOB COLLINS—You are here at estimates committees representing the government. I am asking you if that is a matter of concern to you, representing the government. Senator Alston—I have no objection to you debating that issue. What we were talking about a moment ago was how you believe some people in the department have reacted to a government decision. Now that cannot possibly help us. Senator BOB COLLINS—Mr Chairman, I just ask you— Senator Alston—You are now leaving that point? I am delighted that you are moving on. Senator BOB COLLINS—No, I am not, I am coming back to it. Minister, I am asking you the only question I have asked you all night. Senator Alston—But if it is asked in the context of justifying the earlier question, it is simply out of order.

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Senator BOB COLLINS—Minister, you represent the government here. Is the government concerned about this issue? Senator Alston—Look, by definition, if we make a decision which, as you put it—I do not understand the detail—overrides the advice that we get from others, we do not do that in a cavalier or capricious fashion. We presumably do it on what we regard as the best advice that we can have and conscious of the consequences of the decision. I cannot say any more than that in principle. Senator BOB COLLINS—Minister, that is fine; thank you. Mr Keith, I ask you: as the chief executive of CASA, has it come to your direct attention that there is a level of disaffection within the organisation among your technical experts— Senator Alston—I have just told you that he is not to answer— Senator BOB COLLINS—I will finish the question, thank you, Minister. Senator Alston—You can’t. Senator BOB COLLINS—at having a highly researched—it has been, as you said yourself, a deeply technically researched issue by CASA—determination on what was the most appropriate equipment to be fitted overridden by a policy decision of the government? Senator Alston—I say again that this has nothing to do with the merits of the issue. Senator BOB COLLINS—Are you saying that you will not direct Mr Keith to answer the question? Senator Alston—Yes, I am telling you that he is not to answer that question. CHAIR—Senator Collins, you have asked the question four times. The minister has indicated the situation at the table. It is outside the realms of estimates— Senator BOB COLLINS—We will have it moved to another committee. CHAIR—That is fine; you can move it to another committee. Senator BOB COLLINS—Chairman, I have some more questions to ask. CHAIR—You said this was your last one a little while ago. Senator BOB COLLINS—No, I didn’t, Mr Chairman. I have about 200 more. CHAIR—Get on with it, but at half past 11 we will make a decision about how long we are staying here for. Senator BOB COLLINS—I have to say I am profoundly dismayed at the answer I have just heard, Minister. CHAIR—Let us get on with the business of what we are doing. The decision has been made—next question. Senator BOB COLLINS—I am getting on with the business, Mr Chairman. Did CASA itself, Mr Keith, seek advice from companies, agencies, or whomever, as to who would be potentially able to supply this equipment in Australia? Mr Keith—Yes, we did. We went through a consultative process. With the industry, not just with suppliers. Senator BOB COLLINS—Are you able to—again, without going into the gory details— advise the committee of what the result of that process was in respect of the number of companies in Australia that would be equipped to provide this equipment locally?

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Mr Keith—I cannot tell you off the top of my head how many suppliers there were in the country. Senator BOB COLLINS—Would you be happy to take on notice this question: can you provide the committee with the results of the inquiries which CASA made as to suppliers or potential suppliers. Can you also include in that advice, in terms of the research that you did on this, the timing—which is a crucial factor in what I am pursuing here—that would have been available for most companies in gearing up for the provision of this equipment. Do you know whether the regulations—that is, the technical requirements of this equipment—were changed in any way from the position that the board would have preferred with fixed equipment, in other words, equipment which was compatible with EPIRBS, equipment which was not necessarily of an aviation variety? EPIRBS are used more broadly for research and rescue in marine situations. Mr Keith—I want to make sure I understand your question correctly. The regulation we proposed was that it would be a C91 or C91A, and if it was installed it could stay installed. The options that we provided and the one that was selected allowed for an approved portable beacon that met the Australian/New Zealand standard, which is different than the Aviation standard. That was the only change I can recall. Mr Pike—The whole process went through a number of iterations. We had originally looked at having an exemption for aircraft that were on training operations within 50 miles of the departure aerodrome. We ultimately changed that to all flights rather than just training flights. We do have, obviously, a comparative table that we would be happy to provide you which shows the final regulation as it was gazetted. Senator BOB COLLINS—The specification I was referring to—and this is by way of a question—in terms of any indications that CASA received from the government, was to include EPIRB and PLB standards which specifically did not apply to ELTs for aeronautical use. Mr Pike—That gets back to the question of portable beacons. Senator BOB COLLINS—Okay. Thanks, Mr Chairman. I do have some other general questions for the CAA but at this point I think it is fair to— CHAIR—No, no questions. Senator BOB COLLINS—I will not detain you long. I have got only about five minutes of additional questioning. The FAC provided the committee with evidence as to the application that it made recently in respect of increasing its aeronautical charges at airports. I am aware that CASA has a formal process—I assume you still do this—of consultation with industry on the question of your charges, and in fact over the last few years there has been a progressive decline in the level of those charges. Could you advise the committee as to when that next round of discussions with industry on CASA charges is due to take place, and does CASA anticipate an increase? I guess that is a silly question, in that it never goes down. Mr Pike—I am not sure that we do actually consult, Senator. Senator BOB COLLINS—You used to. Mr Keith—The CAA did on a whole regime of charges, but the safety authority— Senator BOB COLLINS—I attended a number of them. The CAA had a formal process whereby— Mr Pike—I am with you. No, we do not have that industry consultative process.

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Mr Keith—The safety regulatory side was a small amount so CASA, the safety authority, has not instituted a formal consultation on regulatory charges. I think that is a policy matter also, on the whole question of charges from the safety side. We have not really started it; we do not have a process now. Senator BOB COLLINS—That is fine. Mr Pike—Obviously, we are not a profit-making organisation either. Senator BOB COLLINS—No, that is true. So you see no need for the introduction of such a routine? Mr Pike—Our present funding arrangements are made up of a mix of excise, government appropriation and a fee for regulatory services that we provide. That is a relatively small amount. Senator BOB COLLINS—The last questions I had, Mr Chairman, are of a general nature. I put some of these to BASI, which indicated that it did not have a direct involvement in this. A truly obvious question and, I am sure, one you were expecting, concerns the recent publicity that was given to some sadly behind paperwork in respect of Qantas and its maintenance. I put the same question to you as I put to BASI, that you would clearly expect that in respect of these issues there would always be a backlog of some sort, but it seemed to even a reasonable person to be somewhat excessive. In the case of Qantas, could you give an indication, firstly, of whether that report was substantially accurate, secondly, how it got that far behind, and, thirdly, whether the airline has repaired the problem. Mr Keith—These were not safety problems with the airline. Senator BOB COLLINS—No. Mr Keith—This is nothing more than their internal system for updating their manuals that they use to run the company, and some of them were as simple as spelling errors. It is improvements in their quality processes that they have inside their company. We audit their adherence to their quality processes. So this was really not a safety issue at all but it is something that we want to make sure that they do in fact get incorporated in the next cycle of revision to their manuals. Senator BOB COLLINS—But in respect of the audit function that you do have—and, I might add, in respect of at least the concern that CASA was alleged in the press report to have about this—there was, I assume, some degree of concern in the organisation as to the extent to which these things had got behind. Mr Keith—That was part of the audit function, to say, ‘This quarter you are this far behind and we would expect you to be caught up in your production cycle of your next manual revisions.’ Senator BOB COLLINS—Are you aware as to whether they have in fact done that since the audit? It does not matter, Mr Keith, I am quite prepared to take that on notice, if you could advise the committee at a later date. Mr Keith—We will take that on notice. Senator BOB COLLINS—The last general question I have for BASI relates to what has been a matter of significant debate everywhere, but here in this parliament over the last couple of years—that is, the general concern, not unique to Australia, of GA, in particular, and regional operators. You would recall examples of Monarch, which acted, at least then, as feeder airlines or subsidiary airlines to the much larger airlines and used similar ticketing and

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Tuesday, 17 September 1996 SENATE—Legislation RRA&T 91 so on. This entire relevant question relates to the financial delicacy, state of health, of these organisations giving a pointer to potential safety problems. Since this incident and the coronial inquiry and all the rest of it, could you advise the committee, in a general sense, Mr Keith, as to what the organisation has done in cooperation with the operators to improve this situation? Mr Keith—That is a very general question. It really gets at the heart of what we are doing in the entire organisation to get the organisation rebuilt. Practically everything we are doing is to get our processes, procedures, training and organisational discipline internally established. The heart of the strategic plan is to get the regulatory structure rewritten with industry participation to address a lot of the concerns that have been identified from the accidents and incidents in the past. That is a long-term program. In the interim, we have had special emphasis inspections. We are involving the industry and redefining our role on how we can be more efficient and effective in finding the carriers. We have financial fitness that we are using now as a part of our review process. But before we issue operator certificates, we have a number of initiatives under way. We will submit for the record a description of the programs that we have under way. They are very involved and very comprehensive. We will provide that for the record. Senator BOB COLLINS—Thank you, Mr Keith, we appreciate that. Thank you, Mr Chairman. CHAIR—That finishes subprogram 1.5 and it is now 11.30 p.m. I think we should now have a look at where we are travelling and how long we are going to go for. Minister? Senator Alston—Because Senator Collins is, once again, in the best position to give us advice on this, if we could dispose of Airservices Australia tonight, within a reasonable time, then I think we should attempt to do that. It does seem to me that beyond that we are getting into areas of some substance which could not reasonably be disposed of before —maybe not even if you sat until four in the morning. So I would suggest in the interests of all of our health that we should adjourn after Airservices Australia or midnight, whichever is the earlier. Senator BOB COLLINS—Mr Chairman, for the advice of the committee and the minister, we can, so far as I am concerned, fairly expeditiously deal with Airservices Australia. I am afraid I have to agree with the minister’s assessment of the rest of the program, in the sense that there are a significant number—big mobs, in fact, to use an old Northern Territory expression—of questions in respect of rail, as you would no doubt expect and have anticipated, and the regional development part of the portfolio. I think that I could safely say, in respect of our previous discussion, Mr Chairman, we probably could not conclude that by 2 o’clock in the morning. CHAIR—Well, if we look at the last section, CASA took precisely one hour—from 10.30 to 11.30. So let us bat on with Airservices Australia. We will go through and try to finish by midnight. The others I would suggest, road and rail policy development, and railways and regional development will probably need an hour each, I would say, minimum. Senator Alston—Previously we have gone more than three hours over on the estimate for aviation, so I would have thought we could safely assume they will be at least an hour. Senator BOB COLLINS—I might add, too, that we previously took about half the time it took under the previous government and previous opposition. CHAIR—That has nothing to do with it.

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Senator Alston—Well, I have to say, that is because we could not keep you quiet when you were in this chair. CHAIR—We shall bat on with subprogram 1.7. Could we have the officers up for 1.7. Senator Alston—I take it, Mr Chairman, that we can formally excuse the rest of the programs. CHAIR—Yes. We will have to discuss when we are going to come back. We will let you know. [11.31 p.m.] Subprogram 1.7—Air Services Australia Senator MURRAY—Mr Pollard, just a quick question. I always get a bit nervous when I see that non-essential services are being cut when the body involved is a search and rescue body amongst others. Those non-essential services that are being progressively cut from your functions, are they being cut as a result of an independent assessment that they are non- essential or are they being cut as a result of someone saying to you, ‘You need to cut your budget, now find some services that you can get rid of?’ Mr Pollard—Well, senator, I will only address the period of time I have been here. First of all, we have not cut any services in the search and rescue area. My other statement would simply be that we are always looking at efficiencies, but we do not cut anything that may impact safety. We have had no direction to cut non-essential services from outside our organisation. Senator MURRAY—I draw your attention to the last paragraph on page 32, under the heading ‘Budget Measure—Airservices Australia Dividend’ which states: Airservices Australia is expected to pay increased dividends in future years as it increases earnings through general efficiency improvements, progressive withdrawal from the provision of non-essential services and increased contracting out of non core business functions. Are you telling me that you do not subscribe to that paragraph? Mr Pollard—No, sir, I think that just confirms what I attempted to say. Where we have efficiencies that we can make, and what is classified here as non-essential services—we consider search and rescue as an essential service. Non-essential would be something like an administrative function. We are looking at efficiencies where we could maybe outsource some of our business, those types of issues. But certainly search and rescue is an essential service as far as we are concerned. Senator MURRAY—So it has not affected your core activity? Mr Pollard—No, sir. We perhaps will look for opportunities in our core activities, but the first thing that we would do before we would take any of that action would be to assess what impact, if any, it would have on safety. Senator MURRAY—Thank you. Senator BOB COLLINS—Mr Pollard, is your annual report available for 1996 yet? Mr Pollard—We submitted our financial report. Our annual report will certainly be tabled within 30 days. Senator BOB COLLINS—Terrific. Mr Pollard—I might add that we are in the process of cleaning it up at this point.

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Senator BOB COLLINS—Thank you, Mr Pollard. Again, Mr Chairman, can I just indicate that we would want a reservation placed on that, simply in case any issues raised by the annual report are relevant to further questions. Thank you. CHAIR—We will have that by additional estimates. Senator BOB COLLINS—Airservices Australia this year advertised for persons to be trained as air traffic controllers. Is it correct that there were in the order of 2,000 applications for those positions? Mr Pollard—There were quite a large number of applications, perhaps even more than 2,000. I think there were some 3,000, approximately. Senator BOB COLLINS—As I understand it there was a problem with the process and it all had to be repeated. Is that correct? Mr Pollard—I am not aware of that, sir, no. Senator BOB COLLINS—As far as you are aware the advertisements were placed, at least several thousand people applied and you recruited X number of trainees from that? Mr Pollard—That is correct. There is a process that was followed. Senator BOB COLLINS—There were no problem with the Equal Opportunities Board in that process? Mr Pollard—No sir. Senator BOB COLLINS—Thank you. Have tenders been called for the supply of the air droppable survival equipment, do you know? Mr Pollard—Search and rescue equipment, sir? Senator BOB COLLINS—Yes. Mr Pollard—The board of Airservices in the August meeting passed a resolution that, in the interest of the public, because of the scrutiny and the criticism the current system had had that basically we would have an evaluation of our system versus the system known as PADS. That evaluation did occur in the week of 23 August and PADS was found to be more accurate than the Airservices system. Senator BOB COLLINS—Thank you. Do you know if Mr Laurence Gruzman is one of the tenderers for the equipment? Mr Pollard—The equipment that I referred to is from a company that Mr Gruzman either owns or certainly is associated with. Senator BOB COLLINS—I had a lot to do with them once. Have there been any trials comparing different systems? Mr Pollard—We had the evaluation that was conducted, as I mentioned, the week of 23 August. It involved some 15 to 18 drops of the two systems. Senator BOB COLLINS—Can you advise the committee whether or not the Gruzman system complies with CASA guidelines for such systems? Mr Pollard—It is my understanding that it does. We have had correspondence with CASA as it relates to the Gruzman system and our system. Mr Gruzman says that he has CASA certification. During the evaluation, I think perhaps with both systems there will be some suggestions as to how they can be modified. I can tell you that there was a CASA observer at the evaluation.

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Senator BOB COLLINS—Has the PADS system been evaluated by the RAAF, do you know? Mr Pollard—There was an evaluation some 15 to 16 months ago that the RAAF was conducting in accordance with our request—the tender issued by Purchasing Australia. They did evaluate the system up to a point when there was a problem with the system—that has since been corrected, I might add—and they terminated the test of the PADS system. Senator BOB COLLINS—Do you know whether a written report was produced from the joint review into the airdrop of survival equipment? Mr Pollard—Yes, sir. We had an individual that was basically the manager of that evaluation for Airservices. There was an initial report, and the final report was produced last Friday. Senator BOB COLLINS—Is that available, Mr Pollard? Mr Pollard—We can make it available, sir. Senator BOB COLLINS—Thank you. I would appreciate it if you could provide the committee with the report. Are you familiar with the Airservices report, the SAREDS report, from the RAAF? Mr Pollard—From the initial tenderer? Senator BOB COLLINS—Yes. Mr Pollard—I am vaguely familiar with it, yes. Senator BOB COLLINS—This is not a question properly for you, but does your organisation have a copy of that? Mr Pollard—I have seen a copy, so I am sure that we have one, yes. Senator BOB COLLINS—Again, Mr Pollard, I can ask the RAAF to do this but, if it causes you no great difficulty and you have one, could you provide the committee with a copy of that as well? Mr Pollard—Sure. Senator BOB COLLINS—The budget statements indicate that the Airservices dividend is expected to increase in future years. Is my interpretation of that correct? Mr Pollard—It increased certainly over last year, when it was $10.2 million, and we are forecasting $11.9 million this year. We would expect that to increase. I would be reluctant to say to what extent, but we certainly have more efficiencies within our organisation. Senator BOB COLLINS—Given that the government has reduced the avgas and AFTA levy as a result of collections of that levy being greater than forecast, why has the government chosen to increase the Airservices dividend rather than simply further reduce the levy? Mr Pollard—I think the reduction that you are referring to, sir, was actually the CASA part of that excise tax. Ours, obviously, is still there. As I am sure you know, we are looking at perhaps different ways of pricing for our services, but currently the excise tax is still on. Senator BOB COLLINS—Thanks. I confess that I still have not quite caught up with the new arrangements, Mr Pollard. I do apologise. Dick Smith produced a report on airspace design in Australia. Is that document also available? Mr Pollard—That document is not completed. In fact, there was a meeting with that work group today. The work group that Dick Smith was basically leading has been disbanded. Airservices has accepted their current product, so to speak. We will be working with CASA

RURAL AND REGIONAL AFFAIRS AND TRANSPORT Tuesday, 17 September 1996 SENATE—Legislation RRA&T 95 and the industry to try to make some changes and to market that document. We are quite satisfied it, with some modifications, is the way of the future. There is no final document at this time; it is still a working paper. Senator BOB COLLINS—Is there any particular reason why Airservices Australia itself did not undertake that work? Mr Pollard—I think in some ways it was a matter of resources, although we did provide some resources to Mr Smith—some of our current employees and an individual that used to work for the then CAA. We probably could have done that. I guess I would accept accountability for most of that. Mr Smith certainly has the knowledge of the system and, rather than me spending a lot of time with him in discussion, I tried to utilise his talents. Senator BOB COLLINS—It did not have anything to do with the fact that during the election campaign AOPA, of which Mr Smith is the president, campaigned vigorously in its publications—which, I might add, I will provide to the committee—for the coalition on the basis that they had been assured that the minister would overturn the decision of CASA in respect of the fitting of fixed beacons to aircraft and that the light aircraft owners would in fact get their way and be allowed to fly their aircraft in the only country in the world which uniquely allows portable beacons instead of fixed beacons? It did not have anything to do with that, did it? Mr Pollard—Not with my decision, Senator. Senator BOB COLLINS—No, I would not have thought so either. What process was followed in the appointment of Mr Smith? Mr Pollard—What process was followed? Senator BOB COLLINS—Yes; to this particular job. Mr Pollard—Basically it involved a discussion with Mr Smith, and included Mr Evans, the General Manager of Air Traffic Services, who is with me here tonight, and Mr Brian Kendal. We sat down with Mr Smith and basically developed terms of reference as to how he should approach this project, whom he should talk to, whom he could talk to, whom we would not permit him to talk to and a process for talking to our employees. We also followed a process where we gave him a work area outside of our building, and we wanted to keep that self-contained as far his efforts were concerned. I think generally we were successful. Senator BOB COLLINS—It was the decision of Airservices Australia to appoint Dick Smith to do this job? Mr Pollard—It was basically my decision, yes. Senator BOB COLLINS—Was a tender process followed? Mr Pollard—No; we paid Mr Smith nothing. That is an important factor. Senator BOB COLLINS—Sorry? There is a bit of noise over here. Mr Pollard—We did not pay him to do this. Senator BOB COLLINS—No. Mr Pollard—He did it for free. Senator BOB COLLINS—Yes; that was my advice as well. Mr Pollard—There was no tender process. Senator BOB COLLINS—So you got a freebie on this one.

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Mr Pollard—Yes. Senator BOB COLLINS—Thank you, Mr Chairman. CHAIR—There being no other questions, we will adjourn for the night. Committee adjourned at 11.45 p.m.

QUESTIONS ON NOTICE The following questions were placed on notice: Mr McMullan to all departments— For each of the agencies within your portfolio, for full-time and part-time permanent and temporary positions as separate categories, and for each of the periods from the election until 30 June 1996, the current financial year and each of the estimates out years: what are the numbers of positions that have been or will be cut; what is the classification profile of these positions; what are the capital city suburbs, regional cities or towns, and the numbers in each, in which these positions are located; what are the numbers of positions by the above locations that will remain in the agencies after the cuts; what are the changes, such as abolition of functions or efficiencies, that will allow the agencies to operate effectively with these numbers; what are the numbers, by gender, of officers who have accepted redundancies; what are the costs of these redundancies; what is the estimated cost of future redundancies; what are the numbers, by gender, of officers who have been or will be declared excess under the award (General Employment Conditions Award); what is the effect on job numbers in affected organisations of the application of a three per cent efficiency dividend to Commonwealth Own Purpose Outlays and Specific Purpose Payments.

Senator Conroy to the Department of Transport and Regional Development— Subprogram 2.1—Road and Rail Policy What is the likely construction timetable for the upgrade to the Mt Barker Road. What are the likely savings per year likely to be realised as a result of the introduction of maintenance contracts for National Highway work. What road user organisations such as RTF or AAA are to be given a say on the prioritisation of work on the National Highway and why is this to be done. Why was the House of Representatives Standing Committee chaired by Mark Vaile the Member for Lyne asked to report on the question of road funding. Subprogram 2.1—Pacific Highway Can the Minister give an indication as to the likely time frame for the construction of the Chinderah Billinudgel section of the Pacific Highway upgrade? What will the condition of the Pacific Highway be after the completion of the proposed ten year program and what level of reduction in car fatalities can be expected as a result.

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Subprogram 2.1—Road transport reform Can the Minister give an indication when the heavy registration vehicle module will be approved and what the likely savings to operators and registration authorities are likely to be. What can be done to ensure that the good experience developed by the National Road Transport Commission is not lost to Australia when the sunset clauses of that organisation come in to effect. Subprogram 2.2—Road safety What is the likely timetable for the abolition of ADR 19 which mandates for lights on in motorcycles and why is this ADR being abolished. What new Coalition Government initiatives are under way to demonstrate to the public the benefits of vehicle safety equipment such as airbags. What initiatives has the Government taken since coming to office to come to grips with the question of vehicle emissions. How is the Government proposing to make organisations such as the FORS and the BTCE more responsive to the needs of our society. What is the present level and cost to the community of vehicle trauma and what has the Federal Government done about it since coming to Office.

Senator Ferris to the Department of Transport and Regional Development— Subprogram 4.1—Regional development I note that the Department has yet to provide an answer to the question asked by Senator Tambling in the Senate on 21 September last year (No. 2527), relating to Better Cities Mark I. These questions were: (1) What applications and/or proposals for funding under Better Cities Program Mark I were unsuccessful or rejected? (2) (a) Who were the sponsoring applicants in each instance; and (b) what was the nature, manner and form of each proposal? (3) On what dates were unsuccessful applications submitted? (4) By whom were the decisions to reject the proposal made in each instance? (5) On what dates were each of the successful applications or proposals submitted and approved. Note, I would like to reactivate that question in my own name, and to also ask: (6) Were any reasons given for rejecting the unsuccessful applications, and if so what were they? Did the former Minister or the Department reject any Better Cities Mark II projects which had been nominated by South Australia? Did the former Minister or Department suggest Better Cities II projects for South Australia which had not been nominated by the State Government? If there were such projects, did they satisfy Better Cities guidelines? Did the Department nominate to the States particular Better Cities II projects which it was interested in progressing? By what criteria were any such applications rejected: Could you provide me with a complete list of the expenditure the Department has directed towards South Australian regions under the Better Cities program since its inception and an indication of the specific regions and projects to which this expenditure was allocated and why these areas were chosen? What criteria were used to evaluate the general effectiveness and efficiency of the Better Cities program? Did these criteria change over the years the program has been in existence? And if so, how? How did the strategy behind the Better Cities Mark I generally differ from the Mark II program?

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What has the Department learnt from administering the Better Cities program with respect to the management of urban development initiatives, specifically in the context of coordinating funding arrangements under Commonwealth-State programs with similar goals. Will any further grants or funding be allocated under the Better Cities scheme during this financial year? If so, what initiatives will these funds be spent on and in what regions? What applications from South Australia remain from Better Cities Mark I and Mark II and will these applications be included?

Senator Crane to Federal Airports Corporation— Subprogram 1.6—Olympics What examination has the FAC made of the ability of Sydney airport to handle the Olympics? How did Atlanta’s airport cope with the Olympics? Did the experience in Atlanta suggest the real challenge is in ensuring people can get to and from the games venues during the Olympics? Subprogram 1.6—Aeronautical charges The FAC has proposed an average 13.8 per cent increase in landing charges but the Australian competition and consumer commission has recommended a slightly smaller increase of an average 10.8 per cent. What is the FAC’s response? When was the last time the FAC increased landing charges? What was the justification for the increase in landing charges?

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