[Peetwo]

The Harfwit gets grilled over ASA toxic culture - 

Yesterday Harfwit appeared before the RRAT committee, the following was the basic ToR and tabled documents:

 

Oversight of Airservices Australia

Background Information

• In May 2020, Airservices released the report A Review of Culture at Airservices Australia, following a broad and independent review of the workplace culture undertaken by Elizabeth Broderick & Co. (PDF)
  

• Correspondence to Senator Susan McDonald from Mr Jason Harfield, Cheif Executive Officer of Airservices Australia. Received by the secretariat on 21 August 2020. (PDF)
  

Public Hearing

• Friday 28 August 2020, Parliament House, Canberra - Program (PDF)
  

  

To view the hearing click HERE and once the Hansard is published I will put up.

It took a while(??) but finally the Hansard Transcript is out - see HERE. 

 An extract of interest and intrigue...

CHAIR: That's fine. Thanks, Senator Antic. I have some questions. I have been looking at Elizabeth Broderick's report and the progress update. I assume that, given the amount of work you've done in this space, you're conducting surveys of the workforce to understand their engagement with this process and how they feel it's going?

Mr Harfield: One of the changes that we've also started to introduce is that we will be doing rolling surveys with the organisation on a regular basis. We used to do a quite extensive employee opinion survey once every two years, with a pulse in the interim year. We are now moving to do this on a continued rolling basis rather than on an annual basis, for that very reason.

CHAIR: That's very good. I want to ask you about the impact that COVID has had on the organisation. How are you going with maintaining your staffing levels? Has government funding assisted you in that?

Mr Harfield: Yes. If I could step you through it, it was an organisation that was set up to be fully funded by industry charges. With the reduction in air traffic that has occurred, not only have we seen a 90 per cent reduction in air traffic; we've seen a comparable reduction in our revenue as well. What the government assistance and funding that we have been provided with has assisted us in doing is—we need to work over three time horizons. Not only are we dealing with the traffic that is still there and operating today; we have to operate and provide our services whether there is one aircraft flying or whether there are a thousand aircraft flying. We don't have the ability to determine that we are only going to service Sydney to Melbourne, for example. We still have to continue to provide those services over 11 per cent of the earth's airspace. We also have to be in a position to ensure that when the industry does start to recover we're there and able to manage that increase, because if we are not in that space and we hamper that recovery then it will have a flow-on impact on what's going on. We also need to start repositioning the organisation over time to what I would call the new normal, where all our predictions et cetera, with the changing shape of the industry, are that, in a few years time, post COVID, we will be probably at 80 per cent of what we were. The government assistance, which we are grateful for, has allowed us to do this in a very measured and controlled way so that we can balance these issues in an environment that is changing on a monthly basis. It's allowed us to manage this and retune our operations to move into what we call a COVID-safe environment, so that, if we have an infection, for example, we are able to minimise the flow-on effect so that we can continue providing services while at the same time ensure the health and wellbeing of our staff.

CHAIR: Alright. So you've not had any job losses?

Mr Harfield: No.

CHAIR: Is Airservices responsible for monitoring parked aircraft? Mr Harfield: No, in the sense that that's the airline and the airport. We would be there to deal with it, if they were being moved around—that is, controlling from an air-traffic perspective—and potentially turning out if there's an incident involving that parked aircraft. CHAIR: What are the risks with aircraft parked up? Are they as dangerous as some people claim?

Mr Harfield: From our perspective, the risk profile depends on the advice we are given from and through our dialogue with the airline as well as the airport. The reason I say that is that how they configure and how they do the parking of the aircraft would define what our knowledge is. It depends on how the airline decides, and what procedures they put in, to put the aircraft into storage. Have I explained myself? I don't know what the risk is unless the airlines have advised us, 'This is the profile of what the parking is,' and we'd assess the risk from there.

CHAIR: I assume that you're talking to the airlines and the airports on an ongoing basis on these matters?

Mr Harfield: Absolutely.

CHAIR: Are you planning on laying off staff in the future? Mr Harfield: The reason for the hesitation is that, unfortunately, I can't predict what the future holds at this moment in time. We do know that we have to be a different organisation, in the sense that we are sustained and funded by industry and how we are sustainable in that way, going forward, in a different operating environment. We need to balance that against providing services today. The issue is that we are continuing to work through it. I can't rule anything in or out, but there are no definitive plans at this stage.

CHAIR: Is this the first time that Airservices has received government assistance? It seems a very novel situation—

Mr Harfield: Sorry; I missed the last part, unfortunately.

CHAIR: I was just asking if this was the first time that you'd received government assistance since the organisation was established?

Mr Harfield: I don't know. I can't recall the early days, but I'll correct the record. I'll go back and check, but this is the first time that we've received this level of assistance, because we've been set up to be totally funded by industry and make a return, and we pay a dividend back to government each year. We're a tax-paying entity as well. CHAIR: You receive a fee from airlines for your operations.

Mr Harfield: Yes.

CHAIR: What do you expect the future holds? Do you expect the domestic airline industry to return to some proportion of normality in the next 12 months? What are you forecasting?

Mr Harfield: At the moment, from the forecasting that we use, we were—I'll call it three months ago—basing it on seeing around 80 per cent domestic recovery by about Christmas time. Now we've seen that slide out to be probably the middle of next year; that's where we would see that. Internationally, where we were originally seeing a recovery to around 80 per cent by mid to late next year, we're seeing that it will probably take another couple of years to get back to those levels. Our planning that we have done, which is conservative, is that we will not return to about 80 per cent of our revenue, which doesn't directly equate to activity but is an approximation of it, until around the end of 2021 or into 2022-23. It will probably take until then before we get back to those levels.

CHAIR: Thank you. Senator Sheldon, I might go back to you and I'll come back to any more questions if we have time at the end.

Senator SHELDON: On 18 March this year the government announced a $715 million package to support the Australian aviation industry. I understand that included funding for Airservices. There were a couple of rounds, as I understand it. Can you detail for the committee how much of the $715 million was directed to Airservices?

Mr Harfield: I can't tell you exactly, just off the top of my head, how much of the $715 million—I think, at that stage, it may have been about $400 million of that. The funding that we've received out of the packages that have been agreed to so far—from March through to the end of this financial year, to June next year—has a total in the order of about $850 million.

Senator SHELDON: Could you send me the details of that as a follow-up?

Mr Harfield: Yes.

Senator SHELDON: This is an important issue, of course. This follows through from some of the previous answers you were giving as well. Are there sufficient funds to meet the shortfall in revenue collected by Airservices as a result of the aviation industry being significantly grounded over the past several months and into the foreseeable future?

Mr Harfield: The way that I'd like to answer the question is this: our normal annual revenue is about $1.1 billion a year; the government funding is $850 million over 15 months, so it obviously doesn't cover all. As we said, this will sustain our business. As a result of the way that we are structured, we have the use of debt facilities. For example, our capital program is completely debt funded et cetera. With that funding, we are in a fortunate position of being able to deal in a measured way with the issues that we've got. The reason I'm structuring my answer that way is that it doesn't return us to the exact same revenue levels that we were at pre-COVID, but there is enough to be able to sustain the business, work forward and working through this particular period in a controlled, sustained way. We're not in a position like other businesses that have to make a short-term cut because they've obviously lost 90 per cent of their revenue.

Senator SHELDON: You don't see the shortfall due to the revenue loss impacting on Airservices in regard to the services they provide now?

Mr Harfield: Absolutely not, because we have facilities to be able to maintain the cash flow and operations. Obviously, longer term, we need to reposition to an environment where—we're not there, but it doesn't affect the services that we provide.

Senator SHELDON: When you say to me that it doesn't affect the services, does that mean there is a continuation of the same levels of employment?

Mr Harfield: As this stage, yes.

Senator SHELDON: And into the foreseeable future?

Mr Harfield: As far as I can predict, yes.

Senator SHELDON: I appreciate that you answered the question earlier about redundancies—that includes of course no redundancies foreseen or planned?

Mr Harfield: One of the things we are considering at this stage is whether we may potentially have voluntary redundancies for people who want to elect at this stage to go for it. However, I say that on the premise that it's something we are considering, because we haven't landed anything yet and we would have consultation and obviously obligations to discuss those things before we actually considered it. But it would be on a voluntary basis only.

Senator SHELDON: I respect the fact that you're raising it on a voluntary basis. If I understand correctly— correct me if I'm wrong here—there is consideration that there may be redundancies and if there were it would be on a voluntary basis. Going back to your earlier answer, you've mentioned that services are still going to be maintained, and I asked the question about staff providing those services. Doesn't it then fall to a shortfall of staff and a shortfall of services? Isn't that a logical conclusion?

Mr Harfield: That's why if we did consider and then had a voluntary redundancy program—the reason it's voluntary is that we could decide what areas would be allowed to go, to ensure that we would continue to provide the right level of service and staffing. There may be capacity in certain areas, but it would not be to the stage where we would compromise on the required level of service that needed to be provided—not only now, with the reduction in traffic, but also for the recovery, and that for the sustainable future there could be the possibility that we may be able to release some people.

Senator SHELDON: Have you considered the areas where there may be voluntary redundancies? These are serious issues, of course—

Mr Harfield: Absolutely.

Senator SHELDON: I'm not suggesting that you're not considering them as serious, but these are serious issues for the committee—questions of services and provision of services and public confidence in those services being provided. Also of course there was the August 2019 Senate report, which raised serious concerns at that time that Australia wasn't meeting—and Airservices weren't meeting, in the Senate committee's view—the international standards for providing, certainly in the case of firefighting facilities. And I want to explore that a bit further. But have you considered which areas you may be asking voluntary redundancy from?

Mr Harfield: That's part of the considerations that we're having a look at. I can give assurance to this committee that if we do go down a voluntary redundancy path we will not compromise the requirements, the regulations and the staffing levels required to provide the level of service required. That includes the aviation rescue and firefighting service, which we continue to staff at the level required by the Civil Aviation Safety Authority.

Senator SHELDON: The Senate committee drew comparisons in 2019 in a committee report that Australia wasn't meetings its commitments—international standards—on provision of firefighter services on airport. One of the questions I'd like to ask you about this is: will you be meeting international standards of firefighter requirements for the airports?

Mr Harfield: We meet the requirements set out by the Civil Aviation Safety Regulations, which are the required ones. The issue about whether those regulations applied in exactly the same way as some of the international regulations is a matter for the department as well as CASA.

Senator SHELDON: You have the capacity to meet international standards if you so wish?

Mr Harfield: First and foremost, we have to meet the Civil Aviation Safety Regulations. If they are above that, that would be a decision that we would require based on the fact that we have to charge for our services and whether the risk warrants it. But, from what I understand, the minimum requirement that is required by the Civil Aviation Safety Authority is that, first and foremost, we have to meet.

Senator SHELDON: So the point is you're able to meet standards, if you so wish, above the standard set by—

Mr Harfield: In the end—

Senator SHELDON: You could meet the international standards if you so wished and it was above the services that other departments are requiring.

Mr Harfield: And there was what I call a business imperative, and it worked out—considering that, even without charging, because we are a monopoly provider it's regulated by the ACCC and there is an ongoing discussion of our prices with those that pay them, such as the airlines. So to go above the minimum standard that is required from the civil aviation, we could meet that, but there would have to be a discussion with industry at the time as well.

Senator SHELDON: Could I get a breakdown of the costs for running the aviation rescue firefighting services specifically—an overall cost but also a breakdown for each of the 27 stations as well as their headquarters and training school? You can take that on notice. I'm not expecting you to have that at hand right now, but if you have I would be very pleased!

Mr Harfield: So, just for clarity, we will provide the cost of providing services for our aviation rescue and firefighting—

Senator SHELDON: Yes, the running of the service.

Mr Harfield: The running of the service. We will also provide what we would take in in a normal charging regime, previously—the revenue that that service earns.

Senator SHELDON: And can break it down to the 27 stations, the headquarters the training school?

Mr Harfield: Yes, we can—the cost, yes.

Senator SHELDON: Airservices is under financial pressure, as you mentioned. Obviously, you're deciding to make some structural changes. If you're not receiving the same revenue, it's right to say it's a financial pressure.

Mr Harfield: We do need to run as efficiently as we can.

Senator SHELDON: Have you been considering that there should be voluntary redundancies amongst the firefighters?

Mr Harfield: As I said before, we are considering the potential, and if there are voluntary redundancies and there is the capacity to provide voluntary redundancies within the firefighter area, we would do that. However, as I said, that is under consideration. If we get anywhere near a landing, we have consultation requirements that we need to pay. So I don't want to give a fait accompli; there's a lot of work to be done and there are, as I said, consultation requirements. We need to have discussions with the appropriate people about that. But it is something that we have to consider.

Senator SHELDON: So what action has Airservices taken to reduce any foreseeable risk that a potential reduction in staff would create in the firefighting area?

Mr Harfield: If we get to the stage where we are thinking about or actively wanting to go down that path, then we would have to assess that risk, and that would be part of the decision-making as to whether we would do it or not.

Senator SHELDON: Has that risk been assessed?

Mr Harfield: Not at this stage.

Senator SHELDON: Are Airservices aware of a report by the University of Newcastle that outlines a significant danger posed with any reduction in the number of staff in the aviation rescue firefighting services? Are you aware of that?

Mr Harfield: I'm aware of the report. I think it was chased down within the organisation.

Senator SHELDON: Do you agree that an unprecedented risk to aircraft assets has been created by the mass grounding of aircraft at Australian airports?

Mr Harfield: No, I do not. I would say that the risk profile at our airports has changed, but our assessment, at this stage, is that those risks are adequately managed, and I wouldn't call them unprecedented.

Senator SHELDON: But with the type of risk that you're now confronted with, with having so many planes parked at our airports, that's unprecedented, though, isn't it—that aspect of the risk?

Mr Harfield: For example, what I will call the risk profile has changed. Having static aircraft versus aircraft that are continually on the move is a different type of risk. That's why I'm saying 'the risk profile'. The fact that we have got a lot of aircraft parked is a different situation to what we had previously, but 'unprecedented' is just too strong a word. It is different to what we've had before.

Senator SHELDON: So this difference is that large numbers of planes—I could go through the figures, but I won't—are now at airports that are under your responsibility, particularly under the responsibility of your air firefighting services. These grounded aircraft—not idle but parked—

Mr Harfield: Static, yes.

Senator SHELDON: Static but not idle. They still pose a number of fire and other safety risks—is that correct?

Mr Harfield: They do pose a risk, and that goes to Senator McDonald's question before. We are in constant dialogue with the airlines, who are the ones that are putting the parking and storage, as well as the airports to make sure that we're in a position to manage those risks.

Senator SHELDON: Those discussions with the airlines obviously include discussions about, as you mentioned before, positioning of the planes.

Mr Harfield: Yes.

Senator SHELDON: Of course, as we've seen, we've had a situation where air routes have been opened up domestically and then closed down and then opened up and closed down. So the level of risk on that particular profile could obviously vary from time to time.

Mr Harfield: Yes, if you have an airport that's in a sense dormant and then suddenly has a level of activity et cetera—a profile. That's why we're in constant discussion. For example, there are two areas where we did reduce our services completely—Ayers Rock and Hamilton Island—because there was just no activity. In Hamilton Island, that included the air traffic control as well as the firefighting. But, as services returned, we reinitiated the service. So we flex our services depending on what the profile is at the airport, because it's forever changing. That was no different to what we had even pre COVID, when you would have change in schedules and change in aircraft types flying in and out of different airports. We would adjust the services we would provide in accordance with what was required.

Senator SHELDON: At this point—you might be able to tell me the difference—is it correct to say there's approximately $16.2 billion in grounded aircraft being protected by the fire services?

Mr Harfield: I'm unaware of what the value is. There are a number of aeroplanes that are on the ground. Ostensibly, the majority of the Qantas and Virgin fleets are on the ground.

Senator SHELDON: It would seem logical, putting the figure to one side, that there is substantially higher monetary value of assets now under the protection, for want of a better word, of the fire services provided by Airservices than would normally be the case.

Mr Harfield: Not necessarily. The difference is that we probably would have had a higher amount pre COVID because the traffic was moving in and out of the airport. In other words, the same value that's sitting on the ground would have been in the air previously.

Senator SHELDON: But the risk profile for ground staff is substantially higher, and logically—

Mr Harfield: I'm not qualified to determine the difference. That's why we are in dialogue with the airports and the airlines to ensure that we know what they are doing with those aircraft and how, when and where they're doing it so that we can make the assessment...etc..etc..waffle and weasel words...

Hmm...basically put it is business as usual for the Harfwit and his oversight of the OneSKY trough fund...

MTF...P2