Inquiry into the Performance of Airservices Australia
The following report relates to an inquiry undertaken by the Senate
Rural and Regional Affairs and Transport Legislation Committee (the committee)
under Senate Standing Order 25(2)(a) into the performance of Airservices
Airservices Australia (Airservices) is a government-owned statutory
authority. It was formed in July 1995 when the Civil Aviation Authority was split
into two separate government bodies - Airservices and the Civil Aviation Safety
Authority (CASA). The functions of Airservices are outlined in the Air
Services Act 1995 and include the provision of air navigation services,
aeronautical information, aviation communications, radio navigation aids and
aviation rescue firefighting services.
Airservices is responsible for the management and monitoring of
Australian airspace – an area which covers approximately 20 million square nautical
miles and amounts to eleven per cent of the world's total airspace.
The area includes the airspace over continental Australia and its territorial
waters and the international airspace boundaries over both the Pacific and
Indian Oceans. Airservices also manages:
upper-level airspace (above 30,000 feet) under contract to the
neighbouring Pacific Island Flight Information Regions of the Solomon Islands
and Nauru; and
lower-level airspace at five airports in the Pacific Ocean region,
for the United States Federal Aviation Administration.
Each year, Airservices manages air traffic operations for more than four
million domestic and international flights, which carry approximately 63
million passengers. The aviation industry relies on Airservices' provision of
aeronautical data, telecommunications and navigation services.
Airservices operates across 600 sites and has approximately 3000
employees – including 900 air traffic controllers working in major centres in
Melbourne and Brisbane and in 26 control towers located at both regional and
international airports. The organisation also provides aviation rescue and
firefighting services at 19 of Australia's busiest airports – where there are
more than 350,000 passenger movements a year.
Airservices is a government owned statutory authority, which is fully
funded by revenue from industry, under a five-year pricing agreement.
Airservices charges airlines and aircraft operators for use of its enroute,
terminal navigation and aviation rescue and firefighting services. The level of
Airservices' charges are based on five year forecasts prepared by the
organisation in relation to activity levels (including traffic volumes), operating
costs and capital expenditure.
The priorities for Airservices as outlined by the Minister for
Infrastructure and Transport (on behalf of the Commonwealth) are set out in a
Statement of Expectations (SOE). Central to these expectations is that Airservices
make the safety of air navigation its top priority. As outlined in the SOE, the
Government also requires Airservices to:
progress the implementation of a new national air traffic system;
work with the Department of Infrastructure, Regional Development
and Cities (the Department), CASA and the Department of Defence (Defence) in
providing advice on options for enhancing the level of safety and efficiency of
Australian controlled airspace, including at major regional airports;
work with the Department and CASA in modernising airspace
assist in implementing the Government's environmental objectives;
undertake effective and ongoing engagement and consultation with
the community, industry and government on the development and implementation of
any significant changes to air traffic services.
As a corporate Commonwealth entity, Airservices is responsible for the
development and implementation of its own procurement policies and procedures –
which are expected to meet general obligations regarding the proper use of
resources and effective internal controls.
Department of Defence
As Australia's other Air Navigation Service Provider (ANSP), Defence
works collaboratively with Airservices to achieve major reforms. The
organisations also work together in the area of airspace design and in developing
procedures which strengthen and support a harmonised approach to Air Traffic
Defence, through the Royal Australian Air Force (RAAF), provides air
navigation services and infrastructure, as well as air traffic services and
rescue and firefighting services at military air bases. Defence also maintains
a fleet of aircraft which is of comparable size to civil national carriers.
Defence, together with Airservices, manage required military airspace to
meet operational and national security requirements, while at the same time servicing
the transit of civilian aircraft safely and efficiently. Defence provides air
traffic services for civil aircraft transiting military controlled airspace and
restricted areas surrounding all airbases, as well as controlling all aircraft
joint-user airports at Darwin and Townsville. It also facilitates civil
aviation at the RAAF Base, Williamtown.
Over recent years, the Australian Defence Force (ADF) has undertaken a
significant modernisation of its piloted and unpiloted aircraft fleet. This has
been supported by investment in its ATM platforms, which is predicted to lead
to significantly greater capability, endurance and range than the ADF currently
possesses. It is also envisaged that this investment will facilitate the many
military activities which require the integration of multiple high-cost, low
endurance aircraft into Australian airspace.
Initiation of inquiry
Airservices' appearance at Supplementary
Budget Estimates 2014–15
In October 2014, the committee held hearings in relation to
Supplementary Budget Estimates for 2014–15. Representatives from Airservices attended
the hearing – held on Monday, 20 October 2014 – and were asked questions about
a number of issues, including:
the risk assessment undertaken by Airservices when seeking a
dispensation from CASA from the requirements of the Aeronautical Information
Package (AIP) (in order to nominate arrivals into Melbourne runways that exceed
20 knots or 5 knots downwind);
answers provided to questions on notice put by Senator Nick
Xenophon during 2014–15 Budget Estimates (held in May 2014) regarding the
Severity Definition Airways System (SDAS), including the categorisation of the
severity of an incident, and the independent assessment of the classification
of an incident;
$96.3 million of expenditure on regional airports – from Port
Hedland through to Coffs Harbour, Ballina, Gladstone and Newman – which was not
referred to the Parliamentary Standing Committee on Public Works (Public Works Committee);
an Airservices employee's reported credit card misuse, the
employee's dismissal, and subsequent actions taken by Airservices' management;
Airservices' discussions with the Civil Aviation Safety Authority
(CASA) regarding a non-directional landing approach at Rockhampton Airport and
the generation of an airspace change proposal (ACP).
At a private meeting held on 29 October 2014, the committee discussed Airservices'
appearance at the Supplementary Budget Estimates hearing, including members' concerns
about the responses provided to the committee's questioning. The committee agreed
to call Airservices to a public hearing to further examine the operations of
Inquiry under Senate Standing Order
As Airservices is a corporate entity, the committee is empowered, under
Senate Standing Order 25(2)(a), to inquire into, and report upon the
performance of departments and agencies allocated to it. It is under this power
that the committee, in 2014 (during the 44th Parliament) initiated
its inquiry into the performance of Airservices. The inquiry was subsequently
re-adopted in the 45th Parliament.
The inquiry involved five public hearings. The first was held in
Canberra on 28 November 2014, with subsequent hearings, also held in Canberra,
on 18 August 2015, 9 September 2015, 9 August 2017 and 4 December 2018. Between
2014 and 2019, the committee also received private briefings, held in-camera
hearings in relation to its inquiry, and continued its examination of the
issues through the Senate Estimates process. A list of those who gave evidence
at the public hearings is included in Appendix 5.
The committee also received four public submissions as part of its
inquiry, a list of which is included in Appendix 4.
Issues raised during the inquiry
The committee's concerns regarding the probity of Airservices are
long-standing. The committee has, for example, long held concerns about the organisation's
administration and governance of corporate credit cards. Over the years, the
committee has also raised its concerns about the bonuses awarded to senior
executives (including termination payments).While some of these matters were
explored during this inquiry, the key issues of concern were:
probity in relation to Airservices' procurement processes,
including the initial engagement and retention of the Centre for Complex
Project Management (ICCPM) as a consultant to the OneSKY project for the
duration of the tender evaluation process;
the impact of the new Accelerate operating model on the
Airservices workforce, the safety of Australia's passenger aircraft and the
safety of air traffic control and aviation rescue firefighting operations; and
the mandate for the implementation of the Automatic Dependent
Surveillance Broadcast (ADS-B) system.
The management of air traffic in Australia is the responsibility of
several government agencies and the aviation industry. Airservices uses The
Australian Advanced Air Traffic Management System (TAAATS) to provide civilian
airspace management, while Defence – through the RAAF – manages military
operations and air traffic control.
In December 2009, the National Aviation White Paper, noted that
Airservices and Defence were both due to undergo major equipment upgrades and
replacement programs (from 2013). The White Paper described these circumstances
as an ideal opportunity to synchronise the ATM capability (to support the requirements
of both Airservices and Defence), and argued that:
Enhanced civil and military ATM system harmonisation will
produce benefits in terms of improved safety, better investment in personnel
and infrastructure, seamless systems compatibility and smarter procurement
The OneSKY program involves the replacement of Australia's ATM system,
under a three year transitional arrangement, proposed to commence from 2018.
The process requires the integration of 16 different systems, and delivery of
the joint service commenced in 2010 when Airservices put a 'request for
information' to the market. The feedback and information provided by the market
was used to develop the Request for Tender (RFT).
As the lead agency, Airservices was responsible for coordinating the joint
procurement of a fully integrated Civil Military Air Traffic Management System
(CMATS). The RFT for the joint procurement was released in June 2013, and
closed on 30 October 2013, having received six tenders.
In February 2015, the announcement was made that Airservices, in
partnership with Defence, would enter into an Advanced Work contracting
arrangement with Thales Australia to deliver OneSKY.
The then Acting CEO of Airservices, Mr Jason Harfield, noted at the time:
The new system, when completed in 2021 will allow us to
provide operational efficiency improvements for future growth and ensure we are
meeting the demands of our customers and delivering them value for money.
ICCPM is an unlisted, non-profit public company limited by guarantee
under the Corporations Act 2001. The company's objective is to facilitate
the management and delivery of complex projects around the world. Early in its
operation, ICCPM was largely reliant on annual fees paid by its funding
partners – including the Defence Materiel Organisation (DMO) and the Thales
Group, Boeing, Lockheed Martin and BAE Systems Australia. The latter four organisations
all responded to the RFT in relation to CMATS.
In September 2010, in order to be eligible for representation in
advisory groups, Airservices became an ICCPM corporate partner. Under a
corporate partnership agreement, Airservices pays ICCPM an annual membership
fee – which in 2016–17 – was $50,000.
Issues raised by the committee
During the inquiry, the committee raised its concerns about the RFT
process – particularly the decision to award the contract to the Thales Group.
The committee raised specific concerns about probity in relation to
Airservices' procurement processes, including the initial engagement and
retention of ICCPM as a consultant to the OneSKY project for the duration of
the tender evaluation process.
The committee also raised concerns about Airservices' management of
conflict of interest matters with regard to the procurement of services via
ICCPM. Of particular concern was the engagement of a member of the ICCPM Board,
Mr Harry Bradford. Mr Bradford undertook the role of lead negotiator during the
contract negotiations with the successful tenderer – Thales – whose Managing
Director was also Chair of the ICCPM Board at the time. The committee was told
during the inquiry that the contracting rate for Mr Bradford as lead negotiator
was "about a million dollars" but that Airservices was "getting
value for money" given the negotiating rates for the size of contracts.
The committee also raised questions about perceived conflict of interest
issues in relation to an Airservices executive – Mr Stephen Hein – who left his
position as the CEO of ICCPM in June 2014 and was replaced in this role by his
spouse – Ms Deborah Hein. Thereafter, when acting as Airservices' Executive
General Manager of Future Service Delivery, Mr Hein recommended approval of a
substantial extension to a contracting arrangement with ICCPM.
The quote had been provided by Ms Hein in her capacity as CEO of ICCPM.
Engagement with the Australian National Audit Office (ANAO)
On 20 August 2015, following its second hearing with Airservices, the
committee wrote to the Australian National Audit Office (ANAO) to raise its
concerns about the administration of corporate governance within Airservices.
Following discussions, and correspondence with the committee, the ANAO
initiated two performance audits in relation to the matters raised.
The ANAO's first performance audit report (ANAO Report No. 1 2016–17)
was tabled in August 2016. The objective of the first audit was to examine
whether Airservices had effective procurement arrangements in place, "with
a particular emphasis on whether consultancy contracts entered into with the
International Centre for Complex Project Management (ICCPM) in association with
the OneSKY Australia program were effectively administered".
Airservices' procurement governance
During the period reviewed by the ANAO – 2012 to the end of 2015 – a
procurement governance framework was in place at Airservices. The ANAO found
however, that this framework did not:
address Airservices entering into strategic partnerships and
adequately contemplate, or regulate, non-competitive approaches
being adopted for procurement with a value of $50,000 or more.
In May 2013, Airservices and ICCPM entered into a strategic partnership
for the duration of the OneSKY program. It was noted that the partnership was commenced
without any approach to the market (to identify other possible strategic
partners) and it was one for which:
no business case had been prepared;
no performance indicators had been established (to enable
monitoring and evaluation);
there was no documentation regarding the nature of services
Airservices intended to obtain from or through ICCPM; and
there was no documentation regarding expected costs, or how
Airservices would satisfy that sole sourcing consulting assistance (from or
through ICCPM) would provide value for money.
The ANAO noted that it was common for Airservices to use the
relationship with ICCPM to engage individuals to undertake particular roles,
and highlighted Airservices' extensive use of ICCPM to assist with the delivery
Since 2012, there were 42 engagements of ICCPM employees and
sub-contractors through 18 procurement processes. The engagements were given
effect through six contracts, 10 contract variations and four uses of an
on-call services schedule under one of the contracts. Under the various contractual
arrangements, Airservices agreed to pay ICCPM total fees of more than $9
The ANAO observed that Airservices' approach to its own procurement
policies and procedures was to regularly depart from them for various ICCPM
procurements. It was noted that internal controls intended to promote
compliance were regularly bypassed and even when they were applied, they tended
to be ineffective. Further, the ANAO noted that often the records kept by
Airservices (in relation to procurement decisions) were perfunctory.
Airservices' approach to contracting ICCPM was also found to be
ineffective in providing value for money outcomes. The ANAO described
Airservices as price takers: noting that the organisation accepted quotes from
ICCPM without comparing proposed rates to similar services, or actively
negotiating reduced rates. The ANAO reported that Airservices' approach to
recording decisions to spend money, and the bypassing of internal controls also
contributed to a "lack of transparency over the decisions to procure
services from, or through ICCPM".
The ANAO reported that between 2012–13
and December 2015, Airservices paid ICCPM a total of $5.8 million in
consultancy fees and expenses. Between 2012–13 and 2014–15, the payments from
Airservices amounted to 75 per cent of the revenue reported by ICCPM as derived
from consulting work.
Allens Probity Review
The committee also raised specific concerns about probity arrangements
(in relation to the OneSKY program) during a hearing held in August 2015. Following
the August hearing, the Airservices Board commissioned an external review of
these probity arrangements. The review was undertaken by legal firm Allens
Linklaters (Allens). Allens provided the Airservices Board with a draft report
on 9 September 2015, and a final report on 27 October 2015.
Airservices Board Chair, Sir Angus Houston, told the committee at a hearing
held on 9 September 2015, that the Allens draft report contained three key
the probity framework for the OneSKY procurement process was
adequate, robust, sound and consistent with market practice;
there is a possible perception of conflict which requires
additional management, but this possible perception did not have any actual
effect on the tender process (including the evaluation of tenders and selection
of a preferred tenderer); and
there is no evidence that the issues raised by the Senate
resulted in any improper influence, bias, favour or breach of confidence or any
incompatibility between duties to the program and the personal and financial
interest of those involved.
ANAO findings – Airservices'
probity management framework
Airservices' procurement framework requires that probity be a key
consideration. This includes the requirement to effectively identify and manage
potential, actual or perceived conflicts of interest.
The ANAO's investigation found that the probity plan and protocols
established by Airservices for the CMATS joint procurement process, together
with the engagement of an external probity advisor and external probity
consultant, provided a "reasonable basis for managing the probity aspects
of the tender process". Airservices did not, however, commission
independent probity audits of any phase of the tender process following the
release of the RFT.
ANAO findings – probity management
in engaging ICCPM and its subcontractors
The ANAO also found that in its decision to enter into a strategic
relationship with ICCPM (for the duration of the OneSKY program or in relation
to any of the 18 sole-sourced procurements that occurred prior, and subsequent
to the establishment of the relationship) Airservices did not address matters
of probity. Further:
...on no occasion was there documented consideration as to
whether the engagement would give rise to potential actual or perceived
conflicts of interest that should either be avoided (by not proceeding with the
procurement) or for which a specific management strategy could be established.
ANAO's findings related to Allens
The ANAO's initial audit also found that Airservices had not provided
all material (relevant to its relationship with ICCPM) to Allens. It was noted
that Airservices had failed to provide Allens with:
advice or documentation regarding the May 2013 decision to
establish a strategic partnership with ICCPM for the duration of the OneSKY
documentation concerning the role played by ICCPM sub-contractors
in the evaluation and contract negotiation processes.
It was also found that:
in conducting its review Allens did not engage with ICCPM; and
the review did not address the question of advice provided to the
Airservices Board of any conflict of interest matters caused by ICCPM's
involvement in the OneSKY project.
The ANAO's first report, published in August 2016, contained six
recommendations which were all agreed to by Airservices. A complete list of the
ANAO's recommendations are included at Appendix 3.
In its response to the ANAO's initial report, Airservices acknowledged
that improvements could be made to its procurement framework. The organisation
accepted the ANAO's findings, and initiated actions to address each of its
recommendations. At the same time, Airservices indicated that it still had significant
concerns about commentary in the report (regarding the management of probity in
relation to the overall OneSKY tender process) which could lead the reader to
draw conclusions about the integrity of the process, which were not supported
Airservices argued that the tender evaluation arrangements that were in
place were robust, and denied any suggestion that "perceived conflicts of
interest at any stage created, or had the potential to create, an actual
conflict of interest that could adversely impact the integrity of the OneSKY
The ANAO's second performance audit report (ANAO Report No. 46 2016–17)
was tabled in April 2017. The objective of the second audit was to assess
whether the OneSKY tender was conducted "so as to provide value with
public resources and achieve required timeframes for the effective replacement
of the existing air traffic management platforms".
The committee's concerns about probity (in relation to the involvement
of ICCPM contractors in the tender evaluation and contract negotiation process)
were considered by the ANAO, which found that:
Airservices did not apply any consideration to potential
actual or perceived conflict of interest matters in deciding to engage the Lead
and Deputy Lead Negotiator via ICCPM. Actual or perceived conflicts of interest
could have been effectively contemplated and managed had Airservices combined
competitively tendering these two long-term, high cost roles with active
consideration of any conflicts as part of the procurement process. Airservices
also did not consider conflict of interest matters before the Lead and Deputy
Lead Negotiator became involved in the evaluation of tenders ahead of the
contract negotiation phase of the tender process. These were significant
failings by Airservices.
The committee's concerns in relation to Mr Hein's recommendation
(approving a substantial extension to a contracting arrangement with ICCPM) and
the perceived conflict of interest, were also addressed by the ANAO. The ANAO
found that Mr Hein signed a memo recommending that the Airservices' CEO approve
the contracting via ICCPM of the lead and deputy lead negotiations for a
further eight months at a total expected cost of $1.247 million, which the
Airservices' CEO approved on 6 October 2014.
Airservices accepted the findings of the ANAO's 2017 report into the
conduct of the OneSKY tender, noting its conclusion that the tender process
"was appropriate for the scale, scope and risk of the project".
Airservices also stated, however that:
With any complex procurement of this scale and scope, there
will always be some potential improvements that, with hindsight, can be
identified and we acknowledge and accept these and we will incorporate them in
our future operations.
The committee notes that its concerns about probity (in relation to the
involvement of ICCPM contractors in the tender evaluation and contract
negotiation process) were considered by the ANAO. The committee notes the
ANAO's finding that any actual or perceived conflicts of interest could have
been more appropriately managed by Airservices.
The committee is also pleased to note that the ANAO's investigation
highlighted the problems that can arise from a situation whereby sub-contactors
(with links to tenderers) became involved in the evaluation of competing
tenderers. The committee is of the view that Airservices should be more aware
of the attendant probity risks which can arise in these circumstances.
The committee is also of the view that Airservices needs to actively engage in
future processes to ensure that attention is drawn to potential conflicts of
interest and they are dealt with in a consistent manner.
The committee is pleased to note that, in its response to the ANAO's
initial report, Airservices did acknowledge that improvements could be made in
relation to its procurement framework. The committee is also of the view that
Airservices' acceptance of the ANAO's findings, and the fact that it has
initiated actions to address each of the ANAO's recommendations, reflects positively
on the organisation.
Structural reform and privatisation
Productivity Commission report
In a report published in 2014, the Productivity Commission noted that
governments had "successfully privatised airports, major ports and
electricity infrastructure and services" and recommended that the
Government determine whether there are net benefits to privatising organisations
such as the Australian Rail Track Corporation (ARTC), Snowy Hydro and
The Government's response to the Productivity Commission's report
indicated that it supported, in principle, the privatisation of public assets,
particularly when it results in increased economic efficiency and better
services for the community. The Government also noted that it would be giving
consideration to the sale of Commonwealth-owned assets – including public
Department of Finance – Functional
and Efficiency Review
During the Senate's Budget Estimates – held in May 2016 – the committee
was told that the Department of Finance's Functional and Efficiency review –
undertaken by KPMG – had been completed in February 2016.
Mr Mike Mrdak, Secretary of the then Department of Infrastructure,
informed the committee that the review had identified areas where the
Government could consider major structural changes, including in relation to
Airservices. The committee was told that the review had looked at international
examples where governments had placed their air traffic control provider (and
air services provider) in different governance structures. Mr Mrdak noted, for
example, that in the United Kingdom and Canada these providers had been placed
in either 'part-private ownership' or within a 'not-for-profit government
Australian Aviation Associations'
In late April 2016, the Australian Aviation Associations' Forum (TAAAF)
– chaired by former Airservices Chief Executive Officer, Mr Greg Russell –
called for the privatisation of Airservices. TAAAF argued that Airservices'
partially corporatised model, which had operated for approximately 20 years,
had become increasingly "incapable of delivering efficient and affordable
air traffic services in a growing aviation market".
TAAAF also argued that the move to privatise Airservices could raise as much as
$1 billion, and that a model similar to the not-for-profit one used in
Canada would make air traffic control more efficient.
Aircraft Owners and Pilots
Association of Australia
In April 2016, the Aircraft Owners and Pilots Association of Australia
(AOPA) expressed similar views, and suggested that Airservices was
underperforming and should be privatised. AOPA argued that the proceeds from
the sale of Airservices should be used to set up an industry trust fund to finance
new technology and university research and development.
It was also argued that the privatisation of Airservices would improve
productivity and provide capital to invest in the General Aviation industry –
while at the same time helping to reduce the budget deficit.
Community and Public Sector Union
In contrast, the Deputy National President of the Community and Public
Sector Union (CPSU), argued that the job losses and restructures at Airservices
could be seen as a possible precursor to privatisation.
The CPSU urged the Government to rule out privatising Airservices, and noted
that given there is no competitive market for air traffic control services:
...Airservices Australia is a natural monopoly providing a
public good and there is no business incentive to improve services. The
privatisation of such an essential public service is not in the public interest
and should be opposed.
Air Traffic Control
Land and Hold Short Operations
The committee examined issues around the Land and Hold Short Operations
(LAHSO) being used at Melbourne, Darwin and Adelaide airports. LAHSO involves
the simultaneous use of two crossing runways in situations where the runway
intersection is a long distance from the landing threshold such that pilots are
able to ensure they can 'hold short' of the crossing runway when landing. The
procedure is only available to operators who have provided specific training to
pilots and received authorisation from CASA.
The committee raised concerns about a specific incident that occurred at
Melbourne Airport on 5 July 2015.
Shortly after one aircraft commenced take-off, two other aircraft conducted
simultaneous missed approach/go arounds, during a night LAHSO operation.
Shortly after the incident, Airservices conducted a review of LAHSO and
issued 'minor improvements to the procedure'.
After a number of delays, the ATSB's final report in relation to the incident –
AO-2015-084 – was released on 6 August 2018. The ATSB found that:
...since 2011, Airservices Australia had been aware of the
hazard associated with the inability to separate aircraft that were below the
appropriate lowest safe altitude at night but had not adequately mitigated it.
This resulted in a situation where, in the event of a simultaneous go-around at
night during LAHSO at Melbourne Airport, there was no safe option available for
air traffic controllers to establish a separation standard and to ensure a
mid-air collision did not occur when aircraft were below minimum vector
altitude. Though Airservices Australia had implemented a number of preventative
controls prior to this occurrence in response to concerns expressed by the
Civil Aviation Safety Authority (CASA), a recovery control was not implemented
Additionally, the compromised separation recovery training
provided to the air traffic controllers employed in the Melbourne ATC Tower did
not include a night scenario for missed approaches during LAHSO.
As a result of the ATSB's investigation, Airservices Australia received
an exemption from CASA "to radar vector aircraft below the minimum vector
altitude at night at Melbourne Airport under certain conditions".
Airserves also instigated a safer procedure for land and hold short arrival
pairs "such that aircraft will not come into unsafe proximity in the event
of a missed approach". Training in compromised separation recovery at
night during LAHSO was also introduced for Melbourne ATC Tower controllers.
Automatic dependent surveillance
According to Airservices, the Automatic Dependent Surveillance Broadcast
(ADS-B) system involves the fitting (on-board aircraft) of electronic equipment
which automatically broadcasts the precise location of the aircraft via a
digital data link. The data can be used by other aircraft and air traffic
control to show the aircraft's position and altitude on display screens without
the need for radar. By using the system, an aircraft uses GPS to determine its
position and a transmitter then broadcasts specific information to dedicated
ground stations that receive the information and relay it to air traffic
control for precise tracking.
It was noted that the United States' Federal Aviation Administration
(FAA) has mandated, that by 1 January 2010, aircraft must be fitted with ADS-B
technology. In Australia, the mandate for all aircraft operating under
Instrument Flight Rules (IFR) to be fitted with serviceable ADS-B equipment
came into effect on 2 February 2017.
At an August 2015 hearing, Mr Greg Hood, Executive General Manager of
Airservices, was asked about the costs of fitting aircraft with ADS-B
technology. Mr Hood told the committee that the minimum cost for fitting
general aviation (GA) aircraft with the new technology would be approximately
In a submission to the inquiry, Mr Dick Smith raised concerns about the
use of ADS-B in non-controlled airspace, and argued that there was "no
present safety problem" that would require small aircraft be fitted with
ADS-B technology ahead of the United States. Mr Smith also argued that if
Australia headed down this path, it would likely result in economic damage to
the general aviation industry.
The issue was raised again during Senate Estimates hearings (held in May
and October 2016). The committee questioned both CASA and Airservices about the
mandate for implementing ADS-B technology. Specifically, questions were asked
about the timing of ADS-B adoption in Australia, given that the adoption would
not take place in the United States – which is the market leader – until at least
Airservices Chief Executive Officer, Mr Jason Harfield, argued that one
of the major benefits associated with the introduction of ADS-B would be that,
for the first time, there would be complete surveillance coverage across Australia.
The committee raised industry concerns in relation to the impact ADS-B
technology would have on general aviation, and noted that the implementation of
ADS-B was originally intended to achieve savings from the closure of secondary
surveillance radar. Further, it was suggested to Airservices that the long delay
in implementing the technology had led to some contracts having to be renewed
which thereby negated the savings:
Senator Xenophon: I spoke to Dick Smith, a former
Chairman of CASA, earlier today in relation to this. He expressed serious
concerns about the impact on general aviation and the necessity of the rollout
of ADS-B at this time. In the continental United States, which is similar but a
bit bigger than Australia in terms of land mass – is that right?
Mr Harfield: It is about the same.
Senator Xenophon: It has about 600 ADS-B, compared
with 70 here.
Mr Harfield: They also have 300 radars and we have 15.
So there are economies of scale in how they actually run their airspace. They
deal with 18 million flights a year and we deal with four million. It is a
completely different premise. The ADS-B mandate that is being introduced in the
United States is for IFR in the VFR aircraft, whereas here in Australia it is
only for IFR aircraft. Their mandate is timed for the end of life of their
radar coverage so that they do not have to replace their radars. Ours is
actually increasing surveillance across the country, because we have a
different need and it is a different issue we are trying to resolve.
Senator Xenophon: But, as I understand it, the ADS-B
implementation was supposed to achieve savings from the closure of the
secondary surveillance radar. Is that right?
Mr Harfield: Originally. The [late] mandate was to
replace all the radars up and down the east coast. However, that was based on
the industry – the broader aviation industry – not have to pay for the
replacement of radars, and using that money to fund the equipage of ADS-B. But
industry did not agree with that, and we had a range of mandates that were
agreed by industry, starting back in 2013. The first one was about all aircraft
above 29,000 feet, working through to Perth and then to next year, which is all
Senator Xenophon: For whatever reason, the ADS-B
implementation took too long, so instead of achieving savings from the closure
of the secondary surveillance radar, Airservices had to renew the service
contracts. Is that right?
Mr Harfield: Some radars. We are actually
decommissioning two radars next year after the mandate for ADS-B –
Senator Xenophon: But will some contracts renew?
Mr Harfield: Some contracts renew, but we still need
that surveillance coverage and we do not have ADS-B in that area because people
up and down the east coast still want to use radar, and it helps supplement the
surveillance coverage across the nation.
The Accelerate program
As the mining boom ended, Airservices reported a plateauing of revenue,
flat growth domestically, and increasing costs. Air traffic contracted during
2014–15, and this, combined with weak traffic growth in some international
markets, led to Airservices' decreased profitability. Airservices told the
In the 2015 financial year, Airservices generated revenue of $1.012
billion, and had costs of $1.006 billion. Costs have grown faster than revenue
for most of the previous ten years. Staff numbers have increased from 2996
employees in 2006 to 4468 employees in 2016, but our workforce planning has not
kept pace with the changing technological environment to deliver us the
capability we need into the future. We were consistently overpromising and
under-delivering on our capital works program, with the gap between our
promised and actual expenditure growing out to around $100m by June 2015.
Airservices acknowledged that its underperformance had been recognised
by the committee, the Commission of Audit, the Productivity Commission and the
Harper Review. These organisations had also raised concerns about the
efficiency of the organisation's investment program, its operating efficiency
and its pricing structures. Mr Harfield told the committee that Airservices was
an organisation that "was doing less with more and understandably the
airlines, our fee-paying customers, expected something to change".
It was in the context of poor financial performance, that Airservices
launched the Accelerate program, which commenced on 1 July 2016, The proposed program
included three work streams:
a new operating model 'with less bureaucracy and more
project and asset refocus – managing assets and projects to
commercial standards; and
technology – making better use of current systems.
Airservices Chief Executive, Mr Harfield, described the Accelerate
program as a "short transformation to reposition the organisation to focus
on our core business of air traffic control, aviation rescue and firefighting".
Under the new operating model, Airservices proposed a reduction of 900
full-time equivalent staff from its 4500-strong workforce, through the use of
both voluntary and involuntary redundancies.
In October 2016, Mr Harfield told the committee that of the 900 redundancies
under the Accelerate program:
580 people left Airservices at the end of September 2016 under a
voluntary redundancy process;
709 people were expected to leave the organisation by the end of
2016 (under the voluntary redundancy process); and
approximately 200 staff would leave the organisation by 30 June
2017, by means of voluntary or involuntary redundancies – which would reduce
the total of Airservices staff by 20 per cent.
At the time, Mr Harfield was reported as saying that the proposed job
cuts would not compromise the safety of Australia's passenger aircraft, because
a "detailed and rigorous assessment" had been conducted to determine
any potential impact on the safety of Airservices traffic control or aviation
rescue firefighting operations. He also argued that a workforce of 3600 was the
appropriate capacity for the organisation to move towards.
In early July 2016, the media reported that in a letter to Airservices'
staff, Mr Harfield had indicated that those working in operational roles such
as air traffic control and rescue firefighting could not apply for one of the
600 redundancies on offer at the time. Reports suggested that more than 600
staff applied for the redundancy packages, with union officials and senior Airservices
management acknowledging a decline in workforce morale.
During an Estimates hearing held in October 2016, CASA officials confirmed
that the proposed cuts to the Airservices' workforce would involve reductions
in engineering and technical support services.
At the same time, media reports also suggested that as many as 50 jobs would be
cut from the IT department as part of Airservices' cost reduction program.
Fair Work Commission
On 30 October 2016, the Community and Public Sector Union (CPSU), the
Electrical Trades Union of Australia (ETU) and Professionals Australia (PA)
raised concerns about the proposed cuts and requested an immediate suspension
of the Accelerate program.
In late October 2016, the CPSU, PA and the Communications, Electrical,
Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of
Australia (CEPU, incorporating the ETU) lodged a dispute over the Accelerate
program with the Fair Work Commission. The parties contended that Airservices
had not complied with the consultation, redeployment and redundancy provisions
of the organisation's enterprise agreement (Airservices Australia Enterprise
Following a number of conferences between the parties, it was agreed
that Airservices would, among other things:
advertise available vacant positions to which potentially surplus
employees could be redeployed;
for a limited time, accept expressions of interest (EOI) from
potentially surplus employees for the available vacant positions;
consider potentially surplus employees who have submitted an EOI
in an available vacant position for redeployment to such positions in isolation
from any other applicants;
upon request from an individual employee, provide an employee
with the result of Airservices' assessment of their capability;
after the redeployment process, make offers of voluntary
redundancy to any potentially surplus employees who were not redeployed to a
vacant position, and who are in a class of employees considered excess to the
efficient and economical working of Airservices;
allow four weeks for an employee to make a decision on whether to
accept the voluntary redundancy offer. If an offer is not accepted, termination
via involuntary redundancy will occur after a specified time period; and
consider a job swap proposed by a potentially surplus employee
and another employee.
During its inquiry, the committee sought and received submissions from a
number of organisations which raised specific concerns about the Accelerate
program, and the impact it could have on various aspects of aviation safety and
security. These included: Civil Air Australia (Civil Air), Airservices,
Australian Federation of Air Pilots (AFAP), Australian and International Pilots
Association (AIPA), Electrical Trade Union (ETU), Community and Public Sector
Union (CPSU) and the United Firefighters Union of Australia (UFUA). On 1
December 2016, the committee also held a private briefing with Civil Air and
Impact of, and response to,
During the committee's inquiry, Airservices maintained that the
Accelerate program would only affect back office staff and operations, and
would not have a direct impact on front line air traffic controllers and
aviation rescue and firefighting services.
A number of stakeholder groups did, however, raise various concerns
about the impact the Accelerate program would have on Airservices' employees
and the organisation as a whole. Stakeholders told the committee:
While it was proposed that staff cuts would only apply to back of
house and support staff in non-safety critical areas, these supporting
positions are vital to the proper functioning of air traffic control systems.
Even though operational air traffic controllers and aviation
rescue firefighters were specifically excluded from applying for voluntary
redundancies, up to 25 air traffic controllers had been approved for voluntary
redundancies. It was explained that while these line managers may have been
performing other duties (or were on leave at the time) they still held current
authorisations to operate air traffic control equipment.
Should air traffic control units in Cairns and Adelaide be
consolidated during 2017, it would result in the loss of 10 air traffic
controllers in Cairns. It was argued that this negated the message that
frontline operational staff would not be affected by job cuts.
The complex ATM system requires engineering and other technical
knowledge to ensure its efficient and safe operation. It was argued that
Accelerate (and other cost reduction programs) could have impact a direct
impact on the ability of Airservices to maintain and operate a national ATM
The Accelerate program had the potential to impact frontline ATM
functions. It was argued that some type of divide between regulatory functions
within Airservices (such as ATM) and its commercial interests may provide a
clearer focus on the provision of frontline services.
Despite excluding 'core operational' air traffic controllers and
aviation rescue firefighters from voluntary redundancies, staff cuts to
'non-core non-operational' maintenance and corporate services were significant,
and ignored the fact that technical staff also service core functions, for
example, keeping infrastructure up-to-date and conducting detailed analysis of
Stakeholder groups also raised concerns about the loss of staff with the
essential specialist skills needed in the areas of air traffic control and
engineering as well as technical and software areas. Stakeholders also told the
committee that there was no evidence to suggest that the necessary safety risk
assessments were being conducted, so it was not possible to assess the
consequences of removing these skills and experience from the organisation.
Concerns were also raised regarding:
the level of Airservices' consultation with stakeholders;
reports of untrained staff being used in technical positions;
problems with staffing projects which identify and manage safety
reports that critical hazard alerts (based on Bureau of
Meteorology warnings and known as AIRMET) had, over a three week period in
November 2016, not been transmitted by Airservices to crews of affected
aircraft within Australian airspace.
The committee followed up on stakeholders' concerns during an October
2016 Estimates hearing. The committee asked the then temporary CEO of CASA, Mr
Shane Carmody, what impact the loss of Airservices' jobs would have. Mr Carmody
told the committee that it would have "no impact on aviation safety".
On 17 November 2016, however, it was revealed that at Sydney Airport –during
the period between late November and early January – air traffic controllers
needed to fill more than 50 additional vacancies in the roster. This included
up to seven vacancies on one day in December. It was reported that:
The holes in the roster for air traffic controllers at
Australia's busiest airport come after at least five line managers – four of
whom were licensed to operate as air traffic controllers – took redundancy as
part of 900 nationwide job cuts at Airservices...
Further, it was noted that the concerns raised about gaps in the roster
emerged "despite Airservices' insistence for months that job cuts
announced in July would not impact operationally rostered air-traffic
At the time, Airservices acknowledged that while some Sydney line
managers had applied for – and been offered – voluntary redundancy, the
organisation still had the capacity to manage the provision of air traffic
control "with a more efficient management structure". Airservices
also asserted that safe and efficient air traffic control would be maintained
across the holiday period.
Airservices also refuted a number of claims about Accelerate's adverse
impact on safety, service delivery and support functions. Airservices asserted
that of the approximately 640 employees who had departed the organisation in
2016, almost 400 performed human resources, legal, financial and communication
functions – which would have no impact on safety operations. Airservices
attributed the remaining departures to natural attrition in areas such as
management, training design and delivery (as well as approximately 100
engineering and maintenance staff).
Airservices maintained that redundancies were not available to
operational and rostered air traffic controllers or aviation firefighters, and
the committee was told that approximately 100 applications from these
classifications of employees had been rejected as ineligible. Airservices
refuted claims that operation air traffic controllers had taken redundancies,
and stated that these employees were actually line managers, with a broad range
of management responsibilities, and duties were accounted for before these
staff departed, "with no operational impact".
Airservices maintained that all staff changes were carefully considered
...ensure potential safety risks were identified, understood
and appropriately mitigated. This is due to the safety critical nature of our
organisation. We have taken a robust and risk-based approach to staff
departures and have implemented a comprehensive safety program in accordance
with the requirements of our Safety Management System (SMS) that has been
oversighted by CASA.
Airservices also implemented an Accelerate Program Safety Plan. The aim
of the safety plan was to assist in safety assessments for each phase of
Accelerate and to ensure that 'safety critical activities are not impacted',
there are no changes to operational air traffic control or aviation
firefighting roles, and the appropriate mitigation strategies are put in place
to manage redundancies.
During the inquiry, Airservices provided the committee with a number of
documents which outlined the organisation's commitment to staff welfare, safety
and the maintenance of service delivery. The documents provided related to:
the Accelerate Program Safety Plan;
the Voluntary Redundancy Program Safety Case; and
statements in relation safety and the transition to a new
operating model and senior leadership structure.
Ongoing issues at Airservices
As part of its oversight of Airservices, a number of issues have been
brought to the attention of the committee over recent months – specifically,
issues relating to workplace culture and community consultation.
In early 2019, media reports suggested that conflict between Airservices
employees, had "been blamed for undermining the operation of Sydney's air
traffic control tower".
It was noted that in late 2018, Airservices had commissioned Converge
International to do a 'workplace wellbeing assessment', following an incident
in which a number of flights were cancelled at Sydney airport (because two air
traffic controllers called in sick at late notice). This situation was repeated
when, in January 2019, three of nine rostered controllers indicated they were
unavailable for duty – which forced a slower rate of landings at the airport.
It was noted that the Converge International assessment had found that:
93 per cent of employees had experienced or observed
disrespectful behaviour, including sexist and racist comments, undermining and
derogatory remarks and discrimination;
employees when asked to rank their primary issues of concern,
listed the behaviour of team members first, conflict between team members
second, staff turnover and then work schedules fourth; and
the staff situation had resulted in an extended period of
additional duties and staff turnover has impacted work-life balance and also
negatively impacted morale.
As a Commonwealth authority, Airservices is bound by various
legislation, including the Equal Employment Opportunity (Commonwealth
Authorities) Act 1987 (EEO Act) as well as the Australian Human Rights
Commission Act 1986, the Racial Discrimination Act 1975, and the Sex
Discrimination Act 1984.
Airservices noted in its 2016–17 Annual Report that in accordance with
the requirements of the EEO Act, the organisation continues to "work
towards a more inclusive and diverse workforce through a range of initiatives
which are implemented across the business".
Airservices' 2017–18 Annual Report noted that as part of its
responsibilities under the EEO Act:
Airservices' employees are responsible for ensuring their
behaviour complies with the Airservices Code of Conduct, which sets the
standard for treating staff with dignity, respect, courtesy, fairness and
equity at all times; and
Airservices' National Consultative Council provides a mechanism for
ensuring ongoing dialogue with our employee organisations about specific employee-related
2018 – Inquiry into the Air
Services Amendment Bill 2018
In early 2018 the committee conducted an inquiry into the Air Services
Amendment Bill 2018 (the bill).
The bill had two primary aims. The first was to provide a consultation
and reporting structure around aircraft noise, including:
requirements that Airservices to consult with local communities
affected by aircraft noise and to report on aircraft noise;
requirements that Airservices minimise the impact of aircraft
operations on the human and natural environment, community amenity and
the establishment of an Independent Aircraft Noise Ombudsman
the establishment of an independent Community Aviation Advocate
The second aim of the bill was to require Airservices to engage with the
flight paths over Melbourne Airport, and to provide for a review of flight
paths. To this end, the bill sought to empower Airservices with the authority
to prepare a plan for management of flight paths and air space in central
Melbourne. As part of this plan, the flights of helicopters and fixed wing
aircraft below 2,000m above sea level within five kilometres of central
Melbourne would be prohibited, with exemptions for emergency services,
hospitals, defence and related purposes.
The committee noted in its bill report that the management of aircraft
noise is a matter of seeking to balance the needs and interests of an extensive
range of parties and affected groups including:
pilots who want easier access to airports;
passengers who want shorter flights;
airlines which seek to minimise the levels of fuel consumption
and greenhouse gas emissions;
local communities who do not want to have their health and
airports which want to maximise flight numbers;
local businesses which enjoy the economic benefits of local
airport growth; and
all parties who want to ensure the safety of passengers and local
The committee tabled its report on the bill in August 2018. The
committee noted at the time that while it recognised that there was significant
scope for improvement in the way in which Airservices engages with affected
...it takes the view that the bill before it will not provide
the effective consultation mechanism as envisaged. Therefore, the committee
does not support the passage of this bill.
The committee's report on the bill did, however, raise its concerns
about the way in which Airservices had engaged with the local community regarding
Hobart flight path changes, and noted that it would:
...continue to monitor the effectiveness with which Airservices
engages with affected communities on aircraft noise and is more transparent
with regard to proposed changes.
Correspondence regarding Hobart
One of the primary characteristics of many airports in Australia is that
they operate in close proximity to residential areas. In recent times there has
been considerable population growth near and around a number of Australian airports.
Over the years, the committee has, at various times, received complaints
from members of the public about aircraft noise and its impact on local
communities. The committee has often taken up these concerns and raised them
directly with the relevant agencies at Senate Estimates hearings.
Since November 2018, the committee has received correspondence from a
number of Hobart residents raising concerns about the change of flight paths
into and out of Hobart Airport, which residents claim took place, unannounced,
in September 2017.
The committee replied to this correspondence, and indicated that while
it does not currently have an inquiry into these specific issues, it is:
...responsible to oversight the performance of Airservices
Australia. Prior to the release of the Aircraft Noise Ombudsman (ANO)
investigation report into complaints about the introduction of new flight paths
in Hobart, the committee was informed by Airservices Australian in October 2017
that it had not consulted local communities appropriately in Hobart.
Recently, the committee also became aware of the ANO's Quarterly Report
(for July–September 2018), which was published on October 2018, and which sets
out the progress made by Airservices in implementing the ANO's 13
recommendations. After considering the ANO's report, and the concerns raised by
members of the public about the Hobart flight path matter, the committee wrote
to Airservices and requested an update on its implementation of the 13
Airservices provided a response to the Legislation Committee's request
on 30 November 2018. The committee published Airservices' response and also
brought it to the attention of Hobart 'submitters' in correspondence sent out
in December 2018.
The committee continues to receive written material and submissions from
residents regarding the impact of changes to the Hobart flight path.
As noted above, the committee undertook this inquiry into the
Performance of Airservices Australia under Senate Standing Order 25(2)(a). The
inquiry, which was initiated during the 44th Parliament, was
subsequently re-adopted in the 45th Parliament, which reflects the
fact that the committee's concerns regarding the probity of Airservices are
As previously noted, the committee has long held concerns about the
organisation's administration and governance, and the inquiry came about as a
result of specific concerns in relation to the use of corporate credit cards. Historically,
the committee has also asked questions of Airservices regarding termination
payments paid to senior executives, community consultation and workplace and
The committee explored a variety of issues during this inquiry. The
primary focus of the committee's concerns, however, centred around:
the issue of probity in relation to Airservices' procurement
the impact of the new Accelerate operating model on the
the safety of Australia's passenger aircraft and air traffic
the implementation of the Automatic Dependent Surveillance
Broadcast (ADS-B) system.
The committee's decision to refer its concerns about administration and corporate
governance within Airservices, is evidence of just how seriously the committee
takes these matters. The committee is pleased that by alerting the ANAO to
these concerns, the ANAO initiated two performance audits and have published
the results of its inquiries in two detailed reports.
The committee notes that Airservices has agreed to all six of the
recommendations made in the ANAO's first report and has initiated actions to
address each of the ANAO's recommendations. Airservices also acknowledged the
issues raised in the ANAO's second report and agreed to take the matters raised
into consideration, and incorporate them into future operations.
The committee is pleased to note that Airservices is also taking the
issues raised by the ANAO seriously. The committee views Airservices Board's
commissioning of Allens to undertake an external review of probity arrangements,
and Airservices' pro-active response to the Allens report as a positive sign.
As noted above, during the course of this inquiry, additional issues
such as workplace culture and the quality of community consultation have been
raised with the committee. The committee notes, however, that it is satisfied
that in relation to the issues that initially triggered the inquiry – use of corporate
credit cards, issues of probity in relation to the procurement process, the
impact of the Accelerate program, and the implementation of the ADB-S system –
some positive progress has been made by Airservices to improve its performance.
The committee will, however, continue to maintain a watching brief in
relation to Airservices, engage with Airservices' stakeholders and ask
questions of Airservices in relation to its performance.
Senator Barry O'Sullivan
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