The United Firefighters Union of Australia Aviation Branch has called on the Federal Government to stop Airservices Australia's aviation firefighting privatisation plan, warning that it will cost taxpayers an extra $135 million for a worse safety outcome.
The plan includes engaging a sovereign wealth fund as a 'strategic partner' to purchase aviation firefighting assets, fire stations and vehicles with the Federal Government leasing them back over time.
An independent report prepared by Professor William Mitchell from the University of Newcastle's Centre of Full Employment and Equity found that the proposal will cost taxpayers an extra $135 million and lead to worse safety outcomes, compared with the Federal Government borrowing the required funds itself. This is because the government can borrow at a much lower interest rate than the private sector.
UFUA Aviation Branch Secretary Wes Garrett said the proposal was a bad deal for taxpayers and a threat to passenger safety.
"The plan to privatise Australia's aviation rescue firefighting service will mean taxpayers will be $135 million out of pocket for a worse service that undermines their safety.
"At a time when the Federal Government is cutting budgets and raising taxes, taking an option that is financially worse for taxpayers to deliver a poorer standard of aviation safety seems completely nonsensical.
"The reality is that this is a short-term budget fix that creates long-term pain for taxpayers.
"It might move the upfront cost off the government's books, but it does not make that cost disappear.
"It simply pushes the cost into the future so a private investor can make a profit. "For taxpayers and air travellers, it's a lose-lose scenario."
The report found the Commonwealth can borrow at lower rates than any private investor, meaning direct public funding would be $135 million cheaper, more transparent and more consistent with Airservices' role as a public safety provider.
Mr Garrett said handing aviation firefighting infrastructure to a sovereign wealth fund would add profit pressure to a service that should only ever be focused on safety.
"That profit pressure has to be paid for somehow. That means pressure to cut resources, delay maintenance, squeeze investment and undermine operational readiness.
"In aviation firefighting, readiness and response time are everything. Passengers have just 3 minutes to live before fire penetrates the aircraft cabin.
"If vehicles, equipment, stations and maintenance are compromised, passengers and firefighters are the ones who pay the price."
Michelle O'Neil, President of the Australian Council of Trade Unions, said that measures that removed aviation firefighting assets from public ownership and weakened accountability should be opposed.
"The ACTU stands with the United Firefighters Union and Airservices unions in calling for aviation rescue and firefighting infrastructure to remain in public hands. We oppose any proposal by Airservices Australia that weakens accountability and adds commercial pressures to an essential public safety function.
"Aviation firefighters are the people who run toward danger when the worst happens on a runway. The essential safety equipment these workers rely on to keep Australians safe should remain publicly owned and be run in the public interest, not for private investment returns.
"Australians expect our governments to properly fund emergency services, including the maintenance and renewal of essential safety equipment. Inserting a private commercial interest into Airservices Australia would put at risk the workers we all rely on and public safety."
Professor Mitchell said the financial case for private finance does not stack up.
"The basic arithmetic is clear. The Commonwealth can borrow more cheaply than any private corporation, and that would save taxpayers $135 million. By comparison, a sovereign wealth fund must borrow at higher private-sector rates and generate a profit for its shareholders.
"Calling this proposal 'Value for Money' does not make it so. On the evidence available, it looks like a more expensive way to deliver essential public infrastructure."
The report also found that risk cannot be genuinely transferred to the private sector when the service involved is essential to public safety.
Professor Mitchell said the public would remain the backstop in the event of any failure.
"Aviation rescue firefighting simply cannot be allowed to fail.
"If a private fund fails, cuts corners or walks away, the public purse will be left to pick up the tab because the Commonwealth will have no choice but to step in.
"So under this proposal, private investors get the profit, but the government keeps the risk, plus the $135 million dollar bill.
"That is not saving the government any money. It is simply underwriting higher private profits dressed up as financial management."
Mr Garrett said the Federal Government must intervene.
"The Federal Government cannot hide behind Airservices Australia.
Airservices is a government-owned authority. The Minister has the power to stop this proposal."
The UFUA Aviation Branch is calling on the Federal Government to direct Airservices Australia to abandon the outsourcing proposal, release the full financial modelling, commit to direct public funding of aviation rescue firefighting infrastructure and rule out any privatisation or commercialisation of the service.
"Australians expect aviation rescue firefighting to be run in the public interest, not as an asset class for private investors.
"We call on the Federal Government to spare taxpayers an additional $135 million cost to deliver a worse service that compromises their safety whenever they get on a plane."
