Thursday 26 June 2008
Estimates Committee B (Cox)
State Fire Commission
Tasmania Fire Service and $ 4.6 million in Loans
Mr FINCH - Fuel efficiency tends to be neglected in emergency service and in the armed services, but with the Tasmanian Fire Service will you be looking at and implementing fuel efficient vehicles and appliances in your replacement program?
Mr COX - It is hard to get a hybrid fire truck.
Mr GLEDHILL - It is a concern that we have and no doubt everyone has. What the fire vehicle of the future we will be using is certainly uncertain. At this stage we are working very fast towards having a totally diesel-powered fleet for a number of reasons and fuel economy is one of them but there are other operational reasons for choosing diesel. We are very much constrained by the options available to us and at this stage, particularly in our four-wheel drive trucks, there are only two or three manufacturers and only half a dozen models to choose from. As far as fuel type is concerned, we prefer diesel and it will remain that way exclusively for the foreseeable future.
Mr FINCH - Table 24.2 also looks at the sales of goods and services by the Fire Service. I know you can buy fire rakes and things like that, but how does the Fire Service obtain more than $4 million from this category? What are the services?
Mr GLEDHILL - We have two units that operate on a commercial basis, one being TasFire Equipment which does the extinguisher sales and service and light fire fighting equipment around the State which is one of the business units. We have a training unit TasFire Training that provides commercial emergency response and safety training to industry and commercial enterprises. That would constitute the majority of that revenue but there is another side of the ledger that you would need to look at. Whilst that is shown as revenue my Director, Corporate Services might like to talk about the accounting side of it.
Mr GALLAGHER - Just to give you a breakdown; sale of fire safety equipment services was $1.6 million, inspection fees charged $800 000, avoidable false alarm charges about $100 000, commercial training about $800 000 and rentals about $700 000. That makes up that $4.3 million.
Mr FINCH - What do you mean by rentals? Rental of what?
Mr GALLAGHER - Alarm rentals. We monitor the fire alarms and charge a fee to premises that are directly alarmed back to the station.
Mr FINCH - That is a good figure to be bringing back into the Fire Service.
In that same table, under the 'Less Expenses' column, there are borrowing costs of $400 000 for this year and that is increasing in the forward Estimates. That category does not come up in the budget papers very often. Can I get an explanation of what the borrowing costs are?
Mr GALLAGHER - Borrowing costs are broken down, we have about $4.6 million worth of loans. About 11 years ago this figure was $12 million but that $4.6 million has been there for a fair period of time, five years at least. These are loans which the commission took out. We have refinanced those, we are not in a position to pay them off. Approximately $300 000 of that is the cost of those loans. Why is it going up? Interest rates are going up so we are in the process of renegotiating one of our loans. The other is because of the fall in the insurance premium two years which really hit us on a cash basis. You will see in our cash flow statements that our overdraft costs us about $93 000 to $100 000 a year. That is what those figures are made up of.
Mr FINCH - Are they not good situations to have on the books, having a loan of that magnitude to the fire service? Would it not be better to extinguish those, to use fire terminology, so that you do not have this expense of $400 000 a year?
Mr GLEDHILL - As the chair of the State Fire Commission I can certainly say that this is a topic of interest to the commission and has been for a long time. Whilst the commission would agree wholeheartedly with you in wanting to extinguish the loans, we simply have not had the ability to do it and keep the business running. It has been their preferred strategy to continue with the loans. As Mike said, we did renegotiate them and they are at a reasonable interest rate. When the opportunity arises the commission will get rid of them, but it will take a windfall from somewhere. We did have a windfall a few years ago and we have dropped them down a lot on what they were. They represent borrowings back in the 1980s, but because they have been renegotiated they are not costing us a lot in interest. We simply have not been able to afford to get rid of them.
Mr COX - It is not a make or break line.
Mr FINCH - If I was in business and I had a loan from the 1980s then I would be looking to move on that and try to eliminate that where possible. It is a little bit of a concern to me that there is overdraft as well. I would have thought that to run a good business you might not be looking at an overdraft situation.
Mr GALLAGHER - Many years ago, back in the 1990s when our State Government contribution was cut, certainly not by this party, we were told by the Premier that everyone was running on overdraft and the commission had to fall into line. We have not changed since then. As I said, because of the fall in insurance two years ago, we are only just starting to get close to what we were getting two years ago. The dollars are not there. We are caught between a rock and a hard place. We cannot pay the loans off. We are in overdraft more than we would like to be. Part of the reason is that funding of the fire service contribution comes in quarterly, so we have peaks and troughs. In the first quarter, once we get the money in, we are flushed with cash, but over the next two months we will run it down and go heavily into overdraft, and then back up again. The other forms of funding are a lot easier for us because they come in on a monthly basis.
Mr Wing - Who gave that advice?
Mr GLEDHILL - It was the Rundle Government back in the early 1990s.
Mr FINCH - I hope that I have done my job in budget Estimates in highlighting that operation to the minister and maybe that could come under the microscope. It is just interesting that you have a loan from the 1980s and you have a bank overdraft. I think I would be scrutinising those very carefully, if I were running the operation.
Mr GLEDHILL - Can I say that we have had discussions with Treasury about this. Treasury are well aware of it. The Auditor-General certainly made some notation about this very issue in his report last year to Parliament. The facts remain that our cash flow is subject to quarterly input form councils and we do not have the cash reserves that we used to because, on the instruction of the Government of the day, they were run down and intentionally so. We run much closer to the wind that we would like and than certainly the Auditor-General suggests. But that is the way it is. We are still solvent some of the time.
Mr COX - No, it is not that bad.
Mr GLEDHILL - Sorry, that was probably a rather flippant remark. On balance, we are in the black.
Mr COX - The Treasurer is doing a review of funding of the fire service and that it is as a result of this year. So we are aware of what you are saying. We have had discussions with the fire service and there will be a review of how we do it and what we have done.
Mrs JAMIESON - On major initiatives I notice you have a fire station building program. Can you comment on the distribution? This year it is $640 000. Is that going to a particular station? Likewise, next year it is $950 000. How are you distributing the money? Are you doing just one station at a time? It is on page 24.2.
Mr COX - I have not got the breakdown in front of me, Mrs Jamieson.
Mr GLEDHILL - Over the last few years and into the future it is likely that we will be addressing one major station each year and apportioning other money on a needs basis to stations that need addressing. There is a range of stations. If you look at Gravelly Beach, this year there is a considerable extension going on there. It is quite a large structure and a significant building, whereas somewhere like Weldborough has a tin shed stage and you cannot even walk around the truck. It houses the truck but it does not house the people of the brigade, which we know is rightly important. Over the last 20 years or so we have had an ongoing program to upgrade the accommodation of all of our brigades but particularly volunteer brigades. It is continuing, but not continuing at the same pace as it was a few years ago. There is an amount of money apportioned each year to the building program to address some of those outstanding small rural stations and probably in most years it will address one significant station.
Mrs JAMIESON - Can you indicate the prioritisation?
Mr COX - Yes, I can give them to you. Fire station build program major works for 2008-09 include the St Marys fire and emergency services facility and substantial upgrading of the Gravelly Beach fire station. Additional allocations for 2008-09 include the construction of fire stations at Parattah and Weldborough, and upgrading of Beaconsfield fire station and station amenities at Ellendale, Broadmarsh and Jericho. A number of smaller volunteer brigade building projects are also going to be undertaken.
Mrs JAMIESON - So by 2011 we have a million, or is that an aggregate amount of money?
Mr COX - That would be aggregate, I suspect.
Mr DEAN - This issue was brought up by some of the volunteer fire officers some time ago and I think a lot of this came out of the east coast fires. I might say, Minister, the volunteer brigade is an excellent brigade, with excellent volunteers and people working -
Mr COX - You will get no dissent from that remark from anyone at this table.
Mr DEAN - I did not think there would be. There was some concern that, where they were called out and needed in wildfire situations, they were away for long periods of time without really getting any remuneration or support for losing time from work and all of those issues. Has that now been rectified? Do we have a position moving forward or not?
Mr GLEDHILL - We do, and the position is unchanged. Essentially, volunteers are that; they are volunteers. We support our volunteers as much as we can, making sure that they are well accommodated and well provided for with food and so on when they on campaign, but their time is for them to negotiate with their employer. I have a very strong position on this because it is a very sensitive area; volunteers and money do not mix well. Money can potentially corrupt the volunteer system