In the Phase 1 price review consultation, the CAA presented an option to introduce differential hourly rates for Professional/Technical and Administration staff contribution to “activities for which fees and charges are made”. There was strong support from customers.
And then, in the Phase 2 consultation document, the CAA stated:
We have established rates for Professional/Technical, and Administration staff charge- out, based on it’s [sic] cost allocation modelling. This would enable activities that are delivered predominately through administrative staff (such as aircraft registration or licensing functions) to have a different base rate applied from those activities delivered predominantly through professional/technical staff.
So we asked: Would you please provide the calculation of how the administrative hourly rate was determined and what portion of the total hourly rate is attributable to an upward movement in direct and overhead costs?
The CAA response:
The CAA does not have an administrative hourly rate. A proposal for the establishment of an administrative hourly rate was considered as part of Phase 1 consultation to the current Triennial Funding Review project but was not proceeded with.
We thought that this was a strange and confusing answer. So we contacted John Kay, General Manager, Policy and Systems Interventions, for clarification.
Mr Kay told us:
Consideration of the feedback from respondents, and an assessment of the ongoing efficiency of charging for what is a small component of the overall revenue from chargeable activity led the Authority to propose that there be no charges made for the administrative time spent on chargeable activities. This is set out in Proposal 5, specifically “We propose that administrative staff time, for which an hourly charge is currently made, is no longer charged for.”
In essence, this means, in the event that the proposal is proceeded with, that:
1) Professional/technical staff working on chargeable activities, would be charged out to participants at the current rate of $284, incl. GST (or $246.96, GST excl.); and
2) Administrative staff working on chargeable activities, would be not charged out to participants, (that is $0)
We thought that the Authority’s proposal was to be commended, particularly in the climate of steadily increasing costs in other areas to CAA clients. But to test how this change of policy might play out, we went back to Mr Kay and told him that in December of last year, a Part 115 operator queried a CAA invoice for processing a change of address notification. The operator had moved from one hangar at Ardmore to another on the same airfield.
He was charged $355 for a simple amendment to the address shown on his Part 115 Adventure Aviation Certificate.
At the time, the reply from the Authority was that:
In this case time was required to change the office address and ensure the exposition was correct where that new address was published – which it wasn’t, and follow up with your exposition writers. An hour is conservative for the time taken to complete this, and again it was actual work done. The remaining 15 minutes was for all administration tasks associated with the work request.
We asked Mr Kay that, if we understood his letter correctly and if Proposal 5 is adopted, there would be no charge for a simple change of address amendment to an Exposition?
Mr Kay stated:
In the case you refer to in your letter, the professional/technical activity carried out by CAA staff was ensuring that the changes being requested were consistent with the exposition. This required clarification with the participant. One hour of professional/technical staff time was charged for. In addition, 15 minutes administrative time incurred on the activity.
Under the Authority’s proposal, the participant in this scenario would be invoiced for one hour for the activity carried out by professional/technical staff, but would not be charged for the 0.25 hours of administrative time incurred on the activity.
We’ve told Mr Kay: “Your explanation does little to convince us that this charge was justified and we would go further to say that those who have been made aware of the scenario we presented to you consider it nothing less than a rort. This was in essence a clerical matter that any competent clerk could have processed at minimal time and cost even if meant picking up a telephone to get further clarification”.
It is with deep scepticism that we view the seemingly benevolent CAA proposal to not charge for administrative time. There will undoubtedly be creative ways to ensure that administrative work will still be classed as professional or technical…