SCHOOL BUS SERVICES

Mr BROCK (Frome) (11:02): I move:

That this house establish a select committee to investigate and report on the effectiveness and cost of the Department of Education and Children's Services (DECS) school bus service, and in particular:

(a) the cost and community effect of DECS running its own school bus service;

(b) the cost and community effect of DECS contracting to local private school bus services;

(c) the effectiveness of school bus services and contracts in South Australia compared to other states;

(d) the management of the bus service tendering process by DECS;

(e) the management of existing school bus service contracts by DECS; and

(f) any other related matter.

I understand that the Education Act of 1972 has the provision in which the minister may, in such manner and to such extent as he or she thinks fit, provide or arrange for the transportation of children to and from any school, and may pay the whole or any portion of the cost of transporting these schoolchildren to and from any school.

With this in mind, I wish to investigate whether this prescribed method of transporting children is still relevant in 2010, some 38 years after the Education Act was brought into force. I bring to this house a request to form a select committee to explore other methods of transporting our students to and from school. In particular, I wish to explore the current transporting arrangements of regional and remote students.

I appreciate that the situation in metropolitan Adelaide is vastly different to that in regional areas. The current regional operation is a joint operation, that is, some 509 free buses are transporting some 16,000 students; 226 of these buses are DECS operated and owned and the others are run by private contractors.

Following the morning runs, the DECS buses are parked at the relevant schools during the school periods, then again utilised at the end of the school day to transport these schoolchildren home. The amortisation of the cost of these units is on a daily basis and, if we look at the cost per actual hours of operation, this could be extremely high given that we would allow for, in most cases, the units sitting idle for six or seven hours per day. These six or seven hours, coupled with the actual running time of the bus, together with the labour component and materials, means that the total cost could be calculated over nine or 10 hours per day.

If the private contractor was operating this facility and only charged for the time these units were being utilised, this could be approximately three or four hours per day, which could be a better utilisation and less costly than the DECS bus operation that is currently used. The private operator would be able to utilise these units during the school periods in his own business and only charge for the time that is contracted to the DECS organisation.

In a letter from the Minister for Education to me dated 13 September 2010, it was stated that the department will spend $114 million over the next four years to improve school bus services across South Australia. This was made up of upgrading the departmental bus fleet with new seatbelts and air conditioning, totalling $23.8 million (which included an additional funding of $19.2 million), plus, over the next four years, there will be $90.7 million for private operators to provide new buses and further improve safety standards.

The department has commenced its procurement process and, whilst this has commenced, I believe the tendering process could be included in the work of the select committee to analyse and ensure that the most equitable system is undertaken. I ask that this house explores the best practice of other states and use the knowledge that we have in our own state and department to ensure that our system is cost-effective, sustainable and safe.

I understand that the industry meetings being held in the regions presently will gather information from current and prospective contractors regarding their experience, concerns and thoughts on the current seven-plus-four-plus-four year contracts being offered.

I feel that a select committee could also explore the issues around viability of private and DECS-funded school buses in our state. I would also like to scrutinise the current arrangements of school bus services being held within the DECS organisation as the client department. I question: is this department best serviced to administer and supervise school buses, or could the department of transport (DTEI) manage this service more effectively? I understand that the DECS-owned fleet does not have a depot to house its vehicles, nor does it require proper accredited EPA washdown facilities, as do private operators.

In 2007, a government study was undertaken to look at the feasibility of transferring the operation of these buses from DECS to DTEI. This report (a cabinet submission only) concluded that DECS school bus services were grossly underfunded and would require substantial funding injection to bring them up to achieve viability.

We also should look at the social and economic effects that these services could have on regional locations. I request that the government permit the formation of this select committee to enable a detailed investigation and subsequent recommendations to be presented to this house. This request is made purely on the grounds of my wanting taxpayers and the government to get the best value for money, and parents and care givers getting peace of mind in that children are transported safely to and from their schools.

Yesterday, the Minister for Education provided me with a report on school bus contracts which was undertaken by the Economic and Finance Committee in June 2004. However, this was only for the 'terms of contract and the tendering process for private bus contractors'. This request was as a result of communication from a private school bus contractor asserting that the value of individual bus contracts had been eroded over the years due to an inadequate index system and also the fact that DECS officials showed no inclination to resolve or respond to any such contractor complaints about the index system.

My notice this morning goes into far more depth than this report. I am looking at not only the contracting process but also at an overall review of the whole system to ascertain if our current system is the best available for both value for money and also for the people for whom we are supposed to provide the service, that is, schoolchildren and particularly regional and remote students. If my request is looked upon favourably, I seek that the composition of the committee be two government members and two opposition members plus two independent members and that it be permitted to report back for further consideration by this house.

The Hon. R.B. SUCH (Fisher) (11:11): I will be brief. I support the member for Frome and, before I get onto the specifics of his motion, I urge the government to be more accommodating in respect of requests for select committees as they are an excellent vehicle to examine issues affecting the community. I highlight some that I have been involved with: one relating to cemeteries, one relating to juvenile justice and one which started looking at DECS but which we did not complete. I ask the government not to take a narrow view and say, 'Look, we don't like select committees looking at—

Members interjecting:

The Hon. R.B. SUCH: We are here to serve the community and the select committee process is one of the best ways of doing it because, as the member for Frome indicated in his request, you have members from both sides plus Independents, and you can call in experts and submissions from the public. It is one of the ways in which parliament can fulfil its role in serving the people and reflecting what the people of the state want.

Specifically, this motion addresses a very important issue as a lot of money is involved and the DECS bus service is critical in terms of giving country students the opportunity to participate in an education in a system (and I am not talking about DECS specifically but overall) where country children are disadvantaged in respect of many educational opportunities. It is important that the facility that helps them to access education is run in the most efficient and effective way.

I have a lot of relatives who live in the country and I go there frequently myself, and from time to time issues have come up and, while not specifically mentioned in the terms of reference (but it could come under '(f) any other related matter'), we have the question of children attending a Catholic or independent school being able to be carried on the DECS bus. I think they should be able to. It came up a few years ago when children wanted to access, I think, the Lutheran school at Murray Bridge.

A whole range of aspects could be looked at in respect of this motion and I commend the member for Frome for introducing it. I trust that the government, in this new paradigm that is affecting Canberra, will see greater involvement of the parliament using techniques such as the select committee. I urge the government to be a little more open-minded than they have been in the last few years with respect to select committees.

Mr GRIFFITHS (Goyder) (11:14): I also support the member for Frome and commend him for bringing this motion to the house. In the last three months I have had an enormous amount of contact with local bus operators in my electorate who are very concerned about delays in the retendering for or engagement of contracts for the provision of school bus services. It is fair to say that all these people are dedicated small business people who have worked for decades.

Of the three people with whom I have had regular contact, the first one (or his family) has been associated with bus services for 52 years, another chap for 50 years and another for 35 years. All these people are very concerned about the delays. They want to ensure that the quality of the service they provide is the best that it can be. There has been much concern in the past about seatbelts and air conditioning on school buses, and I note that the government has committed additional dollars to its own fleet for replacement.

It has also been indicated to me in a letter I received recently that there is $90.4 million—and I am watching to make sure that that is further dollars, or on top of something else—over the next four years to improve the contracts that will be in place for private operators. The motion from the member for Frome is a very appropriate one, because we have some 65 contracts that will expire by the end of this calendar year and another 100 contracts that will expire at the end of 2011.

There is great concern about the fact that, because of the 25-year limit that is in place on school buses, an enormous amount of buses will have to be purchased brand-new. I am advised that, if people in Australia want to buy Australian-made buses, there is something like an 18-month lag time, even though, at a Bus and Coach Association function on Monday night, we were told that 12 would be ready for delivery by the end of this year. However, it is a very small number compared to what is needed.

I think it is important that the parliament actually engages in this process to ensure that the best system is out there. Obviously the private operators want to continue, and they have confirmed with me that South Australia is rather unique in the fact that it is the only state that has a combination of government-provided and privately-provided buses in its school bus fleet. Every other state operates with a private fleet only, and they believe that works well. Obviously, for other governments to pursue that option, it must be quite cost-effective. So, this motion from the member for Frome allows for a detailed investigation to take place to determine if what we are currently doing is indeed the best option moving forward. Let us hope that we get some support on it.

There is also concern about the future contracts that are in place and the emission standards the new buses will have to meet. I have been informed by some operators that DECS has told them to go out and purchase the buses, or engage in discussions with their financial backers—banks and that sort of thing—about the dollars they would need to buy new buses. Of course, the problem is that the banks want to see the contracts in place, so that is where the delays in negotiating contracts have had a profound effect upon those small business people.

They are spread all around South Australia, and it is of great concern to me that, as part of my investigation into this issue, I was provided with a copy of a newsletter from the DECS staff who control bus contracts which was dated August 2008 and which was supposedly forwarded to all operators around South Australia. However, none of them have received it. I got a copy of the newsletter and provided it to the Bus and Coach Association, and immediately received feedback from them and their members saying that it was the first they had ever seen of it; and this newsletter was meant to go out to operators and give them some guidance on how contracts were to be put in place. So it seems to me that there are some people who work within this section of DECS who truly need a bomb put underneath them—

Mr Pengilly: Several.

Mr GRIFFITHS: The member for Finniss says 'several'—to ensure that the process is working the way it should be. We should not have got to this situation. The member for Frome wants to ensure that we have the best system in place in the future, and I commend him on that, because it does ensure the best use of the dollars provided by our community. It is not a political move; it is very much a bipartisan move, and that is why the opposition supports the motion for the member for Frome. We believe the investigation needs to take place.

This proposal includes the suggestion that two members from the government, two members from the opposition and two of the Independent members in this house form a select committee, and I am sure that this collection of six people interested in this very important subject would allow the detailed investigation to take place. The recommendations that come from the select committee would allow the parliament, and indeed the process, to move forward to give operators some surety, be it a recommendation for a bus fleet controlled by government or a bus fleet controlled by private operators. We need to know how we are moving forward, because at the moment it is a bit of a shambles.

That is what the small-business operators from the Bus and Coach Association, and specifically three operators in my electorate, have approached me about: their continued frustration. For them it is a history of a gradual build-up in controls placed upon them and cost implications to their businesses that now puts a lot of things in jeopardy. One of the operators in my electorate has some 15 people working for him, and he is very concerned that, because he cannot guarantee he will have contracts moving forward, he will lose good staff. The mechanic who does the maintenance on his trucks has already indicated that he intends to resign very soon—this bloke is very important to the business—and it is because of the uncertainty and the fact that DECS cannot seem to get this project right.

I do recognise that DECS is now having a series of regional meetings—one was held in my electorate at Kadina on Friday last week, and I know that there are several occurring this week—and that is a step forward, but it is still too late. That is the frustrating part of it.

I commend the member for Frome. I do hope that the government members decide to support this motion. It will allow for the provision of a very important service for our schoolchildren to be put in such a way that it is the best possible one for them.

I will then not have to have situations where I get a call from a parent at the Mallala Primary School who tells me that their governing council has now instigated a rule that, for any day of 39 degrees or over, school buses will no longer run, thereby putting the requirement upon parents to arrange, often at very late notice, pick-up and delivery opportunities for their child at school. This just throws the whole thing into confusion. We need the best possible bus fleet we can get out there, be it a mixture of government or private, or indeed, all government or all private, but let's get it right, and the best way to do that is by supporting this motion and allowing the select committee to be established.

Mr PEGLER (Mount Gambier) (11:20): I congratulate the member for Frome on this motion and I certainly support it. I believe that both, or all, sides of the house should attempt to address this motion with an open mind and in a bipartisan manner, because the whole motion is about addressing the way that our children are transported to schools.

We must bear in mind that this motion is not about what was covered in 2004 in addressing the private tenders. This motion is about the manner in which we transport our children to our schools, and, through this motion, if we can all work together we will be able to find the most cost-effective manner to transport our children to school in a safe and environmentally friendly manner. I certainly support the motion and I hope that all sides of the house use an open mind and approach this matter in a bipartisan way because it is extremely important to all of our children.

Mr TRELOAR (Flinders) (11:22): I, too, rise to support the motion to establish a select committee. I congratulate the member for Frome on this initiative and I would ask that parliament give support to this motion.

There is absolutely no doubt that the provision of school bus services to country, rural and regional students is absolutely imperative. It provides educational opportunities for our students who are some distance from regional schools. In the case of my own electorate of Flinders, almost all of my schools are in regional areas and probably more than half of the students travel to school by school bus.

I agree that it is time for a review of this process. What is interesting to me is that this state is the only state that still runs a fleet of DECS buses. Every other state has moved entirely towards private contractors providing that service, and you have to ask the question why that is and whether we are, actually, operating the service inefficiently.

The member for Fisher raised an interesting point with regard to the transport of children to private independent schools. A number of those schools exist in my electorate, and certainly the issue has been raised with me about the transport of students to those particular institutions. It has already been touched on by the member for Goyder with regard to small bus operators who are in small businesses in country towns providing a service not only of transport to school but to the broader community as well. So there is the utilisation of those buses as well as the contribution that those small businesses make to the small local economies.

What has been highlighted over the last few weeks is, I think, the poor relationship between DECS and the South Australian government. I think this has probably forced the issue of contracts with private operators. One wonders why the delay has occurred and what the problem has been. I think it is very timely that this select committee be established and I certainly support the motion.

Mr VENNING (Schubert) (11:24): I just want to briefly support the member for Frome and what he has done here because, as you know, I am actually his constituent.

Mr Pengilly interjecting:

Mr VENNING: No, I don't, I live somewhere nicer. I live in the Barossa Valley. I do support this because it has been an issue for many years, particularly in my area, where there has always been a dispute in relation to the people of Crystal Brook about whether they should be bused to Port Pirie or whether they should be bused to Gladstone; it has been an ongoing dispute, which has never been clarified.

Also, I take my hat off to the private operators. I believe they need protection, particularly when we change the rules in relation to seatbelts and air conditioning in buses, because to buy a new coach today that is approved is very expensive. It is a major financial outlay, and these contracts need to be such that the people can actually win the contract first and then go and buy the bus, not the other way around, because if you go and buy the bus and you lose the contract, it is almost a ruinous situation where you have a bus and you have not got a route to drive it on.

So, certainly, I do believe we have come a reasonable way in relation to addressing these issues, but I think a select committee would be a great opportunity for us to have a look at all the aspects that the member for Frome has highlighted here. I am also sure that the operators will appreciate having the opportunity to come in and give evidence to this committee. So without any further ado, I commend the motion, and I commend the member for moving it.

Mr PEDERICK (Hammond) (11:26): I commend the member for Frome for bringing this motion forward. There are many issues with transport, especially in country areas, where people do not have the benefit of the public transport subsidies that we have, especially the Metroticket service, and the way services are run causes a lot of grief in country areas. There is also a major concern with area rights or route rights, where certain owners are guaranteed a certain area. It is amazing in this day and age that where operators can operate is restricted. If other operators want to run a tandem service they are restricted, unless they can gain an exemption to run that service.

I would like to see full competition open up in the transport service. Competition would sort it out. I remember when the area rights situation was renewed by minister Conlon several years ago. I went over to the minister after that and I said, 'Why did you do that?' and he said, 'We wouldn't have enough buses.' Well, I can assure you, there would be plenty of buses come on stream. There are plenty of operators keen to put their services out there, not just for school runs, which this motion is about, but for public services across the state.

In relation to school runs, I have had many issues put to me concerning both public schools and private schools. Sometimes these runs work together, where services are coordinated between the private system and the public system, and these have come into some problems under the area rights or route rights system that is in place. There are irregularities, such as people cannot even pull up in a town because a certain bus operator owns the right for picking up people in that town, which I think is just utterly ridiculous.

Furthermore, regarding bus routes, there has been a closed system in place for many years for public school tendering, and that has been a very good way for operators who have been operating these services to put their case, regain their contract and service the community. I believe the government is going for a full open tender for these services, and this runs the very real risk, as the member for Goyder so rightly put, of putting jobs at risk in country areas. People may own only one, two or three buses, but they provide vital income and support for regional communities. Certainly, throughout the seat of Hammond there are several operators who have maybe only one to three buses. This is vital work, not just for drivers; sometimes it supports farmers who need a bit of extra income, and it also employs mechanics and keeps good mechanical knowledge in these regional areas.

I can tell members from experience that, when local garages in country areas get to the stage where, all of a sudden, they are slowing down and no-one is there to take over the business and a mechanical service is lost in a country area, it is a real tragedy for the people of that area because they have to travel many kilometres—sometimes hundreds of kilometres—to have vehicles serviced. So, it is not just about the bus operator operating the buses; it is the community flow-on effect. I certainly believe that, if DECS is handling these contracts in the same way it runs the buses, it goes to show that it is not very efficient and not very efficient in the process of delivering new contracts into the future.

Many operators have been operating on basically a wing and a prayer since early this year when their contracts effectively ran out. They have been told, 'Just get on with life and we'll sort it out later.' Well, that is not good enough from a department which has hundreds, if not thousands, of people working there; the department should be able to sort this out. The problem is that we have people with a government-centric vision working in these departments. They have no idea how small business operates and how these people function—people who have put their house and business on the line so that they can provide these services to rural communities. I commend the member for Frome for moving this motion, and I hope it makes it through to the select committee process and that the house moves it forward.

Mr PISONI (Unley) (11:32): I rise as the shadow education minister to support this motion. We have been in contact with a number of bus operators, and this is an issue that has been bubbling along for quite some time in the department.

It is not a unique situation for DECS. I know that the cleaning contractors had similar difficulties in dealing with contracts that were signed before the fair work legislation was passed at the federal level. Those contracts were for five years, and some of them had been running for only 12 months or so when the new labour rates were put in place. The Fair Work Act standardised a lot of award rates, and South Australia inherited from New South Wales a lot of higher rates. The difficulty a number of cleaning contractors had because of the new labour rates and the tight margins is exactly the same situation faced by bus operators, who are running on very tight margins. It is a very competitive business, and cleaning is a competitive business.

Running bus services, whether they be charter bus services or whether they be bus services for schoolchildren, is a very competitive business, unless, of course, you are a DECS-operated bus. Then you are very inefficient and you sit for six hours a day. A public asset sits for six hours a day being unused. It drops kids off in the morning and sits in the grounds all day and then drops off the kids in the afternoon; whereas what private operators are forced to do (and rightly so) is to fully utilise their assets, which is what we do not see with DECS buses.

I am digressing a little, but I return to the fact that the lack of understanding the department had with these cleaning businesses is also being seen in the way in which the department is conducting the contract negotiations with contractors in the bus services industry. With the cleaning contractors, due to changes at a federal level, we saw increases in labour rates for cleaning staff, which meant that a number of cleaning contractors were paying out of their own pockets anything between $25,000 and $50,000 a year to maintain those contract because of the increase in labour costs.

The department would not budge in allowing those contracts to be adjusted simply to cover the new labour rates. Eventually, I think it came about because a number of the cleaning companies got together and said, 'Look, we're going to tear our contracts up and you'll have to re-tender and pay this anyway.' The department then agreed to increase labour rates so that they were back on the same profit margins as they were before the changes in federal labour laws.

However, I have been told about what happens within the department when a DECS bus contractor raises a concern with the department or raises concerns about the negotiation process for DECS or the rollover agreement. Remember, a lot of these bus agreements are rolled over for three, six, nine and 12-month periods and many of them are very old. Although it was announced there was to be more funding for buses (for seat belts and air conditioning) in the 2006 budget, we heard from the education minister that we will not see that process finished until 10 years after the announcement. That is a whole generation of school kids from when the announcement was made until we see something in place.

It is important to understand that there is a disconnect (and the minister has sacked his CEO because of this) between those in the bureaucracy in the department of education and those in the real world, including teachers, students in schools and, of course, those in the private sector who are servicing the education department. It is important to have a select committee to investigate just what it is about the department that makes it so angry towards the private sector and working with contractors.

When contractors raise concerns with the department they are threatened with having their contracts torn up. The department says, 'We've got our own buses and will bring our own buses in and you won't have a contract.' This would have devastating effects for local communities because not only do they provide very cost-effective services to schoolchildren, by delivering kids to school—and it is in the charter in the Education Act that the department has a responsibility to deliver children to school in regional areas—but there is also the opportunity for local contractors to service buses, for groups and communities to charter buses, whether it be for additional school services, social projects or communities within the regional areas—they all rely on bus services being there. Of course, their core business is the school bus service but their buses are also available for community use as well. That brings in additional business and has tourism implications for the regions.

It is important that we encourage the private sector in regional South Australia and make sure that we do not lose these bus contracts to the department altogether because that would be an absolute disaster. I think it is bad enough that half of the bus services are run by a government department but if we saw all of the bus services run by a government department what a disaster that would be for value for money and for local communities in South Australia.

I would like to see this committee established so that we can examine the methods and ensure that local communities are benefiting from small businesses providing these services. Also, that we are not going to see large interstate or overseas companies consuming the businesses that have been supporting the local community for many years and where the community benefits through businesses sponsoring the local footy or netball club.

Small community businesses bring a lot of value to regional South Australia. There is no doubt that a regional community is much better off having a small business that is owned and operated by someone living in the community than a branch office and a manager who has been shipped in from the eastern states to run that business. There is much more connection with that business and the local community if it is a local member of the community who is running the business. That is a documented fact, where a lot of work has gone into the benefits of home-grown businesses in regional areas, in the Midwest of the United States, in particular, where they understand the benefits of having locally grown and incubated businesses participate in their own community.

I support this motion, and I hope the government will support it. I think that, in the spirit of the sacking of the CEO of the department of education, we owe it to regional South Australia to examine just how the bureaucracy is working in the department of education in regard to dealing with bus contracts, in particular, where this motion goes. So, I urge the government to show some courage and to support this motion. This will be a bipartisan situation. This is not about political points, this is about getting a result for small businesses and local bus operators and for communities in regional South Australia.

Mr PENGILLY (Finniss) (11:41): I would also like to offer a few words of support to the member for Frome's motion. It is a fairly simple solution in the metropolitan area for children to get to school on public transport, but out in the bush school buses are absolutely critical. Over the years, while my own children regularly used school buses and I was involved in the school community, school bus routes and dealing with the bureaucrats who make the decisions on school bus routes and school bus drivers, discipline and general behaviour on buses have always been, and continue to be, the subject of a fair bit of debate. You only need one ratbag on a bus and the bus can quite often descend into chaos, quite frankly.

What the member for Frome has proposed is an infinitely commonsense approach to the matter and will put in place, as I think the member for Unley said, a cross-chamber committee to have a look at this whole issue. We really need to decide whether the department, the government of the day, needs to be in the school bus business. They have done it very successfully for decades and decades, let us not forget that, but times have changed. The capital cost of putting these school buses in place is great, the state is rapidly going broke—we are paying $2 million a day in interest on the debt—so it is past time that we looked at this.

The points that the member for Frome has raised about the cost and community effect of DECS running its own bus services, the cost of contracting to local private school bus services, and the other dot points that he has raised are most important. A select committee can work through this, have a look into it and go to places, get a lot of information and report back to the house on its outcomes. It may turn out, but I doubt it, that what we now have in place works well. It may turn out that in some places we have not much choice but to have in place a government-run school bus service.

However, listening to contractors last Monday night from the Bus and Coach Association, it became pretty clear to me that the services they offer are good and they are cost-effective. We, as the taxpayer, one way or another pick up part of the cost but we do not pick up the large capital cost of putting these buses on the road. The cost of new buses now is prohibitive, anywhere from $300,000 to $500,000, depending on whether you get a bus or a coach, of course—there is a bit of a difference in that.

The member for Frome is acting in the best interests of his rural constituents and there are many on this side of the house whose constituents' children use school bus services. So, I support it. I think it is a step in the right direction.

The Hon. R.B. Such: In Fisher we have them.

Mr PENGILLY: The member for Fisher—a blast from the past—says that he has them in his electorate.

The Hon. R.B. Such: We do.

Mr PENGILLY: Good. Excellent. So, I think it is good. Let us have a look at it. I urge the government to consider its position on this and support the member for Frome's motion. There is not much point in putting this stuff off forever and a day. We need to get it happening, if it is going to happen. We do not want to go into Christmas and the new year without having made a decision on this. So, the minister, the Premier and others on that side of the house, want to have a good look at it and support the member for Frome as, indeed, the opposition is doing on this particular motion.

Debate adjourned on motion of Mrs Geraghty.

Mr PENGILLY: Madam Speaker, I draw your attention to the state of the house.

A quorum having been formed: