WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Aviation Legislation Amendment Bill (No. 1)
1997
Date Introduced: 26 February 1997
House: House of Representatives
Portfolio: Transport and Regional
Development
Commencement: Royal Assent
This is an omnibus Bill which provides amendments to two
Commonwealth Acts to enhance environmental regulation for airport
sites, to prevent sub-leasing of airports to trusts, to establish a
national register of encumbered aircraft and to streamline (and
tighten) the approval process for air charter flights.
The proposal for the privatisation of Australia's airports was
announced in the Labor Government's Budget for
1994-95.Subsequently, the proposal was varied to offer the airports
on a commercial lease basis rather than the actual sale of the
sites.The Coalition (then in Opposition) broadly supported the
privatisation process, subject to a review of the East-West runway
issue at Sydney's Kingsford-Smith airport. (1)
This asset sale scheme is a sale of long term leases of the
airports currently owned and operated by the Commonwealth's Federal
Airports Corporation (FAC).The profitability of Australian airports
for 1995-96 is shown in the following table.Some of these airports
do not, at present, operate at a profit but it has been observed
that the level of profitability for airports depends on the
accounting methods used and the level of debt serviced by a
particular airport. (2)
Airport Profit/ Loss Contributions (Before Interest and
Tax) 1995-96
Airport Profit/Loss Airport Profit/Loss
$ $
Sydney 91,003,000 Melbourne 48,302,000
Brisbane 44,556,000 Adelaide 11,649,000
Perth 24,064,000 Hobart 1,182,000
Launceston 920,000 Coolangatta 4,812,000
Canberra 4,211,000 Alice Springs (653,000)
Darwin (898,000) Townsville (734,000)
Mount Isa (225,000) Essendon (1,114,000)
Bankstown 678,000 Moorabbin 30,000
Archerfield (347,000) Parafield (40,000)
Jandakot (612,000)
Figures in brackets
represent a loss.
Source: Annual Report 1996 - Federal Airports
Corporation
The Minister for Finance, Hon John Fahey, has stated '... that
one of the key objectives of the Government is to ensure that new
airport operators have the necessary financial strength and
managerial capabilities to operate and develop airports over the
lease period.'(3) The Minister identified other paramount
considerations which include:
- quality of service
- economic development and airport pricing policy as they pertain
to environmental and regional interests
- diversity of ownership. (4)
In the separate but related area of environmental protection,
the Bill strengthens environmental safeguards by extending
statutory obligations beyond the airport lessee to other persons
carrying out activities on an airport site.
The Bill also establishes a national register of encumbered
aircraft to alert those who trade in aircraft to be informed as to
whether a particular aircraft (including the airframe, engines and
avionics) is subject to the security interests of lenders and
creditors.
The Bill also contains amendments to streamline the approval
process for charter flight operations to enhance competition, and
to also strengthen consumer protection provisions in terms of who
can apply for charter flight approvals.
Reader's Note: The proposed amendments are included in
Schedule 1 to the Bill.The terminology to be used therefore is
'Item' in the Schedule in lieu of 'Clause' in the
Bill.
Charter Flights
Items 1 and 2 include proposed
amendments to the Air Navigation Act 1920 (Principal Act)
to extend the definition of 'non-scheduled flight' to cover all
non-scheduled flights irrespective of nationality of the
aircraft.Also proposed are new definitions for 'charterer' and
'charter operator' in section 15 of the Principal Act.A 'charterer'
can include a travel agent or a package tour organiser.A 'charter
operator', however, can only be the owner of the aircraft or the
operator of the aircraft.Only a 'charter operator' can apply for
permission to operate a non-scheduled flight (see proposed new
section 15B).
Although the approval process is to be streamlined to enhance
competition, a key modification is the preclusion of package tour
operators and travel agents from applying directly to operate a
charter flight.The approval will only be available for the owner or
operator of the aircraft (who is in the best position to know
whether the aircraft and the flight will be available, as
advertised).Information necessary to support an application for a
charter flight approval will now include a statement that holders
of tickets for the flight will be indemnified for any financial
loss caused by the failure of the charter to complete its program
(see proposed new section 15C(2)).
Decisions taken as to approval or rejection of an application
for permission to operate a charter flight will be reviewable by
the Administrative Appeals Tribunal (see proposed new section 23A)
which is inserted by Item 6.
National Register of Encumbered Aircraft
Item 9 inserts a new section 27A in the
Principal Act.This proposed new section provides for the
establishment of an Australia-wide register of encumbered aircraft
and aircraft components.Hire purchase agreements, securities or
leases which apply to aircraft will be recorded in the register so
as to alert prospective purchasers that lenders or creditors have
an interest in the aircraft.
Digest Comment:The register of encumbered aircraft is
likely to be a fee-for-service system (cost recovery for the
service) but it does not actually provide legal protection in
relation to ownership of the aircraft merely because information is
on the register.It is assumed that such a 'guarantee' would be
prohibitive in terms of costs for the registration system to carry,
given the potential unit value of aircraft.
Airport Leases
Items 10 to 56 cover proposed
amendments to the airport lease provisions contained in the
Airports Act 1996.These proposed amendments tighten the
leasing provisions.For example, Item 25 inserts
additional subsections to existing section 33 to require
Commonwealth approval of any airport-management agreement that the
lessee makes with another party to manage the airport.Item
29 enables Regulations to be made to prohibit specified
terms being included in subleases of an airport lease.Proposed new
sections 34C and 34D prohibit the use of a trust to separate the
beneficial and legal interest in an airport sublease.Item
32 provides controls which mirror those in Item
29, but to apply to an airport lease, as distinct from a
sublease.Items 37 and40 propose
the addition of the opportunity for public comment for proposed
draft minor variations to an airport master plan, or a draft
variation to a major development plan for an airport,
respectively.
Enhanced Environmental Provisionsh
Items 57 to 72 provide a
tightening-up of environmental protection provisions at airport
sites.These provisions do not deal with noise pollution which is
addressed in separate Commonwealth laws.Item 58 is
a key provision and it extends the obligation for compliance with a
final environment strategy to a person (other than only the airport
lease company) for activities engaged in on an airport site.
The key provisions are proposed new sections 131B, 131C and 131D
which provide a three-tiered classification of environmental
harm.The graduations are 'serious environmental harm', 'material
environmental harm ' and 'environmental nuisance'.
All three classifications of environmental harm expressly
exclude noise pollution, which is dealt with under separate
legislation.
Although this omnibus Bill has no central theme, there is an
important and related issue which has arisen in the matter of the
privatisation of airports.The High Court recently held (by
majority) that premises leased by the Commonwealth to a private
operator did not cease to be a place 'acquired by the Commonwealth
for public purposes' (Allders International Pty Ltd v
Commissioner of State Revenue (Vic) - 1996).(5)In the
Allders case, this meant that State duties such as a stamp
duty on a commercial lease could not validly apply to a lease
between the Commonwealth and a duty-free store located at
Tullamarine airport.Under section 52(1) of the
Constitution, the Commonwealth has exclusive power to make
laws with respect to the Seat of Government and '... all places
acquired by the Commonwealth for a public purpose'.
It is legally possible for the Commonwealth to impose an
obligation under the airport leases for the lessee to pay an
equivalent amount to what would otherwise be payable under various
State laws, such as stamp duty on instruments, rates, payroll tax,
financial institutions duty and tobacco and liquor licensing
fees.It is reported that the States have served notice on the
Commonwealth that they want the Commonwealth to sell the sites to
enable State revenue laws to apply without reliance on the
legislative or commercial goodwill of the Commonwealth.The
Allderscase, in combination with airport privatisation, is
being used by the States as one of the arguments for tax reform.It
appears that this issue will be on the agenda for the forthcoming
Premiers' conference in Canberra on 21 March 1997. (6)
- A brief outline of this matter is provided in the Bills Digest
(No. 43 - 1995–96) by Mr Chri
- Field, on the Airports Bill 1995.
- Ibid.
- Press Release, 'Airport privatisation and the Government's
national development strategy'
- Hon John Fahey MP, Sydney, 25 September 1996.
- Ibid.
- (1996) 71 ALJR 1.
- Taylor, L. 'States seek talks on airport businesses' tax',
Australian Financial Review, 7 Marc
- 1997.
Brendan Bailey
11 March 1997
Bills Digest Service
Information and Research Services
This Digest does not have any official legal status. Other
sources should be consulted to determine whether the Bill has been
enacted and, if so, whether the subsequent Act reflects further
amendments.
IRS staff are available to discuss the paper's contents
with Senators and Members and their staff but not with members of
the public.
ISSN 1323-9031
Commonwealth of Australia 1996
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Published by the Department of the Parliamentary Library,
1997.
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Last updated: 9 April 1997
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