Bills Digest 116 1996-97 Aviation Legislation Amendment Bill (No. 1) 1997


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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

Passage History

Aviation Legislation Amendment Bill (No. 1) 1997

Date Introduced: 26 February 1997
House: House of Representatives
Portfolio: Transport and Regional Development
Commencement: Royal Assent

Purpose

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.

Background

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.

Main Provisions

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.

Concluding Comments

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)

Endnotes

  1. A brief outline of this matter is provided in the Bills Digest (No. 43 - 1995–96) by Mr Chri
  2. Field, on the Airports Bill 1995.
  3. Ibid.
  4. Press Release, 'Airport privatisation and the Government's national development strategy'
  5. Hon John Fahey MP, Sydney, 25 September 1996.
  6. Ibid.
  7. (1996) 71 ALJR 1.
  8. Taylor, L. 'States seek talks on airport businesses' tax', Australian Financial Review, 7 Marc
  9. 1997.

Contact Officer and Copyright Details

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

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1997.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 9 April 1997



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