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CONTENTS
Airports Legislation Amendment Bill 1997
Date Introduced: 1 October 1997
House: House of Representatives
Portfolio: Finance
Commencement: On the day on which the Act receives
the Royal Assent.
The purpose of the Bill is to facilitate the second phase in the
sale of federal airports.The Bill introduces the flexibility of
allowing some of the remaining airports to be offered on a freehold
basis.The previous sales of major airports have been limited to
long-term leasehold.
On 1 July 1997, the Government executed the first phase of the
sale of federal airports with the granting of long-tern leases of
major airports at Melbourne, Brisbane and Perth.Melbourne airport
was sold for $1.31 billion to Australia Pacific Airports
Corporation (comprising AMP Society, BAA Plc, Axiom Funds
Management and Hastings Funds Management).Brisbane airport was sold
for $1.39 billion to Brisbane Airport Corp Ltd (comprising
Amsterdam Airport Schiphol, Commonwealth Bank, Brisbane City
Council and Port of Brisbane Corp.).Perth airport was sold for $643
million to Airstralia Development Group (comprising Airport Group
International, Infratil Australia and Hastings Fund
Management).(1)
In this second phase of airport sales, the following airports
will be offered for sale by way of a long-term lease of 50 years
with an option of renewal for 49 years, or, in certain
circumstances, on a freehold basis:
Regular Public Transport Airports: Offered for Lease
Adelaide Alice Springs
Canberra Coolangatta
Darwin Hobart
Launceston Townsville
Regular Public Transport Airports: Available As Freehold
Mount Isa Tennant Creek
General Aviation Airports: Available As Freehold
Archerfield Essendon
Jandakot Moorabbin
Parafield
Although there has been continued private sector interest in the
acquisition of the airports, the expected interest of the States
and the Northern Territory in acquiring airports on a freehold
basis does not appear to have materialised.(2) Under the freehold
sale process, the States (or the Northern Territory) would accept
jurisdiction for the zoning, environmental planning and operation
of the airports.Commonwealth controls over flight safety, flight
paths and aircraft noise would remain.Airports sold on a freehold
basis must continue to operate as airports.
There is no indication of the estimated return from the second
phase of airport sales but the speculation is that the individual
prices will be lower than the first phase because these mainly
'regional' airports in this second phase have a lower strategic and
commercial value.The reported total return from the sale of the
Melbourne, Brisbane and Perth airports was $3.3 billion.(3)
The proposed new sections are contained in Schedules to the
Bill.
Schedule 1 Amendments of the Airports (Transitional) Act
1996 (the Transitional Act)
Item 3 inserts a new definition of
airport-freehold entity in section 4 of the Transitional
Act to recognise that the Commonwealth may transfer its freehold
interest in airport land to a particular purchaser (see also,
proposed section 44B).
Items 4 and 9 link the second
phase of the sale of federal airports to a definition used in the
Airports Act 1996 to identify a core regulated
airport.Core regulated airports include:
| Sydney (Kingsford-Smith) |
Sydney West Airport |
| Melbourne (Tullamarine) Airport |
Brisbane Airport |
| Perth Airport |
Adelaide Airport |
| Sydney Coolangatta Airport |
Hobart Airport |
| Sydney Launceston Airport |
Alice Springs Airport |
| Sydney Canberra Airport |
Darwin Airport |
| Townsville Airport |
Item 13 is a key provision in the Bill.It
inserts a proposed new Part 7A Sale of certain airports
into the Transitional Act.The new Part7A includes sections 44A to
44M, the primary purpose of which is to recognise that certain
airports may be sold on a freehold basis in lieu of a long-term
lease.As per an ordinary sale of a business enterprise, the sale
will involve the transfer to the airport-freehold entity the
airport land, certain assets, contracts and liabilities of the
Federal Airports Corporation (FAC) associated with that particular
airport.Proposed new section 44C enables the Commonwealth to impose
a restriction on the subsequent use of the airport land (such as,
that the land must be used as an airport).
Proposed new section 44N is an appropriation from the
Consolidated Revenue Fund for the purposes of the freehold sale
process.
Items 18 to 20 recognise that
staff of the FAC may be transferred to either an airport-lessee
company or to an airport-freehold entity.
Item 29 extends the existing requirement in
section 91 of the Transitional Act (the section specifies that
Australian Archives must give permission for the transfer of any
Commonwealth record held by an airport) to any freehold sale of an
airport.
Item 30 excludes from the operation of the
proposed Legislative Instruments Act 1997 (still before
the Parliament), any declaration made by the Minister concerning
the sale of airports.The Minister's declarations include such
matters as a declaration as to the FAC's title and interest in land
and which entity is successor in law to those title rights and
interests.The Minister also declares the amount of consideration
payable by an airport purchaser to the Commonwealth for the
transfer of title and interests formerly held by the
Commonwealth.The effect of the exclusion of the proposed
Legislative Instruments Act 1997 primarily means (for the
purpose of this airports sale process) that such declarations are
not a disallowable instrument.
Remaining items, such as Item 39 and
Item 42, cover such matters as the preservation of
the accrued entitlements (long service leave) and the preservation
of deferred benefits (under the Defence Force Retirement and
Death Benefits Act 1973) of staff transferred to an
airport-freehold entity.
Schedule 2 Amendments of the Airports Act 1996 (the
Airports Act)
Item 2 provides a new definition of a
joint-user airport for the Airports Act.The proposed new
section 7B expressly recognises that Darwin Airport and Townsville
Airport are jointly used by civil and Defence Force operations.For
the time being, Canberra Airport is a joint-user airport but the
indication at page 23 of the Explanatory Memorandum to the
Bill is that a decision will be made in the future to withdraw the
Royal Australian Air Force operations from Canberra Airport.To
accommodate this development (should it occur), the proposed new
section provides authority for a Regulation to be made to change
the status of Canberra Airport.Conversely, Regulations can be made
to declare another airport to be a joint-user airport.
Items 4 and 5 have the effect
of streamlining the Minister's power to approve airport management
agreements with an airport operator under section 33 of the
Airports Act.It is superfluous to require the Minister to frame
approvals on the basis that he or she is satisfied that the
airport-operator company is not foreign controlled.This is because
Part 3 of the Airports Act already specifies that an
airport-operator must not be in an unacceptable
foreign-ownership situation (i.e. the presence of foreign
ownership of more than 49% of the airport-operator company see
section 40 of the Airports Act).
Items 11 and 13 have the
effect of making a determination by the Minister, that a specified
agreement is an approved airport-management agreement, a
disallowable instrument.
Item 22 expands the existing section 192 of the
Airports Act.Section 192 brings airports within the third party
access regime under the National Competition Policy provisions
contained in the Trade Practices Act 1974.Essentially, the
regime opens-up significant infrastructure to broader-based
competition.The proposed amendments enable the Australian
Competition and Consumer Commission (ACCC) to issue written
determinations which specify whether a particular service, use or
facility falls within the scope of an 'airport service' for the
purposes of section 192.The ACCC determination is a disallowable
instrument.
Item 25 excludes from review by the
Administrative Appeals Tribunal a range of decisions made by the
Minister connected with the approval, or refusal to approve,
airport master plans or major development plans or environmental
strategies for airports.The reason for the exclusion of this
administrative review of the merits of the Minister's decision is
stated in the Minister's Second Reading speech as justified on the
grounds that the development of such plans and strategies requires
public consultation and, further, the Minister is required to table
a statement in Parliament about his or her decisions (see also,
Item 27, which expands the class of statements to
be tabled in Parliament).(4)
Schedule 3 Amendments of the Federal Airports Corporation
Act 1986(the FAC Act)
These three items are simple consequential amendments to
recognise that the sale of certain federal airports is now offered
on a freehold basis.Previously, the sale of the airports was on a
long-term lease basis, only.The proposed amendments are to the FAC
Act.
The extension of the options for sale of airports to include
freehold sale of specified federal airports appears to have been
directed at attracting interest from the States and the Northern
Territory.As noted above, that interest does not appear to have
materialised.Taken overall, this sale program of federal airports
is reported to be the largest airport asset sale of its type in the
world.(5)
- See Ian Thomas, 'Fears and rivalry dog airport sales', The
Australian Financial Review, 13 September 1997.
- Michael Sharp, 'Hopefuls flock to new airport sale', The
Age, 2 October 1997 and Andrew White, 'States tardy as 500
bids vie for regional airports', The Australian, 2 October
1997.
- See the Ian Thomas article at Endnote 1, above.
- Australia, Hansard, House of Representatives, 1
October 1997: 8656 (Proof).
- See Andrew White, 'States tardy as 500 bids vie for 15 regional
airports', The Australian, 2 October 1997.
Brendan Bailey
10 October 1997
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
© Commonwealth of Australia 1997
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Last updated: 13 October 1997
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