Bills Digest No. 197  1998-99 Customs Tariff Amendment (Aviation Fuel Revenues) Bill 1999


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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
Purpose
Background
Main Provisions
Endnotes
Contact Officer and Copyright Details

Passage History

Customs Tariff Amendment (Aviation Fuel Revenues) Bill 1999

Date Introduced: 2 June 1999

House: House of Representatives

Portfolio: Justice and Customs

Commencement: The amendments outlined in this Digest commence on 12 May 1999

 

Purpose

To increase the rate of customs duty on imports of aviation gasoline and kerosene.

 

Background

The amendments proposed by the Bill gives effect to the Government's Budget decision to increase customs duty on aviation gasoline (avgas) and aviation kerosene (avtur). The amendments have two stated objectives, namely:

  • providing funding for the Civil Aviation Safety Authority's role of fostering air safety regulation in Australia and
  • offsetting the Government's subsidisation of Airservices Australia operations at a number of control towers at regional and general aviation airports.(1)

With respect to the Civil Aviation Safety Authority, the rationale given for the increase in Budget Paper No. 2 is that the measure will:

Address a shortfall in industry contributions to air safety programs.(2)

More detailed rationale for the increase is provided by the Government in the Explanatory Memorandum to the Bill, namely:

The Civil Aviation Safety Authority (CASA) was established to promote and foster air safety regulation. The main source of CASA funding is through the collection of excise and customs duty on avtur and avgas. It is estimated that there will be a shortfall of funding for CASA operations in the financial year 1998-99 which will continue in the subsequent years.(3)

With respect to offsetting the Government's subsidisation of Airservices Australia operations at a number of control towers at regional and general aviation airports, the rationale given is that:

[It] was announced in the 1998-99 Budget that Government and users at the major capital city airports would subsidise that charges at these airports. However, at the time the subsidy was agreed to, it was on the basis that it was required as an interim measure. It was anticipated that Airservices would be able to contract out or privatise tower services at many of these subsidised locations, thus reducing the costs imposed on airport users, and allowing the subsidy to phase down markedly in 1999-2000; and disappear the following year.

The recent disallowance by the Senate of the contracting out regulations has meant that cost reductions through the use of alternative service providers are no longer an option in the short term. In order to ensure these essential services are provided at regional and GA training centres at a reasonable cost to users, the Government has agreed to maintain a subsidy.(4)

To date there has been no negative industry reaction to the proposed increase reported in the major daily's. The two major industry players, Qantas and Ansett, have not issued press statements arguing against the increases.

The increase in the rate of customs and excise duty proposed by the Bill and the Excise Tariff Amendment (Aviation Fuel Revenues) Bill 1999 coincides with a major restructure of the Civil Aviation Safety Authority. The restructure aims to establish clearer lines of accountability, transparency of responsibility and the introduction of new skills and capabilities. The restructure and changes proposed by the Bill, Excise Tariff Amendment (Aviation Fuel Revenues) Bill 1999 and Aviation Fuel Revenues (Special Appropriation) Amendment Bill 1999 reflect, in particular continuing turbulence within the air safety regulation sector.

While there has been minimal industry reaction to date to the proposed increase, it could be argued that the increase will have a disproportionately negative effect on small operators and private pilots. As part of the revenue raised by the increase will ultimately pay for radar and tower services used by larger commercial aircraft, a question arises as to why the small operator, and particularly the private aviator, who rarely uses radar and tower services, should be burdened with paying for those services.

 

Main Provisions

Item 1 increases the rate of customs duty on avtur to $0.0271/L.

Item 2 increases the rate of customs duty on avgas $0.0271/L.

 

Endnotes

  1. Customs Tariff Amendment (Aviation Fuel Revenues) Bill 1998, Explanatory Memorandum, p. 3.

  2. Budget Measures 1999-2000, p. 8.

  3. Customs Tariff Amendment (Aviation Fuel Revenues) Bill 1998, Explanatory Memorandum, p. 5.

  4. Ibid., p 8.

 

Contact Officer and Copyright Details

Ian Ireland
11 June 1999
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

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 1328-8091
© Commonwealth of Australia 1999

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, 1999.

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