Airports Legislation Amendment Bill 1997 (1997-98 Bills Digest 56)

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Bills Digest No. 56 1997-98
Airports Legislation Amendment Bill 1997

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
Concluding Comments
Endnotes
Contact Officer and Copyright Details

Passage History

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.

Purpose

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.

Background

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)

Main Provisions

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.

Concluding Comments

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)

Endnotes

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.

Contact Officer and Copyright Details

Brendan Bailey
10 October 1997
Bills Digest Service
Information and Research Services

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Published by the Department of the Parliamentary Library, 1997.

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Last updated: 13 October 1997