Bills Digest 98 1995-96
Airports Bill 1996
WARNING:
This Digest is prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments.
This Digest was available from 14 June 1996
CONTENTS
Date Introduced: 23 May 1996
House: House of Representatives
Portfolio: Transport and Regional Development
Commencement: Royal Assent
To provide a regime for the leasing of major Commonwealth airports.
Federal airports are currently operated by the Federal Airports Corporation
(FAC) which owns 22 primary, regional and general aviation airports. The
FAC commenced operations in 1988 and in world-wide studies and studies
commissioned by the FAC has been shown to be an efficient operator of
airports. According to the FAC's 1994 Annual Report, a Travers Morgan
study of the 40 major international airports showed that Sydney airports
landing and associated charges were fourth lowest of the airports studied.
Additionally, an FAC commissioned study by a UK Professor showed that
' compared to UK and European airports, the FAC's productivity is significantly
higher while unit operating costs are proportionally lower.'(1) In terms
of passengers per staff member, there was a 14% productivity increase
in 1995, which followed a 15 % increase in 1994.(2)
The FAC is a fully owned government business enterprise that operates
according to normal commercial practices and pays company tax and dividends
to the owner. Total Commonwealth equity in FAC was $707.7 million as at
30 June 1995.(3) In 1994-95, $19 million in dividends were payable by
the FAC.(4)
While the FAC is a profitable body, the majority of the airports it
operates are, according to the FAC, loss making enterprises that receive
cross subsidies from the profits made by the major airports. During 1994-95,
in relation to the 19 major airports managed by the FAC, Sydney, Melbourne,
Brisbane, Adelaide, Perth, Hobart, Launceston, Coolangatta, Canberra and
Essendon airports made a profit, with profits being dominated by Sydney
($68.7 million), Melbourne ($52.3 million) and Brisbane ($43.5 million)
airports. major loss making airports during this period were Darwin ($1.7
million), Townsville ($1.7 million) and Essendon ($1.5 million).(5) However,
it has been reported that a private study by BZW found that the level
of profitability largely depended on the accounting methods used, that
only four FAC managed airports had negative cash flow and the profitability
status of an airport largely depended on the debt serviced by the airport.(6)
(Transitional) Bill 1996 debt can be removed before an airport is leased.)
The possible sale of Federal airports was announced in the 1994-95 Budget.
The proposal was based on the premise that increased competition in the
management of airports would lead to efficiency gains. The proposal met
considerable opposition within the then government. Following a study
of the proposed sale, the government's position changed to support long
term leases of major airports, with 99 year leases being suggested as
the most likely option. The policy to offer maximum 50 years leases with
the possible option of 49 year renewal was agreed at the ALP National
Conference held in September 1994. The Conference also agreed on restrictions
on foreign and cross ownership of the airports. In the 1995-96 Budget
it was announced that the airports would be leased in two stages, with
Sydney (including Sydney West), Melbourne, Brisbane and Perth airports
being leased in the first stage which was expected to be completed in
1996-97. The remaining airports were planned to be leased in 1997-98.
The measures were contained in the Airports Bill 1995 which was introduced
in the House of Representatives on 27 September 1995 and lapsed on the
dissolution of Parliament for the 1996 General Election.
The Coalition's Aviation Policy released before the 1996 General Election
provided:
- for the leasing of the 22 Federal airports controlled by the FAC;
- that Adelaide airport would be leased in the first stage; and
- that Sydney and Sydney West airports would not be leased until there
was a satisfactory solution to the airport noise problem in Sydney and
that before they were leased two conditions must be met: the reopening
of the east-west runway (which has occurred) and the completion of a
genuine environmental impact statement for Sydney West.
The objects of the bill are dealt with in clause 3 and include:
- to establish a system for the regulation of airports that has due
regard to the interests of airport users and the general community;
- to promote the efficient and economic development and operation of
airports;
- to ensure majority Australian ownership and control of airports; and
- to limit the ownership and control of airports by airlines.
'Core regulated airport' refers to the airports listed in clause
7 of the Bill, which include all major airports, including Coolangatta,
Launceston and Townsville airports. The list also includes Sydney West
Airport and other Commonwealth airports specified in the regulations.
Leases
The Commonwealth will be given power to grant an airport lease if the
conditions contained in sub-clause 14(5) are complied with. The
conditions are of great importance as sub-clause 14(4) provides
that if a lease breaches the clause, including the conditions, it will
be of no effect. The conditions are:
- there is to be single lessee which is to be a company over which the
Commonwealth has Constitutional power;
- leases are to be for a maximum of 50 years and may contain an option
for renewal for a maximum of 49 years;
- except for joint use airports (ie. those used for both civil and military
purposes Canberra, Darwin and Townsville airports) and Sydney West Airport,
the lease provides that the area is to be used as an airport;
- for a joint use airport, the lease provides for the area leased to
be used for prescribed purposes;
- for Sydney West Airport, the lease provides that a condition of the
lease is to develop the site as an airport or use the area as an airport;
and
- the lease provides for access to the airport for interstate and/or
international traffic.
A company is to only hold an interest in one airport lease and any transfer
or grant of lease in breach of this requirement will have no effect (clause
16). (However, with no restrictions on cross-ownership a company should
be able to establish subsidiaries to operate various airports.)
Leases for Sydney (Kingsford-Smith) and Sydney West Airports are to
be held by subsidiaries of the same company. If the lease for Sydney West
is granted to a Commonwealth owned company, as provided for in the Airports
(Transitional) Bill 1996, the Commonwealth is to ensure that if it disposes
of the company the disposal is to be to a company that is a subsidiary
of the same company as the holder of the Kingsford-Smith Airport lease
(clause 18). Sub-clause 18(6) provides that a lease for
Kingsford-Smith or Sydney West Airport is to terminate if an 'unacceptable
leasing situation' exists. This will be where the lease holders for those
airports are not subsidiaries of the same company. (The situation where
the Sydney West Airport lease is held by a Commonwealth owned company
is not addressed in this provision.)
There is to be only one lease in respect of an airport at any time,
and any lease that breaches this requirement will be of no effect (clause
19).
A lease is not to be granted if it would breach foreign or airline ownership
rules (see below) and a lease granted in breach of this condition will
be of no effect (clause 21).
Leases are not to be transferred, otherwise than as enforcement of a
security, without the written approval of the Minister and any transfer
in breach of this will have no effect (clause 24). Such
approval is not to be granted if the ownership restrictions would be breached
as a result of the transfer (clause 25). Additionally, a
transfer is not to separate the legal and beneficial interests in a lease
(clause 27) and if a lease is acquired as a result of the enforcement
of a security it is to be transferred to a qualifying company within 90
days of the acquisition (clause 29).
Lessee companies are to use the leased premises as an airport, or for
joint use airports for prescribed purposes in connection with an airport,
or for:
- the development of an airport; or
- activities incidental to the operation or development of the airport
(regulations may be made to prescribe the activities that are also to
be considered incidental to the operation/development of the airport)
(clauses 31 and 32).
A lessee is not to enter into an agreement for another to manage an
airport unless the contract is approved by the Minister (clause 33)
and regulations may be made to prohibit the sub-leasing of an airport
(clause 34).
Restrictions on Ownership and Control
Foreign ownership and control
Foreign ownership of an airport lease will be restricted to a maximum
of 49% (clause 40). It will be an offence for a person or persons
to acquire shares in a company if they knew, or were reckless to the effect
of the acquisition, that it would result in foreign ownership exceeding
this amount (clause 41). An airport operator is to take reasonable
steps to assure that the 49% limit is not exceeded (clause 42).
If the foreign ownership limit is exceeded, the Minister may apply to
the Federal Court for an order to remedy the situation, including orders
that shares be disposed of, that payments relating to shares held be deferred
or prohibited, or that rights in relation to shares not be exercised (clause
43).
Airline ownership and control
An airline and its associates will be restricted to a maximum ownership
of 5% of a company that holds an airport lease (clause 44). Clauses
45, 46 and 47 contain similar provisions as clauses 41,
42 and 43 (see above).
General
The head office of an airport operator company must be in Australia
(clause 48), and the company is to ensure that the majority of
its directors are Australian citizens or foreign citizens who are ordinarily
resident in Australia (clause 49). If either of these provisions
is breached, the Minister may apply for an injunction to enforce the requirement.
State and territory laws are to apply to the extent that they are capable
of operating concurrently with the above provisions (clause 51).
Anti-avoidance
If one or more person enters into a scheme and it would be concluded
that the person/s entered into the scheme with the sole or dominant purpose
of avoiding the leasing or ownership and control provisions and as a result
of the scheme they have acquired an airport lease, sub-lease or a licence
relating to an airport lease, the Minister may direct the person/s to
dispose of the asset acquired. If such a scheme is entered into and the
result is the acquisition of an increased stake in an airport operator
company, the Minister may direct that that interest be disposed of (clause
55). Finally, if such a scheme is entered into and results in a person/s
entering into an agreement to manage the development or operation of an
airport and the agreement is of a kind that will breach requirements of
the lease, the Minister may give notice to the parties to the agreement
to terminate it (clause 56).
Land use
The requirement dealing with land use, planning and building controls
will apply to core regulated airports and other airports specified in
the regulations where there is a lease in effect for the airport (clause
58).
Airport master plans
Draft and final airport master plans (a final plan will be one approved
by the Minister) are to deal with matters relating to the development
and operation of an airport. Plans are to deal with the matters specified
in clause 61, which include:
- matters prescribed by regulation;
- the development objectives of the lessee;
- the lessee's assessment of the future needs of the airport; and
- forecast noise level exposure due to the operation of the airport.
In relation to joint use airports, the requirements are substantially
the same but apply only to the area of the airport that has been leased
to the airport operator.
Plans will continue in force when a lease is transferred (clause
64) and airport lessee's will be given 12 months, or such longer period
as the Minister allows, from the granting or acquisition of a lease to
prepare a draft plan (clause 65).
Plans will have effect for 5 years or until a new plan is prepared (clause
67), although an airport operator will be required to submit a
new draft plan to the Minister before the expiration of the current plan
(clause 66).
During the operation of a plan, the Minister may request the operator
to prepare a new draft plan that may replace the plan in operation (clause
68).
Consultation: Before a draft plan is submitted to the Minister, the
airport operator will be required to advertise that a plan has been prepared
and allow 90 days for public comment on the plan. If public comment is
made on the plan, the company is to certify to the Minister that it has
considered the comments in preparing the draft plan submitted to the Minister.
In addition, regulations may specify information regarding the public
comments that is to be provided with the draft plan (clause 69).
If an airport operator has had consultations with a State or Territory
government, a State or Territory Authority, a local government body, an
airline or other airport user, or any other person prior to the request
for public comment under clause 69, the draft plan submitted to
the Minister is to include a list of the people or organisations consulted
and a summary of their views (clause 70).
Where a replacement plan is prepared under clause 68, the Minister
may exempt the plan from the consultation requirements of clauses 69
and 70 (clause 71).
In deciding whether to approve a submitted draft plan, the Minister
is to have regard to:
- whether the plan, if implemented, would meet the requirements of civil
aviation users of the airport;
- the effect on land use in the airport and surrounding areas;
- the consultations that occurred in preparing the plan;
- the views of the Civil Aviation Safety Authority and Air Services
Australia; and
- other matters the Minister considers relevant.
If the Minister refuses to approve a plan, the Minister may require
the airport operator to prepare a new draft plan within 180 days or such
longer period as the Minister allows (clause 72).
Where a plan has been approved and becomes a final master plan, and
the lease requests a variation of a 'minor nature' (the term minor nature
is not defined) the Minister may approve the variation, or, if the variation
is not approved, the Minister is to notify the lessee of the reasons for
the refusal (clause 75).
Clause 78 allows FAC documents dealing with an airport to be
included in the draft or final master plan for the airport. The FAC documents
may be incorporated with or without modification.
Major Development Plans
Division 4 of Part 5 of the Bill deals with plans that must be prepared
when it is proposed to:
- construct or extend a runway;
- construct a passenger terminal that exceeds 500 square metres or extend
a passenger terminal by more than 10%;
- construct a non-passenger building, taxiway or access route that will
cost more than $10 million; or
- proceed with a development of a kind specified in the regulations
(clause 80).
Such developments are not to proceed unless they are in accordance with
an approved major development plan (clause 81).
Major development plans are to deal with:
- the objectives of the development;
- the extent to which the needs of users of the airport will be met;
- whether the development is consistent with the final master plan for
the airport, if such a plan is in force;
- if the development could affect noise levels, the effect on noise
exposure levels;
- the lessee's assessment of the environmental impact of the development;
and
- other matters as specified in the regulations (clause 82).
Public submissions, consultation and approval procedures are substantially
in accordance with those regarding master plans (clauses 83 to 87).
Building control
'Building activities', which are to be controlled, is given a wide definition
in clause 89 and includes work involving the construction and demolition
of structures, earth works, engineering works, electrical works and hydraulic
works.
A holder of an airport lease is not to conduct, or allow to be conducted,
building activities unless they are carried out in accordance with approval
granted under the regulations or the activity has been declared to be
exempt by the regulations and is consistent with a final master plan or
major development plan if such a plan is in force (clause 90).
Regulations relating to building activities may deal with:
- the granting of approval for building activities;
- conditions relating to an approval;
- the variation or removal of approval;
- fees in respect of approvals; and
- the transfer of approvals to new lease holders (clause 91).
Approval is only to be given if consistent with any final master plan
and major development plan in force (clause 92).
Where work is carried out without approval or a condition of approval
is breached, the Minister may order that remedial work, including demolition,
be carried out. This will not apply where the work is exempt under the
regulations and, if there is a final master plan or major development
plan in force, the work is consistent with the relevant plan (clause
94).
Clauses 95 to 100 deal with the requirement for a certificate
of fitness to be issued before a building or other work can be occupied
or used. Regulations may be made to exempt works from the requirement
for a certificate of fitness and may also be made in relation to the issue
of certificates, conditions of certificates, revocation of certificates
and the fees that may be payable in relation to certificates.
Environmental management
The requirement for an environment strategy applies to the same airports
as the requirement for a airport master plan.
A draft or final environment strategy is to relate to a five year period
and must specify:
- the objectives of the environmental management of the airport;
- the source of environmental impacts;
- the proposed studies, reviews and monitoring of environmental impacts
from the operation of the airport;
- the measures to be carried out to prevent, control or reduce environmental
impacts;
- details of the consultations involved in the preparation of the strategy;
and
- such other matters as specified in the regulations (clause 107).
In determining whether to approve a draft strategy, the Minister is
to have regard to the effect the implementation of the strategy would
have on air, water and soil quality; the effect on noise levels; and details
of the consultations entered into in developing the strategy. If the Minister
refuses to approve a strategy, the Minister may require the company holding
the airport lease to submit a new draft plan within a minimum of 180 days
of being notified of the requirement (clause 118).
Provisions relating to public comment, consultations and minor variations
to the strategy are similar to those for airport master plans. As with
replacement master plans, replacement strategies may be exempted from
these requirements (clause 117).
Clause 124 allows regulations to be made establishing environmental
standards relating to environmental pollution, noise generated at an airport
(other than noise generated by aircraft in flight) or the disposal or
storage of waste at an airport. It will be an offence to knowingly or
recklessly breach the standards. Regulations may are be made for monitoring
any breaches of the standards and for remedial action to be taken to rectify
the breach (clause 125). If a person breaches the standards and
an airport operator incurs cost in rectifying the breach, the costs incurred
may be recovered from the person who breached the standards by the airport
operator. A similar provision will apply if the Commonwealth incurs costs
in rectifying a breach (clauses 126 and 127).
Where a person is alleged to have breached the environmental management
rules contained in the Bill, or regulations made under clause 125,
they may opt to pay a penalty, equal to one fifth of the maximum fine
that could be imposed by a court if the person was convicted (clause
130).
Part 18 of the Bill (clauses 224 to 232) provides for
the monitoring of land use, planning, building control and environmental
requirements. Authorised officers will be able to search premises either
with the occupier's consent (clause 227) or under a monitoring
warrant, which is to be issued by a magistrate if satisfied that it is
reasonably necessary for the officer to have access to the airport premises
to ensure compliance with the requirements (clause 228). An officer
may require a person in premises subject to a conscentual search or a
monitoring warrant to answer questions and/or produce documents. It will
be an offence, with a maximum penalty of 6 months imprisonment, to fail
to comply with such a requirement without reasonable excuse (clause
229).
Accounts and reports
Accounts of airport operator companies are to be prepared in accordance
with the regulations which will incorporate the accounting standards applicable
to the Corporations Law (clause 133). Accounts are to be audited
(clause 134).
Accounts and reports are to be lodged with Australian Competition and
Consumer Commission (ACCC) (this body was established as part of the reforms
resulting from the Hilmer report and replaces the Trade Practices Commission
and the Prices Surveillance Authority) (clause 135). Regulations
may be made to allow the ACCC to require airport operators to report to
the ACCC (clause 137).
Service Monitoring
Clause 145 provides for the regulations to specify performance
indicators for airport operators and those who provide services under
an agreement with such a body. Examples of performance indicators are
given in clause 146 and include indicators relating to passenger
and aircraft congestion and standards for passenger services, runways,
taxiways and aprons.
ACCC is to monitor and evaluate the quality of services against the
performance indicators and other criteria that ACCC develops (clause
147).
Regulations may also be made regarding the records that must be kept
regarding performance indicators and for the provision of such information
to ACCC (clause 148).
Variation and closure
Part 9 of the Bill (clauses 152 to 155) provides that
if a lease exists in respect of an airport, regulations are not to made
that would vary the site, repeal the declaration of the site as an airport
or result in an absolute prohibition on the use of the site as an airport
without the written consent of the lease holder. The Part also provides
that a lessee may surrender the lease to the Commonwealth either unconditionally
or subject to such conditions as agreed between the parties.
International agreements
Where Australia is a party to an international agreement that deals
with the carriage of international freight, passengers, or freight by
air, and that agreement has come into force in Australia, clause 158
will allow regulations to be made to give effect to the agreement so far
as it relates to the operation of airports that are accessed by international
air transport.
Control of certain activities at airports
Part 11 of the Bill (clauses 160 to 170) provides for
regulations to be made in relation to leased airports regarding:
- the sale, supply and possession of liquor;
- the control of the supply of goods and services;
- the parking or use of vehicles within the airport site; and
- the control of gambling and smoking.
At least 30 days before such regulations are made in respect of an airport,
operators at the airport are to be given a notice inviting submissions
on the proposed regulations (clause 170).
The Part also provides that it is not to exclude the operation of State
or Territory laws that are capable of operating with these measures (clause
169).
Protected airspace
Clause 173 provides for the regulations to define 'prescribed
airspace' where it is in the interests of safety, efficiency or regularity
of air services that such airspace be protected. It will be an offence
for a person to conduct a controlled activity in prescribed airspace without
permission (controlled activity is defined to be construction, alteration
or other activity that extends into prescribed airspace)(clauses 174
and 175).
Access to airports
Access to airport facilities and services is dealt with in clause
184 which will apply Part IIIA of the Trade Practices Act 1974
(those provisions allow a declaration to be made that a service is
an essential service and then provides for person seeking access to the
service to negotiate with the service provider on how those services are
to be accessed. If no agreement is reached, arbitration will apply). In
relation to a core regulated airport, the Minister must, as soon as possible
after the end of the designated period (generally 12 months after the
granting of the lease) declare each airport service to be a service to
which Part IIIA applies except to the extent to which an access undertaking
is in force. Airport service is defined to be a service:
- necessary for the purposes of operating and/or maintaining civil aviation
services at the airport; and
- provided by means of significant facilities at the airport which cannot
be economically duplicated.
Demand management
The Minister may declare the capacity of an airport, based on the maximum
number of aircraft movements that the airport is capable of handling during
a specified period of time (clause 187). Before making such a declaration,
the Minister is to prepare a draft declaration and allow public comment
on the draft (clause 188). Before calling for public comment on
a draft, the Minister is to offer the airport operator, aircraft operators
who use the airport, Air services Australia and the Civil Aviation Safety
Authority an opportunity to make submissions on the capacity of the airport
(clause 189).
If a declaration relating to the capacity of an airport is in force,
the Minister may declare that the airport is subject to statutory demand
management (clause 190). In determining whether to make such a
declaration, the Minister is to have regard to the matters listed in clause
191, which include:
- whether demand exceeds capacity;
- the effectiveness of the self management and self regulation of the
capacity;
- the effect of pricing arrangements on demand;
- the extent or likely extent of congestion at the airport;
- existing or proposed laws or other controls relating to environmental
matters, including noise; and
- Australia's international obligations.
- A demand management scheme may be:
- a category exclusion scheme - ie a scheme that excludes certain categories
of aircraft at certain times or all the time;
- a slot allocation scheme - a scheme based on the allocation of take
off and landing slots;
- a movement limitation scheme - a scheme that limits the total movements
or limits the number of movements for certain categories of aircraft
movements during a period; or
- a scheme not covered by one of the above categories.
A demand management scheme for an airport may be a combination of the
above schemes (clauses 193 to 199).
The demand management plans will have effect in addition to the Sydney
Airport Curfew Act 1995 and the air navigation regulations (clauses
202 and 203).
Air traffic services and fire and rescue
An airport lessee is not to provide air traffic, navigation, fire fighting
or rescue services unless those services are provided by Airservices Australia
or through an arrangement between Airservices Australia and a third person
(clause 208).
Remarks
Major differences between the 1995 and 1996 Bills, as introduced, and
other aspects of the leasing process are:
- the 1995 Bill restricted cross ownership between various pairs of
airports. Basically, the pairings were Tullamarine and Kingsford-Smith;
Brisbane and Kingsford-Smith; Tullamarine and Sydney West; and Brisbane
and Sydney West. The maximum proposed cross-ownership between companies
operating either one of the paired airports was 15% of any type of stake
in the other company operating at a paired airport. There are no such
restrictions in this Bill;
- the ability of the Minister to exempt replacement master plans and
environment strategies from the consultation process was not contained
in the 1995 Bill;
- specific monitoring provision were not contained in the 1995 Bill;
- provisions relating to the regulation of environmental standards at
airports are significantly expanded in this Bill (the 1995 Bill contained
a provision similar to clause 124, but with a lesser penalty
for its breach, but contained no references to monitoring and rectifying
of breaches of the standards);
- access to airport facilities under Part IIIA of the Trade Practices
Act 1974 was not dealt with in the 1995 Bill;
- under the 1995 Bill, if remedial work was necessary due to breach
of building controls the Minister needed to approach the Federal Court
to seek an order requiring the work to be carried out. Under this Bill,
the minister may order that such work be carried out; and
- the 1995 leasing proposal was that Sydney and Sydney West airports
be included in the first group of airports to be leased. It now appears
that they may be last to be leased while potential difficulties with
Sydney West are resolved.
(1) FAC, 1994 Annual Report, p. 10.
(2) FAC, 1995 Annual Report, p. 28.
(3) Ibid., p. 39.
(4) Ibid., p. 33
(5) Ibid., pp. 34 & 35.
(6) The Sydney Morning Herald, 27 August 1994.
Chris Field Ph. 06 277 2439
14 June 1996
Bills Digest Service
Parliamentary Research Service
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.
PRS staff are available to discuss the paper's contents with Senators
and Members and their staff but not with members of the public.
ISSN 1323-9032
© Commonwealth of Australia 1996
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Published by the Department of the Parliamentary Library, 1996.
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Last updated: 16 June 1996
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