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
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amendments.
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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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