Coalition Senators' additional comments

Coalition Senators' additional comments

1.1The Coalition continues to advocate for a more affordable, reliable and competitive aviation sector for all Australians. The Sydney Airport Demand Management Amendment Bill 2024 is the most significant change to the rules governing Australia’s biggest airport in nearly 30 years. The Bill aims to improve transparency, reliability and compliance, but it falls significantly short of delivering a more competitive ecosystem for all airlines.

1.2The Sydney Airport Demand Management Amendment Bill 2024 is in direct response to the former Coalition Government’s review of the demand management scheme by former chair of the Productivity Commission, Peter Harris AO (the Harris Review).[1] The review’s recommendations had been with the Albanese Government for nearly two years before the Minister for Infrastructure, Transport, Regional Development and Local Government, Catherine King, announced on 21 February 2024 the Government’s response to the review.[2] At the time of this report, that is nearly nine months ago.

1.3It is noted by Coalition Senators that the Albanese Government chose to delay the implementation of its response to the Harris Review (the Bill) until very late in the life of this Parliament and had sought to rush the Bill through the Senate without an inquiry until the Senate insisted. Even then, the Government nominated an unachievable reporting date and had to push out the tabling of this report by almost a week. The Coalition is also disappointed that there was only one hearing held into this very important aviation Bill and that the hearing was held in Canberra and not in Sydney. It is also noted that evidence to this inquiry suggested the regulations that are critical for the Bill to have effect would not be published until as late as April 2025.

1.4The Coalition also notes that the lack of community consultation is a broken promise by the Albanese Government in regards to the implementation of these intended reforms.

1.5The committee also learned that in the nine months since the Minister issued a press release outlining the intended reforms to the Sydney Airport Demand Management Scheme, and specifically committing the ‘Government will be consulting with community and industry organisations on the best way to implement these reforms ahead of bringing forward legislation to Parliament’[3], the Department of Infrastructure, Transport, Regional Development, Communications and the Arts did not consult with the local community. The Albanese Government’s failure to conduct community consultation does not align with the Bill’s purported purpose of enhancing transparency around the Sydney Airport Demand Management Scheme.

1.6The Coalition supports enhancing transparency measures in the Bill and the regulations that will underpin the scheme. Coalition Senators encourage the Albanese Government to ensure the regulations include provisions to report regularly on the use of the recovery period and that any declaration is published and available to the public on the day it is made. The evidence presented to the committee is that without seeing the regulations, it remains unclear what would constitute a ‘significant disruption’ and on what or who’s advice would a declaration be made. At the time of publication of the report, the Government has not yet made clear the timing of the regulations. It is therefore incumbent on the Minister, for absolute transparency, to ensure that the regulations include a requirement for Airservices Australia to provide a regular report to the Minister on the compliance with the cap and the ongoing use of the recovery period, and that the report be tabled in both houses of Parliament within 15 days of receipt by the Minister.

1.7Finally, Coalition Senators would note that whilst the Bill, and the yet unknown regulations, will deliver some improvements to the scheme, they do not address the full recommendations of the Harris Review.

1.8A significant element of the Harris Review recommendations was to improve the settings of the Sydney Airport Demand Management Scheme to promote competition within the domestic market. As was noted by the ACCC on the same day as this committee’s hearing, the market share of Qantas and Virgin has now reached 98.4 per cent under the Albanese Government.[4]

1.9Management of Sydney Airport slots has been identified by the ACCC as important to promoting competition. The regulator warned the Albanese Government of the impact of restricted access to Sydney Airport slots on domestic competition:

Access to take-off and landing slots during peak times at Sydney Airport is critical for airlines seeking to build an intercity network. The most effective way that the Australian Government could enhance airline competition for the benefit of consumers would be to implement reforms to the way Sydney Airport slots are allocated to airlines. Without these slot changes, there will not be any material improvement in domestic airline competition in Australia in the foreseeable future.[5]

1.10In its November 2024 report on Domestic airline competition in Australia, the ACCC stated:

One of the reasons behind the reforms was to make it harder for airlines to hold on to more take-off and landing slots at the airport than they needed, therefore making more slots available for new and expanding airlines.

...

The ACCC considers that the measures announced in February 2024, if implemented effectively, would help support greater airline competition, and therefore, improved consumer choice.[6]

1.11The committee heard in evidence from Qantas, Sydney Airport’s largest holder of slots, that they do not anticipate being required to hand back slots as a result of reforms in the Bill.

Senator McKENZIE: What slots do you hold today that you'll need to hand back when the changes are actually in force, under the 'use it or lose it' rule?

Mr Zeglin [Head Commercial Strategy and Performance, Qantas]: None ...

Senator McKENZIE: There won't be any change? This bill will effect no change? Is that what your evidence is here?

Mr Zeglin: The clarity is—in terms of our slot holdings—at HBD [hand-back date], we intend to operate all of those slots.[7]

1.12From the evidence to the inquiry and the reading of the Albanese Government’s intended changes to the regulations, Coalition Senators are not convinced the reform would lead to any substantial increase in availability of slots for a future third domestic airline to compete at scale. Combine this with the slot guidelines that rank ‘Historical Rights’ before new entrants, plus no proposed changes to the ‘use it or lose it’ rules and it would be logical to conclude the Government’s reforms will likely remain ineffective in creating a more competitive slot system, and that Australian travellers will continue to suffer higher airfares and less choice under the Albanese Government.

Senator the Hon Matthew Canavan

Senator the Hon Richard Colbeck

Deputy Chair

Member

Nationals Senator for Queensland

Liberal Senator for Tasmania

Senator the Hon Bridget McKenzie

Senator Dave Sharma

Participating Member

Participating Member

Nationals Senator for Victoria

Liberal Senator for New South Wales

Footnotes

[1]Peter Harris AO, Review of the Sydney Airport Demand Management Scheme, February 2021 (accessed 18 November 2024).

[2]The Hon Catherine King MP, Minister for Infrastructure, Transport, Regional Development and Local Government, ‘Reforming Sydney Airport slots to boost efficiency, competition and consumers outcomes’, Media Release, 21 February 2024 (accessed 18 November 2024).

[3]The Hon Catherine King MP, Minister for Infrastructure, Transport, Regional Development and Local Government, ‘Reforming Sydney Airport slots to boost efficiency, competition and consumers outcomes’, Media Release, 21 February 2024 (accessed 18 November 2024).

[4]Australian Competition and Consumer Commission, Domestic airline competition in Australia – November 2024,12 November 2024, p. iv.

[5]Australian Competition and Consumer Commission, Airline Competition in Australia – June 2023 report, 5June 2023, p. 28.

[6]Australian Competition and Consumer Commission, Domestic airline competition in Australia – November 2024,12 November 2024, pp. 7–8.

[7]Senator Bridget McKenzie and Mr Scott Zeglin, Head of Commercial Strategy and Performance, Qantas, ProofCommittee Hansard, 12 November 2024, p. 6.