Bills Digest 116 1996-97
Aviation Legislation Amendment Bill (No. 1) 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
Aviation Legislation Amendment Bill (No. 1) 1997
Date Introduced: 26 February 1997
House: House of Representatives
Portfolio: Transport and Regional Development
Commencement: Royal Assent
This is an omnibus Bill which provides amendments to two Commonwealth
Acts to enhance environmental regulation for airport sites, to prevent
sub-leasing of airports to trusts, to establish a national register of
encumbered aircraft and to streamline (and tighten) the approval process
for air charter flights.
The proposal for the privatisation of Australia's airports was announced
in the Labor Government's Budget for 1994-95.Subsequently, the proposal
was varied to offer the airports on a commercial lease basis rather than
the actual sale of the sites.The Coalition (then in Opposition) broadly
supported the privatisation process, subject to a review of the East-West
runway issue at Sydney's Kingsford-Smith airport. (1)
This asset sale scheme is a sale of long term leases of the airports
currently owned and operated by the Commonwealth's Federal Airports Corporation
(FAC).The profitability of Australian airports for 1995-96 is shown in
the following table.Some of these airports do not, at present, operate
at a profit but it has been observed that the level of profitability for
airports depends on the accounting methods used and the level of debt
serviced by a particular airport. (2)
Airport Profit/ Loss Contributions (Before Interest and Tax) 1995-96
Airport Profit/Loss Airport Profit/Loss
$ $
Sydney 91,003,000 Melbourne 48,302,000
Brisbane 44,556,000 Adelaide 11,649,000
Perth 24,064,000 Hobart 1,182,000
Launceston 920,000 Coolangatta 4,812,000
Canberra 4,211,000 Alice Springs (653,000)
Darwin (898,000) Townsville (734,000)
Mount Isa (225,000) Essendon (1,114,000)
Bankstown 678,000 Moorabbin 30,000
Archerfield (347,000) Parafield (40,000)
Jandakot (612,000)
Figures in brackets represent a loss.
Source: Annual Report 1996 - Federal Airports Corporation
The Minister for Finance, Hon John Fahey, has stated '... that one of
the key objectives of the Government is to ensure that new airport operators
have the necessary financial strength and managerial capabilities to operate
and develop airports over the lease period.'(3) The Minister identified
other paramount considerations which include:
- quality of service
- economic development and airport pricing policy as they pertain to
environmental and regional interests
- diversity of ownership. (4)
In the separate but related area of environmental protection, the Bill
strengthens environmental safeguards by extending statutory obligations
beyond the airport lessee to other persons carrying out activities on
an airport site.
The Bill also establishes a national register of encumbered aircraft
to alert those who trade in aircraft to be informed as to whether a particular
aircraft (including the airframe, engines and avionics) is subject to
the security interests of lenders and creditors.
The Bill also contains amendments to streamline the approval process
for charter flight operations to enhance competition, and to also strengthen
consumer protection provisions in terms of who can apply for charter flight
approvals.
Reader's Note: The proposed amendments are included in Schedule 1
to the Bill.The terminology to be used therefore is 'Item' in the Schedule
in lieu of 'Clause' in the Bill.
Charter Flights
Items 1 and 2 include proposed amendments to the Air
Navigation Act 1920 (Principal Act) to extend the definition of 'non-scheduled
flight' to cover all non-scheduled flights irrespective of nationality
of the aircraft.Also proposed are new definitions for 'charterer' and
'charter operator' in section 15 of the Principal Act.A 'charterer' can
include a travel agent or a package tour organiser.A 'charter operator',
however, can only be the owner of the aircraft or the operator of the
aircraft.Only a 'charter operator' can apply for permission to operate
a non-scheduled flight (see proposed new section 15B).
Although the approval process is to be streamlined to enhance competition,
a key modification is the preclusion of package tour operators and travel
agents from applying directly to operate a charter flight.The approval
will only be available for the owner or operator of the aircraft (who
is in the best position to know whether the aircraft and the flight will
be available, as advertised).Information necessary to support an application
for a charter flight approval will now include a statement that holders
of tickets for the flight will be indemnified for any financial loss caused
by the failure of the charter to complete its program (see proposed new
section 15C(2)).
Decisions taken as to approval or rejection of an application for permission
to operate a charter flight will be reviewable by the Administrative Appeals
Tribunal (see proposed new section 23A) which is inserted by Item 6.
National Register of Encumbered Aircraft
Item 9 inserts a new section 27A in the Principal Act.This proposed
new section provides for the establishment of an Australia-wide register
of encumbered aircraft and aircraft components.Hire purchase agreements,
securities or leases which apply to aircraft will be recorded in the register
so as to alert prospective purchasers that lenders or creditors have an
interest in the aircraft.
Digest Comment:The register of encumbered aircraft is likely
to be a fee-for-service system (cost recovery for the service) but it
does not actually provide legal protection in relation to ownership
of the aircraft merely because information is on the register.It is
assumed that such a 'guarantee' would be prohibitive in terms of costs
for the registration system to carry, given the potential unit value
of aircraft.
Airport Leases
Items 10 to 56 cover proposed amendments to the airport
lease provisions contained in the Airports Act 1996.These proposed
amendments tighten the leasing provisions.For example, Item 25
inserts additional subsections to existing section 33 to require Commonwealth
approval of any airport-management agreement that the lessee makes with
another party to manage the airport.Item 29 enables Regulations
to be made to prohibit specified terms being included in subleases of
an airport lease.Proposed new sections 34C and 34D prohibit the use of
a trust to separate the beneficial and legal interest in an airport sublease.Item
32 provides controls which mirror those in Item 29, but to
apply to an airport lease, as distinct from a sublease.Items 37
and40 propose the addition of the opportunity for public
comment for proposed draft minor variations to an airport master plan,
or a draft variation to a major development plan for an airport, respectively.
Enhanced Environmental Provisionsh
Items 57 to 72 provide a tightening-up of environmental
protection provisions at airport sites.These provisions do not deal with
noise pollution which is addressed in separate Commonwealth laws.Item
58 is a key provision and it extends the obligation for compliance
with a final environment strategy to a person (other than only the airport
lease company) for activities engaged in on an airport site.
The key provisions are proposed new sections 131B, 131C and 131D which
provide a three-tiered classification of environmental harm.The graduations
are 'serious environmental harm', 'material environmental harm ' and 'environmental
nuisance'.
All three classifications of environmental harm expressly exclude noise
pollution, which is dealt with under separate legislation.
Although this omnibus Bill has no central theme, there is an important
and related issue which has arisen in the matter of the privatisation
of airports.The High Court recently held (by majority) that premises leased
by the Commonwealth to a private operator did not cease to be a place
'acquired by the Commonwealth for public purposes' (Allders International
Pty Ltd v Commissioner of State Revenue (Vic) - 1996).(5)In the Allders
case, this meant that State duties such as a stamp duty on a commercial
lease could not validly apply to a lease between the Commonwealth and
a duty-free store located at Tullamarine airport.Under section 52(1) of
the Constitution, the Commonwealth has exclusive power to make
laws with respect to the Seat of Government and '... all places acquired
by the Commonwealth for a public purpose'.
It is legally possible for the Commonwealth to impose an obligation
under the airport leases for the lessee to pay an equivalent amount to
what would otherwise be payable under various State laws, such as stamp
duty on instruments, rates, payroll tax, financial institutions duty and
tobacco and liquor licensing fees.It is reported that the States have
served notice on the Commonwealth that they want the Commonwealth to sell
the sites to enable State revenue laws to apply without reliance on the
legislative or commercial goodwill of the Commonwealth.The Allderscase, in combination with airport privatisation, is being used by the
States as one of the arguments for tax reform.It appears that this issue
will be on the agenda for the forthcoming Premiers' conference in Canberra
on 21 March 1997. (6)
- A brief outline of this matter is provided in the Bills Digest (No.
43 - 1995–96) by Mr Chri
- Field, on the Airports Bill 1995.
- Ibid.
- Press Release, 'Airport privatisation and the Government's national
development strategy'
- Hon John Fahey MP, Sydney, 25 September 1996.
- Ibid.
- (1996) 71 ALJR 1.
- Taylor, L. 'States seek talks on airport businesses' tax', Australian
Financial Review, 7 Marc
- 1997.
Brendan Bailey
11 March 1997
Bills Digest Service
Information and Research Services
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.
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 1323-9031
Commonwealth of Australia 1996
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Published by the Department of the Parliamentary Library, 1997.
This page was prepared by the Parliamentary Library, Commonwealth of
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Last updated: 9 April 1997
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