Mr FAHEY (Minister for Finance)(6.46 p.m.) —I move:

That the bill be now read a second time.

The Airports Legislation Amendment Bill 1997 will facilitate the sale of the remaining federal airports by amending the Airports (Transitional) Act 1996, the Airports Act 1996 and the Federal Airports Corporation Act 1986.

On 1 July, the government executed the airport leases for the sale of the three phase 1 airports—Melbourne, Brisbane and Perth—and the new owners took over running of those airports on 2 July 1997.

It is a matter of public record that these sales represented a further major step forward in the micro-economic reform agenda for the aviation sector. The sale of long-term leases over three of our major airports enables world's best practice to be brought to the management and operation of Australia's major airports and facilitates future capital investment on a commercial basis.

In this regard I had previously announced that the new lessees of Brisbane, Melbourne and Perth airports are contractually committed to long-term development obligations—including substantial investment commitments in core airport infrastructure—totalling over half a billion dollars over the next 10 years. Moreover, this investment is being made under a post-privatisation pricing regime which will see a real decline in aeronautical service charges over the next five years in line with expected productivity improvements at these airports.

Innovative management practices are already becoming evident with the announcement by the new Melbourne airport lessees that rebates of up to 50 per cent on aeronautical charges are available to airlines, on application, offering new services and up to 30 per cent for those increasing frequency of existing services to and from Melbourne airport. Available on a decreasing scale for three years, the aim of this measure, with direct benefits to the travelling public, is to lower operating costs for start-up services and to facilitate the growth of services considered viable in the longer term.

The sale of the Sydney basin airports, which are Kingsford Smith, Hoxton Park, Bankstown, and Camden airports, will take place only after completion of an environmental assessment of options for the site for the second Sydney airport and when the government has effectively addressed noise issues relating to Sydney airport.

Under this phase of the sales program, 10 regular public transport (RPT) and five general aviation (GA) airports are to be disposed of. It is proposed, as for phase 1 sales, the eight RPT airports at Adelaide, Alice Springs, Canberra, Coolangatta, Darwin, Hobart, Launceston and Townsville will be sold by long-term leasehold. Each lease would be for 50 years with an option for an additional 49 years. These sales can, of course, be undertaken under the existing provisions of the Airports (Transitional) Act 1996 and will be subject to the same Commonwealth regulatory controls that apply to the phase 1 airports as provided for under the Airports Act 1996 and associated regulations.

On this occasion, however, the government wishes to have the flexibility of offering the five GA airports at Archerfield, Essendon, Jandakot, Moorabbin, and Parafield and the two RPT airports at Mount Isa and Tennant Creek for freehold disposal. A freehold disposal of these airports, however, requires amendments to be made to the Airports (Transitional) Act 1996.

Before I turn to the specifics of the proposed amendments I would like to briefly elaborate on the reasons for the government's decision. While the airports included in phase 1 were all airports of national and international significance, the 15 airports in phase 2 are diverse. Some are major national airports while others are principally of regional and local significance, many with a large general aviation base.

Freehold sale of the general aviation airports and the smaller regional airports will provide greater opportunities for those airports to be integrated into the policy and planning frameworks of state and local authorities. The sites would cease to be Commonwealth places and in the future the states and territories would assume the responsibility for planning and environment controls on the airports.

This is logical and consistent with the practice adopted under the previous government's aerodrome local ownership program where some 230 local airports were transferred under freehold title to local owners, a number of which are far larger in terms of revenue and aircraft traffic volumes than some of those now being proposed to be disposed of by freehold sale.

Unlike the major airports, these airports are principally intrastate in their traffic and their non-aviation activities are more locally orientated, with a local community focus and impact. A freehold sale of these airports provides an opportunity for a strengthened association with local community interests—those best placed to influence the development and operation of the airports in a manner conducive to fulfilling regional aspirations—without a Commonwealth overlay of controls in the areas of planning and environment.

Existing Commonwealth controls over safe operations, flight paths and aircraft noise would be unaffected, but the question of how an airport's operations interlink and interact with the community in which it is located would become a matter for the state or territory concerned. The Commonwealth will require, however, before an airport is sold freehold that the relevant state government undertakes to ensure that state or territory and local laws do not jeopardise continued airport operations and that the core airport site will be restricted to continued use as such. The Commonwealth wants to ensure that any airport sold freehold continues to be used as an airport, and is reserving the option of leasing any of these airports if the required assurances are not forthcoming from the relevant state or territory governments.

As mentioned earlier, in order to allow for freehold sale of some of the phase 2 airports it is necessary to amend the Airports (Transitional) Act 1996. Those amendments are contained in schedule 1 to the bill and their main provisions are to facilitate the transfer of: land from the Federal Airports Corporation to the purchaser; the assets, liabilities, contracts and employees directly to the purchaser following the transfer of land; and the relevant staff at each of the airports to the purchaser.

As for the phase 1 sales, it will be important that the jobs and entitlements of FAC staff at the airports to be sold will not be threatened by the disposal process. Therefore, whether the airports are to be leased or sold, staff and management will be transferred to the relevant airport entity immediately upon sale. Existing awards, enterprise agreements and contracts of employment will transmit to the new airport lessees or airport entity which will ensure that airport staff retain key terms and conditions of employment and entitlements to accrued benefits following their transfer. Following the transfer of staff, the terms and conditions of their employment, as contained in awards, enterprise agreements and contracts of employment, will be able to be varied only according to the terms of those agreements.

There are two minor amendments to the stamp duty provisions in the Airports (Transitional) Act. Firstly, item 14 of the bill provides that, post sale, an entity is not liable to stamp duty in respect of an instrument which was executed by the FAC before sale. This is an extension of the existing provisions under section 47 of the Airports (Transitional) Act in regard to a leasehold disposal. Its purpose is to ensure that an airport company does not become liable to pay stamp duty in respect of an instrument to which the FAC was party and which was formerly exempt from duty. Any alteration to the instrument after sale which would attract stamp duty is not exempted by this provision.

Secondly, item 15 of the bill is to extend the application of section 48 of the Airports (Transitional) Act to freehold entities. Section 48 ensures that stamp duty is payable in circumstances where the sale is affected by making of a declaration vesting the freehold in the airport entity. That section provides that, where stamp duty would have otherwise been payable, it is not exempt just because the transfer of the airport was affected by a ministerial declaration.

There is one minor amendment, item 16, to the special income tax rules in the legislation and that is to extend to a freehold entity the power of the minister to make a declaration that the Income Tax Assessment Act applies to the FAC as though it had received payment for the disposal. This provision was used in the phase 1 sales to declare the value for tax purposes on the assets disposed by the FAC.

As for the phase 1 sales, I am not proposing to utilise the determination provisions available in sections 49, 50 and 51 of the Airports (Transitional) Act. For the purposes of their bids, prospective purchasers will be advised that they should value the airports on the basis of depreciation arrangements that are consistent with those outlined in the Treasurer's press release of 4 August 1997.

This bill also contains amendments to the Airports Act 1996 which are proposed to streamline the regulatory regime for the leased federal airports. Schedule 2 of the bill covers four main areas, which I will deal with in turn.

Firstly, section 5 of the Airports Act specifically defines a joint-user airport as Canberra, Darwin and Townsville. The Department of Defence is currently considering the nature of its operations at Canberra Airport and the status of the airport may change in the future. The bill will amend section 5 of the Airports Act to enable a regulation to be made declaring that Canberra would no longer be a joint-user airport at such time as the Department of Defence chooses to cease operating at that airport.

Secondly, section 33 of the Airports Act provides that an airport lessee company cannot enter into an airport management agreement with another person unless that person is both approved in writing by the minister and a qualified company within the meaning given under the act. The Airports Act also provides that the minister cannot approve an airport management company if it breaches ownership restrictions under the act.

Since the ownership restrictions in part 3 of the act already apply to an airport management company, the provision is unnecessary and so the bill provides for the requirement to be repealed. In its place the Minister for Transport and Regional Development will retain a simple power to determine by disallowable instrument whether a specific agreement is, or is not, an airport management agreement, and to not approve any agreements if there are concerns with them. The government wishes to take advantage of the benefits that foreign management expertise can bring to Australia's airports, but it remains important that any structures designed to circumvent the public policy objectives of the legislation can be denied.

Thirdly, section 192 of the act provides that the minister may determine that each airport service provided at an airport will be a declared service for the purposes of the access regime set out in part 111A of the Trade Practices Act 1974, except to the extent to which a service is the subject of an access undertaking given within 12 months after the airport is leased to the private sector.

The bill proposes to give authority to the Australian Competition and Consumer Commission, the ACCC, to determine by disallowable instrument which activities at an airport fit within the relevant definition of an `airport service' as a result of a determination by the minister. This amendment will ensure that the ACCC has the capacity to clarify situations where doubt arises about the scope of an `airport service' that has been declared as a result of the minister's determination.

Fourthly, subsection 242(1) of the Airports Act provides for applications to the Administrative Appeals Tribunal for review of certain decisions made by the minister. Those decisions concern the approval of master plans, major development plans and environment strategies, including variations to master plans and major development plans and environment strategies.

Under the act, the airport lessee is required to undertake wide public consultation prior to submitting draft master plans, major development plans and environment strategies to the minister for approval. The minister then either approves or refuses to approve the draft plans having regard to the matters to be considered as set out in the act, including: whether an airport development would assist airport users; how the airport and surrounding areas are affected; comments made by interested and affected parties as part of the public consultation process; and the environmental impact.   These procedures are comprehensive and permit soundly based decisions to be made by the minister. The amendments ensure that these decisions will be open to the scrutiny of the parliament. The minister is required to prepare and table in both houses of parliament a statement about these decisions, except to the extent that the commercial interests of a person would be substantially prejudiced. This will also bring these provisions into line with planning processes under state law.

In addition to these four changes, the bill will insert a number of notes to existing sections of the Airports Act to clarify the way in which state law applies to airport activities. Schedule 3 of the bill extends the corporation's functions to include assisting in the sale of a federal airport by way of freehold disposal. This removes any ambiguity as to whether the corporation is empowered to assist in the disposal of its assets by this means and provides the board with an assurance that they are clearly operating within their responsibilities.

The additional amendment to section 41 of the FAC Act clarifies that information obtained by the government under a ministerial direction given before the commencement of the amendment may be used after its com mencement. This ensures that there is no perceived legal impediment to using the information in connection with any freehold sales.

In conclusion, I would like to note that the government's airport sales process and the post-sale regulatory regime, which has been put in place, is making Australia a world leader in airport ownership and management. It provides the opportunity for the utilisation of private sector investment and expertise at Australia's airports.

There is already a great deal of investor interest in the next tranche of airports, particularly in regional areas. The proposed measures outlined in this bill will maximise the opportunities for the development of regional airports and will provide a more streamlined and effective regulatory regime. Given the need to provide certainty to airport bidders and airport users, it is essential that this legislation be passed in the current sittings to meet the airport sales timetable. I commend the bill to the House. I present the explanatory memorandum to this bill.

Debate (on motion by Dr Theophanous) adjourned.