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Wednesday, 25 June 2003
Page: 17422


Mr TUCKEY (Minister for Regional Services, Territories and Local Government) (9:22 AM) —I move:

That this bill be now read a second time.

The Civil Aviation Legislation Amendment (Mutual Recognition with New Zealand and Other Matters) Bill 2003 (the bill) amends the Civil Aviation Act 1988 to put into effect a historic joint Australian and New Zealand commitment to mutually recognise each other's aviation related safety certification.

The bill has been developed concurrently with New Zealand legislation, which is due to be introduced into the New Zealand parliament shortly.

In broad terms, mutual recognition will mean that aviation safety certificates issued to eligible aviation organisations in one country will be recognised for use in the other.

The proposal will be introduced through a phased approach, based on the type of certificate and size of aircraft. This will provide for a safe and measured introduction of the initiative that can gradually be extended, as both countries consider appropriate.

Air Operator's Certificates, or AOCs for short, will be the first to be mutually recognised. These certificates, which permit a person or organisation to operate aircraft, are issued only if the aviation safety regulator determines that the operator has the ability to conduct its operations safely. In Australia, the Civil Aviation Safety Authority, or CASA, is the relevant aviation safety regulator.

On that basis, under the new mutual recognition arrangements, CASA will be able to approve an AOC for an Australian operator that will authorise operations in both Australia and New Zealand and will be accepted for use by New Zealand authorities. This particular AOC will be termed an Australian AOC with ANZA privileges, with ANZA standing for Australia and New Zealand Aviation.

The aviation authority that issues the AOC with ANZA privileges will be the one to regulate its use by the operator, whether its operations are in Australia or New Zealand. This means that Australian operators opting to hold an AOC with ANZA privileges issued by CASA will be monitored by CASA even when operating in New Zealand.

It is important to note, however, that although the operator will be overseen by the authority that issued the AOC, it will also be required to comply with the general laws and rules of the air applicable to operations in both the home country and the host country. For example, New Zealand operators conducting passenger services in Australia using an AOC with ANZA privileges issued by the Civil Aviation Authority of New Zealand, will have to comply with Australian laws with respect to the environment, curfew, aviation security and carrier's liability.

The New Zealand legislation will make a similar provision in relation to the ability of the Civil Aviation Authority of New Zealand to issue an AOC with ANZA privileges to New Zealand operators that wish to operate in Australia as well as New Zealand.

Only large capacity aircraft of greater than 30 seats or 15,000 kilograms will be able to operate under this scheme at this time. In practical terms this limits mutual recognition to airlines at this stage.

In line with its phased introduction, consideration may be given to extending mutual recognition to aircraft of less than 30 seats at some point. Similarly, other safety certificates not already covered by other mutual recognition arrangements may be brought under the umbrella of mutual recognition in the future. For example, it may be possible in future for there to be mutual recognition of aircraft maintenance organisation certificates.

There are three important aspects of this proposal.

The first and most important, is that there will be no effect on the safety of aircraft operations in either Australia or New Zealand by its introduction.

The second is that mutual recognition is expected to reduce administrative costs of airlines, because they will no longer have to hold and comply with dual certification issued in both countries. This in turn will remove a barrier to airlines taking up commercial opportunities available under trans-Tasman air services arrangements.

The third is the fact that this initiative is a major step forward in the integration of the trans-Tasman aviation market and marks a historic development in the aviation relationship between Australia and New Zealand.

With regard to safety, careful consideration has been given to the issue of whether safety would be compromised by the adoption of mutual recognition. It has been concluded that it will not, because it has been recognised and accepted that Australia and New Zealand have aviation safety standards that are each consistent with international best practice for airline operations using large capacity aircraft.

It is also important to note that mutual recognition is not about harmonisation of Australian and New Zealand safety standards. Australia and New Zealand recognise that there are differences between our two systems, including in particular standards, but these can be accepted, as it is the overall safety outcome achieved by each system that is being recognised.

Notwithstanding this, by way of added guarantee, further measures have been built into this bill to ensure that safety is maintained at current high levels. One example is a provision that ensures that the regulator most effectively able to monitor the activities of the operator will be the one to issue the AOC with ANZA privileges. In nearly all cases this will, of course, be the operator's home regulator as determined by a number of set criteria.

Another provision allows a regulator to issue a temporary stop notice to an operator holding an AOC with ANZA privileges issued by the other regulator, who is normally responsible for regulating the safety of its operations. Temporary stop notices would only be issued if there were considered to be a serious risk to flying safety. The provision builds in a strong safeguard that may never be needed but is nevertheless available to both regulators. The temporary stop notice will be in force for a maximum period of seven days, during which time the regulator that issued the AOC will consider what action should be taken in relation to the operator in question.

Strong communication and cooperation between CASA and the Civil Aviation Authority of New Zealand will underpin mutual recognition and are given the force of law by the provisions of this bill. Indeed mutual recognition has only been possible because of the joint understanding and commitment of the two regulatory agencies to continued safe practice.

Mutual recognition is expected to significantly reduce administrative costs of airlines, as they will no longer be required to obtain and maintain duplicate certification issued in both countries.

For example, under current arrangements an airline wishing to operate services in both countries would need to hold an AOC from both regulators and comply with both, according to where their operations were being conducted. Mutual recognition will mean that they will now only need to hold one, from their home regulator.

Operators will also be able to use both Australian and New Zealand registered aircraft, regardless of which authority provides their AOC with ANZA privileges, providing the aircraft is included on the certificate. This will allow airlines to cross-utilise their aircraft and will provide increased flexibility for their operation.

These efficiencies are likely to have flow on savings to the wider community, if passed on by the airlines concerned, either by reduced fares or through greater choice as a result of competition.

Mutual recognition arrangements will, however, remain optional. An operator will therefore have the flexibility to continue to hold two separate AOCs if they wish.

This said, operators who do opt for an AOC with ANZA privileges from its home regulator will not be able to hold an AOC issued by the other. This is because it is important that all parties understand what AOC is in force and which regulator is ensuring compliance with it.

Mutual recognition is an undertaking by both governments that arose as a result of the open skies air services agreement between Australia and New Zealand.

The open skies agreement was itself an important step in the further development of closer economic relations with New Zealand, intended to promote competition and build upon the principles contained in the Australia-New Zealand single aviation market arrangements.

When the open skies agreement was negotiated in November 2000, the overall value of the Australia-New Zealand single aviation market was estimated at $A6.8 billion ($NZ8.7 billion). Mutual recognition will create opportunities for our airlines that will add further value to the relationship between our two countries.

It will help to ensure that the benefits of the integration of our two aviation markets continue, making it easier for Australian and New Zealand airlines to operate services in both countries, to integrate their fleets and achieve operating efficiencies.

The target date for implementation of the first phase of mutual recognition in both countries is 31 December 2003. I present the explanatory memorandum to this bill.

Debate (on motion by Mr Cox) adjourned.