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Monday, 8 October 1984
Page: 1407


Senator WALSH (Minister for Resources and Energy)(6.17) —I move:

That the Bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows-

AIR NAVIGATION (CHARGES) AMENDMENT BILL 1984 The three main purposes of the Air Navigation (Charges) Amendment Bill 1984 are to improve the Commonwealth's ability to collect air navigation charges, to place payment and penalty provisions on a more commercial basis and to pave the way for the introduction of a separate airport and airway charging arrangement to replace the existing air navigation charges. The Bill also makes some machinery amendments to the Air Navigation (Charges) Act. At present the Commonwealth's powers to recover debts for air navigation charges are limited to the imposition of penalty charges and normal debt recovery action through the courts. These powers have proved insufficient particularly with respect to certain general aviation operators. Over the two years to 30 June 1984, air navigation charges from the general aviation sector outstanding for more than 28 days increased from about $3.5m to about $5m. While the majority of overdue payments can not be classified as bad debts, they nevertheless represent a significant cost to Commonwealth revenue.

As well as depriving the Commonwealth of revenue, operators with outstanding air navigation charges reflect poorly on the industry and adversely affect its overall cost recovery results. Moreover, we cannot allow a situation to continue in which often unscrupulous operators are, through such devices as straw companies, gaining an unfair commercial advantage over the great majority of operators who pay their air navigation charges promptly.

While the Department of Aviation has actively tried to assist operators facing short term financial difficulties by encouraging them to make arrangements to pay by instalment, many problems have been encountered in dealing with recalcitrant debtors and straw companies.

Mr President, it gives the Government no pleasure to introduce a Bill which provides for more stringent means to collect air navigation charges and only does so after considerable consultation with the aviation industry through the aviation industry advisory council. Council recognises the seriousness of the situation and the need for the Commonwealth to take strong action. Indeed, some industry counsellors believe the Commonwealth has been too lenient in the past in its efforts to collect air navigation charges. We endorse the tenor of this view but the fact is that the Commonwealth has not had the necessary tools to take a firmer stance.

In these circumstances the government must be able take effective steps to recover and secure monies owed both under the present charging arrangements and any future charging regime. We have given careful consideration to alternative courses of action to solve the problem including a suggestion made by industry representatives that operators should have their aircraft de-registered as soon as charges become outstanding.

I should like to briefly refer to this proposal which at first glance appears to be a simple and attractive solution akin to the approach adopted by motor vehicle registration authorities. On closer examination this is far from the case. In fact I am advised that that government could only pursue this course where there was a question of safety involved.

In any event deregistration, of itself, would not place the Commonwealth in any better position to recover overdue charges in particular where aircraft are operated by straw companies or where an operator goes into liquidation since the Commonwealth would not rank as a secured creditor.

For these reasons this proposal was not pursued.

As an alternative the Government has decided to put in place a debt recovery process based on the creation of a statutory lien over aircraft in respect of which charges are overdue. This process will be exercised on a discretionary basis consistent with the circumstances of the debt. Use of the process will provide the Commonwealth with security and will also enable a graduated approach to be taken.

I would like to elaborate on the way in which the lien arrangement will operate . When charges have been outstanding for more than 28 days there will be a power to impose on the aircraft a statutory lien which will vest a right over the aircraft in favour of the Commonwealth. Nothing more is involved at this stage.

The Commonwealth will of course continue to take such steps as it can to encourage payment of outstanding amounts including payment by instalment. Where all efforts to make satisfactory arrangements to recover outstanding charges have been unsuccessful and the lien has been in force for at least six months the Bill establishes the right to deregister the aircraft by virtue of the claim which the Commonwealth has established through the lien. This will have the effect of prohibiting the aircraft from being flown and using Commonwealth facilities and services. The aircraft could not then be reregistered until the charges have been paid in full.

The Government intends that the decision to deregister be reviewable in accordance with the Administrative Appeals Tribunal Act.

Where the lien has been in force for at least nine months the Bill provides for the Commonwealth to seize and/or sell the aircraft concerned. The power to sell is clearly a last resort and it is our hope that it will not prove necessary to use it. I would like to emphasise, Mr President, that at each critical point in the graduated process which I have outlined, it is necessary for the Minister for Aviation or the Secretary to his Department or an officer authorised by the Secretary, to exercise a discretion having regard to the particular circumstances of individual debtors. No step in the process is automatic. As I have already mentioned, the decision to deregister an aircraft will be reviewable under the terms of the Administrative Appeals Tribunal Act. As part of this process the Bill provides that in the first instance such decisions may be reviewed by the Secretary to the Department of Aviation.

Mr President, the Commonwealth has no wish to ground or to sell aircraft and the measures that I have outlined will have no effect on the great majority of operators in the aviation industry who conscientiously pay their air navigation charges. However, the measures are aimed at those who choose not to meet their financial obligations yet still expect to use Commonwealth aviation facilities and services. I have no doubt as to how such a situation would be handled in the business world.

I believe the Commonwealth has adopted a balanced approach which provides an effective debt recovery procedure and a capacity to accommodate genuine difficulties faced by individual operators. It will also continue to be an effective debt recovery measure when the Government moves to the system of separate airport and airway charges later in 1985.

The statutory lien provisions of this Bill are to come into operation by proclamation and we do not expect this to be possible before the end of March 1985. There will therefore be ample opportunity for those with outstanding charges to meet their obligations before these provisions come into operation. Even then, the Bill provides that the age of outstanding debts prior to the date of proclamation will be disregarded for the purpose of applying the lien provisions which, I would repeat, is a discretionary process which will take into account all the relevant circumstances of the debt.

It will of course be essential to have further detailed discussions with industry before the administrative arrangements are finalised and these provisions are proclaimed. In the coming months the Department of Aviation will be conducting discussions in each State with industry groups and other interested parties, for example, representatives of the finance sector, to ensure the measures are given the widest possible coverage and to ensure that their views are taken into account.

Turning to other aspects of the Bill, it increases the rate of penalty interest charged on unpaid amounts from 1 per cent to a more realistic 1.5 per cent per month compounded and also reduces the period of grace for payment before a penalty charge is imposed from 45 days to 28 days to bring the payment provision more into line with normal commercial practice. These measures will be effective from 1 January 1985.

A further administrative matter is the introduction of new route and zone factors necessary to calculate charges for airline operations on routes on which services have recently been commenced. These measures will also apply from 1 January 1985.

On top of this, it is proposed to allow the remission of penalty interest. The inability to do this as the Act currently stands has frequently added to administrative complexity. It is proposed that this apply from the date of royal assent to this Bill.

Mr President, on 26 August 1984, the Minister for Aviation announced that his department would commence preparations for the introduction of separate charges for airport and airway facilities. The Government's in-principle decision to introduce separate charges was announced previously.

There are a series of interrelated administrative and policy changes in prospect which will, over the next 12 months or so, result in a complete review of cost recovery arrangements. In addition to the introduction of separate charges for airport and airway facilities and action to reduce late and non- payment of air navigation charges, cost recovery arrangements are currently being examined by the independent inquiry into aviation cost recovery chaired by Mr Henry Bosch.

Together these measures will result in a more effective and equitable cost recovery policy and will pave the way for the introduction of the national airports authority.

The introduction of separate airport and airway charges, for which this Bill provides the machinery, will involve charges related to the use made by operators of broad categories of airport and airway facilities and services. These charges will replace the existing single charge for the use of airport and airway facilities. Their precise form will, of course, be subject to detailed discussion with the aviation industry and can only be finalised after the Government has considered the findings of the Bosch inquiry which is due to report by the end of October. Once determined, the schedules of charges will be detailed in regulations, rather than in the Act as at present, thus greatly simplifying the procedures for revising the charges in future.

The principal purpose of introducing separate charges is to enable charges to more closely reflect the cost and use made of major airport and airway facilities in the various phases of a flight. Their introduction will, consequently, permit a more commercial approach to aviation investment decisions by enabling the identification of revenue associated with a particular facility or group of facilities and comparison with the capital and operating costs associated with such facilities. This action is of course a necessary prerequisite to the establishment of the National Airports Authority.

The new charging arrangements are expected to be effective on a date to be proclaimed next financial year. Before this occurs there will of course be further extensive consultation with industry and other interested bodies.

The cost of administering the statutory lien arrangements will be absorbed within existing appropriations and it is estimated that there will be a once only increase in revenue of around $7.5m in 1984/85 arising from the introduction of the statutory lien and changes to the payment and penalty provisions.

The new charging arrangements address the form rather than the level of charges and will not, of themselves, have any impact on Commonwealth revenues.

It is estimated that the annual costs of administering the new separate airport and airway charging arrangements will be $1.0m, some $0.4m more than the present arrangements. Computer hardware, software, and system development costs are estimated at $1.0m in 1984/85 and due to the need to operate both new and old charging systems for a three month introductory period additional operating costs of approximately $0.3m will be incurred in 1984/85. I commend the Bill to the Senate.

AIR NAVIGATION AMENDMENT BILL (No. 2) 1984

Mr President, the purpose of this Bill is to amend the Air Navigation Act so as to broaden the Government's power to cancel or suspend the international airline licences of foreign airlines operating to Australia. The proposed amendments have no financial impact.

The Air Navigation Act currently limits the power to suspend or cancel a licence for a foreign operator to a situation where an airline has actually failed to comply with a provision of the Act or the Regulations, or fails to conform to or comply with the terms or conditions of agreements or arrangements entered into with overseas countries.

Firstly, this Bill will provide wider power to suspend or cancel international airline licences on safety grounds, which as I have indicated is currently limited to an actual breach of the Act or Regulations. The Act does not presently provide for a situation where information to hand indicates that there is likely to be a breach of the Act or Regulations which is going to affect safety. In the interest of preserving air safety in Australia the Government should have the power to act before the breach occurs.

Another situation which can prejudice air safety is where an overseas aeronautical authority does not make adequate provision to ensure that its airline or aircraft substantially comply with the standards, practices and procedures set out in the Chicago Convention and its annexes. This situation could arise as a result of a failure to set appropriate standards or a failure to carry out adequate surveillance to ensure that an airline is complying with appropriate standards. As honourable senators will appreciate Australia is dependent to a large degree on the role of relevant overseas authorities to ensure that their aircraft operate safely into and out of Australia.

Secondly, the Bill provides for an amendment to the Air Navigation Act so as to enable the cancellation or suspension of a licence of a foreign carrier where this is considered necessary or desirable to preserve or promote fair competition in international air transport services.

At the moment the Government does not have the capability to cancel or suspend a licence where an overseas government decides to withdraw the licence of or reduce the activity of an Australian carrier. If these circumstances eventuated it would be important to be able to respond to this situation. I commend the Bill to the Senate.

Debate (on motion by Senator Reid) adjourned.