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Tuesday, 6 February 2007
Page: 97


Senator COLBECK (Parliamentary Secretary to the Minister for Finance and Administration) (6:39 PM) —I move:

That these 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—

AIRSPACE BILL 2006

This bill provides for the transfer of airspace regulation and administration from Airservices Australia to the Civil Aviation Safety Authority (CASA). This will create a new function for CASA of civil airspace regulator. CASA will continue to be subject to its existing primary obligation to regard the safety of air navigation as the most important consideration.

As a nation, Australia is responsible for administering eleven percent of the airspace above the earth’s surface. It is vital to the aviation industry that this airspace is well administered.

The airspace Australia is responsible for is divided into blocks, with the level of air navigation services for each particular volume of airspace being determined through a classification process. This process takes account of a range of factors - including the local topography and number and type of aircraft that use that airspace.

Since 1995, Airservices Australia has been responsible for classifying each particular volume of non-defence airspace to set the level of services it needs to ensure safety and efficiency of aircraft operations, while also taking account of its other legislative obligations including environmental protection.

However, the Government considers that to progress airspace reform and ensure Australia’s airspace management reflects best management practice, airspace regulatory functions need to be separated from Airservices Australia due to the potential for a conflict of interest between Airservices Australia’s industry and commercial focus and its airspace regulatory functions. The Government wants to ensure that Airservices Australia’s airspace regulatory decisions can not in any way be seen to have been influenced by its commercial relationships and focus on efficiency. The Government has decided that it is time to remove any perception of a conflict of interest by moving airspace classification and designation to the Government’s civil aviation safety regulator - CASA.

CASA will perform this function by establishing a dedicated administrative unit within the Authority - the Office of Airspace Regulation.

This legislation to transfer the airspace regulatory function from Airservices to CASA provides an opportunity for a series of other important changes to airspace regulation and administration. This opportunity comes against the background of important international and domestic developments. The International Civil Aviation Organization has released a global Air Traffic Management Operational Concept: - a vision for an integrated, harmonised and globally interoperable air traffic management system that will take the world beyond 2025. The Australian Government has itself been implementing a substantial change to the way Australian airspace is administered through introducing the National Airspace System, based on the National Airspace System of the United States of America. There has also been a rise of satellite based technologies offering new systems for aircraft navigation and surveillance that will change the way in which airspace is administered in the future. It is important that Australia’s regulatory arrangements enable us to take advantage of new technologies and approaches to improving the safety and efficiency of our airspace administration.

The Government considers it important that clear objectives are set for Australian-administered airspace and that the Australian aviation community is given the opportunity to participate in the process for considering and analysing airspace change. This will provide a solid base for decisions to be made on the future of Australian-administered airspace and the integration of Australian airspace into the global system, while ensuring that Australian-administered airspace continues to make its contribution to a safe, secure and efficient aviation industry.

This bill requires that airspace change be underpinned by an Australian Airspace Policy Statement, which will outline the Government’s objectives for civil airspace administration, and provide assistance for industry in its investment decisions. The Ministerial Statement will be developed in consultation with the Minister for Defence, CASA, Airservices, the Department of Defence and the Australian aviation community. The Statement will describe the processes to be followed for changing classifications and designations of particular volumes of airspace, the policy context for those processes and the Australian Government’s strategy for the future administration and use of Australian administered airspace.

Importantly, the Statement will require that major changes to Australian airspace will be made only after the results of a risk analysis, a detailed examination of the potential costs and benefits, and inclusive consultation with stakeholders to rigorously test proposed changes before they are implemented.

This process will ensure that CASA will continue to have safety as the most important consideration, but that the safety case will always be properly justified. In considering reforms, CASA will also be obliged to look for opportunities to deliver benefits through greater efficiency, environmental protection, equity of access and national security. The Government believes that we should not ignore the scope for benefits on these fronts if they can be obtained while preserving or enhancing safety standards. The assessment process will start with the remaining unimplemented elements of the NAS, and continue for future proposals that fall outside the current NAS framework.

The Australian Government expects that CASA will be an active regulator, undertaking on-going risk reviews of the existing classifications of airspace and the services provided to ensure that they remain appropriate. The Government also expects that CASA will take the lead on airspace system change, proposing and designing and steering the implementation of system changes consistent with the Australian Airspace Policy Statement. All of this activity will be with the aim of ensuring that Australian airspace remains safe, while also seeking benefits in terms of efficiency and the environment, and taking account of access and national security.

While this bill does not impose obligations upon Defence in relation to the decisions it takes, both Defence and CASA have undertaken to work closely together to ensure that the decisions each authority takes are closely coordinated. Airservices and Defence already have a close working relationship as both organisations provide air traffic control services in Australian administered airspace, and the Government expects that Defence will work closely with CASA.

The cost of airspace regulation is currently borne by industry through air navigation charges levied by Airservices Australia. CASA will charge Airservices for the cost of airspace regulation and administration. Airservices will in turn pass that cost on to industry. CASA will establish an administratively separate unit to ensure that the costs of airspace regulation and administration are transparent, and it will be up to CASA to transparently demonstrate to the aviation industry the value of the regulatory role it performs.

The transfer of the airspace regulatory function from Airservices to CASA forms part of a broader governance change for the Australian Government’s civil aviation regulators. The Government will shortly be introducing a Bill to further improve CASA’s accountability and performance by making it subject to the Financial Management and Accountability Act 1997 and by changing the employment arrangements for CASA staff so that they are employed under the Public Service Act 1999. This legislative framework recognises that CASA is a Government regulator and not a commercial business.

The world is changing and this bill is part of a broader change to the administration of Australian administered airspace that will ensure Australia is well placed to take advantage of the benefits the future has to offer. This bill also ensures that the Australian aviation community will have the opportunity to understand and be a part of the process of determining that future.


AIRSPACE (CONSEQUENTIALS AND OTHER MEASURES) BILL 2006

The purpose of this bill is to make a number of consequential amendments to the Civil Aviation Act 1988. These amendments are necessary to allow the effective introduction of the Airspace Bill.

Amendments to the Civil Aviation Act 1988 ensure that airspace regulation is a clear and separate function for the Civil Aviation Safety Authority and that it act consistently with the Australian Airspace Policy Statement. The bill also grandfathers decisions made by Airservices Australia under regulations to be transferred to the Civil Aviation Safety Authority.

The bill also makes a number of technical amendments to the Air Services Act 1995 and the Civil Aviation Act 1988 to accommodate amendments made to the functions of Airservices Australia by the Civil Aviation Legislation Amendment Bill 2003.


CUSTOMS TARIFF AMENDMENT (INCORPORATION OF PROPOSALS) BILL 2006

The Customs Tariff Amendment (Incorporation of Proposals) Bill 2006 contains amendments to the Customs Tariff Act 1995 that were included in Customs Tariff Proposal No. 4 of 2005 and Customs Tariff Proposal No. 1 of 2006.

First, the bill will alter item 47 of Schedule 4 to the Customs Tariff Act by reducing the rate of customs duty from 3% to Free for goods entered under this item. Item 47 applies to machinery that incorporates, or is imported with, other goods which for technical reasons render the machinery ineligible for a Tariff Concession Order. Item 47 allows such goods to be dutiable at the same rate of customs duty that would apply if the goods were subject to a Tariff Concession Order.

The lowering of the duty rate applying to goods entered under item 47 maintains consistency with the 2005-06 Budget decision to remove the 3% duty on business inputs that are subject to a Tariff Concession Order.

This measure will be of particular benefit to the mining industry, which is the main importer of goods covered under item 47. It will reduce costs to Australian business by $2 million per annum. This is in addition to the approximately $300 million per annum already saved through the original Budget decision to remove the 3% duty on business inputs that are subject to a Tariff Concession Order.

This measure took effect from 11 May 2005.

Secondly, the bill alters item 31 of Schedule 4 to the Customs Tariff. This item allows for duty free entry of certain aircraft parts, materials and test equipment for use in the manufacture, repair and maintenance of aircraft. The bill proposes to alter item 31 by extending duty free entry to certain goods used in the modification of aircraft.

The extension of item 31 to include goods for use in the modification of aircraft will reduce costs to business and will provide a clear incentive to continue heavy maintenance work in Australia. This will strengthen the international competitiveness of Australia’s aviation and maintenance industries, and is consistent with the Government’s policy to improve the international competitiveness of Australia’s aerospace and aviation industries.

The main beneficiaries of this measure will be domestic airline and defence contractors, as well as Australia’s vibrant general aviation aircraft manufacturing and modification industry. Many of the firms in this sector are located in regional Australia and this alteration to the Customs Tariff will provide a new certainty to underpin their competitiveness in the world market.

This measure was announced in the 2006-07 Budget, and took effect from 1 July 2006.

Finally, the bill will alter item 71 of Schedule 4 to the Customs Tariff by expanding the Enhanced Project By-law Scheme to include the duty free entry of qualifying goods for the power supply and water supply industries.

Currently, item 71 underpins the Enhanced Project By-law Scheme offering tariff concessions to major projects in the mining, resource processing, agriculture, food processing, food packaging, manufacturing and gas supply industries, for imported eligible goods that are not available from Australian production.

The inclusion of the power supply and water supply industries in the terms of item 71 will encourage investment, increase opportunities for Australian industry to participate in major projects, and lower business input costs.

The above amendment was also announced in the 2006-07 Budget, and applies to goods imported and entered for home consumption on or after 1 July 2006.


ENERGY EFFICIENCY OPPORTUNITIES AMENDMENT BILL 2006

The purpose of the Energy Efficiency Opportunities Amendment Bill 2006 is to make technical amendments to the Energy Efficiency Opportunities Act 2006 to correct a small number of anomalies to properly align the Act with the original publicly understood policy intent, and to improve its administration.

The bill amends the Act, which took effect on 1 July 2006, to clarify that corporations do not need to register if they are already registered, to make clear that the period allowed for program participants to submit their assessment plans and the consequential timing of the five year assessment cycle starts immediately after the end of the energy-use trigger year, and that for efficient administration, the Secretary’s powers and responsibilities may be delegated to acting Senior Executive Service employees.

These amendments are consistent with the intended obligations explained in the Explanatory Memorandum to Energy Efficiency Opportunities Act 2006, set out in the Energy Efficiency Opportunities Regulations 2006 and published in the Energy Efficiency Opportunities Industry Guidelines. They do not represent new policy, and do not affect the budgeted cost of the program.

Energy Efficiency Opportunities is a significant achievement flowing from the Government’s 2004 energy policy statement, Securing Australia’s Energy Future. It requires Australia’s largest energy using businesses to undertake energy efficiency opportunities assessments and publicly report on outcomes. This applies to an estimated 250 corporations that use more than half a petajoule of energy per year, covering over 40% of Australia’s total energy use.

For the first program cycle, firms that use more than 0.5 petajoules in the 2005-06 financial year of energy per year must register by 31 March 2007, and must complete their first assessment by June 2008 and publicly report by December 2008.

The aim of Energy Efficiency Opportunities is to stimulate the business sector to take a more rigorous and effective approach to energy management, reduce unnecessary demand on energy infrastructure and contribute to reducing greenhouse gas emissions, while improving the competitiveness and productivity of business.

Companies that used over half a petajoule in 2005/06 have until March 2007 to register. By late November 2006, six companies, Alcoa World Alumina Australia, Hanson Australia, New Hope Mining, Qld Alumina, Riotinto Ltd and Leighton Holdings Ltd have registered for the EEO program, and more are expected to be registered shortly. These companies, and others who are preparing to apply, are to be commended for their involvement. There is a high level of interest, with many companies already enquiring about registration, assessment and reporting for the program.

The companies who have been trialling the program assessment have found that they have been able to identify between 30 and 50 energy saving opportunities by following the EEO assessment process. Orica has identified opportunities which could save up to 1.2 million dollars and reduce greenhouse emissions by 30,000 tonnes per year. Xstrata Copper plans to implement opportunities at one site that will save it an estimated $300,000 a year, and is considering opportunities to save an additional $300,000 annually.

I believe that every company that participates will find opportunities that will deliver them cost effective energy savings, and will be able to make very positive changes in how they manage their energy use.

The Government is working with industry and other experts to build on the best of what works for business in identifying significant energy savings. The Government will continue to work closely with industry leaders to develop guidelines, materials, training and support to undertake effective assessments. Recognising and learning from leading companies and their innovative approaches to identifying and implementing energy savings will be an important strategy for achieving a major shift in Australia’s energy efficiency performance.


SAFETY, REHABILITATION AND COMPENSATION AND OTHER LEGISLATION AMENDMENT BILL 2006

This Bill will amend the Safety, Rehabilitation and Compensation Act 1988 (SRC Act), which is the legislative basis for the Commonwealth workers’ compensation scheme.

The scheme has come under growing pressure in recent years from increasing numbers of claims, longer average claim duration and higher claim costs. This is, in part, a result of court interpretations of the legislation, some of which have departed from the initial intent of the legislation. The principal amendments contained in this Bill are intended to maintain the financial viability of the scheme. The amendments will also improve the administration and provision of benefits under the scheme.

The definitions of ‘disease’ and ‘injury’ are of central importance in the SRC Act. These definitions will be amended to strengthen the connection between the employee’s employment and the employee’s eligibility for workers’ compensation under the scheme.

The Act currently requires a material contribution by employment to a disease before compensation is payable. When originally enacted this provision was meant to establish a test requiring that an employee—and I quote from the then Minister’s second reading speech in 1988—‘demonstrate that his or her employment was more than a mere contributing factor in the contraction of the disease’. The mischief being addressed was—and again I quote from the then Minister’s 1988 second reading speech—‘the Commonwealth being liable to pay compensation for diseases which have little, if any, connection with employment’. Notwithstanding this clear expression of legislative intent, the courts have read down the expression ‘in a material degree’ to emphasise the causal connection between the employment and the condition complained of rather than the extent of the contribution itself.

The Bill therefore includes an amendment to restore the initial legislative intent by requiring that an employee’s employment must have contributed in a significant way to the contraction or aggravation of the employee’s ailment.

The current definition of ‘injury’ contains exclusionary provisions which prevent compensation claims being used to obstruct legitimate administrative action by management. These provisions ensure that compensation is not payable in respect of an injury, usually a psychological injury, which arises from reasonable disciplinary action taken against an employee, or a failure by the employee to obtain a promotion, transfer or benefit in connection with employment. The exclusionary provisions are being updated and expanded to include other similar activities which are also regarded as normal management responsibilities—provided, of course, that they are reasonably undertaken. These include matters such as a reasonable appraisal of the employee’s performance, and reasonable counselling action taken in respect of the employee’s employment.

These amendments to the definitions of ‘disease’ and ‘injury’ seek to restore the operative effect of the legislation to what Parliament and the then Government intended in 1988 when Labor was in office.

The Bill also amends the provisions that set out the circumstances in which an injury to an employee may be treated as having arisen out of, or in the course of, his or her employment.

In its March 2004 Report on National Workers’ Compensation and Occupational Health and Safety Frameworks, the Productivity Commission recommended that coverage for journeys to and from work not be provided, and for recess breaks and work-related events should be restricted to those at workplaces and at employer sanctioned events. The fundamental common sense principle underlying the Productivity Commission’s recommendations was, of course, that employers should only be held liable for conduct that they are in a position to control.

Consistent with the Productivity Commission’s approach, the SRC Act will be amended to remove coverage for injuries sustained by employees during journeys between home and work and during recess breaks undertaken away from the employer’s premises, for example lunch breaks during which an employee leaves the employer’s premises to go shopping.

Employers cannot control circumstances associated with journeys to and from work or recess breaks away from employer premises and it is not appropriate for injuries sustained at these times to be covered by workers’ compensation.

The Bill also enhances various entitlements available to employees under the principal Act. The Bill will amend the method for calculating of retirees’ incapacity benefits to take account of changes in interest rates and superannuation fund contributions since the time the Act was first introduced. The change in the interest rate provision would result in increased benefits payable to retirees. Amending the notional superannuation deduction would restore the original policy intent by providing for benefits to affected retirees to be set at 70 per cent of pre-injury normal weekly earnings.

The Bill will also increase the maximum funeral benefits payable under the SRC Act—and its counterpart for members of the defence forces, the Military Rehabilitation and Compensation Act 2004—to bring these closer into line with actual funeral costs.

Finally, the Bill includes a number of minor technical amendments to the SRC Act which correct anomalies that adversely affect the efficient operation of the Act or are inconsistent with the original policy intent behind particular provisions.


TAX LAWS AMENDMENT (2006 MEASURES No. 6) BILL 2006

This Bill amends various taxation laws to implement changes and improvements to Australia’s taxation system.

Schedule 1 amends the list of deductible gift recipients in the Income Tax Assessment Act 1997.  Deductible gift recipient status will assist the listed organisations to attract public support for their activities.

Schedule 2 makes a number of technical corrections, amendments and general improvements to the taxation laws.

These amendments include fixing duplicated definitions, missing asterisks from defined terms and incorrect numbering.  The most significant of the amendments formalises the transfer of the power to appoint acting Commissioners of Taxation during periods of absence from office, from the Prime Minister to the Treasurer. 

While not implementing any new policy, these amendments are part of the Government’s ongoing commitment to improve the quality of the taxation laws.

Full details of the measures in this Bill are contained in the explanatory memorandum. I commend this Bill and present the explanatory memorandum.

Debate (on motion by Senator Colbeck) adjourned.

Ordered that the Airspace Bill 2006 and the Airspace (Consequentials and Other Measures) Bill 2006 be listed on the Notice Paper as one order of the day, and the remaining bills be listed as separate orders of the day.