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Thursday, 7 June 1984
Page: 2712

Senator GIETZELT (Minister for Veterans' Affairs)(10.03) —I table a document setting out the Government's responses to the recommendations of the report of the Senate Select Committee on Passenger Fares and Services to and from Tasmania. I seek leave to make a statement on the Government's response to the Senate Select Committee's report and ask that the text of the statement be incorporated in Hansard.

Leave granted.

The statement read as follows-

The Government views the Report as a substantial and further contribution to the development of policies aimed at resolving Tasmania's special transport difficulties. The Report's 25 recommendations represent a detailed proposal for the enhancement of Tasmania's passenger transport links with the mainland and overseas. The Government is pleased to note that many of the Committee's recommendations are either already the subject of Government initiatives or are currently under consideration.

The Government fully supports what it believes to be the broad objective underlying the Report's detailed recommendations, namely provision of adequate, realistically priced passenger services.

We recognise the importance of the continued provision of such services for the economic and social well-being of the State. This takes account not only of Tasmania's disabilities due to the State's isolation from the mainland but also takes into consideration the importance of tourism to employment and to the whole Tasmanian economy. In this context, the Government recognises that tourism is relatively more important to Tasmania than it is to some mainland States principally because of Tasmania's narrow economic base and because of the recent decline of some of the State's major industries.

I should like now to draw the attention of honourable Senators to some of the more detailed aspects of the response to the report. The recommendations fall readily into two categories: first, long term initiatives for the future development of passenger services and second, short term actions to maintain existing services at an adequate level.

The Government accepts that there will be a continuing demand for sea passenger transport. Sea services provide an alternative for those travellers who cannot or do not wish to fly and also tourists on 'self-drive' holidays.

The current service provided by ANL's 'Empress of Australia' has required significant subsidisation since 1973-74.

The maximum level of Budgetary assistance made available to sustain the ' Empress' operations was set at $1 million per year in 1973-74 and now is $2.75 million per year.

In 1982 the previous Federal Government, in collaboration with the Tasmanian and Victorian Governments, sought detailed Statements of Interest from shipowners for the provision of commercially viable seas passenger services across Bass Strait to replace the 'Empress', which in 1985 will be 20 years old. Refurbishment would permit the vessel to remain in service for a further period beyond 1985.

The Committee's recommendation that ANL replace the 'Empress' with two combined freight and passenger ships was brought to shipowners' attention in the invitation of May 1982 to submit Statements of Interest and it was given careful consideration by them. Of the five responses received only one offered a commercially viable sea passenger service on a proven design.

In October 1983 Federal, Victorian and Tasmanian Transport Ministers agreed unanimously that there was no purpose in pursuing this exercise further.

The Federal Government is working closely with the Tasmanian Government to meet the latter's wishes for continuing and adequate sea passenger service. A joint statement by the Federal and Tasmanian Ministers for Transport recently announced that the Federal Government would fund the provision of a suitable replacement vessel to provide this service-subject to satisfactory resolution of a number of details including negotiations for a vessel at a satisfactory price and successful negotiations about manning scales.

Much of the Committee's report was concerned with the adequacy of existing and future air links, both with the mainland and overseas. Many of the recommendations seek to ensure that domestic air fares are kept as low as possible while the level of services provided is maintained or improved. Others sought guaranteed levels of service to particular geographic areas, such as the North West and the Bass Strait Islands.

Five of the Committee's recommendations address the question of air fares and subsidies. In accordance with the provisions of the Independent Air Fares Committee Act 1981, responsibility for approving domestic fares, whether full tariff or on a discount basis, resides with the Independent Air Fares Committee. However, the Senate Committee's concern over the level of domestic air fares was in large part influenced by changes in the air fare jet formula resulting from findings of the Independent Public Inquiry into Domestic Air Fares (the Holcroft Report) in 1981. The adjustment to short haul fares, relative to overall network increases, would have resulted in a sharp increase in fares on the trunk routes between Melbourne and the Tasmanian mainland.

Each air fare purchased on trunk services between Tasmanian ports and Melbourne receives a 10 per cent subsidy. This subsidy was introduced to keep increases in the air fares charged by the two major carriers on these routes to about the average increase in fares across the whole of their network, following the adjustment to short haul fares in April 1981. This subsidy was not extended to commuter operators' fares as they were not subject to the fare structure changes which affected fares charged by the major airlines. With the take over of TAA's services to North West Tasmania by East-West Airlines, the subsidy was extended to include East-West's services on these routes.

The committee also suggested that air services to the Bass Strait Islands from both Melbourne and the rest of Tasmania receive a 20 per cent subsidy. This 20 per cent would be composed of the 10 per cent applied to TAA/Ansett/East-West services and an additional 10 per cent as an isolation subsidy. As I mentioned previously, the 10 per cent paid to the major operators' fares is not applicable to the fares of other operators as their fare structures were not affected by air fare formula adjustments made following consideration of the Holcroft Report . The proposed 10 per cent isolation subsidy is also not applicable. This type of assistance is only provided to ensure a basic level of air service (normally one service per week) between a remote area and the most appropriate regional centre. There are already unsubsidised air services to the Islands. The Prime Minister wrote to the Tasmanian Premier on 19 September 1983 and 16 December 1983, noting that services to the Islands were far in excess of the normal weekly services incorporated in the Remote Area Subsidy Scheme, and were therefore ineligible for assistance from this source.

From 1 January 1984 the Tasmanian Government has provided a passenger subsidy for air travel between the Tasmanian mainland and King and Flinders Islands. Under this scheme, all residents of the Islands are entitled to a 10 per cent subsidy with pensioner residents receiving a 50 per cent subsidy on their air fares.

I can assure Honourable Senators that in this matter full detailed consideration has been given to the Committee's recommendation. The question has been the subject of regular consultations between the Commonwealth and Tasmanian Governments.

Let there be no doubt that the Government is concerned to see that Tasmanians are not unfairly disadvantaged by the lack of a land transport alternative. However, in this particular case, the residents of the Islands are benefitting from services already being provided.

With regard to the provision of direct air services between Tasmania and New Zealand, the Committee commended the introduction of Hobart-Christchurch services in 1980 on an interim basis and recommended that these be continued. It was agreed in consultation with New Zealand authorities in mid-1981 that the services should continue. TAA continues to operate on the route under arrangements with Qantas, but Ansett no longer does so. However there continue to be two airlines operating Hobart-Christchurch services, following a decision by Air New Zealand to commence services from January 1983.

The Committee was not convinced that the present two operator service was necessarily the best arrangement for Tasmania's main domestic trunk route services. It recommended that the Government examine whether a single operator or a third operator proposal offered a more flexible and beneficial air passenger service than the current system. The Committee suggested that any investigation of this proposal could be considered in the context of the inquiry proposed by the previous Government into deregulation of the domestic airlines. The Minister for Aviation has already announced that a review of current air service arrangements will be commenced this year. The questions raised are likely to be addressed in that review.

Air services to the North West region attracted some adverse comment in the Report and the Committee made a number of suggestions aimed at improving them. Most of the suggestions were concerned with such aspects as frequency of services, delays to services, improved aircraft types, promotional fares and employment of staff in the region. These are commercial matters which must be addressed by the airlines. In these circumstances, the frequency of services provided is essentially a matter for decision by the operators concerned. Similarly, the standard of services provided is not subject to regulation by the Commonwealth. This Government seeks at every opportunity to encourage the airlines to improve their standards. The airlines for their part have an obligation to, wherever possible, meet the needs of the travelling public.

I will now turn to the Committee's recommendations concerning the upgrading of some of Tasmania's airports. Honourable Senators may recall that, late in 1981, the previous Government announced a plan to upgrade Hobart Airport. This Government is carrying out that plan. The upgrading has included the construction of an international terminal and associated facilities. In the 1983 -84 Budget the Government announced that upgrading of the aircraft pavement areas at Hobart Airport to permit unrestricted B727 operations would be carried out at an estimated cost of $3.0m. These works have now been physically completed.

The Government recently decided to provide an additional $3.0m to improve the pavements of the airport to a standard accommodating limited operations by wide- bodied aircraft. This work will permit international passenger and freight operations by aircraft up to B747 standard, with some limitations on weight, range and frequency. The work does not provide passenger terminal capacity for full wide-bodied aircraft loadings at normal levels of service. However, it will serve to test the Tasmanian Government's belief that services by wide-bodied aircraft will eventuate if such capacity is provided.

While reviewing the whole question of air services to the North West, the Committee considered the need for overall upgrading of the region's airports. The Committee was keen to see a jet aircraft service introduced but recognised that this was dependent on the upgrading to medium jet standard of either or both Wynyard and Devonport airports.

A difficulty for the Committee appears to have been deciding which of the airports to recommend for upgrading. The question of upgrading is linked with the Aerodrome Local Ownership Plan (ALOP), which provides for the Commonwealth funding the full cost of approved aerodrome movement area upgrading of Commonwealth owned aerodromes to meet known aircraft needs, provided a local authority agrees to take over ownership of the aerodrome. Ownership of Devonport Aerodrome, under the provisions of the ALOP, was transferred to the Marine Board of Devonport, now the Port of Devonport Authority, on 1 March 1982. The previous Government had agreed that Wynyard Aerodrome should be upgraded to medium jet standard as part of an agreement on local ownership. This decision was reversed by the present Government as part of the economic review announced in the May 1983 economic statement, on the basis that the expenditure proposed could not be justified at this time.

By way of illustration, Devonport airport was recently upgraded to accommodate proposed medium jet cargo services. As there were no firm proposals for medium jet passenger services through Devonport at that time, an air traffic control tower was not included in the upgrading program although a new passenger terminal was provided due to the poor condition of the former terminal. East- West Airlines has recently introduced medium jet services on the Melbourne- Devonport and Sydney-Devonport routes and Department of Aviation is permitting such services to Devonport without the provision of a control tower as overall traffic levels at this airport are still relatively low.

Clearly in addressing the future development of Wynyard airport, the Commonwealth would have regard to the standard of facilities already available at Wynyard and elsewhere in the North West and expected future airport requirements. There are no current proposals before the Government for the introduction of medium jet services to Wynyard, but there have been recent discussions between the Commonwealth and the Marine Board of Burnie concerning possible upgrading works in connection with a transfer of the airport under the Local Ownership Plan.

The Government is also considering possible developments at Launceston to enable the operation of new freight aircraft at a frequency which will not damage the existing pavements.

The Committee also examined the Melbourne end of Tasmanian air services and recommended that the Commonwealth establish a regional/commuter terminal facility at Tullamarine Airport. The Committee was concerned that commuter or regional airlines are forced to use the berths of the two major domestic airlines and, consequently, are unable to preserve their independence from these large operators. A Commonwealth/State Committee studied the question of the airport needs of the Port Phillip region and reported to the previous Government in November 1980. Consequent to this study, a plan for the long term facility requirements of Melbourne Airport is in preparation and an investigation into the future role of Essendon Airport is underway. The issue of a commuter or regional airline passenger terminal at Melbourne Airport in addition to, or in place of, those commuter facilities already provided at Essendon is included in the studies associated with this long term airport planning.

Finally, I should mention the Committee's recommendation concerning the establishment of the Inter-State Commission (ISC). The Inter-State Commission Act was passed in 1975 and was proclaimed on 27 September 1983. The Minister for Transport announced the initial appointments to the Commission on 6 March 1984 and the Commission became operational on 15 March 1984. The Commission will have an investigating and advisory role with respect to interstate transport matters referred to it. Whilst the ISC will not have a role in regard to the Airlines Agreement or the operation of the IAFC, it will be able to consider other aspects of interstate aviation, including interstate air freight operations. It is not a regulatory body.

In summary, the Government welcomes the Senate Committee's report as a most useful contribution to the ongoing examination of Tasmania's transport needs.

The Government supports the general thrust of many of the Report's recommendations, and has taken action on these recommendations.

The report will remain a useful reference document of value not only to the Government but also to the transport industry. The Government will continue to take the Report into account and to assess applicability of its recommendations to meeting Tasmania's continuing passenger transport needs.

Senator GIETZELT —by leave-I move:

That the Senate take note of the statement.

Debate (on motion by Senator Peter Baume) adjourned.