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Thursday, 17 October 2002
Page: 5421

Senator WEBBER (4:26 PM) —In considering the Space Activities Amendment Bill 2002 we are told that this piece of legislation aims to overcome a number of deficiencies that were contained in the Space Activities Act 1998 and clarify the operation of space launch sites within Australian jurisdiction. The main elements of the current bill being considered relate to the insurance and capping of liabilities, as referred to by Senator Stott Despoja, in regard to space launches with the Commonwealth also accepting some liability. The bill also includes changes to the risk minimisation test for launches. This change means the applicants for space licences must show that the risk of damage is as low as reasonably practicable. Finally, this bill amends section 8 of the Space Activities Act 1998 to define space as an area beyond 100 kilometres above mean sea level.

The operation of space launch activities is fast becoming a reality with the construction of the Asia Pacific Space Centre, or ASPC, launch facility on Christmas Island. We are told that the ASPC intends that its first launch will take place some time in late 2004. Although this legislation is designed to regulate space activities anywhere within Australian jurisdiction, the reality, I feel, is that the only potential launch site that is likely to be operating within the near future is that belonging to ASPC.

It is clear that the government's approach to ASPC has been to assist in the development of its facilities. The Commonwealth has supplied land and other infrastructure and signed an agreement with the government of Russia concerning the operations proposed by ASPC. All of this is being done for the benefit of Australia. We will enter into the commercial space market with the opening of the ASPC on Christmas Island. But what is this market worth to Australia? The total cost of the project is in the order of $800 million, with the government to receive some $1.5 billion in licence fees over 20 years. We are told that there will be some 300 to 400 jobs in the construction phase, with a total of 550 jobs once the facility is operating. One of the really interesting claims made is that all of this will lead to opportunities for Australians in high-tech jobs associated with the space industry. However, it has to be noted that of the 550 jobs referred to with the launch activities 300 will be Russian—although I do suspect there will be some jobs for Russian translators and in language instruction on Christmas Island as a result. But, as we can see, the majority of the jobs will actually be Russian.

I have said before in this chamber that I am really concerned about the creation of jobs and, like Senator Lundy, I want to see new jobs created, especially at the high end of the employment sector. This facility has the potential to promise just such jobs. However, I think we have to take note of the following concerns: (1) how competitive would APSC be compared to other players in the market; (2) how large is that total market; (3) what are the risks to other sectors of the economy; and (4) will this project lead to benefits to Australia?

My first concern is that there are a number of issues that need to be addressed regarding the competitiveness of APSC. In fact, if you refer to APSC's submission to the Senate Economics Legislation Committee you notice that the company raises a number of concerns with the bill and how it will impact on its proposed activities. In relation to the amount of third party liability insurance, the bill sets down the second highest rate of required insurance at $US405 million. The European governments, who are also in the space market, only require the European Space Agency to have third party liability insurance to the level of $US53 million. In fact on page 8 of its submission APSC suggests:

... the liability cap be set at a level to support the Australian launch industry by being less than that of Australia's key competitors.

Now when you take into account the relative merits of the APSC operation and that of its main commercial competitor, the European Space Agency, the most significant factor is this one of third party liability insurance. In fact, APSC will be required to pay for insurance at eight times the level of its European competitor. So it could be said that this bill sets out to make Australian launch providers uncompetitive. So we have this situation where the Commonwealth government bent over backwards to assist APSC to get started and now this legislation is going to provide a significant competitive impediment to their operations.

The second concern I mentioned was about the size of the market. One of the factors we are told that works in favour of the APSC approach is that it will be able to launch larger satellites at less cost because of its location close to the equator. Based on APSC information, I understand the launch facility is designed to launch up to 10 vehicles per year. In recent years, however, there has been a dramatic shift in the number of launches undertaken by this industry. In 1999 there were some 70 launches worldwide. In 2000 there were some 80 launches worldwide. But in 2001 only 18 launches took place worldwide.

Obviously this market, like most others, is subject to dramatic fluctuations. In times of global slowdown it would seem that the number of space launches contracts. The other factor that has to be considered, in my view, is that not all launches are of a commercial nature. In any given year there are a number of staffed launches, for example the famous space shuttle and staffed Russian flights. There are also a number of non-commercial satellites placed in orbit each year that would also shrink the size of the market.

In fact, in 2001 we are talking about a marketplace that saw fewer than 10 commercial launches in total. So we have a market that even in boom times is not particularly large. This is a new space industry that is trying to attract new customers. And into this mix we have new legislation that will impose the second highest third party insurance overhead in the entire world.

It seems strange to me that we have the government wanting to encourage this industry to set up in Australia—to the extent that a considerable amount of money is spent on infrastructure and that special conditions are granted—but it then turns around and imposes such a high cost structure. APSC states that Australia will earn $1.5 billion over 20 years from licence fees and, as I have mentioned before, see 550 jobs created. I suspect, however, that this figure and these jobs are dependent on there being 10 launches per year. But maybe we have got this wrong. I think the operation of this bill will need to be closely monitored to ensure that we have not costed APSC out of the market before it even starts.

The third concern I mentioned was the risk or cost to other sectors of the economy. I, along with all senators in this chamber, and particularly those from Western Australia, was pleased to hear the recent announcement of the natural gas contract with China. As a Western Australian, I was pleased to know that significant levels of business investment and many new jobs will be created in my home state as a consequence. I have also been pleased to note over recent times that the Timor Gap projects, which I am sure Senator Crossin is familiar with, will add significantly to the economies of both Australia and East Timor.

I make these points in the context of this bill because of the proposed flight paths from the APSC facility on Christmas Island. As I understand it, there are three planned trajectories, depending on the type of orbit that is planned for the satellite. The equatorial flight path runs north-east from Christmas Island passing between Australia, Indonesia and East Timor. At no time, I am told, will this flight path pass closer than 30 kilometres to a coastline. The second flight path designed to place satellites in orbit goes along the moderate inclination path that runs south-east from Christmas Island.

This launch profile differs in that the ascent is changed to ensure that all of the hardware falls into the ocean. And therein lies the problem. The basic nature of space launches, as I understand it, requires bits of the launch vehicle to fall back to earth. In the case of APSC there are a number of major components that are designed to fall back into the sea, and they are: four strap-on boosters and stage 2 and stage 3 of each vehicle.

This bill is designed to ensure that all of the risks are adequately covered and that risk is minimised. However, one of the factors that needs to be kept in mind is that, in the event of something going wrong, the potential risk to Australian lives and economic interests could be catastrophic. In the event that this hardware falls in the wrong place, a number of significant offshore economic facilities could be in danger. In fact, many of the other submissions that the committee received also made this point.

At this stage I am reasonably satisfied that there are sufficient protections in place and that the space industry is generally an industry with very high safety standards. However, I believe there are two things that need to be done. Firstly, APSC should consult with the operators of all offshore facilities to outline the way that missions will be conducted. Secondly, the government must classify any staffed facility in the vicinity of these flight paths at the highest level under this piece of legislation.

The last concern I raised was whether this would all be of benefit to Australia. I am of the view that the operations outlined by APSC will be of long-term benefit to Australia. This new industry will provide a significant boost to the economic activity of Christmas Island and does provide for some new jobs. The bill also sets out stringent safety requirements that mean that the potential for accidents is quite low.

The major problem confronting this new industry is the depressed state of the market at the moment. If the market turns around over the next two years, prior to the planned first launch in 2004, the only other issue will be the high cost of third-party insurance. I am hopeful that this will not impact on the competitiveness of APSC. However, I believe we should monitor this carefully and be prepared to amend this legislation if it is warranted.