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Wednesday, 28 November 1973
Page: 4022


Mr NIXON (Gippsland) - The 2 Bills under debate now are the Airlines Agreements Bill 1973 and the Air Navigation (Charges) Bill 1973. The first point that needs to be made comes out of the first paragraph of the second reading speech of the Minister for Civil Aviation (Mr Charles Jones) on the Airlines Agreements Bill 1973, which states:

When the previous Government introduced the Airlines Agreements Bill 1972 towards the end of the previous Parliament, we who were then in Opposition expressed the view that it was inappropriate to enter into a further important agreement between the Government and Ansett Transport Industries Ltd and the Australian National Airlines Commission at that particular time.

The important point to register is that this Bill is expressed to be supplementary to the 1952-1972 agreements and is to be read and construed as forming part of those agreements. As the Minister for Civil Aviation has signed the 1973 Agreement himself on behalf of the Australian Government, it is quite clear that he has given political endorsement to the 2-airline policy contained in that Agreement and the earlier agreements developed by the previous Government. So on that point I congratulate the Government, because it means that despite the criticism that was heaped on the 2<-airline policy by members of the present Government when they were in Opposition they have come to realise that the policy has been the basis of a viable and stable domestic air transport system. So in that respect this legislation is a significant landmark in 2-airline history.

The main product of the Airlines Agreements Bill is to bring into effect the expressed wish of the Government as stated by the Treasurer (Mr Crean) in his Budget Speech that a cost recovery program should be introduced that will recover 80 per cent of costs within 5 years. We had, when in Government, initiated a policy of recovery of the cost of facilities properly attributable to civil air trans port, subject to taking into account the level of air fares, the rate of growth of the industry and the requirement of airlines to provide a reasonable return on capital. To ensure the reasonable progression to full recovery consistent with the stability of the industry the Commonwealth contracted under the Airlines Agreements with Trans-Australia Airlines and Ansett Transport Industries Ltd not to increase charges in any year by more than 10 per cent or to increase fuel tax by more than the corresponding amount of increase in motor fuel tax. We had as a Government not reached any decision on what costs were properly attributable. For example, should interest and depreciation be recovered? What part of the costs were properly attributable to defence and national development? Should fuel tax be regarded as part of a recovery, and if so, what weight should be given to the fact that international operators do not pay fuel tax yet make the greatest demands for expensive facilities?

To resolve these questions the previous Minister appointed a working group to study the costs and revenue of the Department of Civil Aviation. The second report of this working group has been made available to the Parliament. It is quite apparent from page 27 of the report that it was: an impossible task of properly apportioning costs between the various class of users in any meaningful way and therefore not possible to determine whether any particular class of user was paying in air navigation charges a higher or lower proportion of costs attributable to it than other class of users.

The working group did not quite throw up its hands in horror, but almost. It suggested that the Department of Civil Aviation should undertake further studies with a view to determining whether new methods could be developed whereby meaningful allocation of costs between users could be achieved.

In the meantime the Government had appointed the now famous, or should I say infamous, task force to review the continuing expenditure policy of the previous Government. The report of this task force, known as the Coombs report, was tabled with the Budget papers. Items 38 and 39 dealing with air service subsidies for development and rural services are relevant. In essence the report suggested that these subsidies should be discontinued immediately or phased out over a period of, say, 3 years, The subsidies are paid in respect of services to the most isolated areas in Australia where other means of transport are non-existent or inadequate. In 1972-73 the subsidy for developmental services was $1.87m and for essential rural services only $130,000. The amount saved by phasing out these subsidies is insignificant, but the abandonment of the subsidy to the communications and development of rural and outback areas could be disastrous. The coffin Coombs report apparently, and without any real study of the implications, had no difficulty in making judgments. This miserable proposition typifies the Government's mean handed approach to country people and its lack of genuine decentralisation policies, and is bringing a severe rebuke from one side of Australia to the other.

Then in June 1973 the domestic airlines applied for an increase in airline tariffs to take into account escalation of costs. The airlines were advised that the increases would not be approved unless the airlines entered into an agreement relating to the attainment of the Government's cost recovery policy and an agreement relating to industrial negotiations. The Government - indeed the Minister himself -subsequently, under union pressure, withdrew its requirements in relation to industrial negotiations. This was an occasion when the Minister for Civil Aviation was really caught with egg on his face.


Mr Charles Jones - That is not true - not union pressure, a Cabinet decision.


Mr NIXON - The Minister can explain later. The airlines agreed in accordance with the wishes of the Government, to negotiate for a revision of the 1952-1972 Airlines Agreements relating to air navigation charges. What is proposed, in brief, is that the Air Navigation Charges Bill will increase air navigation charges by 15 per cent per annum with effect from 1 December 1973. As such an increase would be inconsistent with clause 8 of the Airlines Agreement 1961, it is necessary for Parliament to amend the relevant provisions of clause 8 in order to increase the charges by 15 per cent without being in breach of the Agreement. Because this is a Budget Bill and because the Opposition has said that the Government ought to get its Budget Bills through the Parliament, we will not oppose the measure although we do not like it.

As it has been duly executed by all the parties to the previous agreements, it must be assumed that there are no valid grounds why TAA or Ansett should object to the legislation. Indeed an examination of the agreement dis closes that it establishes a number of principles which are of considerable importance to the airlines. Under clauses 6 and 7 the Commonwealth undertakes to increase fares and freight charges to offset losses resulting from the imposition of the higher charges. The Commonwealth recognises that the tax on aviation fuel is deemed to be received by way of recovery of the cost of facilities properly attributable to civil air transportation. It should be pointed out here and highlighted that the international operators do not pay fuel tax and therefore on this basis are not making contributions to recovery comparable with the domestic airlines. The Commonwealth undertakes to increase the rate of navigation charges to international operators by the same percentages as that applied in respect of TAA and Ansett

Clause 12 is also of great importance since the Commonwealth now undertakes to consult annually with TAA and Ansett on departmental activities, programs, practices and costs with a view to minimising the amount to be recovered by way of air navigation charges. Whilst this provision is not yet operative, since it requires the passing of this Bill, and whilst it may be argued that the terms of clause 12 require only annual consultation, I find it difficult to understand how the Minister would approve an ad hoc expenditure df $1.35m for aerodromes and facilities in Western Australia to enable TAA to operate DC9 aircraft because there has been no mention of it in the civil aviation works program. This expenditure seems quite incongruous against the background of the activities of the Coombs task force because Western Australia is well served by a fleet of modern, fast F28s.

The F28s are able to maximise the use of runways at airports. But the decision to allow TAA to use DC9s will call for a further expenditure of $ 10m before a viable network of DC9 operations could be mounted. The proposition runs counter to the position taken by the previous Government on the extension of operations by TAA in the West.

The former Minister for Civil Aviation, Senator Cotton, in a letter to both airlines dated 6 October 1972 said:

In this regard, the Government's decision on the Perth-Port Hedland-Darwin route is on the basis that there is no commitment on the Commonwealth to upgrade airport facilities at any proposed intermediate stopping place to cater for any proposed aircraft type.

In other words, if TAA wanted to enter Western Australia it should not expect the taxpayers to pay for costly alterations to meet its convenience when alternative excellent aircraft that can make use of the present facilities are available. The proposal runs completely counter to what the Treasurer said, and I quote: 'We see no reason why the general taxpayer should subsidise air services in this way.' He also said: 'We have decided that all future proposals for investment in civil aviation projects should be subject to economic evaluation.'

I ask the Minister these questions: Were there consultations in the spirit of clause 12? Can the Minister answer that question?







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