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Thursday, 28 October 1993
Page: 2697


Senator FAULKNER (Manager of Government Business in the Senate) (10.23 a.m.) —I move:

  That this bill be now read a second time.

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

  Leave granted.

  The speech read as follows

  This bill amends the Aviation Fuel Revenues (Special Appropriation) Act 1988. Currently the Act provides for appropriation to the Civil Aviation Authority (CAA) of duty on aviation gasoline.

The purpose of the amendment is to enable duty on aviation turbine fuel (aviation kerosene) to also be appropriated to the CAA as part of the aviation safety regulation cost recovery regime.

Government Decision

In the 1992 Budget it was announced that the cost of aviation safety standard setting and surveillance would be jointly met by the Government and the aviation industry.

The Government will meet 50 per cent of the costs up to a limit of $22.8 million (in real terms).

Cost recovery of the industry's portion of these costs is being phased in over two years from 1993/94.

Cost recovery arrangements for 1993/94 involve a slight increase in duty on both aviation gasoline and aviation turbine fuel.

The required increase, which applies from 1 September 1993 is 0.264 cents per litre.

Because fuel used by Australian airlines on international services is exempt from duty, the CAA will introduce a fee for safety regulation in relation to these international operations.

In implementing these cost recovery arrangements for 1993/94, the Government has carefully noted the views expressed by the aviation industry.

Post 1993/94 Arrangements

The CAA is developing a long term funding strategy for aviation safety regulation to apply from 1994/95.

The development of the strategy will involve an examination of the economic ,and safety implications and impacts of possible mixes of charges and taxes on the aviation industry. The process will also involve extensive consultation with the aviation industry.

Financial Impact

The industry contribution to aviation safety standard setting and surveillance for 1993/94 will reduce Government outlays by $4.5 million.

Users of aviation gasoline recently benefited from a three cent per litre reduction in duty and the CAA is currently exploring the prospect for a further reduction following the introduction of new airspace management arrangements in November this year.

Given the very low rate of duty, therefore, the 1993/94 arrangements are not expected to result in any significant adverse financial impact on any particular aviation industry sector.

The post 1993/94 funding arrangements will take into account the effects on the industry of any new funding strategies.

I commend the bill to the Senate and present the Explanatory Memorandum for the Bill.

  Debate (on motion by Senator Reid) adjourned.