1999

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

HOUSE OF REPRESENTATIVES

AIRPORTS AMENDMENT BILL 1999

EXPLANATORY MEMORANDUM

(Circulated by authority of the Minister for Transport and
Regional Services, the Hon. John Anderson MP)

ISBN:  0642 389403

table of contents
table of contents	I
outline	1
financial impact statement	1
Regulatory Impact Statement	1
notes on clauses	8

Airports AMENDMENT BILL 1999
outline
This Bill proposes to make several amendments to the Airports Act 1996.  These amendments have 3 purposes:

•	to extend the time available to some airport lessees to have access undertakings to airport services approved by the Australian Competition and Consumer Commission (ACCC);
•	to capture activities of a non-structural nature that intrude into protected airspace and may impair the ability to pilot an aircraft; and
•	to make minor technical changes to the Airports Act 1996 to overcome some practical difficulties associated with day to day administration of airport leases.

Further detail on the proposed amendments can be found in the notes on clauses.
financial impact statement
The Airports Amendment Bill 1999 will have no impact on the Budget.
Regulatory Impact Statement
ISSUE IDENTIFICATION

The principal problems with the Airports Act 1996 that are proposed to be addressed by this Bill are twofold:
•	insufficient time available to negotiate undertakings with the Australian Consumer and Competition Commission (ACCC) regarding access to services offered for use at airports; and
•	some activities have the potential to cause intrusions into protected airspace, thus posing a threat to the safety, efficiency or regularity of aviation operations.

These problems are addressed separately below.

1. Insufficient time available to negotiate access

Under the current arrangements under the Airports Act 1996, airport lessees have 12 months to get access undertakings to airport services approved by the ACCC.  The ACCC has advised that this process normally takes at least 4 months.

At the end of the 12-month period, if approval has not been granted, services are formally “declared” under the Airports Act 1996 to be subject to Part IIIA of the Trade Practices Act 1974.  When an airport lessee has been “declared” and a service user is unable to agree with the airport lessee on access to the service, the ACCC must be notified that an “access dispute” exists.  The ACCC arbitrates the dispute in accordance with matters specified under Part IIIA and makes a determination in regard to it.  The kinds of determinations that can be made are also restricted by Part IIIA. 

The approval of an access undertaking with the ACCC enables airport lessees to provide services and resolve disputes on terms that are acceptable to service users, the ACCC and the service provider.  No such flexibility exists if the service provider is “declared”.  

The 12-month time-period was originally imposed to assist a speedy development of access arrangements, so that those seeking access to leased airport services would have a convenient and tailored process by which to do so.

Phase 1 sales commenced on 1 July 1997, when leases were signed for Brisbane, Melbourne and Perth Airports.  The Phase 1 lessees, Brisbane Airport Corporation Limited, Australian Pacific Airports (Melbourne) Pty Ltd and Westralia Airports Corporation Limited attempted to negotiate access arrangements, however they found that there was insufficient time to complete negotiations by the 12 month cut-off.

The 12 month period was not long enough because of a combination of factors, including the significant workload on the airport lessees to meet the requirements of the Airports Act 1996 to both produce Master Plans and Environmental Strategies and negotiate with the ACCC within the designated period.  Phase 1 lessees were unable to satisfy the ACCC within the designated period that they had adequately addressed all the issues required in an access undertaking.  Phase 1 lessees advise that they believe they would have had their draft undertakings approved if they had more time. 

The Phase 2 sales commenced on 28 May 1998.  The access arrangements for such sales are likely to be as complicated as they were for Phase 1 sales. 

2. Some activities are causing intrusions into protected airspace that pose a threat to the safety, efficiency or regularity of aviation operations 

Currently, Part 12 of the Airports Act 1996 and the Airports (Protection of Airspace) Regulations (the Regulations), address activities (such as constructing or altering buildings, poles, towers etc) that intrude into prescribed airspace which must not be carried out without an approval from the Secretary of the Department of Transport and Regional Services.  This is because the building of such structures and the occurrence of temporary structures (such as cranes) pose a threat to the safety, efficiency or regularity of aviation operations around the airport.  Currently, fines of up to $27,500 (250 penalty units) are imposed on those who build structures in such airspace without the relevant authority.  To obtain such authority, an applicant must satisfy the requirements of the Regulations, by applying, through the airport lessee of the airport which is affected by the proposed activity, to the Department of Transport and Regional Services, which liaises with various air safety authorities.  The process normally takes no more than 35 days. 

However, the current arrangements do not address activities of a non-structural nature, which may intrude into prescribed airspace causing interference to aviation.  Examples of such activities include industrial plants discharging efflux, which may endanger or restrict aviation operations within the protected airspace due to the resulting air turbulence or reduced visibility.  In addition, any direct lighting (such as sport stadium lights or laser beams) or reflected lighting (such as that created by solar farms) can also affect the safety, efficiency or regularity of aircraft operations by causing glare or confusion for aircraft.
DESIRED OBJECTIVE(S)

The objectives of the current proposal are to:

•	expedite fair and efficient access arrangements for users of airport facilities and services;

•	extend the definition of “controlled activity” to ensure adequate protection of airspace.

IDENTIFICATION OF OPTIONS

The options available to address to problems are:

(a)	Access

1.	to do nothing — the status quo; 

2.	provide more time to negotiate access undertaking with the ACCC — for example 6 months, 12 months, 18 months; 

(b)	Airspace

1.	to require activities that may cause non structural interference to aircraft to be authorised by the Department of Transport and Regional Services;

2.	to ban all activities resulting in non-structural intrusions into prescribed airspace; and

3.	no change.
IMPACT ANALYSIS

The principal parties affected by the proposed amendments are:

•	airport lessees and the users of the services provided by them at airports;
•	persons whose activities intrude into protected airspace, the pilots, crews and passengers of aircraft and persons who occupy land within protected airspace.

(a)	Access

1.	Option 1 - to do nothing

If the Commonwealth does not make these amendments:

•	airport lessees and users of services at airports will have to use a more expensive, less flexible and time-consuming process to resolve disputes over the fair and efficient provision of airport services.

•	it is unlikely that access undertakings would be agreed within the current specified period.

2.	Option 2 - to provide more time for airport lessees to negotiate access undertaking with the ACCC

Most airport lessees have indicated that an extra 12 months would be ideal in order to allow them to agree their access undertakings with the ACCC.  This time-period was preferred to a lesser time-period, given the burden of complying with the requirements of the Airports Act to provide the Master Plans and Environmental Strategies referred to above.  The 12-month extension is superior to a further extension (such as 18 months) because it still facilitates a relatively quick resolution of access arrangements so that those seeking access will have a process to do so within a reasonable amount of time.  In practice, the current time-period has proved unworkable.

However, under this option, those seeking access may have to wait another 12 months before having a process by which to do so.  This may impose costs upon those businesses, as they may not be able to compete effectively without such access.  Of course, those seeking access may use the provisions set out in Part IIIA of the Trade Practices Act 1974 at any time they choose.  The ACCC has advised that the time and costs involved in doing so are likely to be far greater than the time and costs incurred in waiting for an access undertaking to be approved by the ACCC.

(b)	Airspace

1.	Option 1 - to require activities that cause non-structural interference into prescribed airspace to be authorised

Under this option, those activities that could cause non-structural intrusion into prescribed airspace would require departmental authority to proceed.

This option may result in the proponents of some controlled activities being required to either amend their design specifications for a proposed plant or facility; or to vary the time when the activity is carried out, so as not to affect aviation operations at the airport.  For example, the proponent of an power co-generation plant whose discharge would result in air turbulence dangerous to aircraft, might be required to reduce the exit velocity of the discharge; or alternatively might be required to organise activities so that any dangerous discharges were emitted outside the normal times of aviation operations.

While such requirements could have some impact on the costs of the power co-generation plant, state government planning requirements and the environment impact assessment processes already require such development proposals to address regulatory and community concerns (including aviation interests) during the feasibility stage of such proposals.  This option reinforces and clarifies aviation requirements as part of such processes.

This option provides the best opportunity to preserve the safety, efficiency and regularity of existing and future aviation operations.

2.	Option 2 - to ban all activities that could cause non-structural intrusion into prescribed airspace

Under this option no activities could be authorised that could allow non-structural intrusion into prescribed airspace.  This would be draconian in its impact on proposals for future industrial development in the vicinity of airports.  While this option would provide a higher level of airspace protection, it would be delivered at a prohibitive cost to those conducting activities around prescribed airspace.

3.	Option 3 - No change

Allowing proponents to undertake activities resulting in non-structural intrusions into protected airspace would result in a considerable cost to the safety, efficiency and regularity of aviation operations.  Such intrusions would result in CASA declaring danger zones around those sections of airspace, thereby rendering that section of the airspace unavailable to aviation operations.  As the number of such controlled activities increased, more of the airspace would become unavailable to aviation operations and the economic viability of the airport would be threatened.
CONSULTATION

Regarding the timing for access negotiations, the ACCC and the Department held a workshop with the airport lessees on 7 August 1998.  In light of the experience of the Phase 1 lessees, it was clear that 12 months was not sufficient to both comply with the planning requirements of the Airports Act 1996, and negotiate access arrangements with the ACCC.  

Following the workshop, the Department consulted with Phase 2 airport lessees and the ACCC to determine whether an additional 12 months would be sufficient time to achieve this.  The Department received unanimous support for the proposal. 

Regarding the non-structural intrusions into protected airspace, the Department has consulted with Federal airports on the proposed amendments and there is widespread support amongst them for the amendments.  The Civil Aviation Safety Authority and Airservices Australia also support the proposed amendments.  
CONCLUSION & RECOMMENDED OPTION  

The same problems experienced by Phase 1 lessees, relating to the creation and approval of access undertakings, now face the Phase 2 lessees.  If the proposed change is not made before 28 May 1999 it is unlikely, for similar reasons, that any of the Phase 2 lessees will have access undertakings approved by the ACCC.  

The preferred option is to make the proposed amendment to allow 24 months to negotiate access undertaking with the ACCC.  The amendment should be made before 28 May 1999 as the first Phase 2 airport lease was entered into on 28 May 1998.

The issue of protecting prescribed airspace from activities of a non-structural nature is a long-standing one.  All parties agree that amendments to the Act are appropriate.  This proposal addresses the problem of non-structural activities impeding aviation, and allows sufficient safety for aviation activities.
IMPLEMENTATION & REVIEW

Section 192 of the Airports Act 1996 provides a one-off opportunity for airport lessees and the users of the services they offer to have access to an efficient and less costly system for the resolution of disagreements over the fair and competitive provision of those services.  If an access undertaking is not agreed, the more complicated process set out in Part IIIA of the Trade Practices Act 1974 automatically applies.  The opportunity for Phase 1 airport lessees to use this provision has passed.  Without an extension of time Phase 2 lessees will also miss the opportunity.  

The proposal to amend the Airports Act 1996 to deal with activities of a non-structural nature that intrude into protected airspace will enable to Commonwealth to monitor and regularly review activities and technologies that have the capacity to pose a significant risk to the safety of air travel in Australia.

notes on clauses

Clause 1 – Short Title
The Bill, when enacted, will be known as the Airports Amendment Act 1999.
Clause 2 – Commencement
The Act will commence on the day it receives Royal Assent. 
Clause 3 – Schedule(s)
This clause provides that the Acts specified in the Schedule(s) to the Bill are amended as set out in the Schedule(s).

Schedule 1 – Amendment of the Airports Act 1996

Schedule 1 of the Bill provides for amendments of the Airports Act 1996 (the Act).
Item 1 – Section 4
This item amends the simplified outline to the Act in section 4.  It is consequential to the amendments in items 17 and 18 below.
Item 2 – Section 5 (definition of airport lease)  
Item 1 of the amendments to the Airports Act 1996 repeals the definition of “airport lease” in section 5 of the Act and substitutes a new definition.

The new definition of ‘airport lease’ in section 5 overcomes the practical difficulties with variations to the boundaries of leased airports through acquisitions and disposal of land, by removing the requirement that the site which is the subject of the lease must include a runway.

The new definition of airport lease also removes the distinction between airport leases for joint-user airports and other airports.  In practice, however, the only area leased and subject to the Act at joint-user airports will remain the civil part of the airport.  The runways and defence part of the airport will remain under the control and jurisdiction of the Department of Defence.
Item 3 – Section 5 (definition of interest)  
Item 3 omits from the current definition of interest the words “does not include a sublease” and inserts new words that clarify the meaning of an “interest” in land. 

Section 23 of the Act only allows certain companies to acquire airport leases or interests in airport leases.  The intention behind that section was to ensure that the ownership of the lease and responsibility for the management and development of the airport, could not be assigned to a party that was not subject to the ownership controls in the Act. 

There are a number of interests in land which do not involve the exclusive use or possession of it and it was never intended that the Commonwealth would maintain detailed control over those types of property transactions at leased airports.  However, concerns have been expressed in some quarters that the existing provision could be interpreted to include all interests in land.

In order to put the matter beyond doubt, the amendment excludes subleases, licenses, restrictive covenants, easements and other incorporeal hereditaments from the definition.

Subleases and licenses are regulated under sections 34 to 35D of the Act and under the Airports Regulations.  The Commonwealth manages other interests in airport leases through its administration of those leases.
Items 4, 5, 6, 7, 8, 13 and 20 – At the end of sections 68, 114, 131A, 140, 151, 169 and subsection 194(1)
These items make minor technical amendments to a number of “scoping” sections (ss 68, 114, 131A, 140, 151, 169 and 194) in the Act that apply various Parts or Divisions of the Act to airports that meet their conditions.  The amendments will clarify that those Parts and Divisions of the Act apply within the boundaries of the airport site for that airport.  The individual airport site descriptions are set out in the Airports Regulations.
Item 9 – At the end of section 160
This item amends the simplified outline to Part 9 of the Act and is consequential to the amendment in item 12 below.
Item 10 and 11 – Subsections 161(1) and (2)
These items are consequential to the amendment in item 2 above. 
Item 12 - After section 163 
Item 12 inserts a new section s163A, dealing with reducing leased areas, into the Act.

Section 163 provides that an airport lessee company may surrender an airport lease to Commonwealth either conditionally or unconditionally.  However, situations in which only part of the land that is the subject of an airport lease needs to be surrendered, are not specifically dealt with.

Airport lessees are already requesting amendments to airport sites to enable minor land acquisitions and disposals at airport boundaries.  While the current provisions of the Act probably do not prevent partial surrender of airport lessees, the new section 163A will provide greater certainty by making it clear that airport lessees may seek to vary airport boundaries without surrendering the whole lease.
Item 14 – Section 182 (before the note)
Part 12 of the Act establishes a regime whereby “controlled activities” that affect “prescribed airspace” around airports require permission from the Department of Transport and Regional Services under the Airports (Protection of Airspace) Regulations.  The regime is designed to ensure that developments around airports are consistent with current and future air transport operations. 

Item 14 expands the definition of “controlled activity” in section 182 to include activities of a non-structural nature which cause an intrusion into prescribed airspace through either the intensity of glare from sources of artificial or reflected light, air turbulence or reduced visibility from discharges into the atmosphere.

Examples of such activities include industrial plants discharging efflux, which may endanger or restrict aviation operations within the protected airspace due to the resulting air turbulence or reduced visibility - see new paragraphs (f), (g) and (h).  Other examples include:
•	any direct lighting (such as sport stadium lights or laser beams – see new paragraph (d)); or 
•	reflected lighting (such as that created by solar power farms – see new paragraph (e)), 
which affect the safety, efficiency or regularity of aircraft operations by causing glare or impeding the clear perception of aeronautical navigation lights on the ground.

This clause also enables the Commonwealth to make regulations specifying standards associated with such activities.  The Commonwealth will be developing these standards after consulting CASA and other interested parties.  Until the Commonwealth makes regulations specifying these standards, the activities listed in the new paragraphs (d) to (h) will not be controlled under the Part 12 regime.
Item 15 – At the end of section 182 (after the note)
Item 15 ensures that regulations for the new controlled activities may only be made if they are pursuant to the objectives of airspace protection, ie to protect airspace in the interests of safety, efficiency or regularity of existing or future air transport operations.

It also clarifies that the new controlled activities do not extend to:
•	ordinary domestic or household activities, which have virtually no impact on the safety, efficiency or regularity of air transport around airports, nor
•	activities arising out of the operation of aircraft, which are regulated under other Commonwealth legislation.

Item 16 – Paragraph 187(1)(a)
Item 16 is consequential to the amendment of section 182.

No amendment has been made to section 187 as a result of the amendment in item 14.  If required, the Minister will be able to apply for an injunction under Part 15 of the Act to prevent any of the new controlled activities from proceeding.
Item 17 – Section 191
This amendment to the simplified outline of Part 13 in section 191 is consequential to the amendment of subsection 192(5) set out in Item 18.
Item 18 – Subsection 192(5) (definition of designated period)
Item 18 extends the period in which airport lessees can have access undertakings approved by the Australian Consumer and Competition Commission from 12 months from the date on which they acquire an airport lease to 24 months from that date.

Section 192 of the Act puts in place provisions that result in automatic ‘declaration’ of ‘airport services’ under Part IIIA of the Trade Practices Act 1974 12 months after airports are leased to private sector companies, unless the airport lessee has an access undertaking approved by the ACCC.   

Melbourne, Brisbane and Perth airports (Phase 1 lessees) did not have access undertakings approved by the ACCC within the designated period.  As a result, services for these airports were effectively ‘declared’ by way of Ministerial determination on 23 July 1998. 

The Government and the ACCC consider that it is appropriate to give the remaining core-regulated airports lessees a longer period of time in which to develop and finalise their access undertakings.
Item 19 – Application - section 192 of the Airports Act 1996
Item 19 makes it clear that the amendments to section 192 apply only to those
remaining core-regulated airport lessees that participated in Phase 2 of the airport leasing process.