House of Representatives

Second Reading Speech

Senator ELLISON (Special Minister of State)

I move:

That these bills be now read a second time.

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

Leave granted.

The speeches read as follows-

AVIATION FUEL REVENUES (SPECIAL APPROPRIATION) AMENDMENT BILL 1999

This bill amends the Aviation Fuel Revenues (Special Appropriation) Act 1988 to give effect to the Treasurer's announcement in his budget speech that there will be a small increase in excise and customs duty on aviation gasoline (avgas) and aviation kerosene (commonly referred to as aviation turbine fuel or avtur) from midnight 11 May 1999.

The additional duty raised will address a shortfall in industry's contribution to aviation safety programs and will help maintain air traffic control services at regional and general aviation airports.

The bill is one of a package of three bills which give effect to the Government's decision. The other bills are the Excise Tariff Amendment (Aviation Fuel Revenues) Bill 1999 and the Customs Tariff Amendment (Aviation Fuel Revenues) Bill 1999.

Customs and excise duties on avgas and avtur are levied under the Customs Tariff Act 1995 and the Excise Tariff Act 1921. The money raised by these duties is then appropriated under the Aviation Fuel Revenues (Special Appropriation) Act 1988.

The Excise and Customs Tariff Amendment Bills increase the rates of duty on avgas and avtur to 2.71 cents per litre. The duty on aviation gasoline will still be 15.8 cents per litre lower than it was when the Government took office in 1996.

The increase comprises an increase of 0.467 cents per litre for the duty on avgas and 0.391 cents per litre for the duty on avtur, which brings both rates of duty to 2.2 cents per litre for appropriation to the Civil Aviation Safety Authority (CASA).

The new rate also includes a temporary surcharge on avgas and avtur of 0.51 cents per litre to offset the Airservices (Location Specific Pricing) Subsidy. The surcharge is limited to two years and will be reviewed before the two year period ends.

CASA has produced a negative operating result for the past two years. The increase in duty will address this by raising an additional $8.6 million per annum.

The rates of duty on avtur and avgas were identical until November 1995 when avgas reverted to the July 1995 rate due to a technicality. The rates will now be brought back in line.

The Government has provided a subsidy to Airservices Australia to enable it to maintain reasonably priced tower services at regional and general aviation airports. The current subsidy of $13 million, comprising $11 million for 1998-99 and $2 million 1999-2000, will be boosted by an additional $9 million for 1999-00 and $7 million for 2000-01. This will bring the total subsidy to $29 million.

The subsidy will be administered by the Department of Transport and Regional Services to ensure that the payments to Airservices are sensibly managed and to achieve the Government's objectives.

The bill expands the definition of `eligible aviation fuel' to include aviation kerosene from 12 May 1999 in addition to aviation gasoline. This will enable avtur to be treated the same way as avgas under the principal act.

The bill also repeals requirements for mandatory consultation with the boards of CASA and Airservices in relation to setting the `statutory rate' and on setting the respective shares of revenue between CASA and Airservices. Determining these matters is ultimately a Government responsibility and legislated consultation is not appropriate. However, I will continue to consult with the boards of CASA and Airservices as appropriate.

To enable the new arrangements to take effect from 12 May 1999, the bill provides for an adjustment to be to the amounts payable to CASA in relation to overpayments collected during the interim period, between 12 May and the commencement date, once the bill receives the Royal Assent.

The increase will make an important contribution to ensuring Australia's skies remain safe and the industry can afford to pay for control towers at regional and general aviation airports.

CUSTOMS TARIFF AMENDMENT (AVIATION FUEL REVENUES) BILL 1999.

The Customs Tariff Amendment (Aviation Fuel Revenues) Bill 1999, which is now before the chamber, contains amendments to the Customs Tariff Act 1995. It implements increases in customs duty on aviation kerosene (avtur) and aviation gasoline (avgas) that were announced by the Treasurer in his Budget speech. These increases are operative from the twelfth of May 1999.

The new rate of duty on both avtur and avgas will be $0.0271 per litre. A portion of the increase will be directed to the Civil Aviation Safety Authority (CASA) to fund its role of fostering air safety regulation in Australia. The remainder of the increase will defray the government's subsidisation of Airservices Australia operations at a number of control towers at regional and general aviation airports.

An increase in the customs duty of 0.391 cents per litre on avtur and 0.467 cents per litre for avgas will be assigned to CASA. It is estimated that the increases on Aviation fuels attributable to CASA will raise $8.6 million per annum in combined excise and customs duties.

An additional increase of 0.51 cents per litre on both avtur and avgas will off-set the government's subsidisation of Airservices. It is expected to raise $11.1 million per annum in combined excise and customs duties.

I commend the bill.

EXCISE TARIFF AMENDMENT (AVIATION FUEL REVENUES) BILL 1999

The Excise Tariff Amendment (Aviation Fuel Revenues) Bill 1999, which is now before the Senate, contains amendments to the Excise Tariff Act 1921. It implements increases in excise duty on aviation kerosene (avtur) and aviation gasoline (avgas) that were announced by the Treasurer in his Budget speech. These increases are operative from the twelfth of May 1999.

The new rate of duty on both avtur and avgas will be $0.0271 per litre. A portion of the increase will be directed to the Civil Aviation Safety Authority (CASA) to fund its role of fostering air safety regulation in Australia. The remainder of the increase will defray the government's subsidisation of Airservices Australia operations at a number of control towers at regional and general aviation airports.

An increase in the excise duty of 0.391 cents per litre on avtur and 0.467 cents per litre for avgas will be assigned to CASA. It is estimated that the increases on aviation fuels attributable to CASA will raise $8.6 million per annum in combined excise and customs duties.

An additional increase of 0.51 cents per litre on both avtur and avgas will off-set the government's subsidisation of Airservices. It is expected to raise $11.1 million per annum in combined excise and customs duties.

I commend the bill to the Senate.

Debate (on motion by Senator Quirke) adjourned.