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More Support for the Aviation Industry

Deputy Prime Minister
Minister for Transport and Regional Services
Leader of the National Party

13th May 2003

The Federal Government will upgrade the quarantine facilities at Melbourne Airport and extend its support for regional and general aviation as a result of today's Budget initiatives, the Deputy Prime Minister and Minister for Transport and Regional Services, John Anderson, said today.

"The Government will also spend $2.1 million in 2003-04 to continue our airspace reform programme, which will make air travel cheaper and safer in the long term," Mr Anderson said.

Improving the quarantine facilities at Melbourne Airport

"The Government will spend $7.7 million in 2003-04 to improve the quarantine facilities at Melbourne Airport.

"Melbourne Airport handles around 20 percent of Australia's international passengers, and the funding will alleviate the chronic congestion that is currently experienced by international passengers.

"The funding will be used to expand the area in the international arrivals hall that is used for processing passengers and their luggage. It will also cover the cost of constructing additional operational and office space for AQIS and Customs officers, equipment and dog teams.

"The funding is in addition to the $600 million package we announced in the 2001-02 Budget to strengthen Australia's quarantine borders against exotic pests and diseases such as foot and mouth.

Extension of the Location Specific Pricing subsidy

"The Government will spend $7.0 million in 2003-04 to continue the location specific pricing subsidy, which was due to expire at the end of 2002-03. The subsidy enables Airservices Australia to provide affordable air traffic control services at 14 regional and general aviation airports.

"These airports handle 1.9 million passengers a year and are an essential part of the transport system in regional Australia. They support thousands of jobs in the training, maintenance and charter sectors of the industry.

"The Government will continue to subsidise tower services at Albury, Coffs Harbour, Launceston, Mackay, Maroochydore, Rockhampton, Tamworth, Archerfield, Bankstown, Camden, Jandakot, Moorabin, Parafield and Essendon.

"The tower charges at these airports will remain $7.42 per tonne (including GST) even though the actual cost of running the towers is much higher. For example, Airservices would have to charge the users of Mackay Airport an extra $261,000 a year without the subsidy.

"In addition, Airservices will set its Hobart Airport tower charges at the same figure, as well as its tower charges for general aviation at Cairns, Coolangatta and Canberra Airport," Mr Anderson said.

The subsidy is funded by a component of the duty on aviation fuel, which will remain at the same level as a result of the extension. The ACCC component of the duty on avtur will also remain at the same level and will be reallocated to help fund the subsidy. The remainder of the aviation fuel duty is used to fund the Civil Aviation Safety Authority (see below).

Over the coming months, the Government will review the subsidy to check that it is the best and most effective way of providing affordable tower services at these airports. The review will involve extensive consultation with regional airlines, the flying training industry and airport operators.

Regional airline enroute charge subsidy

"The Government will save small regional airlines $6.0 million in 2003-04 by continuing to subsidise them for the enroute air traffic control charges imposed by Airservices Australia," Mr Anderson said.

"I announced the enroute subsidy during the 2001 Federal election campaign. All airlines operating regular public transport services using aircraft with a maximum take-off weight of 15 tonnes or less are eligible for the subsidy, as well as aeromedical operators such as the Royal Flying Doctor Service. About 40 small airlines currently receive the subsidy.

Advancing airspace reform

"The Budget allocates $2.1 million to reform Australia's airspace management, including the implementation of the National Airspace System (NAS).

"The Government's decision to adopt the NAS as our preferred model for airspace reform ends ten years of debate about the future structure of Australian airspace. The NAS brings in new and simpler procedures that are consistent with international best practice for pilots operating through Australian airspace. It will make air travel safer, cheaper and more efficient.

"The implementation of the NAS is now well under way. The funding will enable us to complete its implementation to provide pilots with the training products they need to get the most out of the new system.

Sydney Noise Amelioration Programme

"The Government will spend an additional $17 million over the next four years ($9.9 million in 2003-04) to finish the Sydney Airport Noise Amelioration Programme.

"The programme has insulated more than 4,000 residences and 90 public buildings in areas of Sydney that are subject to high levels of aircraft noise exposure. It has been highly successful - over 80 percent of residents have rated their noise insulation as very good or excellent.

"The funding will enable us to complete the insulation of the remaining residences and public buildings that are eligible for assistance under the programme -- a high school, an aged care centre, three churches and about 10 residences. The Sydney Noise Amelioration Programme Manager will contact the owners of the eligible properties in the immediate future to make arrangements for the insulation work.

"The total cost of the programme is now estimated to be around $420 million. It is recovered through the Sydney Airport Noise Levy, which the airlines have chosen to pass on to passengers as a $3.40 charge on most flights through Sydney Airport.

"The levy has now raised $276 million, and I expect it will now need to continue until April 2007 to recover the full cost of the programme. The Government's decision to insulate the remaining buildings will add less than six months to the duration of the levy.

Maintaining CASA's ability to protect aviation safety

"The Government is budgeted to spend $108.3 million in 2003-04 to maintain Australia's high level of aviation safety through the Civil Aviation Safety Authority (CASA). The figure includes a new measure to maintain CASA's level of funding despite the decline in aviation fuel duty collections.

"CASA is substantially funded by duties on aviation gasoline and aviation turbine fuel. In 2002-03, aviation fuel duty receipts are likely to be around 11 percent lower than forecast, due to the conclusion of Ansett operations, the reduced demand for air travel and the introduction of larger and more fuel-efficient aircraft. Aviation fuel duty collections are not expected to recover in 2003-04.

"The Government is determined to maintain Australia's exceptional air safety record by ensuring that CASA receives the funding it needs. Accordingly, CASA's budget in 2003-04 includes a $6.5 million supplement that will be funded by a slight increase in the duties on the two aviation fuels.

"The Government will set the new duty rates closer to the start of the 2003-04 financial year, when we have the May fuel consumption figures. We need to have as much information as possible before we set the rates, because we do not want to impose any more duty on the aviation industry than is absolutely necessary to protect air safety," Mr Anderson said.

Media contact: Paul Chamberlin 02 6277 7680 / 0419 233989