Craig Kelly (Hughes, Liberal Party) Share this | Hansard source

I rise to speak on the Aviation Transport Security Amendment (Air Cargo) Bill 2011. The majority of legislation proposed by the government is ill-conceived and misguided, as we have seen, from GroceryWatch to pink batts to border protection. Just about everything they touch turns to a complete and utter shambles. As we witnessed last night with the budget, this mob would struggle to run a chook raffle. However, the coalition supports this bill, which demonstrates that on the very rare occasion when the government introduce a bill that will not damage our economic prosperity the coalition is prepared to support it.

Airfreight is essential to the world's economy. Every year, over 26 million tonnes of goods travel by airfreight around the world. In value, 30 per cent of all international trade in goods is carried by airfreight. No other means of transportation is better equipped to meet the economic realities of the future, where global supply chains and just-in-time logistics require companies to receive and ship greater quantities of goods more frequently, quickly and reliably over long distances. Australia, as an island continent with no land borders and geographically isolated from the major markets of the world, relies more heavily on efficient and competitive air services than any other country. Although airfreight represents less than one per cent of our nation's trade by volume, it makes up over 20 per cent by dollar value.

An efficient and competitive airfreight sector allows our nation to turn the tyranny of distance and our geographic isolation to our competitive advantage. Annually in Australia over 680,000 tonnes of airfreight are shipped, worth over $100 billion. An efficient and competitive airfreight sector also contributes significantly to the economic viability of passenger airlines, which are so vital to our tourism sector. The holds of passenger aircraft typically contain significant amounts of air cargo. Therefore, well-organised and economically efficient airfreight services are indispensable to the success of Australia's economy. However, there are risks to these efficient and competitive airfreight services. These risks are also a threat to our economic prosperity. These risks come from the threat of international terrorism, from anticompetitive practices and, of course, the delusional nonsense of a tax on carbon dioxide. In recent years we have seen this danger to the efficient and competitive airfreight industry of anticompetitive practices such as price fixing and price discrimination. Only late last year the European Union fined 11 airlines, including Qantas, a total of €1 billion for forming a global cartel for fixing airfreight prices. This illegal price-fixing cartel conspired to fix fuel surcharges to ensure that, worldwide, airfreight carriers imposed a flat surcharge per kilo on all shipments. The cartel members also extended their illegal activities by conspiring to introduce a security surcharge and refusing to pay commissions.

In Europe, the Air France group received the biggest fine of €340 million. British Airways was fined €104 million, Singapore Airlines was fined €75 million, Cathay Pacific was fined €57 million and Qantas was fined €8.8 million. In addition, in the US further fines totalling US$1.5 billion were levied against airlines that acknowledged fixing fuel surcharges. In the US, Qantas agreed to pay a US$26.5 million settlement to resolve their liability under a US class action, and they still face a further $200 million class action in Australia. Hopefully, with these penalties, the threat of cartel conduct in the airfreight industry has diminished.

Another threat to our airfreight industry is the threat of anticompetitive price discrimination. Put simply, price discrimination occurs when the same product is sold to different buyers in competition with each other at prices where the difference is not reflected in costs. The dangers of price discrimination to the airfreight industry were evidenced about 10 years ago in three cases in Europe, known as the Spanish, Belgian and Portuguese airport cases. These cases were brought under article 82(c) of the EC Treaty, which makes it unlawful to apply:

… dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage.

While Europe and the USA also have these protections against price discrimination, Australia, under our competition laws, does not. So, until this loophole is closed in our competition laws, the risk of anticompetitive price discrimination remains a threat to the Australian airfreight industry.

The other major threat to an efficient and competitive airfreight industry is the threat of international terrorism. This threat of terrorism in Australia remains real. Only last December a group of Islamic extremists were found guilty by a jury of conspiring to plan a terrorist attack on the Holsworthy Army base in New South Wales, which is part of the electorate that I represent, the seat of Hughes. The jury heard that, armed with high-powered military weapons, this group planned to storm the lightly guarded base, shooting anyone in their sights until they were gunned down themselves or captured. The ringleader was seen on CCTV arriving at the Holsworthy railway station—a station which I often go to to give handouts to the many thousands of commuters who go through it every morning—walking along the perimeter fence of the Army base and approaching the gatehouse, which was manned only by unarmed private security guards. This attack was foiled only by the brilliant investigative work of our police, which potentially saved hundreds of lives.

The threat of international terrorism to the efficient airfreight sector was also highlighted last October, when two bombs containing powerful explosives were sent from Yemen through FedEx and UPS. They were bound for the US but were intercepted by security officials in the UK and Dubai. Qatar Airways confirmed that the bombs intercepted in Dubai had actually been transported on two of its passenger jets, the first from Yemen to Doha and then from Dubai on a second plane. The first leg would have seen these bombs on an Airbus A320 and on the second leg they would have been on an Airbus A320 or a Boeing 777. The devices seized in the UK also went via Dubai and are believed to have passed through Cologne airport in Germany before being intercepted in the UK. Both parcels were addressed to synagogues in Chicago, although it is believed that the bombs were meant to go off on the aircraft rather than at their destinations. Again, this plot was foiled by the work of our intelligence agencies.

The air parcel bombs addressed to synagogues in Chicago have highlighted a major vulnerability in the global aviation sector: our airfreight, where the checks are far less stringent than in passenger travel, even though the larger percentage of freight is carried on world passenger jets. In my previous occupation I was the export management for our company and I would often have to take goods down to Sydney Airport. I was often concerned and surprised by how easy it was to get goods on board a plane, although I was also concerned that additional security requirements could delay the procedure and hold up international trade. From these security threats we know that it is human nature that each new security incident promotes a desire to introduce yet more security measures. But good security is all about comprehensive threat assessment and balanced risk management, not the elimination of every conceivable risk. We must also remember that terrorists measure their success by how much we overreact to their provocations. Therefore, a reasoned and coordinated response to this threat is essential.

Security comes at a cost already measured in tens of billions of dollars to the world economy for aviation alone, and any new security procedures can be justified only when it is demonstrated that the benefits outweigh the additional burdens they impose on a society. Any new air cargo security programs need to be driven by a supply chain approach so that everyone from the manufacturer of the goods to the airport is responsible for the security of shipments. That is why the coalition is happy to support this bill. The Accredited Air Cargo Agent Scheme extends the existing Regulated Air Cargo Agent Scheme to cover small operators with less complex business operations, such as couriers and contract drivers.

The coalition believes this bill gets the balance right to strengthen our air security, and we give our support to this bill. However, we must monitor the practical effects of the bill to ensure that small business is not unduly restricted by additional regulations which unnecessarily burden the efficient operation of our air freight industry, which is so vital to our ongoing economic prosperity.

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