Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Transport) Share this | Link to this | Hansard source

Thank you, Mr Acting Deputy President Murray. You would have noted that after the consideration of the last bill I departed not knowing that the Civil Aviation Legislation Amendment (Mutual Recognition with New Zealand) Bill 2005 [2006] was to come on next, because it is not even on the red today. I arrived back at my office to find that we are now to deal with a piece of legislation that the government had not thought a priority when the red was constructed this morning.

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

Why would you be surprised?

Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Transport) Share this | Link to this | Hansard source

I will take that interjection from the senator even though he is not sitting in his place. I would not be surprised that the government does not know what it is doing from time to time. I would not be surprised that the Manager of Government Business has got things so wrong that we are dealing with a bill that was not on the red. The difficulty is, apparently, that there is nothing else that the government wishes to do. So we are dealing with the Civil Aviation Legislation Amendment (Mutual Recognition with New Zealand) Bill 2005 [2006], which is a bill that the Labor Party does not support and will not be giving its support to in this chamber.

We oppose the introduction of a new aviation regulatory regime in the absence of an assessment of the likely safety and economic outcomes. This is a foolhardy measure that may have serious consequences for safety in our skies and may cost Australian jobs. Labor’s principal objection to this bill is that we believe it has the potential to undermine aviation safety standards in this country.

The bill would permit the holder of an air operator’s certificate issued in New Zealand for the operation of an aircraft of more than 30 seats or 15,000 kilograms to conduct operations in Australia, without having to obtain an Australian issued air operating certificate; and vice versa, for that matter. It is a matter of great concern to Labor that the Howard government has pursued the mutual recognition of Australian and New Zealand aviation safety certification without first establishing that aviation safety regulations in our countries are in fact equivalent. It is because the government has not done that work that Labor is so firmly opposed to this bill.

The Howard government first attempted to legislate for mutual recognition of air operating certificates through the Civil Aviation Legislation Amendment (Mutual Recognition with New Zealand and Other Matters) Bill 2003, which was introduced into the parliament in June 2003. At the time, the government claimed that mutual recognition was consistent with the open skies air services agreement between Australia and New Zealand, signed in August 2002. The provisions in the current bill comprise the first phase of such mutual recognition.

Labor referred the original legislation to the Senate Rural and Regional Affairs and Transport Legislation Committee for inquiry and report. What the committee established in the course of its inquiry spoke volumes about the Howard government’s mishandling of the move to mutual recognition. First, the committee established that Australian and New Zealand regulators have entirely contradictory views on the impact of mutual recognition. The Civil Aviation Safety Authority of New Zealand gave evidence that mutual recognition would lead to the harmonisation of safety standards; the Department of Transport and Regional Services firmly repudiated that view. This left the committee questioning, not unreasonably, the inconsistency between Australia and New Zealand on this critical issue.

Second, the committee established that Australian and New Zealand aviation safety standards are not directly comparable. A number of submissions to the committee highlighted this issue, including the Australian and International Pilots Association submission, which said:

New Zealand’s aviation safety system may well comply with the standards required by ICAO and still offer a lesser standard of aviation safety than Australia’s system.

Mr Guy Maclean made a submissions that stated:

... compliance with ICAO benchmark standards does not comparatively rank the Australian and New Zealand aviation systems against each other. Rather, such audit findings only indicate that both systems meet or exceed a minimum required ICAO standard.

One of the key differences between the Australian and New Zealand aviation safety regimes considered by the committee related to flight attendant to passenger ratios being one to 36 passengers—that is, actual passengers—in Australia and one to 50 seats—that is, the seats available in the aircraft—in New Zealand. A number of submissions made to the committee expressed concern, with respect to safety standards and security, about New Zealand’s lower ratios.

We all know the important role flight attendants have played in past incidents involving passengers who present a risk to other passengers or, in some cases, pose a risk to the flight itself. None of us in the parliament are strangers to the inside of an aircraft. Like other air travellers, we have reason to be grateful for the role that flight attendants play in keeping our skies safe. That the Howard government should be prepared to so blithely accept a lower flight attendant ratio on aircraft operating in Australia is surprising.

A related matter considered by the committee was the impact of the competitive advantage to be enjoyed by airlines operating with a New Zealand issued air operating certificate. According to the Flight Attendants Association of Australia International Division this competitive advantage favouring New Zealand registered aircraft would create pressure to reduce operational standards applying to aircraft registered in Australia. This is the sort of harmonisation forecast by the New Zealand regulator—a harmonisation that could see Australian standards reduced.

Anecdotally, some airline operators expect that upon the implementation of this legislation there will be a review of Australian standards that exceed New Zealand standards, particularly cabin crew standards, for the purpose of harmonisation. That is an industry expectation; it is not a statement from CASA. But I will not be surprised if that occurs. We shall see in the course of time. Of course, in the event that a harmonisation of standards does not occur, the bill provides the airlines with, in the words of the FAAA, ‘an economic incentive to register aircraft in New Zealand’. Either way, the bill has the potential to deliver Australia lower safety standards.

The wider issue of whether the bill would permit airlines to operate domestically in Australia on a regular basis while remaining on a New Zealand issued AOC was also considered by the committee. The committee found that there may be some hurdles preventing an Australian airline transferring its whole operation to New Zealand while continuing to operate domestically in this country. However, no such prohibition would be imposed on the subsidiary of an Australian airline based across the Tasman.

In its submission to the inquiry, Virgin Blue suggested that carriers may take an opportunistic approach that will result in ‘a race towards the cheapest regulatory option’. That is not what a government that cares about aviation safety should be encouraging or, in terms of the bill before us, actively facilitating. Of course, it is not just about safety; it is also about jobs. This bill would facilitate the movement of some jobs across the Tasman.

Let me now return to the committee inquiry into the first incarnation of this bill. Not surprisingly, government members recommended the passage of the bill, albeit with two important caveats. The first was that a comparative safety assessment should be undertaken after the introduction of the new rules, and the second was that mutual recognition should not be extended without further legislative amendment—that is, the government should abandon its plan to extend mutual recognition by regulation. Labor senators delivered a dissenting report that recommended that the bill be opposed in the absence of a comparative assessment of safety systems, a full regulatory analysis of the two systems and a detailed analysis of the costs and benefits of the proposed regime. The dissenting report supported the minority report’s opposition to an extension of mutual recognition by regulation.

The government could not win the support of this chamber when it operated as a genuine house of review, and the 2003 bill lapsed with the last parliament. The Civil Aviation Legislation Amendment (Mutual Recognition with New Zealand) Bill 2005 was introduced into the Senate in June last year. It substantially replicates its precursor bill, with the exception that it does not contain a provision for the extension of mutual recognition, beyond AOCs, by way of regulation. This is a welcome concession by the government, but it does not ameliorate the substantive damage likely to be wrought overall.

This bill was also referred to the Senate Rural and Regional Affairs and Transport Legislation Committee for inquiry and report. In the report, tabled on 5 September 2005, the government dominated committee again recommended passage of the bill, notwithstanding ongoing concerns about the movement of Australian aviation operations to New Zealand and the government’s continuing failure to undertake a comparative safety assessment. Labor senators again opposed the passage of the bill on these same grounds. We said:

It defies logic to undertake this basic research after the change has been made.

Labor’s key objection to this bill is our concern that it will serve to diminish Australia’s rigorous aviation safety standards. Despite the passage of three years and two Senate inquiries, the government has failed to acknowledge concerns about the safety implications of the proposed mutual recognition regime. The government has ignored the opposition of pilots and flight attendants, and today we again urge the government to think again and do the work that must be done before we head down the proposed path.

One would have thought that by now the government could have at least initiated a comparative assessment of the safety systems in a public inquiry. A full regulatory analysis of the two systems should have been able to have been completed by now. No such information has been conveyed to the opposition. A detailed analysis of the costs and benefits of the proposed regime should have been done by now and ought to be available. As I said, this bill was introduced in June last year. We are now in May, almost 12 months later, but the government has no intention of commissioning such work because it has no concern about the impact of this bill on aviation safety, on the industry, on jobs in the industry or on anything other than a compliance with what it has agreed to do with New Zealand. So much for the national interest.

Labor’s key objection to this bill is our concern that it will serve to diminish Australia’s rigorous aviation safety standards. We say again that the government has failed to acknowledge that concern and has ignored other concerns. I do not understand why the government has not already done the work which I believe is necessary in relation to the passage of this bill. We believe that this legislation will have a dramatic effect on aviation operations in this country.

The government has taken a decision in relation to other air routes and international operations to decline the carrier Singapore Airlines access to the Pacific route, and as a result may well have damaged Australia’s relationship with Singapore. I wonder what the impact would be if one of the carriers operating in Australia now, Virgin Blue, were to establish operations in New Zealand as an international carrier. They already have Pacific Blue as one of their operators in New Zealand. It flies certain routes in the near Pacific region. If they were to seek to base such an operation in New Zealand, would the government give consideration to such a New Zealand based carrier having access to the Pacific route if it was a subsidiary of the Virgin Blue operation in Australia? What if it was also flying on certain domestic routes in this country? What would the government do in those circumstances? These are questions that I have asked myself in relation to the possibilities for aviation operation in this country.

Particularly given the current state of the majority owner of Virgin Blue, Patrick, and the takeover discussions which now seem to be coming to a conclusion—and I understand that Friday is the final day for shareholders in Patrick to accept the offer of Toll and to transfer their shares to Toll for the arrangements currently on the table—one wonders what may happen with that carrier. I would not want to make any reflection on Virgin Blue in terms of its operation here in Australia. It is a very professional operation. I regularly fly in their aircraft from Launceston and from other parts of the country as their service from time to time provides the best option. I merely highlight the circumstances of Virgin Blue, their arrangements with Pacific Blue, the Pacific route arrangements and what might occur there, and the possibility that airlines based in New Zealand and connected with Australian based airlines will take advantage of these arrangements and of what the government has suggested they might do—give a Virgin Blue owned operation access to the Pacific route when they have refused access by the Singapore Airlines operation. The Pacific route is Australia to Los Angeles from one of the eastern Australian ports. Sydney was the port of preference rather than the port of Adelaide—it was certainly not Perth.

I wonder what would occur were the government confronted with that option after the passage of this legislation and what impact that would have on the nature of aviation operations in this country. How many jobs that the government expects to remain here would actually migrate to New Zealand if it cost less for a carrier to operate in New Zealand? Who knows what airlines will seek to operate in this country in the future? More importantly, who knows what airlines will seek to register in New Zealand and then seek under these arrangements to be able to operate in Australia?

If we pass this legislation, what we are saying is that the awarding of an air operation certificate to an airline in New Zealand will be accepted as effectively the awarding of the same certificate by the Civil Aviation Safety Authority in Australia and that the airline will be able to fly here. That potentially will mean that certain aircraft based in New Zealand will be able to operate in Australia without having gone through any of the regulatory checks that we require. I do not know that there is anything in this legislation that requires New Zealand to harmonise its operations with Australia, despite what the New Zealand Civil Aviation Safety Authority had to say. That will be a matter for their parliament and for their executive government.

It also does not, as I understand it, oblige the New Zealand government to not change the existing arrangement. I suspect that if there were a change and we wanted to modify the arrangements with New Zealand then that would require us to change this legislation, although there may be some regulation under this legislation that would allow us to do so without changing the legislation. Those matters are also matters of concern which this parliament should give consideration to when it is considering passing this legislation. We are very concerned about this legislation. We believe that this is legislation which should not pass this parliament. If it does, we are very concerned about the impact on Australia’s aviation safety regime for the future.

Lyn Allison (Victoria, Australian Democrats) Share this | Link to this | Hansard source

I rise to speak on the Civil Aviation Legislation Amendment (Mutual Recognition with New Zealand) Bill 2005 [2006]. This is an important piece of legislation that deals with the safety of the aviation industry, the safety of those working in the industry and the safety of the travelling public in general. Because of Australia’s geographic size and its distance from many countries, Australians are heavily dependent on having a safe and efficient aviation industry. The safety of air travel has become even more of a focus in the wake of the tragic events of 11 September 2001.

This is the second time the government has attempted to bring in mutual recognition provisions for the aviation industry and the second time that the sector has raised concerns about what is being proposed. It is also the second time that this government has decided to ignore those concerns. In broad terms, mutual recognition will mean that aviation safety certificates issued to eligible aviation organisations in one country will be recognised for use in the other. On the face of it, this seems like a sensible decision to reduce administrative costs but in reality what this legislation will do is make airlines compete on safety costs, and that means that we will see a race to the bottom in terms of safety standards, in our view. It will be a race in which the travelling public and those working on planes will be the losers as their lives are put at higher risk due to cost-cutting measures.

The government has argued that the New Zealand and Australian safety legislation is equivalent and therefore there is no risk in allowing mutual recognition. The government has suggested that because both countries have consistently met the International Civil Aviation Organisation safety standards there is no difference in safety standards. But, as the Australian Federation of Air Pilots points out:

ICAO provides a minimum position—in effect, the lowest common safety benchmark on a global basis. Aviation safety in Australia traditionally has been about establishing and maintaining margins of safety over and above the minimum standards.

What the government is implicitly suggesting is that Australia no longer has to maintain these higher standards, that the lower standards, the minimum standards, are in fact good enough.

As was pointed out during the inquiry into this bill, Australia and New Zealand have different standards in some very important areas. One that has been highlighted is the very different requirements in the area of the required ratio of cabin crew to passengers, and this is a very important element of aircraft safety. Research undertaken by Professor Galea at the Fire Safety Research Faculty at Greenwich University’s School of Numerical Modelling has shown a clear correlation between higher crew ratios and more effective—that is, safer—aircraft evacuations. As was pointed out by the Flight Attendants Association of Australia, airline operators go to great lengths to compare Australia’s one to 36 crew to passenger ratio with that of America, Europe and New Zealand, which is one to 50 crew to seat ratio, to suggest that Australia’s ratio is too high.

Apart from the fact that they are actually comparing fundamentally different ratios, it is clear that airline management feel that a ratio of one to 36 crew to passengers is not necessary. In evidence presented to the inquiry, the head of safety systems from Virgin Blue airlines indicated that as far as the airline management was concerned, four flight attendants on all of its aircraft was all that was necessary for safety. He went on to say:

The presence of extra flight attendants carried to meet the required ratio of one to 36 is not considered from a safety perspective.

Once airlines are operating in Australia that are able to carry fewer staff, how long will it be before other airlines with attitudes like that start pushing for fewer staff on their flights? When a New Zealand company can operate an identical aircraft to an Australian company but have one fewer cabin crew member, why would the Australian company not push to be able to do the same? The acting manager of corporate relations at CASA told the committee looking into the bill:

We have received word from the airlines that at some time they will be looking to come to CASA with a safety case to demonstrate whether changes—

in relation to cabin crew to passenger ratios—

are required. CASA has responded by saying that, while at this stage we have not made any moves to change the 1:36 ratio, we will look at safety cases if they are presented to us.

How long after this legislation comes in will it be before the airlines are bringing forward their calls for changes, and how long will the government resist the argument that will inevitably be put by Australian companies that New Zealand companies have a commercial advantage so Australian standards should be lowered to allow us to compete on an equal playing field? Virgin Blue acknowledges that the difference in cabin crew ratios between the two countries:

... does result, potentially, in a less than level playing field in both countries, with operators in Australia exposed to a significant cost penalty.

Cabin to crew ratios are not the only difference between the two countries that has the potential to impact on safety. The Flight Attendants Association noted that New Zealand does not have cabin safety specialists within the standards division of their equivalent of CASA—CAANZ—or specialist cabin safety auditors within the CAANZ compliance division. Surely this diminishes the New Zealand regulator’s ability to provide an equivalent level of oversight to that currently undertaken in Australia by CASA.

In the short term we will have a two-tiered safety system. Those people who can afford the higher prices that will be associated with the airlines with the higher safety standards will get the high standards, and those who can only afford the cheaper tickets will have to accept the higher level of risk. In the words of the flight attendants:

What we could have ... is an institutionalised system with one level of safety for lower cost foreign operators operating within our country ... Secondly, you would have a higher level of safety if you chose to fly with a main line Australian carrier operating to Australian standards.

But in the long term, all Australians will have to accept a high level of risk within the Australian aviation industry because of the downward pressure on standards in order to save costs.

The explanatory memorandum estimates the value of mutual recognition to be $1,000 for every average Australian family. Given the choice, I think that these families would prefer to maintain the higher levels of safety. It is not only safety that will be compromised under the new system, however. This legislation simplifies the ability of airline operators to transfer aircraft operations between Australia and New Zealand and this may well encourage operators to shift business to whichever country provides greater cost-saving measures, with a potential job loss from the Australian airline industry.

The aviation market is highly competitive. There have been dramatic changes in the nature of the industry since September 11, with a range of companies going bankrupt, collapsing—such as occurred with Ansett—or merging. That means that airlines now operate in a very tough competitive environment not only domestically but also internationally. Of course, airlines have experienced additional costs as a result of new regulations governing airline security since September 11. It is not surprising then that airlines will look for ways to reduce costs and save money. The flight attendants pointed out that this legislation may act to encourage operators to shift businesses to the country that has more viable cost-saving measures. They said:

The airlines now have started employing overseas. Qantas has a base in New Zealand of international flight attendants who operate under vastly lower conditions than their Australian counterparts. They have set up subsidiary airlines in New Zealand, such as Jetconnect, and there is evidence that jobs that would normally have gone to young Australians are now moving overseas and particularly to New Zealand.

The Australian Federation of Air Pilots also pointed out that Virgin Blue established its own company within New Zealand called Pacific Blue. Pacific Blue engages its pilots through a contractor at a substantially lower rate of pay than Virgin Blue. So this bill will not only risk the flying public’s safety but also risk jobs. The report by the committee itself recognises this. The report says:

... it is inevitable that the proposed legislation will encourage Australian operators to either reduce standards of employment or employment opportunities for cabin crew and pilots or encourage operators to move offshore. The Committee believes that this may not be in the best interests of the industry or the travelling public, particularly if it results in the reduction of standards of safety Australian passengers enjoy.

So I think that it is not enough for the government to say, as they did in the report into the earlier version of this bill, that after 12 months of operation of the new system an assessment of the safety standards of airlines operating in Australia should be conducted. The Democrats say that the government has a duty of care to prove that the new system will not reduce safety levels before they introduce change, not wait and see how it all goes. If a privately owned company said that they were going to introduce a new safety system without investigating impacts on safety prior to introducing it, the Australian community would be rightly outraged. Yet that is exactly what the government is proposing to do with this legislation. The explanatory memorandum for the bill states:

CASA has advised that an analysis of the safety systems has been conducted and both sides are confident that aviation can inter-operate safely in the form being considered.

It goes on to say:

There has been no detailed analysis of accidents or incidents, however as noted above, the two countries are considered to have comparable records, particularly in relation to larger capacity aircraft.

Unfortunately, details of CASA’s analysis have not been made publicly available so it is not possible for anyone to examine their processes or conclusions to determine whether this is a reliable assessment of the situation. All we know about that examination is that it did not look at accidents or incidents. I would ask: how can any examination of the safety impact of mutual recognition not look at airline accidents and incidents? How can the public possibly be confident that CASA’s assessment is reliable when it is not open to evaluation or critique? And, of course, there has been no examination of the possible job losses that might result from the introduction of the legislation despite calls for this in the dissenting report when the earlier version of the bill was considered by the committee in 2004.

We have now had two inquiries that have heard evidence from the aviation industry professionals that there are serious concerns about the impact of this legislation. But the government is powering ahead regardless without undertaking any research into the likely outcomes of introducing the new regime. The government botched the National Airspace System back in 2004. That was another example where the government ignored industry warnings about the inadequacies of the system from the start and it is a great pity that the government has not learned from that mistake. The Democrats will not be supporting the bill but we will be moving an amendment that delays the bill coming into effect until the government has conducted a comparative assessment of the airline safety systems operating in Australia and in New Zealand.

Debate interrupted.