[Peetwo]

A hopeful Hansard -  

While trolling through pages and pages of Senate hearing transcripts sometimes I come across a section of Hansard that truly gives me hope that the shiny bum Senators may actually give a toss about the parlous state of affairs inside of the Australian aviation industry. The following Hansard, from last Friday's Senate air routes inquiry, is one such occasion...   

Rural and Regional Affairs and Transport References Committee
15/02/2019
Operation, regulation and funding of air route service delivery to rural, regional and remote communities

HEATLEY, Ms Jayne, Partner, Norton White Lawyers

McMILLAN, Mr Scott, Managing Director, Alliance Airlines

MARTIN, Mr Ben, Partner, Norton White Lawyers

SCHOFIELD, Mr Lee, Chief Executive Officer, Alliance Airlines


[11:49]

Mr McMillan : May I introduce Ben Martin, partner of Norton White, who are a specialised law firm based in Sydney who solely do aviation.

CHAIR: Thank you. I'm not going to offer for you to do a brief opening statement. We know why you've been called to the table. We're very keen. We are on a timetable. We'll give you the nod on—what's the name of the thing—

Senator PATRICK: CASA v Caper Pty Ltd I guess. Is that what it is?

Mr Martin : That's right. This is a decision that Scott McMillan mentioned. It started as an administrative action by CASA against the charter operator that was flying to, I think, the Tiwi Islands in the Northern Territory. The operator was selling its services to a tour company that was selling a tour. So you could go to Tiwi Islands. You could go in the morning. You got a package, if you like, and then came back in the afternoon. CASA took the view that that operation met the criteria for regular passenger transport operations.

In the Australian regulations we have different classifications of operation. They range from private, aerial work, charter and regular passenger transport. Obviously, the highest standards apply to regular passenger transport operations. But the regulation, which is civil aviation regulation 206, that defines the different classifications of operations is a problematic regulation that has caused difficulty for many years. Both the industry and CASA have recognised that there is this difficulty in defining it. In the Caper decision, and it was a Federal Court appeal from the Administrative Appeals Tribunal, the court—and it was Justice Murphy—determined that that particular operation fell within the definition of regular passenger transport operations. So that meant that many operations that for a long time had been considered by industry, and possibly the regulator, as being a form of charter operation had been determined by the court to be a regular passenger transport operation. So that then meant that many of those flights that could be conducted as a charter flight could no longer be conducted.

It's important to bear in mind that when you look at the requirements they are requirements not just on the operator. If you classify a flight as a regular passenger transport flight the aerodrome has to meet different standards to a charter flight. What it meant was that some flights to remote areas could no longer be conducted, because if they were regular passenger transport operations then the aerodrome didn't meet the requisite standard.

Senator O'SULLIVAN: What was the test they applied there? Was it the frequency, the rhythm of frequency or—

Mr Martin : I don't have the regulation in front of me. But the regulation provides something like a regular passenger transport operation is a flight conducted for the carriage of passengers, or cargo, to fixed schedules between fixed locations for hire and reward. It is a problematic regulation and there needs to be regulatory change essentially to eliminate this classification. The Caper decision was handed down in 2012. The Civil Aviation Regulations, as Mr McMillan said, are in a state of change. They've been in that state of change, I think, since about 1988. This particular issue has been identified for a very long time as an issue that needs to be rectified. In the new regulations that CASA is working on putting into effect, there will be a difference in the change in the classification of operations. No longer will there be private aerial work charter and RPT. RPT and charter will be called air transport, and this issue will be resolved. The difficulty is in where the standards sit, because if you get rid of the two classifications and treat them as one but impose the higher standard then you're potentially going to affect a lot of remote and regional operations.

Senator PATRICK: What's CASA's current position on that?

Mr Martin : To be frank, I'm not entirely certain as to whether the detail has been finalised. The regulatory change is essentially happening. CASA wants to bring the change into effect by 2020, when new parts of new parts to the regulations are coming into effect.

Senator O'SULLIVAN: It won't just take some. Really, that's where the impact is going to be in relation to regional and remote areas. You couldn't compete to say, 'We're going to put a charter together between Brisbane and Sydney for the day to go to the Sydney Opera House and the Darling Harbour and then I'll fly them back.' You just would not be able to go anywhere near it, would you? You wouldn't be able to compete. I can go to the internet and get my $140 return ticket today from Virgin.

Mr McMillan : We might be able to, but this impact has been far more in remote areas, particularly with tour operators, as Mr Martin said. We published at two o'clock on every Tuesday afternoon we're going to take you out to the Tiwi Islands. By publishing that, from Darwin to Tiwi Islands, it's a fixed location so it's regular public transport.

Senator O'SULLIVAN: Let's pretend that you could do that in the city. You probably wouldn't, but, if you did between cities, it wouldn't matter because the travelling public would choose to go there, there or there. It seems like we're determined at a federal level right at this moment in time to do all that we can to inhibit the free movement and passage of people and goods around this country with regulations between security and this crap and half a dozen other things. Somehow we need to have a big, hard look at this, not just a Senate inquiry. This requires—

Mr McMillan : We would regard that as a very good summary of the situation.

Senator PATRICK: That's something we can ask at estimates.

Senator O'SULLIVAN: You think they're going to answer?

Senator PATRICK: No, I'm just interested in where the standard will shift to the highest. That sounds like our CASA—I don't want to pre-empt their answer—but it's better to stop this and deal with it before—

The view that the court took was that it was fixed schedules, fixed frequency, and therefore it fit within the definition. So, the advertising wasn't the point in difference.

Senator PATRICK: And I offer no criticism of the court. The court's clearly simply defining the law as it is as opposed to where we can take it.

Mr Martin : The definition is fraught with difficulty, has been debated several times over the years and really needs to be amended.

Senator O'SULLIVAN: Was this the High Court?

Mr Martin : No, it was a single judge in the Federal Court.

Senator O'SULLIVAN: Obviously, it hasn't been tested. Can it be tested? Is there a judicial appeal to the High Court on this?

Mr Martin : The time period for appealing has passed.

Senator O'SULLIVAN: But, in theory, it could've been contested?

Mr Martin : In theory, if the issue came up again, someone else could test it. But what you would be looking at is a case involving the safety regulator against probably a smaller operator—

Senator O'SULLIVAN: David and Goliath.

Senator PATRICK: But that doesn't stop the parliament from redefining what the circumstances are.

Mr Martin : And that is what CASA is doing. CASA does recognise the issue, and so this next round of regulatory change will—

Senator PATRICK: But they brought the action.

CHAIR: You say CASA want to work with you to change it—is that what you just said?

Mr Martin : I should add—and perhaps I didn't say this at the beginning and I should have—in the rest of the world there is no distinction between charter and regular passenger transport. There's just air transport, so there's commercial and then there's aerial work, which is—

Senator O'SULLIVAN: Is it a higher standard of regulation or is it more relaxed?

Mr Martin : I don't know what the operating standards are in other parts of the world but, essentially, they don't have this distinction in classification which has caused the difficulty with CASA and, obviously—

Senator O'SULLIVAN: But we want the distinction, don't we? Sorry: it depends on what their view of the planet is, but if their view of the planet is, 'We'll make everyone meet the highest standards' then the distinction's the only way we're going get exemptions for operators.

Mr Martin : I think the answer is having a definition and standards that are capable of flexibility so that you can have the same high standard that you know and expect on a flight between Sydney and Melbourne. But then, if you have a single charter flight to a remote location, the regulations have to be sufficiently flexible—that is, not prescriptive—so that you can achieve the safety standard that's acceptable.

Senator O'SULLIVAN: My experience with CASA—and we're about to at lunchtime meet the good folk from Angel Flight—is: it's not always all about safety; it's introduction of regulation and processes that don't yield up a safety outcome. They're motivated—it's a bit like someone stabbing someone with a butter knife. The next thing you and I are buttering our toast with our thumbs along with the rest of the nation because of that. I see that attitude frequently that they're not prepared to have a tolerance level. There are acceptable tolerances—I know that's a hard term to make—even around safety, God forbid, but we just seem to go to the—

Senator PATRICK: You've been hanging around Senator Leyonhjem too long, Senator. Look, that's a really helpful regulation to us.

CHAIR: Can I just go back—sorry, Senator Patrick. Mr Martin, I didn't get an answer. Did you say that CASA were trying to work with the industry to change that?

Mr Martin : They are, so there are new regulations that have not come into effect yet that will remove this distinction between charter and regular passenger transport. There are working groups between CASA and industry that are trying to set the standard which, as I understand it, is based on a more variable set of requirements so that you don't have the Qantas-Virgin standard applying to the four-seat single-engine charter operator flying to somewhere remote. There's a differing standard that applies, depending on the particular operation.

CHAIR: And are you involved in those conversations with CASA, or is it industry?

Mr Martin : No. It's technical people in the industry who understand what the different technical requirements are for the—

CHAIR: Is your company involved in the conversations, Mr McMillan?

Mr Martin : No.

CHAIR: Not at all.

Senator O'SULLIVAN: To get back to the chairman's observation, that's like suing someone then paying for their defence team. They've created the problem that they want to work with industry now to solve. Are we missing something?

Mr Martin : The difficulty was in the legislation. I'm not sure CASA created the legislation. It's a difficulty that has been there for a very long time. It became a practical difficulty when a court interpreted the regulations. Before then—

Senator PATRICK: After CASA brought the application?

Mr Martin : After CASA brought the application. That's right.

Senator PATRICK: I think we need to maybe put a question on notice about the weight of the old documentation set versus the new documentation set, or the new regulation.

Mr McMillan : I can answer that question. We went very close two years ago, because we have a very good arrangement with New Zealand. There is nothing to stop Alliance—nothing—registering all of its aircraft in New Zealand and not being subjected to CASA at all, because of our trans-Tasman arrangement. We haven't done that, but I can tell you that in part 61, which is the pilot training area, there has been this huge blockage. Ours is about as thick as I am indicating, and the Kiwis—

Senator PATRICK: For the Hansard, what was that?

Mr McMillan : It is five inches, and the Kiwis' is probably half a centimetre. We've often asked—I'll get this off my plate and then I'll feel really good—why we just can't pick up the legislation that the New Zealanders have adopted. They adopted it in two years. We're now 24 or 25 years into it. Every country surrounding Australia has adopted the New Zealand regulations.

CHAIR: What is the answer—

Mr McMillan : Well, the impact of that means that if you're a Pacific Islands carrier and you want to get something fixed—

CHAIR: I understand that. But what was CASA's response?

Mr McMillan : They didn't seem to care.

CHAIR: You're not going to shock us. Just get it on the record. What was it?

Mr McMillan : They didn't seem to care.

CHAIR: That has not come as a shock.

Mr McMillan : So, all of the Pacific countries now send all of their aircraft for overhaul and repair to New Zealand.

CHAIR: Has CASA come back and said that we're smarter than the rest of the world and we're far more safety conscious? Is that their reason?

Mr McMillan : No. We are constantly told that this country will not adopt legislation that's been drafted by another country.

CHAIR: It's a shame we don't have that with the wine equalisation tax and apples and pears. We won't go down that path, will we?

Mr McMillan : To Senator O'Sullivan's earlier comment: if I were king for a day I would simply go to Wellington with my photocopier and photocopy all their legislation and come back and wipe New Zealand off it and put Australia on top of it.

CHAIR: Luckily, I'm not king for a day, because I'd start with CASA!

Senator O'SULLIVAN: We've got a problem but it's not just a CASA problem. We've got it with the APVMA with the adoption of herbicides and pesticides. We've got it with medicines. Other developed nations—Germany, Japan, France—have spent millions of dollars approving a particular product and we just duplicate it here. Our stupidity as a parliament sometimes knows no bounds. These things typically fall into some of that.

CHAIR: Ms Heatley, did you wish to add anything?

Ms Heatley : It's probably worth adding that there's been a recent High Court case that is going to have quite a large impact. I think it impacts on cost. That's in the area of safety. Ben will probably summarise the case a lot better than I will. Essentially, the outcome of the case was that the court found that state and territory WHS legislation can also apply to air operators. Prior to that time it was believed that the Civil Aviation Safety Act covered the field in relation to safety matters with aviation, and that's consistent with the global position—the Chicago Convention, and the way that that's supposed to work. Now, we have a position where you can have two sets, or more, applying to the operator, depending on how many states and territories you're going to operate through for a flight. And they can have differing sets of requirements. CASA might say that you need to have a certain safety belt on a helicopter but the local state or territory WHS officer might want a harness. The operators are now going to have to work through that minefield and it's obviously going to have a cost impact.

CHAIR: I'll have to go to the expert here. Did you have a question, Senator O'Sullivan?

Senator O'SULLIVAN: No, but when I reflected on this it's just what we've dealt with in the transport industry, where we've got transport operators having to pull up at the border between the Northern Territory and Queensland to let one beast off three double-deckers with 180 beasts. They've got to put one off because there's a slight variation in the tare weight and a range of things. So we're used to it in the transport industry, and we've actually been going the other way. We've had some success recently the other way.

But you should write to the chair or to me in my capacity as chair of the other part of this committee, and we will take this up. These are things that exercise our minds. We will take this up and take up the fight. We've got estimates coming up on Monday. I don't mean to burden you, but if there's a prospect that we can get a copy of the brief of the judgement that will give impact to this, and that can get to Dr Thompson by Monday—

CHAIR: By close of business today.

Senator O'SULLIVAN: I promise you CASA will be at the table a lot longer than otherwise.

Senator PATRICK: Not just the case but maybe just a short brief that says, 'This is the impact that will flow from that decision as opposed to the decision reasoning.'

CHAIR: Sorry, it has to be by close of business today, or before Monday.

Ms Heatley : That's fine. This is something that we've raised with the lobbying groups, and the industry associations are all over it. So we have material that we can provide to you quickly.

CHAIR: Let me just assist everyone. Hello, CASA down in Canberra. You heard that. The questions are coming. They're listening too.

Senator O'SULLIVAN: The problem with CASA is that it's easy as a regulator or a law enforcement agency or whatever it happens to be to have people who are unhappy with you but—if CASA are listening, and I'm sure they are—it just seems like everybody's unhappy with them. It doesn't matter whether it's our retired pilots flying Spitfires or major airlines. We really need, I think, to turn our minds to this and have a very thorough look at this whole stuff at a level that's beyond a Senate committee or a select committee. But we'll take it up in estimates. If you've watched us in the past, we look forward to CASA's visits at estimates. It's a time when nobody nods off.

Mr Martin : What we'll put in that paper is what we think a possible solution is, and it does involve amendment of the regulation. Looking at your analogy, the difficulty we have here is that it applies to international operators as well. So it's not just a case of interfering with operations between states; it will apply to the foreign airlines that are flying in. Of course, Australia has agreements and obligations in relation to international harmonisation of civil aviation safety that are affected.

Senator O'SULLIVAN: I know state governments have a peak body with respect to, say, the standards that we build roads to. They're based out of Melbourne. They're an instrument funded by all of the states and territories. That's where they send their briefs. They give advice back, very much like in a COAG capacity. Does anybody know whether the states have such a body for aviation, or, as we see with things like transport and debt mediation and all that, do the states do it in isolation?

Senator PATRICK: In Western Australia, they've got a federally owned airport.

Senator O'SULLIVAN: No, an association that is funded by the states. There are quite a number of them in other areas. Do we know whether there's one around aviation regulation?

Mr Martin : My understanding is: no, there isn't. It's principally because, for a very long time, it's been settled that the Commonwealth has control over—

Senator PATRICK: It's the Constitution, isn't it?

Mr Martin : Well, the Constitution came before flight, but certainly there are settled cases from the High Court from very early on in civil aviation days that made it clear that the Commonwealth controlled civil aviation.

Senator O'SULLIVAN: But now the High Court have taken a different view—is that what we're seeing?

Senator PATRICK: I presume that if there were a regulation or a Commonwealth law in place that stated what needed to happen then section 109 would kick in. That's what I would have thought

Mr Martin : That's what the High Court decision was all about—whether there was a conflict between the laws. The solution is to make the law a little clearer.

CHAIR: Sorry, I'm going to show some discipline here. It is now 12.15, so thank you Ms Heatley and we look forward to that information. I thank you Mr McMillan, Mr Schofield, Ms Heatley and Mr Martin for your time. Thank you very much. We know where to find you should we need to follow anything up. I look forward to talking with CASA on Monday.

Proceedings suspended from 12:15 to 13:03

---

This was the lead up to the above witness evidence:

Senator PATRICK: No—I just thought that, if counsel were not giving advice to the witnesses, they could give us a brief summary of the Caper decision, because you said it had unintended consequences. So, rather than wasting your money today, you could perhaps be helpful—if you wouldn't mind, Chair.

CHAIR: I'll tell you what I'll do. I'm mindful of timing. We have a meeting at 12.15, so, rather than doing half—

Senator PATRICK: No—I'm talking about a 10-minute summary of what counsel—

CHAIR: What time do we have now?

Senator PATRICK: We've got another—

Senator O'SULLIVAN: I won't object to this, as long as it is relevant to the exercise of our minds on the terms of reference and where we'd like to be.

Mr McMillan : I think it is very relevant, Senator—

CHAIR: All right. Let's make it easy. Before we go to that, I just want to throw a quick one at you, Mr McMillan and Mr Schofield. We have had a lot of conversation around the alleged pilot shortage, to which we commissioned some work to be done through the Parliamentary Library to inform the committee of what's going on. The information came back saying, 'No, there's no pilot shortage,' but with subsequent conversations with the airline industry, the evidence is absolutely at the other end.

Senator O'SULLIVAN: The result was that the take-up of traditional advertising for vacancies for pilots hadn't changed They didn't pick up any trend in that: 'Last year there were 10 ads and this year there are 20.' There were 10 ads last year and there were 10 ads this year. I think what challenged us was whether that was the only pathway for recruitment.

Mr McMillan : The truth is always somewhere in the middle, Senator.

CHAIR: That's why I'm going to give you the opportunity to tell us.

Mr McMillan : We categorise it not as a pilot shortage but as a pilot training blockage. That might sound like a euphemism, but, at the end of the day, we've got to roll back five years. We've had aviation regulatory reform that's been going on for 23 years and it's not finished. Some of its been okay; some of it's been appalling. In the pilot training area, it's been an absolute disaster. There's a whole heap fewer pilot training centres in Australia than there used to be. Many of them are foreign owned and they're only training pilots for their own operations elsewhere and the number of training establishments has shrunk considerably. Australia's population is growing. You could only think that the same percentage of people want to be pilots. I think what's happening is that the sausage machine has shrunk so small that it's very hard to get a training place. We would say that, from Alliance's perspective, as many people are out there wanting to be pilots. As a company, we are always training ahead. We train eight pilots at a time. We bring them in. We seem to be a good place to work. There are all the different places around Australia to go and live. There is a whole range of different training techniques and things have come in that are far smarter than they were 10 years ago. Some of the regulatory requirements that we have to meet in this country are absurd. That's a separate argument for a separate place. There were no safety issues; there wasn't a number of accidents or anything. But the unintended consequence of what CASA have done with some of their regulations has caused this issue, particularly in Australia.

CHAIR: We are a very long way back.

Senator PATRICK: I presume, because we've also heard evidence in other inquiries, that there used to be a whole bunch of training entities in GA, and GA has also been killed off by those regulations?

Mr McMillan : Correct.

CHAIR: I just wanted to get your view on the record. Thanks very much.

MTF...P2