Details of the Financial Framework (Supplementary Powers) Amendment

(Infrastructure, Transport, Regional Development, Communications and the Arts Measures No. 1) Regulations 2023

 

Section 1 - Name

 

This section provides that the title of the Regulations is the Financial Framework (Supplementary Powers) Amendment (Infrastructure, Transport, Regional Development, Communications and the Arts Measures No. 1) Regulations 2023.

 

Section 2 - Commencement

 

This section provides that the Regulations commence on the day after registration on the Federal Register of Legislation.

 

Section 3 - Authority

 

This section provides that the Regulations are made under the Financial Framework (Supplementary Powers) Act 1997.

 

Section 4 - Schedules

 

This section provides that the Financial Framework (Supplementary Powers) Regulations 1997 are amended as set out in the Schedule to the Regulations.

 

Schedule 1 - Amendments

 

Financial Framework (Supplementary Powers) Regulations 1997

 

Item 1 - In the appropriate position in Part 3 of Schedule 1AB (table)

 

This item adds one new table item to Part 3 of Schedule 1AB to establish legislative authority for government spending on a certain activity to be administered by the Department of Infrastructure, Transport, Regional Development, Communications and the Arts
(the department).

 

New table item 65 establishes legislative authority for the Government to provide a grant to Hobart International Airport Pty Limited (HIAPL) to contribute towards meeting the costs of an upgrade of the runway and associated airfield works at Hobart International Airport.

 

The grant to HIAPL will deliver on the Government's election commitment to upgrade and strengthen Hobart International Airport's runway and airfield facilities. The runway upgrade is expected to enable the airport to service long-distance freight and wide-body international passenger flights to:

• expand international freight capability to non-stop flights to Asia;
• enable long-haul wide-body international passenger flights from Asia;
• increase the aviation capability of the Australian Antarctic Gateway; and
• cater for future Australian Defence air operations from Hobart.

 

HIAPL is a private company that operates the Hobart International Airport under a head lease with the Australian Government. The Airport is located on Commonwealth land and is regulated under the Airports Act 1996. A 99 year lease to operate the Hobart International Airport was granted to HIAPL on 11 June 1998. Since October 2019, the shareholders of HIAPL consist of a consortium comprising Australian-based asset manager, the Queensland Investment Corporation, the Netherlands based airport operators the Royal Schiphol Group and Australian superannuation fund Spirit Super.

 

HIAPL previously received a grant from the Australian Government of $38 million to contribute towards meeting the costs of a runway extension and associated capital works at the Hobart International Airport.

 

Additional funding of $60 million over two years from 2023-24 was provided as part of the 2022-23 October Budget to support activities which will enable Hobart International Airport to service long-distance freight and wide-body international passenger flights, to attract more tourists and increase freight efficiency, generating greater economic activity in Tasmania.

 

Eligible expenditure includes purchase of materials, external labour hire, plant and equipment hire, construction activities, external consulting costs directly related to the delivery of the construction and other expenditure agreed to by the department and specifically identified in the grant agreement.

 

HIAPL is required to provide a project business case, including provision of project and organisation information, with supporting documentation, to allow the department to undertake a value for money assessment of the project. The value for money assessment will assess:

*         objectives and outcomes;

*         project specifications, viability and sustainability; and

*         organisation capacity and capability.

 

HIAPL is required to contribute any funding required to complete the project above the agreed grant amount. The grant to HIAPL will be provided through a closed non-competitive grants process. The department considers that this is an appropriate type of selection process considering the nature of the grant is specifically dependent on HIAPL being able to upgrade and strengthen the runway and associated airfield facilities at Hobart International Airport.

 

The grant will be administered in accordance with the Commonwealth resource management framework, including the Public Governance, Performance and Accountability Act 2013, the Public Governance, Performance and Accountability Rule 2014, the Commonwealth Grants Rules and Guidelines 2017 and departmental grant requirements and processes.

 

The grant will be administered by the department and information about the grant will be made available on the GrantConnect website (www.grants.gov.au).

 

The Minister for Infrastructure, Transport, Regional Development and Local Government will approve the grant opportunity guidelines and grant funding. A delegate of the Secretary of the department under the Financial Framework (Supplementary Powers) Act 1997 will enter into an arrangement with HIAPL before any payments will be made. The delegate (the SES officer with responsibility for the program) will have the relevant expertise in, and understanding of, program administration in the aviation context, and be able to perform relevant functions in accordance with the Commonwealth resource management framework.

 

The department will only make payments after the grant recipient has demonstrated it has met agreed milestones and satisfactory Progress Reports have been approved by the relevant department delegate.

 

Independent merits review of decisions made in connection with the grant would not be considered appropriate because the decisions relate to the provision of a one-off grant to a specific service provider, over other service providers. The Administrative Review Council has recognised that it is justifiable to exclude merits review in relation to decisions of this nature (see paragraphs 4.16 to 4.19 of the guide, What decisions should be subject to merit review?).

 

HIAPL was determined to be the appropriate organisation to pursue this grant as the nature of the grant is specifically dependent on it being able to upgrade and strengthen the runway and associated airfield facilities at Hobart International Airport.

 

The review and audit process undertaken by the Australian National Audit Office also provides a mechanism to review Government spending decisions and report any concerns to the Parliament. These requirements and mechanisms help to ensure the proper use of Commonwealth resources and appropriate transparency around decisions relating to making, varying or administering arrangements to spend relevant money.

 

The department has consulted with the Department of the Prime Minister and Cabinet, the Department of Finance, the Department of Defence, Australian Border Force and HIAPL as part of the development and administration of the grant.

 

Consultation with key stakeholders will continue until the upgrades are completed.

 

Funding of $60 million for the grant was included in the 2022-23 October Budget under the measure 'Support for the Aviation Sector' for a period of two years commencing in 2023-24. Details are set out in Budget October 2022-23, Budget Measures, Budget Paper No. 2 at page 165. 

 

Funding for this item comes from Program 2.3: Air Transport, which is part of Outcome 2. Details are set out in Portfolio Budget Statements 2022-23, Budget Related Paper No. 1.12, Infrastructure, Transport, Regional Development, Communications and the Arts Portfolio at page 45.

 

Noting that it is not a comprehensive statement of relevant constitutional considerations, the purpose of the item references the following powers of the Constitution:

*         the Commonwealth place power (section 52(i)); and

*         the trade and commerce power (section 51(i)).

 

Commonwealth place power

 

Section 52(i) of the Constitution empowers the Parliament to make laws with respect to 'places acquired by the Commonwealth for public purposes'. The places referred to in section 52(i) are often called 'Commonwealth places'. 

 

Hobart International Airport is located on Commonwealth-owned land. 

 

Trade and commerce power

 

Section 51(i) of the Constitution empowers the Parliament to make laws with respect to 'trade and commerce with other countries, and among the states'. 

 

The program involves providing a grant to HIAPL to service long-distance freight and
wide-body international passenger flights which may foster interstate and/or international trade and commerce activities through increased freight efficiency and tourism. 

 

 

Statement of Compatibility with Human Rights

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Financial Framework (Supplementary Powers) Amendment (Infrastructure, Transport, Regional Development, Communications and the Arts Measures No. 1) Regulations 2023

 

This disallowable legislative instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Overview of the legislative instrument

 

Section 32B of the Financial Framework (Supplementary Powers) Act 1997 (the FF(SP) Act) authorises the Commonwealth to make, vary and administer arrangements and grants specified in the Financial Framework (Supplementary Powers) Regulations 1997 (the FF(SP) Regulations) and to make, vary and administer arrangements and grants for the purposes of programs specified in the Regulations. Schedule 1AA and Schedule 1AB to the FF(SP) Regulations specify the arrangements, grants and programs. The powers in the FF(SP) Act to make, vary or administer arrangements or grants may be exercised on behalf of the Commonwealth by Ministers and the accountable authorities of non-corporate Commonwealth entities, as defined under section 12 of the Public Governance, Performance and Accountability Act 2013.

 

The Financial Framework (Supplementary Powers) Amendment (Infrastructure, Transport, Regional Development, Communications and the Arts Measures No. 1) Regulations 2023 amend Schedule 1AB to the Principal Regulations to establish legislative authority for the Government to provide a grant to Hobart International Airport Pty Limited (HIAPL) to contribute towards meeting the costs of an upgrade of the runway and associated airfield works at Hobart International Airport. The grant is administered by the Department of Infrastructure, Transport, Regional Development, Communications and the Arts.

 

Funding of $60 million over two years from 2023-24 was provided as part of the 2022-23 October Budget to support activities which enable Hobart International Airport to service long-distance freight and wide-body international passenger flights, to attract more tourists and increase freight efficiency, generating greater economic activity in Tasmania. In addition, the upgrade is expected to enable the airport to:

• expand international freight capability to non-stop flights to Asia;
• support long-haul wide-body international passenger flights from Asia;
• increase the aviation capability of the Australian Antarctic Gateway; and
• cater for future Australian Defence air operations from Hobart.

 

Eligible expenditure includes purchase of materials, external labour hire, plant and equipment hire, construction activities, external consulting costs directly related to the delivery of the construction and other expenditure agreed to by the department and specifically identified in the grant agreement.

 

 

Human rights implications

 

This disallowable legislative instrument does not engage any of the applicable rights or freedoms.

 

Conclusion

 

This disallowable legislative instrument is compatible with human rights as it does not raise any human rights issues.

 

 

 

 

Senator the Hon Katy Gallagher

Minister for Finance