Airports (Transitional) Act 1996

Airport-lessee companies: The central commercial counterparties whether entities like Sydney Airport Corporation, Melbourne Airport, Brisbane Airport Corporation, or the general aviation airport operators listed in section 20. They receive the airport leases, inherited assets and transferred employees, and operate subject to the Airports Act 1996 framework thereafter.

The Federal Airports Corporation: The Act progressively stripped the FAC of its assets, liabilities and staff. The FAC received corresponding capital payments and return-of-capital flows during the disposal of Commonwealth-owned companies (Part 6) and the sale of leases to private companies (Part 7), before the corporation was wound up.

Transferred employees: FAC employees whose employment is transferred under section 58 declarations. They retain their pre-transfer terms and conditions, accrued leave, and continuity of service. They had specific protections under Schedules 1, 2 and 3 for long service leave, superannuation and workers compensation respectively.

Third parties with existing interests in airport land: Sections 26 and 17 preserve the rights of lessees under existing leases. Existing lessees become lessees of the airport-lessee company after the airport lease is granted; the company steps into the Commonwealth's position as lessor.

State and Territory revenue authorities: Section 46 removes State and Territory stamp duty liability on transactions involving companies granted leases under section 21. Section 48 limits (but does not entirely remove) stamp duty exposure for companies granted leases under section 22.

Finance Minister declaration obligations: Once a declaration is made under sections 11, 12, 13, 14, 23, 24, 25, 30, 31, 33 or 58, the Act requires a copy to be published in the Gazette within 21 days (section 89). Pre-grant declarations may be varied or revoked before the specified date (section 88).

Sale time Gazette notice: Under section 6(4), the Finance Minister must publish the sale time notice within 21 days of the relevant time.

FAC obligation to provide employee statements: Before a transfer under section 58, the FAC must give each employee a written statement setting out the particulars of accrued benefits (section 61(1)). The statement is prima facie evidence in later proceedings. A failure to provide the statement does not affect the validity of the transfer.

FAC information obligations: The FAC must provide the Finance Minister with information required about the application of depreciation and capital allowance provisions in the ITAA 1997 to relevant assets and the FAC (sections 49B(5), 50B(3), 51B(3), 52A(3)).

FAC repayment obligations: Where the Commonwealth takes over FAC borrowing obligations (section 73 or 74), the FAC must pay the Commonwealth an amount determined by the Finance Minister (section 76). The Commonwealth simultaneously pays the FAC an equal amount by way of capital provision effectively a set-off that recapitalises the FAC.

Airport-lessee company not an agency: Section 82 imposes a clear status rule: a company granted a lease under section 21 is not to be treated, for any Commonwealth, State or Territory law, as a Commonwealth authority, an entity established for a public purpose, or a public authority or Crown instrumentality unless the applicable law expressly provides otherwise. This must be actively considered when assessing whether Commonwealth laws apply to the airport operator.

Finance Minister asset and liability declarations (ss 11–14, 23–25, 30–31, 33): Broad discretion to make written declarations effecting the transfer of specified assets, contracts and liabilities. Declarations may specify assets by name, class, or any other way. Declarations conditional on a lease grant may be varied or revoked before the grant day (section 88).

Finance Minister income tax determinations (ss 49B(4), 50B(2), 51B(2), 52A(2)): Finance Minister may make written determinations of the cost or notional consideration for assets being transferred, for the purposes of Division 40 and related provisions of the ITAA 1997. This gives the executive considerable power to shape the tax outcome of asset transfers without requiring legislative amendment.

Finance Minister capital determinations (ss 36, 37, 38, 42, 43, 69, 77): Determines amounts payable by Commonwealth to FAC in connection with share disposals and lease grants, and authorises the actual payments from the Consolidated Revenue Fund.

Finance Minister pending proceedings (s 84): May determine that a successor in law is not substituted as a party to particular pending proceedings, preserving flexibility to allocate litigation exposure.

Treasurer borrowing transaction powers (ss 68, 73, 74): Treasurer may call up Commonwealth loans to FAC (section 68), declare by Gazette notice that FAC borrowing obligations become Commonwealth obligations (section 73), or enter into a contract to take over FAC borrowing obligations (section 74).

Regulations (s 55, s 93): Governor-General may make regulations for Act purposes. Specifically, regulations may modify the application of ITAA 1936 and ITAA 1997 depreciation, capital allowances and CGT provisions to airport leases and transferred assets where sale time does not occur within 7 days of the initial grant.

Land registration officials (ss 16, 27): May register vesting of FAC land in Commonwealth on lodgement of an authorised certificate, and may make entries in title registers noting the existence of the Act after an airport lease is granted.

The Act contains no direct criminal penalties for non-compliance. Its enforcement mechanism is structural rather than punitive:

• A purported airport lease grant that does not satisfy the ownership requirements of section 21 (all shares beneficially owned by Commonwealth) or section 22 (no shares beneficially owned by Commonwealth) is of no effect (ss 21(3), 22(3)).
• Section 85 provides that the Act's operation does not place any person in breach of contract, confidence or civil wrong, and does not release sureties from obligations. This is a protective carve-out rather than a penalty provision.
• Section 90 provides a constitutional safety net: if the Act's operation results in an acquisition of property otherwise than on just terms within the meaning of section 51(xxxi) of the Constitution, the Commonwealth is liable to pay reasonable compensation. The person may institute proceedings in the Federal Court of Australia.
• Section 92 confirms that the Act does not authorise the imposition of taxation within the meaning of section 55 of the Constitution.
• Part 11 (section 80): the Director of Public Prosecutions retains jurisdiction over acts or omissions that occurred before the sale time, even after the company ceases to be a Commonwealth authority. This ensures prosecutorial continuity during the transition from public to private ownership.

The privatisation sequence contemplated by the Act followed this sequence:

1. Finance Minister declares transfer of FAC land and assets to Commonwealth (ss 11–14). Gazette publication within 21 days (s 89).
2. Finance Minister makes conditional declarations for onward transfer of assets, contracts and liabilities to airport-lessee company (ss 23–25, 30–31, 33), conditional on lease grant on a specified day. Land registration officials notified (s 16).
3. Commonwealth grants airport lease to the relevant company under section 21 or section 22. The conditional declarations take effect immediately. Existing interests in the land are preserved (s 26).
4. Land registration officials may make register entries (s 27). Gazette publication within 21 days (s 89).
5. FAC employees are transferred under section 58 declarations, which may also be conditional on the lease grant. FAC must give employees accrued benefit statements before transfer (s 61).
6. If the company is Commonwealth-owned (s 21 route): the Finance Minister determines capital flows to the FAC under sections 36–38 during the period before sale. Finance Minister declares sale time when majority of voting shares transfers to private hands (s 6(4)), within 21 days.
7. If company is privately-owned (s 22 route): Commonwealth pays FAC under section 42 when consideration from the airport-lessee company becomes payable.

The FAC's borrowing obligations may be dealt with at any point via the mechanisms in Part 10 (Treasurer declarations and Finance Minister capital payments).

Airports Act 1996: Defined terms for airport, airport lease, airport-lessee company and airport site are all imported from that Act (section 4). The grant of airport leases under sections 21 and 22 must also comply with Part 2 of the Airports Act 1996 (noted in sections 21 and 22). The Airports Act 1996 establishes the ongoing regulatory regime; the Transitional Act is the one-time enabling mechanism.

Income Tax Assessment Act 1997 and Income Tax Assessment Act 1936: Part 8, Division 3 (sections 48A–55) modifies the application of these Acts to transferred assets. Finance Minister determinations under sections 49B, 50B, 51B and 52A shape the cost, depreciation and capital gains treatment of airport assets. Section 54A deems the airport-lessee company to be the owner of capital works for Division 43 ITAA 1997 purposes. Section 55 allows further modification by regulation.

Federal Airports Corporation Act 1986: Section 15 provides that when FAC land vests in the Commonwealth under Part 2, the airport ceases to be a "Federal airport" or "Federal airport development site" within the meaning of the FAC Act 1986. This extinguishes the FAC's statutory jurisdiction over those airports.

Lands Acquisition Act 1989: Expressly excluded from applying to transactions done under Part 2 (section 18) and Part 3 (section 28). This removes the normal acquisition procedures that would otherwise apply to Commonwealth land dealings.

Director of Public Prosecutions Act 1983: Continued application to pre-sale-time conduct by airport-lessee companies under section 80 (Part 11).

Archives Act 1983: Section 91 requires Archives Act compliance before Commonwealth records are transferred to airport-lessee companies; Australian Archives permission is needed.

Acts Interpretation Act 1901: Section 33(3) of that Act allows pre-grant declarations to be varied or revoked before the specified day (section 88 of this Act).

Long Service Leave (Commonwealth Employees) Act and related instruments: Schedule 1 preserves long service leave entitlements for transferred employees and treats the airport-lessee company as an approving authority.

Defence Force Retirement and Death Benefits Act 1973: Schedule 2 preserves deferred benefit status and periods of eligible employment for former FAC employees with DFRDB entitlements.

Safety, Rehabilitation and Compensation Act 1988: Schedule 3 rules deal with continuing application to transferred employees and pre-transfer workplace injury claims.

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 and Workplace Relations Act 1996: Section 59(4) references pre-reform certified agreements, individual transitional employment agreements, AWAs and enterprise flexibility agreements as the source of terms and conditions to be carried across to the airport-lessee company.

Constitution, section 51(xxxi): The just terms compensation safety net in section 90 is a direct response to the constitutional requirement that acquisitions of property by Commonwealth must be on just terms.

Constitution, section 55: Section 92 ensures the Act is not characterised as a taxation law.

The "sale time" concept has precise legal significance throughout the Act. It is not a commercial completion date but a ministerially-declared moment based on a majority of voting shares passing to non-Commonwealth persons. Declarations under sections 36–38, Part 11, Part 12, and Schedule 2 all pivot on this moment. Getting the Gazette notice out within 21 days (section 6(4)) is a mandatory step.

Sections 21 and 22 ownership requirements are non-negotiable. If a lease is granted to a company that does not meet the all-Commonwealth (s 21) or none-Commonwealth (s 22) ownership test, the purported lease is of no effect. There is no saving provision. This creates a hard compliance gate that must be confirmed before grant.

The stamp duty exemption (s 46) applies only to s 21 companies. Transactions with s 22 (privately-owned) companies do not have the same blanket exemption. Section 48 allows States and Territories to impose stamp duty on s 22 transfers, subject to a reasonableness limit benchmarked against what a commercial arm's length transfer would have attracted.

Finance Minister income tax determinations are a one-way valve. Under sections 49B, 50B, 51B and 52A, the Finance Minister may make written determinations fixing the cost or deemed consideration for assets. Once made, these determinations affect the company's depreciation base, capital works pool and capital gains calculations for the life of the airport lease. The FAC is required to supply the information needed, but the Act does not set a time limit.

Section 82 (not a Commonwealth agency) means general Commonwealth law protections do not apply by default. Airport-lessee companies are not taken to be Commonwealth authorities for any law unless that law expressly provides otherwise. Practitioners analysing whether a Commonwealth statute or Territory law applies to an airport operator must check for an express provision.

Existing sub-lessee interests survive the privatisation and attach to the airport-lessee company. Under section 26, existing lessees automatically become lessees of the airport-lessee company; the company steps into the Commonwealth's lessor position. Section 17 addresses the separate situation where the Commonwealth itself is a lessee of FAC land the leasehold interest does not merge into the freehold that vests in the Commonwealth under Part 2.

Employee benefit statements (s 61) are evidentially significant but not a validity condition. The FAC's failure to give a statement of accrued benefits does not affect the validity of the transfer, but the statement is prima facie evidence in any later dispute about accrued entitlements. Employers and employees should ensure these statements are accurate.

Scenario 1: Privatising a major airport (s 21 route) The Commonwealth wants to privatise Brisbane Airport. The Finance Minister declares by written instrument that FAC's land, assets and contracts vest in the Commonwealth (ss 11–13). Simultaneous declarations, conditional on the airport lease being granted to Brisbane Airport Corporation Pty Ltd (which is 100% Commonwealth-owned) on a specified date, vest those same assets in the company and transfer the FAC's relevant employees to it (ss 23, 30, 58). On the date the airport lease is granted under section 21, all conditional declarations take effect. A copy of each declaration is published in the Gazette within 21 days (s 89). When the Commonwealth subsequently sells its shares to private investors, the Finance Minister declares the sale time and issues the Gazette notice within 21 days (s 6(4)). From that point, Parts 11 and 12 determine the DPP's continuing jurisdiction and the company's non-agency status.

Scenario 2: Stamp duty on a general aviation airport (s 22 route) A private consortium is granted the airport lease for Essendon Airport directly under section 22. The stamp duty exemption in section 46 does not apply. The relevant Victorian State Revenue authority assesses stamp duty on the transfer of assets to the company. Section 48 means that duty is permissible, but only if a corresponding amount would have been payable had the transfer been done by written instrument between commercial parties and the amount charged cannot exceed that benchmark.

Scenario 3: Existing sub-tenants at an airport Before privatisation, various businesses hold leases from the FAC over parts of the airport site. Under section 26, when the airport lease is granted, those businesses automatically become lessees of the airport-lessee company. The company steps into the Commonwealth's position as lessor. Those lessees do not need to novate their leases or consent to the change of landlord the Act effects it automatically.

Scenario 4: Dispute about "in lieu of rates" payments An airport-lessee company's lease includes a clause requiring it to make payments in lieu of rates to local government. A dispute arises about how those payments are calculated. The Federal Court's jurisdiction to hear the dispute turns partly on whether there is a federal "matter" within Chapter III of the Constitution. The Hobart International Airport Pty Ltd v Clarence City Council litigation ([2022] HCA 5) confirms that such disputes, which arise from leases granted under section 21, can engage federal jurisdiction because the rights and obligations owe their existence to Commonwealth legislation.