Thursday, 20 June 2013
International Interests in Mobile Equipment (Cape Town Convention) Bill 2013, International Interests in Mobile Equipment (Cape Town Convention) (Consequential Amendments) Bill 2013; Second Reading
It is a good day, indeed, when I have two bills in a row. The bill and its associated consequential amendments bill will ratify two international treaties, known collectively as the Cape Town convention—the Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment.
The Cape Town convention, which came into force internationally in 2006, has now been ratified by 51 countries, including the United States of America, New Zealand, China, Singapore and Canada. It is an international legal system to protect secured creditors of aircraft, including many helicopters, engines and other components, by reducing the risk and costs associated with financing these valuable pieces of equipment. These creditors can access a voluntary international register to list their security interests and then receive priority ranking in case of default. This is very important when you have engines that might be owned by one airline, get repaired, dropped off and then make their way to another part of the world and then the airline goes broke. Someone goes looking for that engine and then there is an issue of its ownership. For the Australian airlines the net effect of ratifying the convention will be better access to cheaper aircraft and asset financing. They will also be eligible for discounts on finance arrangements for the purchase of aircraft and related equipment. For example, depending on the credit rating of the borrower and the purchase price of the aircraft, airlines can save up to $2.5 million on the purchase of a new Airbus A380 and $330,000 on the purchase of new ATR 72s or Dash 8s, which are common on regional flights. That is why I have such a strong interest in it.
There are potential benefits to regional and general aviation operators as well, because the Cape Town convention applies to aircraft carrying as few as eight passengers or as little as 2,750 kilograms of goods. As we all know, airlines are capital intensive businesses that operate in a highly competitive environment and stakeholders are appreciative of a financial advantage to the businesses, particularly when many of the main overseas competitors are already taking advantage of the benefits of the convention. The Cape Town convention has been supported by the parliament's Joint Standing Committee on Treaties and by state governments, which have some jurisdiction under this bill. The coalition will support the bills as drafted.