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The Future of Australia's Aviation Sector, in the Context of COVID-19 And The Senate Rural and Regional Affairs and Transport References Committee Future of Australia’s aviation sector, in the context of COVID-19 and conditions post pandemic Interim report March 2021 © Commonwealth of Australia ISBN 978-1-76093-209-1 This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 4.0 International License. The details of this licence are available on the Creative Commons website: https://creativecommons.org/licenses/by-nc-nd/4.0/. Printed by the Senate Printing Unit, Department of the Senate, Parliament House, Canberra. Members Chair Senator Glenn Sterle ALP, WA Deputy Chair Senator Susan McDonald NATS, QLD Members Senator Nita Green ALP, QLD Senator Alex Gallacher ALP, SA Senator Peter Whish-Wilson AG, TAS Senator Gerard Rennick LP, QLD Participating Members Senator Tony Sheldon ALP, NSW Secretariat Gerry McInally, Committee Secretary Paula Waring, Principal Research Officer Joshua Wrest, Senior Research Officer Kaitlin Murphy, Senior Research Officer Michael Fisher, Research Officer Jason See, Administrative Officer PO Box 6100 Telephone: (02) 6277 3511 Parliament House Fax: (02) 6277 5811 CANBERRA ACT 2600 Email: [email protected] iii Contents Members ............................................................................................................................................. iii List of Recommendations ............................................................................................................... vii Chapter 1—Background ..................................................................................................................... 1 Chapter 2—Government support for aviation during COVID-19 ............................................. 9 Chapter 3—The impact of the COVID-19 pandemic on the aviation workforce .................. 27 Chapter 4—Initial committee view on the aviation support package .................................... 61 Government members - additional comments ............................................................................ 65 v List of Recommendations Recommendation 1 3.156 The committee recommends that JobKeeper, or wage subsidies modelled off JobKeeper, be continued by the Australian Government to support aviation workers and organisations at the cessation of the JobKeeper scheme in March 2021. This support should be tailored to the economic conditions and government restrictions, including international border restrictions. Recommendation 2 3.157 The committee recommends that Australian workers who pay tax and are employed by companies wholly owned by foreign sovereign entities, and Australian local government-owned entities should be eligible to apply for any wage subsidies or other Australian Government support programs for the aviation industry after the cessation of JobKeeper. Recommendation 3 3.158 The committee recommends that the Australian Government consider making any further support to the aviation sector conditional on companies agreeing to: not further weaken the job security of employees; maintain existing regional services; and implement moratoriums on the payment of dividends, executive bonuses and executive pay increases. vii Chapter 1 Background Referral of inquiry 1.1 On 9 November 2020, the following matters were referred to the Senate Rural and Regional Affairs and Transport References Committee (the committee) for inquiry and report by 31 March 2021: The future of Australia’s aviation sector, in the context of COVID-19 and conditions post-pandemic, having particular regard to: (a) the importance of Australia’s aviation sector in supporting the economic and social wellbeing of all Australians; (b) the immediate and long-term impacts of the COVID-19 pandemic response on all aspects of the Australian aviation sector; (c) the immediate and long-term impacts of the COVID-19 pandemic response on all sectors that rely on aviation (e.g. tourism); (d) the adequacy of government industry support and procurement and programs for the social and economic well-being of workers for all sections of the aviation industry to survive the downturn caused by the pandemic; (e) the immediate and long-term employment landscape within Australia’s aviation sector; (f) what policy and practical measures would be required to assist the industry to recover in the medium term; and (g) any related matters. 1.2 Following a resolution of the committee on 3 February 2021, and in accordance with the motion agreed by the Senate on 18 February 2021,1 the reporting date for the inquiry was extended to 13 May 2021. Conduct of the inquiry 1.3 The committee advertised the inquiry on its website and invited submissions from a range of relevant stakeholders, including government agencies, industry, community groups and individuals. Details regarding the inquiry and associated documents are available on the committee's webpage. 1.4 To date, the committee has received 32 submissions. This included 31 public and name withheld submissions which are published on the committee's website. 1.5 In addition, the committee held public hearings on: 28 and 29 January 2021 in Brisbane; 10 February 2021 in Sydney; and 1 Journals of the Senate, No. 88, 18 February 2021, p. 3112. 1 2 3 and 4 March 2021 in Canberra. Purpose of this report 1.6 It should be noted that this interim report is focussed on the immediate impact of COVID-19 on the aviation workforce. It sets out the committee's early findings on the adequacy of government support for aviation workers responsible for maintaining the viability of the aviation sector through the pandemic. 1.7 While this report outlines some of the major issues faced by the aviation sector as a result of COVID-19, it is not intended to provide an exhaustive examination of the many issues raised with the committee in written submissions, correspondence and hearings. The committee will report on these issues in greater detail in its final report. Acknowledgments 1.8 The committee thanks all organisations and individuals who contributed to the inquiry by preparing written submissions and appearing before the committee at public hearings to give evidence. References to Hansard 1.9 In this report, references to Committee Hansard are to proof transcripts. Page numbers may vary between proof and official transcripts. Structure of the report 1.10 This interim report is divided into three chapters. Chapter 1 provides an overview of the committee's conduct as well as a brief background of Australia's aviation sector. 1.11 Chapter 2 outlines the Australian Government's support for aviation during COVID-19. In particular, it examines JobKeeper and relevant issues, such as eligibility criteria and the impact these have had on the aviation workforce. 1.12 Chapter 3 discusses the impact of the COVID-19 pandemic on the aviation and tourism sectors, in terms of job losses, stand downs and the resultant loss of skills. It also outlines the need for ongoing support to sustain Australia's aviation sector and ensure it is ready to lead economic recovery once travel restrictions are lifted. An overview of Australian aviation 1.13 The following section2 provides an overview of Australia's aviation sector, including the importance of Australian aviation as well as discussing the impacts of COVID-19. 2 The following section is based on information contained in Department of Infrastructure, Transport, Regional Development and Communications, Submission 20; Department of 3 Importance of Australian aviation 1.14 The aviation sector makes a major contribution to Australia's economy, as well directly and indirectly supporting the employment of thousands of Australians. Submitters emphasised the role of aviation as 'a vital linchpin to the health of the Australian economy'.3 For example, in 2018 the aviation sector directly contributed around $20 billion to the economy, or 1 per cent of gross domestic product (GDP).4 1.15 In particular, the aviation sector is integral to freight supply chains. Air freight comprises a small proportion of Australia’s international freight task by mass (0.1 per cent) but represents around 20 per cent of trade by value. In 2019, the air and space transport industry directly contributed around $10 billion to the economy, or 0.5 per cent of GDP.5 Furthermore, total Australian international air freight recently surpassed 1 million tonnes annually.6 1.16 In its Skills Forecast published in 2019, the Aviation Industry Reference Committee, of the overarching Australian Industry and Skills Committee, revealed prior to COVID-19 Australia's aviation industry employed more than 93 000 people across five main subsectors.7 These are domestic commercial aviation, international commercial aviation, general aviation, air-freight transport and aviation support infrastructure.8 1.17 In addition, Mr James Goodwin, Chief Executive, Australian Airports Association, estimated that Australia's airports maintained the jobs of more than 200 000 Australians. 1.18 Furthermore, EY analysis for the Business Council of Australia estimated that international aviation supports around 515 000 jobs: 248 000 jobs associated with education services for international students; Infrastructure, Transport, Regional Development and Communications, The Future of Australia's Aviation Sector: Flying to Recovery, Issues Paper 2020, August 2020; Australian Competition and Consumer Commission, Airline competition in Australia, September 2020. 3 Mr Scott McDine, Head of ITF Sydney, International Transport Workers' Federation, Proof Committee
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