Launceston Airport payments to Northern Midlands Council
Over the last two weeks, Northern Midlands Council has embarked on a public campaign regarding Launceston Airport’s ex‐gratia rate equivalent payments. Below are a few clarifying points to set the record straight.
- Launceston Airport is leased from the Commonwealth Government on a 50 year long‐term lease with the option to extend the lease for another 49 years. The lease is overseen by the Federal Department of Infrastructure and Regional Development.
- Launceston Airport is owned by Launceston City Council (10%) and Australia Pacific Airports Corporation (APAC) (90%). APAC is a privately held company owned predominantly by investment companies who manage the superannuation funds for millions of Australians. APAC also operates Melbourne Airport.
- There is no statutory requirement for federally leased airports in Australia, including Launceston Airport, to make ex‐gratia rate equivalent payments to local councils. However, as part of their lease agreements, airports are required to make ex‐gratia rate equivalent payments in lieu of council rates on commercial (non‐aeronautical) sites to achieve competitive neutrality. This means that aeronautical common use sites such as runways, check‐in areas and boarding facilities are not subject to valuation and ex‐gratia rate equivalent payments. This has been confirmed by the Department of Infrastructure and Regional Development in a letter to Northern Midlands Council and Launceston Airport.
- Launceston Airport has made ex‐gratia rate equivalent payments to Northern Midlands Council since the airport was privatised in 1998.
- In 2012, at the request of Northern Midlands Council, The Tasmanian Valuer General re‐evaluated the value of the airport site which determines the amount of the ex‐gratia rate equivalent payments to be made by Launceston Airport. The re‐evaluation resulted in a proposed increase of more than 61 per cent for Launceston Airport’s future ex‐gratia rate equivalent payments.
- Launceston Airport is exercising its right to challenge the valuation process, and is disputing the amount of the proposed new ex‐gratia rate equivalent payments as they do not reflect market value for the commercial sites on the airport.
- Launceston Airport is also disputing the non‐aeronautical sites that were included in the proposed new ex‐gratia rate equivalent payments. Previous ex‐gratia rate equivalent payments made to Northern Midlands Council have, in error, incorporated payments for non‐commercial sites and Northern Midlands Council is aware of this fact. The Tasmanian Valuer General’s re‐evaluation has not excluded these sites.
- While the matter is being resolved, Launceston Airport continues to make ex‐gratia rate equivalent payments to Northern Midlands Council. These ex‐gratia rate equivalent payments are in accordance with an independent valuation that Launceston Airport subsequently commissioned.
- In a normal rate payer and council situation, the council is responsible for the maintenance and upgrades to roads, footpaths, waste disposal, street lighting and sewerage and storm water systems. Launceston Airport is wholly responsible for this maintenance and these services at the airport. Launceston Airport is also responsible for the development and construction of new facilities and infrastructure at the airport.
- In addition, as the gateway to the region, Launceston Airport has an important role in the growth and development of northern Tasmania and works closely with industry and government to bring tourists to the region to support businesses. Launceston Airport’s operations also directly support more than 400 jobs.
- Launceston Airport wishes to resolve this matter as fairly and quickly as possible and welcomes the appointment of an independent expert by the Department of Infrastructure and Regional Development to identify the areas at Launceston Airport that are subject to ex‐gratia rate equivalent payments, and the amount of the ex‐gratia rate equivalent payments due.
- Launceston Airport will abide by the decision and valuation made by the Department of Infrastructure and Regional Development’s independent expert and encourages Northern Midlands Council to make the same commitment.
- Hobart Airport and its council have recently resolved their ex‐gratia payments with the assistance of the Commonwealth Government and Launceston Airport is aiming for a similar resolution.
- Launceston Airport believes that ratepayers of Northern Midlands Council should be concerned at the costs involved in Northern Midlands Council’s public campaign, particularly when a process to resolve the issue was underway. The campaign has not had any impact on this process.
- Launceston Airport looks forward to resolving this issue fairly and quickly.
For further information contact: Launceston Airport ‐ (03) 6391 6222