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Annual Report 2005-06: Other major events

Other major events

Under the Commonwealth Authorities and Companies Orders 2002, CASA must report on any significant changes in accordance with:

  • subclause 10(1)(e)—significant changes in the authority’s state of affairs or principal activities that have occurred during the financial year
  • subclause 10(1)(f)—developments since the end of the financial year, giving particulars of any matter or circumstance that has arisen and has significantly affected or may significantly affect:
    • the results of those operations in future years or
    • the authority’s state of affairs in future financial years.

The following significant changes and developments occurred in 2005–06.

Introduction of cost recovery

On 1 January 2006, new fees were introduced for regulatory services provided by CASA in line with the Australian Government’s formal cost-recovery policy, which outlines the direction government agencies should take to improve the consistency, transparency and accountability of cost-recovery arrangements, and promotes the efficient allocation of resources.

CASA’s cost-recovery program is to be phased in over three years. Phase 1 was implemented on 1 January 2006. The second phase, which includes a review of our costs and fees and charges and is due for implementation from 1 July 2007, is now underway.

Charges currently apply to more than 180 regulatory services, including licences and ratings, examinations, medicals, aircraft registration, certificates, permits, exemptions, approvals and authorities. Fees are charged at either a fixed rate for particular services or at an hourly rate for the time taken to provide the service.

Before any further changes are made, CASA will consult with industry. As part of the process, we will be conducting a series of public forums across Australia explaining why and how future charges will be determined, and will invite industry members to provide feedback. This will ensure that industry and the public have the opportunity to comment on proposed changes before they are introduced in July 2007.

New fee structure to recover costs

In line with Australian Government policy, CASA is required to recover costs for providing regulatory services to the aviation industry. After extensive planning, and industry consultation, Phase 1 of CASA’s new cost-recovery fee structure was implemented on 1 January 2006.

Our long-term financial model aims for annual revenue from fees to increase from $5.0 million to $20 million over three phases. Phase 1, which will last two years, targets an increase to $10.5 million per annum. With the introduction of Phase 1, the number of CASA services that attract fees increased from around 50 to 180, and the single hourly rate of $75 was changed to $130 or $150 an hour, depending on the regulatory service provided.

We have received complaints about various aspects of the new fee structure. The hourly fees, which are based on averages across all services, have been described as too high for some of the more simple services. Certain fixed fees have also been criticised for not being flexible enough to accurately reflect variations that occur. Medical fees and costs associated with travel have been criticised, as has the initial Phase 1 industry consultation process.

In response to these concerns, certain reforms are planned for Phase 2. Industry consultation will be more accessible and widely promoted. New cost models will determine more accurately how much each service actually costs CASA, and a wider range of hourly fees will be introduced to reflect this. We will develop greater consistency in processes and procedures across the regions.

The purpose of cost recovery is not to make a profit or impose some kind of tax; it is to charge realistic fees that reflect the costs actually incurred by CASA. Naturally, there are challenges involved with this. Phase 1 represents the first steps to a sustainable funding model for CASA based on charging fees that are as fair and reasonable as possible.