The cost of business in space – ASA consultation

The Australian Space Agency (ASA) recently sought consultation on the fees (if any) to be charged for applications for various licenses under the new Space Activities (Launches and Returns) Act 2018. The fees potentially encompasses direct costs of the Agency itself (such as staff time assessing applications), as well as costs of engaging external technical expertise.

ASA sought comments on:

• Initial estimates of demand for approvals to conduct space activities;
• How fees compare to overall costs for space – related projects (whether fees are a large proportion of overall costs);
• A comparison of fees charged across the globe and how that might affect the Australian space industry; and
• The impact a decision on a full or partial cost recovery model would have on your business or projects. IALPG recently provided comments to the Agency through the SIAA (Space Industry Association of Australia) as well as independently. Our primary concerns, which are shared by the industry generally, and the SIAA in particular, are:

• The ASA was established to reflect a broad aspiration across the Australian public for Australia to play a more active role in a rapidly growing global space industry, to capture a larger proportion of an industry worth over A$400billion, to give Australia greater influence in respect of an industry that does now and will in the future affect current, next and future generations and to inspire every Australian girl, boy, man and woman;
• The proposed cost recovery fee structure will be a major disincentive to the successful establishment of the nascent Australian space launch industry and the Australian Space Agency’s mission more generally;
• The imposition of fixed direct costs provides no incentive for the Agency to improve its efficiency over time in the assessment of applications;
• It would also be uncompetitive globally, noting that the vast majority of other jurisdictions do not charge fees to cover the direct costs of agency assessment of applications;
• Even if no direct costs are charged as fees, the imposition of costs of external technical experts on industry participants is open-ended, undermining commercial certainty;
• The need for external technical expertise suggests that the Agency requires a period of learning before it is able to assess applications without the additional cost of external technical experts. During this period the fees charged will be artificially high and the industry is essentially paying for the Agency to learn – something it should be independently funded to do; and
• The development of this fee structure is occurring before the Agency has settled the procedures and criteria against which applications will be assessed. In those circumstances, it is not possible for industry to predict the impact that the fees will have on the industry. For example, if a single application could cover multiple space activities, then the financial impact will be less than if every space activity requires a separate application.

In all the circumstances, a decision about whether to charge fees and if so, how much, should be deferred until the Agency can get other Rules and procedures in place and until it has undertaken a suitable period of adjustment, enquiry and learning, so that it can internalise the assessment process as much as possible. In the interim, like other jurisdictions, the fees should be set at zero. On the other hand, the imposition of fees is likely to push many would-be Australian space enterprises overseas, undermine the Agency’s mission and defeat the aspirations of the Australian public for an Australian space industry.

While we acknowledge that the broader Australian public should be able to realise a return-on-investment from a vibrant Australian space industry, that return-on-investment comes through the 20,000 extra jobs, export earnings that arise from a tripling of the size of the Australian space industry, greater global influence in respect of space activities and inspiration of the Australian public, each of which are objectives that the Agency is expressly mandated to achieve.

The following link can be used to track the progress of the consultation process:
https://www.industry.gov.au/news-media/australian-space-agency-news/comments-welcomed-on-cost-recovery-for-approvals-of-space-activities

Image credit: Getty Images/iStockphoto; Copyright:MarcelC

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