Bills Digest 157 1996-97 Commonwealth Vehicles (Registration and Exemption from Taxation) Bill 1997


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WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History

Commonwealth Vehicles (Registration and Exemption from Taxation) Bill 1997

Date Introduced: 28 May 1997
House: House of Representatives
Portfolio: Finance
Commencement: Royal Assent

Purpose

The purpose of this Bill is to:

  • establish a Commonwealth register of motor vehicles in which vehicles owned by or leased to the Commonwealth may be registered
  • exempt the transfer of DASFLEET assets and Commonwealth leasing arrangements from State and Territory taxes.

Background

DASFLEET is the Federal Government's vehicle leasing and rental business operating within the Department of Administrative Services which supplies passenger and commercial vehicles to the majority of Commonwealth Government departments and agencies.The fleet comprises 17,027 vehicles.(1)

DASFLEET's primary market is the Commonwealth Government.Services are provided on a commercial basis.Departments and agencies operating on the Commonwealth Public Account are required to lease civilian vehicles from DASFLEET but are free to use private sector operators for their short-term rentals and fleet management and maintenance requirements.(2)

The Labor government announced in the 1995 96 that it intended to sell and lease-back DASFLEET's motor vehicle fleet.(3)

In March 1996, the Coalition government announced a review of the 1995 Budget measure to sell and lease back vehicles managed by DASFLEET.(4) Management and financial consultants, Baring Brothers Burrows and Company Limited were engaged to undertake the review.The consultants were also asked to consider:

  • the past and likely future financial performance of DASFLEET
  • government policy on privatisation and contracting out, and
  • the directions set by the National Competition Policy Review (Hilmer Report) and the draft Industry Commission Report on Competitive Tendering and Contracting Out.

The 1996 97 budget stated:(5)

The review recommended the investment in DASFLEET should be realised by either sale of DASFLEET or refinancing of the vehicles.The Government has accepted this recommendation and will call expressions of interest in both options concurrently in an effort to maximise the value from DASFLEET.

On 27 February 1997, advertisements appeared in all national newspapers inviting registration of interest in purchasing 6 DAS business enterprises and purchasing or refinancing DASFLEET.(6)

On 13 May 1997, the Minister for Administrative Services provided an update ON the sale process for each business.In respect of DASFLEET, the update provided:(7)

27 Feb Call for registration of interest

12 March Closing date for registering interest - Australian responses

21 March Closing date for registering interest - overseas responses

21 April Closing date for submitting indicative bids

30 April Due diligence begins

23 May Closing date for final bids

Following the closing of bids, these will be evaluated and a preferred tenderer/refinancier selected.The transaction is expected to conclude in mid 1997.

A DAS spokesperson has commented that eighty per cent of jobs will be retained by the private sector upon the sale of each business enterprise.(8) It is unclear how many, if any, of the 375 DASFLEET jobs will be affected if the fleet is refinanced as opposed to being sold.

DASFLEET's operating revenue and net operating profit over the past four years were:


1992 93
$
$1993 94
$
1994 95
$
1995 96
$
Operating Revenue 130,191 143,943 136,487 138,302
Net Operating Profit 43,999 56,909 29,372 23,103

The Commonwealth currently pays registration fees to the respective State or Territory in which its vehicles are registered.The Commonwealth does not pay registration fees in respect of vehicles which are registered as Commonwealth vehicles, e.g. 'Z plated' vehicles.The Commonwealth does not pay stamp duty on the purchase or registration of vehicles.

Main Provisions

Part 1 of the Bill is the preliminary part which contains definitions and objects.

Part 2 of the Bill provides for the creation of a register of Commonwealth vehicles (including motor vehicles and trailers).Vehicles may only be registered as Commonwealth vehicles where they are owned or leased by the Commonwealth or a Commonwealth authority for at least three months (clause 8).

Digest Comment:The terms of the Bill do not compel registration of Commonwealth vehicles under this register.Vehicles such as those provided to Commonwealth senior executive servants will continue to be registered in the respective State in which they are provided and the Commonwealth will continue to pay standard State registration fees on the registration of those vehicles.

There is currently a register of Commonwealth vehicles which was established administratively.It is necessary to establish the register legislatively because of the proposed split in functions between registration and ownership of vehicles.

Upon the Commonwealth or the authority ceasing to own or lease the vehicle, its registration ceases (clause 11).

Vehicles which are registered as Commonwealth vehicles are not required to be registered under the law of a State or Territory.

Part 3 of the Bill exempts from State and Territory taxation:

  • the sale of vehicle fleet or a major part of it
  • the lease of a vehicle for more than 3 months
  • the registration of a vehicle leased to the Commonwealth.

Part 4 of the Bill contains a general regulation making power.

Endnotes

  1. Information provided by DASFLEET, current at 30 March 1997.
  2. Department of Administrative Services, Annual Report 1995 96, p. 50
  3. House of Representatives, Hansard, 9 May 1995, p. 68
  4. Minister for Administrative Services (David Jull), 'Government vehicle fleet to be reviewed', Press release, 29 March 1996
  5. 1995 96 Budget Paper 3, 20 August 1996, p. 3 68
  6. The six DAS businesses were:
    1. Asset Services - maintenance and repairs, minor property improvement and professional technical advice on facilities and related equipment
    2. Australian Operational Support Services - prime contractor for facilities support services and the Sydney Airport Noise Insulation Project
    3. DAS Centre for Environmental Management - management of ozone depleting substances such as halon and CFC (Halon Bank) and environmental consulting services
    4. DAS Distribution: domestic freight, international freight and warehousing and distribution
    5. DAS Interiors Australia: Strategic advice and planning for accommodation, design/documentation and supervision of office fitout and high-tech engineering services
    6. Works Australia - project and program management, architectural and engineering design and documentation services
  7. Minister for Administrative Services (David Jull), 'Continued reform of DAS commercial operations', Press release, 13 May 1997
  8. Peter Clack, 'The last day of DAS: 4000 jobs to go', The Canberra Times, 12 March 1997

Contact Officer and Copyright Details

Lee Jones
19 June 1996
Bills Digest Service
Information and Research Services

This Digest does not have any official legal status. Other sources should be consulted to determine whether the Bill has been enacted and, if so, whether the subsequent Act reflects further amendments.

IRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 1997

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1997.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 9 July 1997


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