Bills Digest No.155  1997-98 ANL Sale Bill 1997


Numerical Index | Alphabetical Index

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
Purpose
Background
Main Provisions
Endnotes
Contact Officer and Copyright Details

Passage History

ANL Sale Bill 1997

Date Introduced: 26 November 1997

House: House of Representatives

Portfolio: Workplace Relations and Small Business

Commencement: Part 1 of the Bill commences on Royal Assent. The remaining provisions come into effect on the 'sale day', ie the day on which the Minister declares the first day a majority of voting shares in ANL is held by a person other than the Commonwealth.

Purpose

The Bill facilitates the sale of ANL(1) by amending a number of Commonwealth laws including the ANL Act 1956 (the principal Act).

Failure to pass the Bill would not prevent the Commonwealth selling its shares in ANL or further selling down ANL's assets. The Bill may best be described as dealing with the consequences of the sale.

Background

ANL is a 100% Commonwealth owned shipping company, which also has land transportation and container park and servicing interests. It formerly operated as the Australian National Shipping Line and was converted to a public company, with effect from 1 July 1989.

The Company has been undergoing a significant restructure since December 1995 which has seen its workforce reduce from 421 as at 1 July 1995 to approximately 280 by late 1997. ANL reported an operating loss before abnormals and tax of $ 1.6 million for the year ended 30 June 1997. This is a considerable improvement on the two previous years. In 1994-95 ANL made a loss of $ 19.6 million and in 1995-96 a loss of $ 11 million.(2)

In his Second Reading Speech, Minister Reith, however, noted against the background of ANL's improving performance, that the Commonwealth's:

[c]ontinued ownership would require taxpayer funded injections of equity, but without equity ANL does not have a viable future. The company is exposed to a major downturn in its Asian Markets, especially as a small operator competing against large companies with global coverage. The Commonwealth and the taxpayer are also exposed to ANL's debt through the Commonwealth guarantee.(3)

According to ANL's latest Annual Report, its fleet comprises 2 vehicle deck cargo ships, 4 cellular container ships and 4 bulk carriers. The total deadweight tonnage of the fleet is 360 558 tonnes.(4)

History(5)

The Commonwealth Government first became a shipowner in somewhat exceptional circumstances. During World War I (1914-1918), the Commonwealth seized and retained a number of enemy vessels. Twenty-eight vessels became Australian prizes of war. The Commonwealth Government established the Commonwealth Government Line in 1916 and it progressively received the war prizes from the Navy.

At one time, the Commonwealth Government owned 54 vessels, including a range of which had been constructed in Australia. The Commonwealth Government Line was re-christened the Australian Commonwealth Line of Steamers in 1923. By 1928, all vessels had been sold.

Following World War 2 (1939-1945), the Commonwealth Government was obliged to charter some of its former vessels from British shipowners.

In October 1956, the Australian Coastal Shipping Commission was appointed to take over and manage the vessels formerly under the control of the Australian Shipping Board. The fleet began operating under the registered business name of The Australian National Line. The relevant legislation was the Australian Coastal Shipping Commission Act 1956. The title to the Act was amended in 1974 to the Australian Shipping Commission Act 1974. The title was again changed to the ANL Act 1956 by the ANL (Conversion into Public Company) Act 1988 which came into effect from 14 December 1988.

As intimated above, the Australian Shipping Commission ceased to exist on 30 June 1989 and ANL Limited came into being. As from 1 July 1989, ANL operated first as a public company wholly owned by the Government and presently as a company incorporated under the Corporations Law.

Selling ANL

In the context of a Debate on Appropriation Bills Nos 3 & 4 for 1991-92, the Government stated that it intended to sell a substantial part of ANL and that a study was under way to ascertain how the proposal might proceed to sale.

Reflecting ANL's deteriorating financial position, the Keating Government acted to restructure ANL.

In August 1994, the Government installed a new ANL board, headed by former NSW Premier Neville Wran, charged with the task of restructuring the company. The Government also announced that it intended to guarantee all ANL's existing debts and any further draw-downs required on its promissory note facility.(6)

The ANL Guarantee Bill 1994 (the 1994 Bill) was introduced on 22 September 1994 for the purpose of giving effect to the Government's earlier commitment. The Bill formed part of a package of measures negotiated between the Government and major industry groups including the Maritime Union of Australia (MUA) designed to guarantee the viability of ANL and the maintenance of employment in the industry. The 1994 Bill was enacted on 8 December 1994.

Also on 22 September 1994, the Senate asked for a report from the Auditor-General on an analysis of the due diligence report commissioned by the Government to assist in an assessment of the financial and strategic outlook for disposal of the Commonwealth's interest in ANL. The Senate also sought a report on other issues relevant to ANL. The Auditor-General responded with Audit Report No. 11 1994-95: Project Audit ANL: Valuation Issues, on 2 December 1994.

Throughout 1994-95 the new ANL Board undertook a considerable restructuring of ANL including the sale of ANL's interest in Australian Stevedores, the winding-up of joint ventures with Howard Smith Ltd in bulk shipping and with Union Shipping in the trans-Tasman trade, the payout of a bank debt facility and some rationalisation of overseas and corporate staff.

On 20 September 1995, the Keating Government introduced legislation to facilitate the sale of the Commonwealth's shares in ANL. This was the ANL Sale Bill 1995 (the 1995 Bill).

The 1995 Bill was introduced whilst negotiations to sell ANL to P&O Australia were in train but not complete. At the date of the Bill's introduction, finalisation of the sale had been deferred until 31 October 1995 and was:

1/4 subject to the satisfactory conclusion of negotiations on ANL's future industrial arrangements and the retention by the Commonwealth of a special share.(7)

The Bill further provided that the articles of association of ANL would contain special terms enshrining the outcome of those negotiations. These protections were not to be removed or altered without the consent of the Minister.(8)

In December 1995 it was announced that the proposed sale to P&O had fallen through on account of opposition from the MUA which reportedly had threatened to shut the nation's docks if the sale proceeded.(9)

Nonetheless, the 1995 Bill received Royal Assent on 5 December 1995. However, section 79 of the 1995 Act provided for the Act's automatic repeal on 1 January 1996 if the sale had not been effected by that date. The 1995 Act was duly repealed.

While in Opposition, the present Government committed itself to the sale of ANL. That commitment was restated in the 1997-98 Budget.

Minister Reith has indicated that the timing for the start of a sale process is yet to be determined. He has also indicated that the Government may need to introduce amendments to the Bill when the sale process is under way, depending on commercial issues which may emerge as the sale progresses.(10)

Main Provisions

The present Bill repeats many of the transitional provisions which formed part of the 1995 Bill.

The major change is that under this Bill the Government will not retain a special or 'golden share' as provided for under the Keating Government's law. This, in effect, means that many terms and conditions of employment of ANL's workforce are not being entrenched by legislative means. The Government, for example, would have no legislative basis for insisting that ANL's articles of association contain a special provision that the company employ only Australian workers.

Under the Bill, employment conditions will be a matter for ANL's new owner and its employees.

Other changes reflect the restructuring of ANL over the past three years.

Clause 34 makes it plain that from the date that the Commonwealth sells its shares, ANL is not to be Commonwealth authority. Hence the privatised ANL will not be subject to a range of obligations under Commonwealth laws applying to government entities. For example, it will no longer be subject to the Administrative Decisions (Judicial Review) Act 1977 (refer Schedule 2).

The Bill further addresses a range of ancillary matters. These include the rights of persons employed by ANL to superannuation, long service leave, maternity leave, Comcare claims and public sector mobility rights.

Clause 35 of the Bill also provides that the purchaser of ANL will not acquire any of ANL's accumulated tax losses. A similar provision appeared in the 1995 Bill.(11)

Long Service Leave

Clauses 7 -13 deal with the long service leave entitlements of ANL employees.

Employees of ANL currently accrue long service leave entitlements under the Long Service Leave (Commonwealth Employees) Act 1976 which confers benefits on persons engaged by the Commonwealth. That Act confers a basic entitlement to 90 days paid long service leave on persons engaged by the Commonwealth for a continuous period of 10 years. The proposed sale of ANL will break that period of continuous service.

The general intention of these provisions is that long service leave entitlements accumulated before the sale day are retained but that rights accumulated on account of service after the sale date are a matter for negotiation.

This approach is the same as that taken in the 1995 Bill.

Work-related Injuries

Clause 16 provides that the Safety, Rehabilitation and Compensation Act 1988 (SRC Act) will continue to apply in relation to work-related injuries suffered by ANL employees prior to the date of sale. The SRC Act will also continue to apply in relation to damage to the property of ANL employees incurred before the date of sale.

This is the same provision as under the 1995 Bill.

Defence Force Retirement and Death Benefits

Clauses 23-24 make special provision for current employees of ANL who were members of the Defence force and who, but for the proposed sale, would have become entitled to benefits under the Defence Force Retirement and Death Benefits Act 1973. That Act limits relevant entitlements to persons who have completed 20 years aggregate service in the Defence Force or in subsequent public employment.

A similar, but not identical, provision formed part of the 1995 Bill.

Superannuation

Clause 26 provides that from the sale day, ANL will no longer be an approved authority for the Superannuation Act 1976. The Explanatory Memorandum notes that employees of ANL will from that date no longer be entitled to contribute to the Commonwealth Superannuation Scheme (CSS). It further notes that employees of ANL who are members of the CSS will have various options in relation to their superannuation benefits which are provided under the Superannuation Act 1976 and regulations made under the Act.

This is the same provision as in the 1995 Bill.

Clause 27 makes the same changes in relation to the Superannuation Act 1990 and for members of the Public Sector Superannuation Scheme (PSS). The 1995 Bill also contained a similar exclusion.

Maternity Leave

Rights acquired prior to the date of sale under the Maternity Leave (Commonwealth Employees) Act 1973 [ML(CE)Act] are to be protected.

This provision applies to women employed by ANL immediately prior to the date of sale and who, within 12 months of the date of sale, would have otherwise been entitled to commence maternity leave under the ML(CE)Act.

Similar protection was provided by the 1995 Bill.(12)

Mobility Rights

Clause 36 provides that persons employed by ANL but with rights under Part IV of the Public Service Act 1922 will lose certain preferential rights of return to the APS when ANL is sold.

Public servants joining ANL after 1988 have never enjoyed such rights.

Significantly, the affected rights presently provide an opportunity for special consideration for those seeking reappointment to the APS in the event of redundancy.

Clause 38 of the 1995 Bill also extinguished these rights.

Further Reading

For further information see: Parliamentary Library Information Service, Backgrounder, 'On the Waterfront with ANL', 27 May 1996.

For a lively case study of government involvement in ANL's commercial affairs, see: Keith Trace, '"You Couldn't Give It Away": Privatising the Australian National Line', Agenda, Volume 2, Number 4, 1995, 433-444.

Endnotes

  1. For ease of expression, unless otherwise indicated, the term 'ANL' refers to 'ANL' or 'ANL bodies'(subsidiaries) as defined in the Bill.
  2. ANL, Annual Report 1997, 2.
  3. Parliamentary Debates, 26 November 1997, 11261.
  4. Ibid., 46.
  5. Drawn from research undertaken by Brendan Bailey for Bills Digest No.33 of 1995-96.
  6. Minister for Transport, News Release, 22 August 1994.
  7. Parliamentary Secretary to the Minister for Environment, Sport and Territories, Warren Snowdon, Second Reading Speech, Parliamentary Debates, 27 September 1995, 1782.
  8. Ibid.
  9. Australian Financial Review, 1 December 1995; The Age, 2 December 1995.
  10. Parliamentary Debates, op cit, 26 November 1997, 11261.
  11. Clause 36.
  12. Clauses29 and 30.

Contact Officer and Copyright Details

Bob Bennett
11 March 1998
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

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.



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