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
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.
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.
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)
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.
- For ease of expression, unless otherwise indicated, the term
'ANL' refers to 'ANL' or 'ANL bodies'(subsidiaries) as defined in
the Bill.
- ANL, Annual Report 1997, 2.
- Parliamentary Debates, 26 November 1997, 11261.
- Ibid., 46.
- Drawn from research undertaken by Brendan Bailey for Bills
Digest No.33 of 1995-96.
- Minister for Transport, News Release, 22 August
1994.
- Parliamentary Secretary to the Minister for Environment, Sport
and Territories, Warren Snowdon, Second Reading Speech,
Parliamentary Debates, 27 September 1995, 1782.
- Ibid.
- Australian Financial Review, 1 December 1995; The
Age, 2 December 1995.
- Parliamentary Debates, op cit, 26 November 1997,
11261.
- Clause 36.
- Clauses29 and 30.
Bob Bennett
11 March 1998
Bills Digest Service
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ISSN 1328-8091
© Commonwealth of Australia 1997
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