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