TRANSPORT LEGISLATION AMENDMENT BILL 2000

The Transport Legislation Amendment Bill 2000 incorporates amendments relating to the Australian National Railways Commission (AN) and the Transport and Communications Legislation Amendment act (No.2) 1992. These amendments are currently before the Senate as part of the Transport and Territories Legislation Amendment Bill 1999. While it appears that provisions unrelated to those contained in this bill will delay its passage, it is important that both the AN and maritime amendments are allowed to proceed in a timely fashion. The amendments will enable the wind-up of AN to be finalised by 30 June 2000 and for Australia to meet its commitments under the 1998 Protocol on Environment Protection to the Antarctic Treaty.

As a consequence of the unrelated difficulties the AN and Maritime amendments are now being re-introduced as part of the Transport Legislation Amendment Bill 2000. I note that the Opposition and Democrats previously indicated that they would support these amendments when they were considered in the Committee stage as part of the Transport and Territories Legislation Amendment Bill 1999.

The sale of the three operating businesses of AN in 1997 constituted a significant milestone in the Government's rail reform agenda. Improving the performance of Australia's railways will contribute to the competitiveness of the nation's businesses and the entire economy. Accordingly, the Government places a high priority on achieving reform in this important area.

The sound performance of the former AN businesses in private ownership clearly supports the Government's view that the Commonwealth should not be involved in the operation of railway businesses. The passenger operator has extended the historic Ghan services between Adelaide and Alice Springs to Melbourne and Sydney as part of a strategy to target important international tourist markets. The two freight businesses have achieved profitability for the first time in many years and have attracted significant new business. These results have only been achievable through the provision of improved service to customers.

The positive performance by these companies is of particular benefit to South Australia and Tasmania. As rail freight becomes a viable alternative, through competitive prices and service quality, it will facilitate and enhance the performance of other businesses. Furthermore, the impressive results achieved will contribute to the security of long term employment in the rail industry.

The sale of the AN businesses was facilitated by the Australian National Railways Commission Sale Act 1997 (the Sale Act), which commenced on 30 June 1997. Following sale, AN was reduced to a non-operating entity charged with managing any residual functions, including the realisation of remaining assets and liabilities, and resolving outstanding litigation and disputes prior to abolition.

Proclamation of the remaining provisions of the Sale Act will enable the residual AN entity to be abolished as well as the repeal or amendment of a number of Acts relating to the previous operations of AN. All conditions specified in the Sale Act which are to be met prior to Proclamation have been satisfied. It is now important to abolish the residual entity to remove the administrative burden and cost currently being borne by the Commonwealth.

Two issues of a technical nature have been identified which need to be addressed before the remaining provisions of the Sale Act can be Proclaimed. The amendments being proposed will correct an inaccurate citing of the Port Augusta to Whyalla Railway Act 1970. It will also enable the preservation of a technically robust process for registration of title for land already legally transferred from AN to the Australian Rail Track Corporation.

While the proposed amendment is of a technical nature, it is essential to enable the wind up of AN therefore reducing the ongoing administrative costs to the Commonwealth.

The commencement provision of the Transport and Communications Legislation Amendment Act (No.2) 1992 is being amended to overcome a technical difficulty that prevents a Proclamation being made for the commencement of amendments to the Protection of the Sea (Prevention of Pollution from Ships) Act 1983. Those amendments relate to the discharge of sewage and disposal of garbage from ships in the Antarctic area.

Currently, the commencement provision provides that the relevant provisions commence on a date to be fixed by Proclamation, being the day on which the Protocol on Environment Protection to the Antarctic Treaty enters into force. The Protocol entered into force on 14 January 1998. Insufficient notice of the entering into force of the Protocol was provided to enable a Proclamation to be made by that date. The amendment removes references to the Protocol. It is anticipated that Proclamation will be made soon after this bill receives Royal Assent.

FINANCIAL MANAGEMENT AND ACCOUN-T-ABILITY AMENDMENT BILL 2000

This Bill, a Bill to amend the Financial Management and Accountability Act 1997, provides for a supplement to annual and special appropriations on account of amounts of GST paid by Commonwealth entities, as part of consideration for a taxable supply or on creditable importations, which are recoverable through the input tax credit mechanism (recoverable GST).

The need for this technical amendment results from the way in which GST will impact on the Commonwealth's transactions, and the way in which annual and special appropriations are made.

The Commonwealth and Commonwealth entities will be liable to pay GST in respect of taxable supplies and taxable importations, so that they will be treated in much the same way as other GST taxpayers. They will not be exempted from GST passed onto them by their suppliers.

The accepted Australian guidance concerning the accounting treatment of GST in respect of expenses and assets is set out in Urgent Issues Group Abstract 31, issued by the Australian Accounting and Research Foundation in January 2000. Consistent with this guidance, annual and special appropriations will be made on a GST exclusive basis. Accordingly, amounts in the annual Appropriation Bills represent the net amount, or cost to the Budget, that Parliament is asked to allocate for particular purposes.

It is a Constitutional requirement that all payments by the Commonwealth be made under appropriation made by law.

This Bill proposes an amendment to the Financial Management and Accountability Act 1997 to provide for additional appropriation to supplement annual and special appropriations, equal to any recoverable GST payable by Commonwealth agencies. This will ensure that there will always be sufficient appropriation to cover the full amount of a payment, where the GST exclusive amount of the payment has been made by way of annual or special appropriation.

Parliamentary control over, and scrutiny of, expenditure will not be diminished as a result of the additional appropriation.

The additional appropriation will not have any Budgetary impact, as the part of the payment it represents will be recovered by the Commonwealth agency or department as an input tax credit.

I commend the Bill.

PETROLEUM (SUBMERGED LANDS) LEGISLATION AMENDMENT BILL( NO. 2) 2000

This bill proposes the repeal of Section 130 of the Petroleum (Submerged Lands) Act 1967. Section 130 was introduced in 1985 to allow the payment of $117.1 million in 1984/85 dollars to Western Australia through an annual schedule of payments. This agreement was entered into after the Western Australian government's gas utility sought to renegotiate domestic gas “take or pay” contracts with the North West Shelf joint venture participants.

The schedule of annual payments was planned to run from 1985-86 to 2004-05. The Commonwealth, with the agreement of Western Australia, intends to discharge the remaining five years of obligations, with a single one-off payment in 1999-2000 of $79,118,990. The payment is fair and equitable to the Commonwealth and Western Australia. It is based on agreed estimates of the future obligations discounted to a current value using discount rates derived from the Commonwealth's yield curve. Repeal of Section 130 is necessary for the Commonwealth to make the payment, as the Section as originally drafted did not foresee, nor allow, amounts in excess of the Commonwealth's retained gas royalty share to be transferred to Western Australia.

The payment will deliver administrative efficiencies and simplification of petroleum taxation revenue arrangements between the Commonwealth and Western Australia. By replacing the current complicated arrangements, the payment honours the Commonwealth's election commitment to review and simplify the administration of petroleum taxation arrangements. Furthermore, the Government is delivering on its tax reform objectives of developing a fairer, more internationally competitive, more efficient and less complex tax system.

The North West Shelf project has evolved from the early stages where royalty from domestic gas was limited by the small market. It is now a mature project with the Commonwealth royalty receipts from LNG, condensate, crude oil, domestic gas and LPG far exceeding the remaining share of royalty to be paid to Western Australia under Section 130.