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Gladstone Power Station Agreement (Repeal) Bill 1999



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Bills Digest No. 93  1999-2000

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Gladstone Power Station Agreement (Repeal) Bill 1999

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

Gladstone Power Station Agreement (Repeal) Bill 1999

Date Introduced:   24 November 1999

House:   House of Representatives

Portfolio:   Industry, Science and Resources

Commencement:   On Royal Assent

Purpose

To repeal the Gladstone Power Station Agreement Act 1970 on the grounds that it is inactive legislation.

Background

Under the Gladstone Power Station Agreement Act 1970, the Commonwealth provided a $183 million loan to the Queensland to finance a coal-fired power station. The power station was intended to provide low-cost power in order to 'attract a viable export orientated industrial complex to central Queensland'. (1) The terms of the loan agreement, which is a schedule to the 1970 Act, included biannual payments over thirty years (ie to 2009).

In 1994, Queensland sold the station to a consortium lead by Comalco for $750 million. Comalco operated an Aluminium smelter at Boyne Island at Gladstone and planned to expand its operations. As part of this process, the Commonwealth and Queensland Governments agreed that Queensland would pay the Commonwealth $59 million in total settlement of the original loan, representing the difference between the outstanding balance and the net present value (2) of the loan. (3) Discussions between the Commonwealth and the Queensland Governments regarding early repayment had been going on since at least 1992.

Notwithstanding this arrangement, Queensland was still technically bound by the 1970 agreement to pay the Commonwealth an additional sum of around $75 million. (4) While the Commonwealth did have the ability to waive debts due for payment under the Audit Act 1901 , that Act did not specifically allow waivers for future or prospective debts. (5) However, with the coming into force of the Financial Management and Accountability Act 1997 in 1998, the Commonwealth was able to waive such debts. (6) The waiver of the $75 million was approved by the Minister for Finance and Administration on 13 July 1998.

Accordingly, with all obligations between the Commonwealth and Queensland Governments discharged, the 1970 Act no longer has any function.

Main Provisions

Ite m 1 of Schedule 1 repeals the Gladstone Power Station Agreement Act 1970 .

Endnotes

1. Second reading speech, the Hon John Gorton MP, House of Representatives, Parliamentary Debates 14 April 1970, p. 1044.

2. Present value is the discounted value of a future earnings stream.

3. Second reading speech, the Hon Warren Entsch MP, House of Representatives, Parliamentary Debates 24 November 1999, p. 3900.

4. This because the loan agreement did not provide for early repayment.

5. In this case, the debt that would technically accumulate between 1994 and 2009 under the terms of the loan agreement.

6. Entsch, W. op cit. See sub-section 34(4) Financial Management and Accountability Act 1997 .

Contact Officer

Angus Martyn

6 December 1999

Bills Digest Service

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