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Australian Airlines (Conversion to Public Company) Bill 1987
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Legislative Research Service Department of the Parliamentary Library
Australian Airlines (Conversion to Public Company) Bill 1987
Date Introduced: 16 December 1987 House: Senate Presented by: Senator the Hon. Gareth Evans, Minister for Transport and Communications
Digest of Bill
Purpose
To allow Australian Airlines to be deemed a public company from a date fixed by proclamation and to restructure the body prior to its conversion.
Background
In October 1987 the Government announced a major change in aviation policy and notice was given that the two airlines agreement, which originated in 1952, would be terminated. Under the agreement, parties are required to give three years notice of termination and, as a result, the
agreement will cease to have effect from 1990. The ending of the agreement will result in much greater competitive pressure from both the established airlines and new entrants to the market.
II is generally agreed that should the aviation industry be deregulated immediately, Ansetl Airlines would be in an advantageous position to become the dominant carrier in the market. This is due both to advantages held by Ansett and deficiencies in Australian Airlines. Ansett's major advantages are a more appropriate aircraft mix, the ability to alter the types of aircraft quickly through the use of the group's international leasing arm and that it need not consult with the
government on major decisions. Australian Airlines suffers not oniy from government control in its day - to - day running, but also from an inappropriate aircraft mix. It is expected that the latter problem will be solved in the near future due to new aircraft purchases.
In recent times the question of the sale of part or all of Australian Airlines to the private sector has been discussed. The change in status from a statutory authority to a public company will make the sale of shares on the stock market possible, though under this Bill all shares are to be issued to the Commonwealth, a nominee of the Commonwealth or the
holding company. All shares in the holding company are to be beneficially owned by the Commonwealth.
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Main Provisions The Minister will be authorised to nominate a holding company that is to be a public company in which all shares are beneficially owned by the Commonwealth (clause 6).
Part III of the Bill (clauses 10 to 14) deals with the capital structure of the Australian Airlines group. Ciause 10 will provide for the Australian National Airlines Commission (ANAC), the body which controls Australian Airlines, to have share capital. ANAC is to use its capital to
buy the shares and they are to be issued to the Commonwealth, a nominee of the Commonwealth or the holding company, as directed by the Minister. The issue of the shares will remove any obligation to repay the capital to the Commonwealth (clause 11). Clause 13 will allow ANAC to increase its share
capital by the creation of new shares or to reduce its share capital by cancelling shares that have not been taken.
Part IV of the Bill (clauses 15 to 22) deais with the conversion to a public company. By clause 15, ANAC will be deemed to be a public company. This clause will take effect from a date fixed by Proclamation (sub - clause (\ 2(2». At the time of the change, ANAC's name will be changed to ;",-J
Australian Airlines Limited (clause 16). The memorandum and articles of association are to be lodged in the A.C.T. (clause 17).
Staff are to continue to be employed under the same terms and conditions (clause 30), though the eXisting power to alter the terms and conditions will remain (clause 32).
Part VII of the Bill (clauses 34 to 51) deals with taxation matters. Exempt matter is defined in clause 34 to be the issue of shares, transfers of property and other matters arising from the operation of this Bill. Tax is defined in the same clause to be taxes other than income tax. Tax will not be payable in relation to an exempt matter or things done in connection with an exempt matter (clause 35). Eligibility for the
investment allowance is not to be effected by a disposal of property to a company in the new group (clause 42) or the assignment of a lease to a company in the new group (clauses 43 and 44). Clause 49 deals with a number of matters relating to the capital gains tax. They include the 1/) caicuiation of the cost of the shares if subsequently disposed of and the !, treatment of pre and post capital gains tax shares on transfer to the new company.
Clause 58 will repeal the Australian National Airline Regulations.
Where the Commonwealth has guaranteed a liability assumed by ANAC. the guarantee will continue notwithstanding the transfer to the new company (clause 61).
If the operation of the Bill results in the acquisition of property from a person, reasonable compensation is payable (clause 62).
Clause 63 will allow the Govenor - General to make regulations under the Bill.
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For further information, if required, contact the Economics and Commerce Group
3 February 1988 Bills Digest Service
Legislative Research Service
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This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.
© Commonwealth of Australia 1987
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