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Tuesday, 9 March 1971

Senator Dame ANNABELLE RANKIN (Queensland) (Minister for Housing) (8.17) - I move:

That the Bill be now read a second time.

The intention of this Bill is to amend the financial provisions of the Overseas Telecommunications Act 1946-1968 to provide for the implementation of revised financial arrangements between the Commonwealth and the Overseas Telecommunications Commission as from 1st April 1970. The section of the Act relating to retirement conditions are also to be amended with this Bill. The financial arrangements between the Commission and the Commonwealth have been governed by the provision of the Overseas Telecommunications Act, which arc essentially unchanged since being drafted at the Commission's inception over 24 years ago. Finance has been provided by Treasury advances on terms fixed by the Treasurer, which have always included liability for interest. Income which the Commission may accrue was exempted from taxation and the derived net profit from the Commission's operations has been used each year as directed by the Postmaster-General following the concurrence of the Treasurer. Up to and including 1967-68 the direction has been that the net profit be retained by the Commission.

In the first 151/2 years of the Commission's operation, Treasury advances totalled $4.4m and retained profits in the same period only $4.7m. Six years later, however, the retained profit had risen to$29.5m whilst Treasury advances totalled $22.5m. Such was the position as at 31st March 1968. This significant change, coming as a direct result of the employment of coaxial submarine telephone cables and satellite communications as well as an increasing use of services provided by the Commission, has emphasised the need for a review of the financial arrangements. Despite tariffs that compare more than favourably with world rates, and a relatively heavy and continuing programme of capital expenditure on new and replacement assets, there has been a significant build-up of cash from profits and depreciation recoveries. In these circumstances, Mr President, it is proposed that the financial relations between the Commission and the Commonwealth be altered to provide: (a) that the nature of the Commonwealth's investment in the Commission be varied - from interest-bearing Treasury advances to capital; (b) that the Commission's income be subject to taxation; (c) that in lieu of the interest that has been paid in the past on Treasury advances, a dividend be paid each year on capital. A commencing rate of 7i per cent is proposed; and (d) that the Commission's requirements for new capital investment, additional to retained profits, be provided from the Budget or from authorised borrowings.

Conversion of existing Treasury advances to capital and transference from the Commission's retained past profits of an amount sufficient to bring the initial capital to S35m will achieve the reconstruction of the capital structure. At present Treasury advances to the Commission stand at S17.5m, following repayment of $5m to the Treasury in 1968. The proposals were designed for introduction in the financial year which began on 1st April 1968 but, for a number of reasons, this was not achieved. On the recommendation of the Commission, and with Treasury concurrence, the Postmaster-General directed that in respect of the profit derived from that year, $6.47m be paid to the Commonwealth Treasury. This represented a payment in lieu of income tax and of a dividend on the Commonwealth's funds employed. For the year ended 31st March 1970 provision has been made similarly for a payment of $6.9 lm to Treasury.

The proposed financial arrangements are similar to those for other Commonwealth statutory business undertakings. It is anticipated that the Commission will require only modest drawings of new capital from the Commonwealth whilst there will be from time to time a need for a review of the level of capital. There is provision in the Bill that the Postmaster-General, with concurrence of the Treasurer, may direct the Commission to transfer further amounts to the capital account from retained profits. Mr President, the Bill also seeks to amend section 24 of the Overseas Telecommunications Act. This section determines the conditions under which the retired. Whilst prescribing a maximum age of 65 years for male officers, female Commission's officers may retire or be officers at the present time must retire on attaining the age of 60 years. This restriction on female officers is to be removed and, in cases suitable to the Commission an officer, male or female, who has attained the age of 65 years may continue in the Commission's service for a period not exceeding 12 months. These amendments provide conditions which are similar to existing provisions in the Commonwealth Public Service Act. I commend the Bill to honourable senators.

Debate (on motion by Senator Willesee) adjourned.

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