Clause 12 South Australia Ports Corp (Disposal of Maritime Assets)

Extract from Hansard

Legislative Council
30 November 2000

Mike Elliott
Leader Australian Democrats
Member of the Legislative Council

Parliament Index
2000 Spring Sitting Index
Browse by Subject
Search all Democrats material
About the SA Parliament
Hansard on line

The Hon. M.J. ELLIOTT: In my contribution, I will not reflect upon the merits of the sale of the Ports Corp or otherwise because the lead speaker for the Democrats in relation to this bill is the Hon. Sandra Kanck. What I will do is address the specific issues that are raised in the amendment to clause 12. The government has essentially admitted that what it is putting into this legislation is a contrivance. It uses the word `mechanism' because it sounds better than `contrivance'. However, it is a contrivance to play games with some bottom lines which appear on some pieces of paper but which do not actually alter the true bottom line situation. Basically, I think the Treasurer is trying to argue that the rating agencies are stupid, that the government can use contrivances and that they will not pick that up.

The government can even say to parliament that it can use a contrivance but, as long as they just take a quick look at the budget and it seems to look all right, then it will be fine. That is probably true of a lot of the ratings agencies because, unfortunately, they are pretty stupid. When you look at what has happened with the state's bottom line over the past seven years-the true bottom line as distinct from some of the other games that have been played around the term `debt' and the way they have reacted with ratings-it just goes to show how stupid they are.

Let us take this $100 million, which would reflect nothing like any superannuation obligation that would have been with Ports Corp-and we will be keeping an obligation in relation to that, I am sure-and put it into a bank account earning interest at the relatively low rate of 6 per cent. The implication of that is that, of the annual $14 million that the Treasurer is talking about needing to spend, $ 6 million will come from interest and only $8 million will come from his $ 100 million capital.

The next year there is 6 per cent interest on the remaining $92 million, so approximately $5.5 million will be needed to top it up with $8.5 million of capital. Obviously, as you follow through, you get to the end of seven years and you never needed the $100 million-in fact, you needed $70 million or thereabouts-and the government has another $30 million slopping around. In other words, another little slush fund is being created.

The Hon. M.J. ELLIOTT: No, it's there now, because the government does not need it all-and it will never need it all because the fact is that $100 million is more than it needs to put aside.

The Hon. M.J. ELLIOTT: But the way the bill currently reads, it provides that it will be put against debt retirement. If you read the bill, at the moment it does not allow for it to be put into general revenue. I seem to recall that the Hon. Terry Cameron, in relation to the electricity sale, was insistent that it should be used for debt retirement.

The Hon. M.J. ELLIOTT: Just a second; let us keep this tumbling on. The point I am making is that, while the government may spend close to $100 million over seven years, if it put that amount away now there will still be $30 million of it left at the end of the seven years. It is also worth noting that I think the Treasurer is being a little disingenuous about accounting processes. The reason that abnormal is not counted is that abnormal is counted as a capital transfer correctly while interest on the abnormal is counted as a revenue inflow.

In other words, the interest on the bank account will be counted as revenue flow to offset against the spending of that interest. Using the $100 million to pay off debt reduces one outlay-annual interest-allowing another outlay-the salinity payments- to go up by the amount of interest saved, that is, about $6 million of the $ 14 million, without adding to our debt bottom line. Hence, the Treasurer really wants to use the rest of the interest saved from the Ports Corp proceeds to pay off debt for some purpose other than salinity.

The question I asked the Treasurer was, `What is that other purpose?' I think it is also worth noting, in terms of looking prospectively, that we will be in net GST gain well before those seven years are up. In fact, it is looking quite likely that, within four years, the state will be making a net benefit and getting increased revenue streams on account of the GST. The evidence is clearly there that the flows are far greater than was first predicted. So far as there will be any difficulty, it will be the next two or three years in terms of finding money from the budget. It is a short-term problem not a long-term problem, yet the Treasurer is trying to set aside $100 million for the next seven years. I would argue that even if one could justify his argument of using a contrivance, which I am not convinced by-

The Hon. M.J. ELLIOTT: After spending 15 years listening to him do it one would be expected to do it, but the fact is that, calling a spade a spade, the mechanism is a contrivance. What I am saying is that even a contrivance is overkill because you do not need anything like $100 million put away now to pay the $ 100 million bill over the next seven years, first, because of the interest implications and, secondly, as I said, the budgetary situation should change dramatically in the next three or four years regardless of how hard the Liberals try to stuff it up.

The Hon. M.J. ELLIOTT: I will ask a few other questions which relate to issues of the asset value of Ports Corp. I understand that legal action is currently in progress. Brighton Cement has taken Ports Corp to court on the basis that port charges should be deemed to be a tax. My understanding is that the argument being put by Brighton Cement is that, if the charges cover only the costs of Ports Corp, they could not be regarded as a tax. That is the challenge it is putting forward; it is saying that the charges are such that essentially there is a tax component in them.

I will not ask the Treasurer to speculate about the case itself. However, what would it cost Ports Corp and/or the state should that legal action succeed in relation to Brighton Cement? If it is successful, there could be a queue of companies and it has been suggested to me that the liability could run into several hundred million dollars. Can the Treasurer throw any light on that matter?

The Hon. R.I. LUCAS: When we are involved in litigation we will not put on the public record what the potential liabilities might be. I am not sure whether the honourable member is serious, but we are involved in a very intensive legal debate with a very powerful company in relation to this issue.

The Hon. R.I. LUCAS: The honourable member might say it is extraordinary, but in all honesty you cannot expect to place on the record one side of the legal dispute.

The Hon. R.I. LUCAS: It has been reported in the paper; you have read it. It has made a claim in relation to the dispute, and the government is obviously defending it, through Ports Corp.

The Hon. R.I. LUCAS: I do not know whether that has been claimed; I do not know what the quantum is. It may be on the public record, but I do not know what the claim is. Whatever the claim, it is being vigorously disputed, and the government will not place on the record information in relation to its legal position or what it might consider in terms of settlement, whatever happens. I am surprised that the Leader of the Democrats would even ask such a question framed in that way, when the state is trying to defend its position on behalf of the taxpayers. If the state is deemed to have a liability, it would be the responsibility of the Ports Corporation and not the responsibility of the new owners and operators.