Government Business
Finance provides advice and support to the Finance Minister in exercising his shareholder and financial oversight responsibilities for GBEs and other commercial entities. The department also assists the Minister in managing residual issues arising from previous asset sales and businesses managed by Finance, and in making decisions about options for the future use of various government assets.
National Broadband Network
Consistent with the government’s announcement on 7 April 2009, Finance, in consultation with the Department of Broadband, Communications and the Digital Economy (DBCDE), assisted with the establishment of a new wholly government-owned company to build and operate the proposed NBN at a cost of up to $43 billion, including private financing. The Minister for Finance and Deregulation and the Minister for Broadband, Communications and the Digital Economy are joint shareholders of the company and Finance will continue to oversee the governance arrangements for the company. Finance will also assist DBCDE to undertake an implementation study to determine the operating arrangements, detailed network design, ways to attract private sector investment and ways to provide procurement opportunities for local businesses.
Australian Submarine Corporation (ASC)
On 16 August 2006, the previous government announced its intention to return ASC Pty Ltd to private ownership through a competitive tender trade sale. Finance commenced sale preparation activities at that time and these continued into the first half of 2008-09.
On 26 February 2009, the current government announced that the sale of ASC would not proceed at this time. Following this announcement, Finance wound up the sale process but continues to provide advice to the Australian Government on the performance of ASC.
Medibank Acquisitions of Australian Health Management and Health Services Australia
Finance advised the government on Medibank Private Limited’s (MPL) acquisition of Australian Health Management, which occurred on 15 January 2009, and the merger with Health Services Australia, which took effect on 1 April 2009. Finance advised on the commercial merit of these processes and the way MPL can be structured to best support the government’s preventative health agenda.
Medibank Conversion to For-profit
Finance advised the government on the conversion of MPL to a for-profit entity as part of the 2009-10 Budget. The conversion will help put MPL on an equal footing with its major competitors in the private health insurance market whilst also bringing MPL into line with other government owned businesses. The conversion provides MPL with additional freedom, incentive to continue to innovate, and will support the government’s preventative health agenda more broadly.
Following the government’s decision, the department worked with MPL on preparations for the conversion, including drafting amendments to MPL’s Constitution as part of MPL’s application to the Private Health Insurance Administration Council for the conversion. On 2 July 2009, the council approved MPL’s application to become a for-profit health insurer.1
Finalisation of the Telstra 3 Sale Process
The Telstra 3 instalment collection process was successfully completed by 21 August 2008. On 21 November 2008, 35,361,956 shares that were reserved under the Telstra 3 Prospectus, but not allocated to meet bonus loyalty share obligations and buffer requirements, were transferred to the Future Fund. Of the residual Telstra 3 sale proceeds held in the Telstra Sale Special Account, $1.735 billion was drawn down by 25 June 2009 to be utilised for the Clean Energy Initiative, local community infrastructure and other infrastructure projects. The $0.97 billion balance of the Telstra Sale Special Account was transferred to the Building Australia Fund on 26 June 2009 and the Special Account was subsequently closed.
On 27 May 2009, the Telstra Sale Company Limited, which was the instalment receipt trustee company established during the Telstra 3 Share Offer to hold the Telstra shares, was deregistered following the conclusion of the Telstra 3 sale process.
Defence Housing Australia (DHA)
On 3 February 2009, the government announced that it would provide DHA with $252 million as part of the Nation Building – Economic Stimulus Plan to build 802 dwellings in metropolitan and regional centres during 2009-10 and 2010-11. The houses will augment the DHA stock which is used to accommodate serving Defence force members and their families. The construction activity will provide jobs and economic stimulus in local economies and assist to offset the impact of the economic downturn. Finance worked with DHA to develop the plan and the department is monitoring its progress. Under the direction of the Coordinator-General, DHA is providing weekly reports on the construction program. At 30 June 2009, DHA had entered into 464 contracts for the commencement of construction.
Australian Rail Track Corporation (ARTC)
On 12 December 2008, the government announced that it would provide ARTC with up to $1.2 billion of equity injections as part of the Nation Building Package. This funding is being provided to ARTC so that it is able to deliver the rail infrastructure projects identified in its strategic investment program ahead of schedule. Finance has worked with the Department of Infrastructure, Transport, Regional Development and Local Government to advise the government and to facilitate the equity injections.
Googong Dam
As noted in Finance’s 2007-08 Annual Report, on 4 September 2008, the Minister for Finance and Deregulation and the ACT Chief Minister signed a 150 year lease over the land at Googong Dam. Googong Dam is located on Commonwealth land in NSW but it is an important storage facility supplying water to the ACT, Queanbeyan and the surrounding area. The lease removes the anomalies that occurred when the ACT commenced self-government in 1989 and sets out the terms of the ACT’s rights to use a significant piece of Commonwealth-owned infrastructure. It also provides a legal footing on which future planning for the dam by the ACT Government can occur.
Discretionary Compensation and Waivers of Debt
In 2008-09, Finance received 4,404 requests for discretionary assistance by way of an act of grace payment or waiver of an amount owing to the Commonwealth, and completed 4,330 of those requests. In addition to assessing requests, Finance liaised extensively with a range of agencies on the other discretionary compensation mechanisms, ex gratia payments and the Scheme for Compensation for Detriment caused by Defective Administration.