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Infrastructure Investment (Asset Restructuring and Disposal) Bill 2009
Infrastructure Investment (Asset
Restructuring and Disposal) Bill 2009
Explanatory Notes
General Outline
Policy Objectives
The purpose of the Bill is to facilitate the restructure and disposal of the
interests in a variety of businesses, assets and liabilities currently held
through several Government Owned Corporations (GOCs) and other
Government owned entities, by a structured program over the forthcoming
3 to 5 year period.
In this context, a staged program of asset sales over coming years will play
an important role in funding the State's infrastructure program, reducing
State debt and encouraging private sector provision of infrastructure.
The sale of a number of State assets is designed to realise value, reduce risk
and/or obviate the need to further fund the significant ongoing capital
requirements of these businesses, where the private sector can fund those
requirements and, in particular, build Queensland's export capacity.
The proposed infrastructure assets restructure and sale program generally
involves the following:
· the sale of Forestry Plantations Queensland's (FPQ) business/assets;
· the sale of Queensland Motorways Limited's (QML) business/assets,
including the planned Port of Brisbane Motorway upgrade project;
· the sale of the Port of Brisbane Corporation's (POBC) business/assets,
but not including the Port of Bundaberg;
· the sale of Queensland Rail's (QR) above and below rail coal
businesses/assets, along with Ports Corporation of Queensland's
(PCQ) Abbot Point Coal Terminal; and
· the sale of QR's other commercial rail services such as Bulk freight,
Intermodal, Retail and Regional freight services, where feasible.
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Infrastructure Investment (Asset Restructuring and Disposal) Bill 2009
It is intended that QR's passenger services business and associated
suburban rail network will remain in State ownership.
In order to facilitate the immediate commencement of the appropriate
governance and other arrangements required to support the proposed
restructure and sale program, special sale legislation will need to be
enacted.
The proposed Bill, Infrastructure Investment (Asset Restructuring and
Disposal) Bill 2009, is similar to that used in other asset sale processes
undertaken by the State in recent years with the Minister (Treasurer) able to
exercise significant powers, including the ability to issue Project Directions
and Transfer Notices.
Previously, specific restructuring and sale processes for significant
Government owned assets have been facilitated by sales legislation which
has been sponsored by the Government, for example -
· the restructure and sale of ENERGEX and Ergon's electricity retail
businesses and ENERGEX's gas distribution business in 2006, and
Stanwell's and Tarong's wind farms and Enertrade's merchant gas and
gas transportation business through the Energy Assets (Restructuring
and Disposal Act) 2006; and
· the restructure and sale (long term lease) of the Cairns and Mackay
airports and the sale of the Port of Brisbane Corporation Limited's
interest in the Brisbane Airport through the Airport Assets
(Restructuring and Disposal Act) 2008.
Under both these pieces of legislation, the Minister was granted significant
powers to direct nominated sale entities to undertake a wide variety of
actions for the benefit of the State. Also, the Minister by transfer notice
could transfer assets and liabilities between entities. In addition, the
Minister was given wide ranging powers to deal with various existing and
new licences, permissions and authorities, including granting, amending
and transferring them under other legislation, including overriding other
legislation.
In order to facilitate the announced program of restructuring and sale of a
variety of large scale projects under the responsibility of the Minister, the
legislation sets up the generic framework for the announced program of
restructuring and sales. The legislation contains a very broad suite of
flexible powers for the Minister to ensure that the program can proceed,
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Infrastructure Investment (Asset Restructuring and Disposal) Bill 2009
including powers to effectively address the variety of contingencies that
will arise with the restructuring of each particular asset for sale.
It is highly likely that, following significant due diligence in relation to
each asset, additional legislative provisions will in the future need to be
introduced into this legislation. These future legislative provisions could
deal with such issues as providing for various existing and new licences,
permissions and authorities, any necessary modifications to the existing
regulatory frameworks for the assets, and other facilitative provisions. For
example, in relation to the recent Cairns and Mackay airport sales it was
necessary to establish appropriate control powers for a new owner to
undertake roles and functions that had traditionally been undertaken by
government officers, and this was achieved by the inclusion of delegation
mechanisms in the legislation.
The legislative scheme is necessary to provide a degree of flexibility to the
State in "packaging" a number of discrete businesses to be sold in a manner
which will maximise the return to the State. This approach will overcome
the need to take multiple steps under different legislation (eg under the
Government Owned Corporations Act 1993).
Even though the legislation is drafted so as to have extraterritorial
application, it cannot force particular outcomes where a relevant law is not
a Queensland law or the relevant law of a contract or licence, permission or
authority is outside Queensland.
It is appreciated that the approach will conflict with a number of
fundamental legislative principles. The approach is necessary and justified
because the sales are a result of the government's announced policy, the
funds to be generated are for particular and necessary purposes and urgent
timeframes are involved. Although there is the potential that third party
rights may be overridden during the implementation of the legislation (ie
overriding consent requirements which could prevent the necessary
restructuring proceeding) there is no practicable alternative which would
enable the necessary outcomes to be achieved.
In addition, it is considered necessary to exempt, from the operation of the
Right to Information Act 2009, documents which are created for the
purpose of, or in the course of carrying out the announced restructuring and
sales program. Documents which fall within this class relate to
commercial business activities of government owned entities involved in
the project. Much of this information is highly commercially sensitive,
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Infrastructure Investment (Asset Restructuring and Disposal) Bill 2009
particularly where the State is considering and implementing the
restructuring of businesses and is undertaking competitive sale processes.
Reasons for the Bill
Legislation is required to facilitate the restructure and disposal of a variety
of government owned businesses. Similar types of sale legislation have
been successfully used in the past.
It is necessary to have general transfer notice powers, because:
(a) it permits a timely and flexible solution to enable the State to take
steps to restructure the relevant businesses, assets and liabilities
for divestment with the timetable set by the State; and
(b) in order to vest assets in project entities, a third party consent
may be required. Thus there is a risk that third parties may seize
the opportunity to exploit the situation to renegotiate the
provisions of their agreement or withhold their consent to the
detriment of the State and the people of Queensland.
Project directions are critical for the State during the sales process. They
have at least two important functions. First, project directions permit
businesses to lawfully provide to the State (and ultimately to bidders in a
virtual data room) material that is subject to a confidentiality obligation
owed to a third party. Second, project directions are part of the range of
measures to permit the boards of the businesses to implement commercial
decisions by the State in circumstances where the board's independent
discretion is limited.
Achievement of the Objectives
As discussed in the Policy Objectives section, there are a variety of
significant projects for disposal which have been announced by the
Government. As with previous processes, it is necessary to undertake a
due diligence into each business, followed by restructuring in preparation
for sale. A sale process (either open or closed) is conducted with the aim of
striking an appropriate balance of maximising the return to Government
while appropriately minimising risks.
In order for this legislation to facilitate the necessary due diligence,
restructuring and sale in respect of each project, a suite of flexible powers
are considered necessary.
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Infrastructure Investment (Asset Restructuring and Disposal) Bill 2009
The powers in the generic sale legislation need to be sufficient to facilitate
· necessary investigations (including the usual protections from
breaches of confidentiality and privacy etc);
· required restructuring;
· the potential need to override certain requirements of third party
contracts (including consents and other requirements) for the purposes
of internal restructuring
· the conduct by the sale team of an open or closed sale process
(including the usual protections for those "government" officers
involved); and
· the ultimate completion of the transactions and repatriation of the
funds back to the State.
The Bill achieves its main policy objectives by:
(a) facilitating the creation of stand-alone businesses in preparation for
the sale of the nominated assets;
(b) facilitating a competitive disposal process being conducted for the
divestment of the State's interest in the nominated businesses; and
(c) conferral on the Treasurer of the power to give directions and to make
transfer notices to transfer the assets of relevant entities (including the
exercise of powers under various pieces of legislation) to restructure
and divest the government businesses.
Alternatives to the Bill
The policy objectives can only be implemented through primary
legislation.
Estimated Cost for Government Implementation
The cost of administering the Bill in respect of the divestment of the
nominated businesses will be defrayed by the proceeds of the disposal of
these assets.
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Infrastructure Investment (Asset Restructuring and Disposal) Bill 2009
Consistency with Fundamental Legislative Principles
The Government has announced the proposed infrastructure assets
restructure and sale program. The Bill is essential to enable the Queensland
Government to restructure and dispose of the nominated businesses.
The Government sale team needs to immediately commence:
(i) the process of identifying and examining the assets and liabilities of
the businesses for the purpose of restructuring the businesses; and
(ii) the necessary preparations for the disposal processes for the State's
ownership in the nominated businesses.
The timeframe for the disposal of the appropriately structured entities will
be in accordance with a program to be developed and is expected to last
some 3 to 5 years. Accordingly, the restructuring provisions under the Bill,
particularly in relation to the Minister's powers, will cease to operate on 1
July 2014.
The Bill is essential to facilitate the restructure of the declared entities
within this strict timeframe and to ensure that the best available
commercial outcome is achieved for the State.
The Bill raises the following issues relevant to fundamental legislative
principles:
(a) Rights and liberties of individuals, facilitation of evidence by
certificate - Legislative Standards Act section 4(2)(a) and 4(3). The
Bill may not be consistent with the principles of natural justice in that
clause 26 provides that the Treasurer may issue a certificate as
conclusive evidence in relation to matters done under the Bill. For
example, the Treasurer may issue a certificate identifying that certain
information was authorised to be disclosed by a GOC or its
subsidiaries to a prospective purchaser for the purpose of this project.
Such a certificate would prevent a person bringing any contrary
evidence to challenge the validity of the certificate. Given the State's
proposed timeframe and the need for certainty for this project, any
legal proceedings would unacceptably "derail" the disposal process.
(b) Rights and liberties of individuals, decisions not reviewable -
Legislative Standards Act section 4(2)(a) and 4(3). Clause 17
provides that a decision under this Act is final and conclusive; cannot
be challenged, appealed against, reviewed, quashed, set aside or called
into question in any other way, under the Judicial Review Act 1991 or
otherwise (whether by Supreme Court, another court, a tribunal or
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Infrastructure Investment (Asset Restructuring and Disposal) Bill 2009
another entity); and is not subject to any writ or order of the Supreme
Court, another court, a tribunal or another entity on any ground.
Given the State's proposed timeframe and the need for certainty and
speed in which things are to be done for these projects, any legal
proceedings would "derail" the divestment processes. The exclusion
of review in relation to things done under this Bill is on the basis that
these are significant commercial projects and the purchasers of the
assets require certainty in the current economic conditions. Also, the
State would suffer a significant financial detriment if it was delayed in
restructuring the State owned government assets and their subsequent
disposal. It is necessary to limit the ability of third parties to
unreasonably delay the implementation of these projects.
(c) Rights and liberties of individuals, disclosure of confidential
information and the deeming of a third party's consent Legislative
Standards Act section 4(2)(a) and 4(3) & conferring immunity from
liability - Legislative Standards Act section 4(2)(a) and 4(3)(h). There
are two circumstances in which third parties' commercial rights may
be affected by the Bill in respect of the restructuring and disposal
provisions:
· the disclosure of confidential information without third parties'
consent; and
· the transfer of businesses, assets and liabilities between a GOC or
other government owned entity and its subsidiary or other government
entity by gazetted transfer notice issued by the Treasurer for the
purposes of restructuring. The transfer notice will potentially override
requirements of third party contracts in a variety of circumstances, for
example where consent to a change of control is required.
For the purposes of this project, it is intended that the entities which are
Government Owned Corporations will have been required by direction to
co-operate with the State and its advisors in identifying and examining the
assets and liabilities of the particular GOC. The GOCs and other
government entities and their subsidiaries will be concerned that they and
their employees may be sued by a third party for a breach of contract or
obligation of confidence in relation to the disclosure of confidential
information to the State and its advisors. This is particularly the case for a
GOC subsidiary or other parent entity which can not be given a
Shareholding Ministerial direction and thus acts voluntarily to disclose
confidential information to the State's advisors which may be to the
detriment of the directors of the relevant company.
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Infrastructure Investment (Asset Restructuring and Disposal) Bill 2009
The sale team will establish "vendor data rooms" to contain information in
the possession and control of the parent entity and its subsidiaries.
Pursuant to clause 20, the State is entering into a confidentiality agreement
with prospective purchasers for the purpose of giving access to information
in the possession or control of an entity or its subsidiaries.
Clauses 21 and 22 authorise an entity or its subsidiary to disclose
information to persons involved in the project, prospective purchasers and
other State owned entities and their subsidiaries for the purposes of the
project. Clause 22 overrides any condition contained in an agreement
between a third party and an entity or its subsidiaries that certain
information (including the terms of the relevant agreement) cannot be
disclosed to any person without that third party's consent.
To achieve the State's proposed timeframe, it is not possible to obtain the
necessary consents from the relevant third parties to disclose the requisite
information to the prospective purchasers. At the same time, this
information needs to be provided to prospective purchasers for the purpose
of them being able to make an informed decision. If this information is not
provided, the State is at risk of liability for, and criticism that it is engaging
in misleading practices by not providing correct and fulsome information.
The purpose of clauses 21 and 22 is to facilitate the due diligence and
disposal processes. This clause will also overcome the need for the
relevant shareholding Ministers to continue to issue directions to the GOCs
relating to disclosure of information to the sale team for the purposes of the
project
Similar provisions to clause 9 (Transfer Notice), clause 20 (Confidentiality
Agreement with Prospective Purchasers), clause 21 (Disclosure and Use of
Information for the Project), clause 22 (Effect on Legal Relationships) and
clause 26 (Evidentiary Aids) were contained in the Energy Assets
(Restructuring and Disposal) Act 2006 and the Airport Assets
(Restructuring and Disposal) Act 2008.
The Bill's objective is to facilitate and ensure the completion of the
disposal process by mid 2014. If the Bill does not override some third
parties' rights, it would not be possible for the restructure of the businesses
to occur in a manner which would maximise the return to the State, and
enable these projects to be completed within the State's proposed
timeframe. These are significant commercial projects and the purchasers of
the assets require certainty. Also, the State would suffer significant
financial detriment if the State was delayed in restructuring the businesses
of the State owned entities and the subsequent disposal of those businesses.
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Infrastructure Investment (Asset Restructuring and Disposal) Bill 2009
Consultation
The Government announced its intention to engage in this program in the
Parliament on 2 June 2009. The Government has moved to establish
consultative committees with trade unions to represent the interests of
employees in this process.
Given that clause 13 of the Bill provides that the acts of the Minister under
this Act is an excluded matter for the Corporations Act, it will be necessary
to consult with the Ministerial Council as soon as possible, seeking their
comments about the proposed section.
Notes on Provisions
Part 1 Preliminary
Clause 1 specifies the name of the Act.
Clause 2 states the main purpose of the Act.
Clause 3 states the intention that the legislation is to operate both within
and outside Queensland and to the fullest extent legally possible.
Part 2 Interpretation
Clause 4 refers to the dictionary in the schedule where particular words
used in the Act are defined.
Clause 5 defines the term "declared project". This definition assists to
circumscribe the limits of the powers granted under the Act. Clause 5(2)
provides that the Minister may, by gazette notice, declare something to be
part of a project for the purposes of the Act.
Clause 6 defines the term "declared entity". This definition assists to limit
the powers granted under the Act. Clause 6(2) provides that the Minister
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Infrastructure Investment (Asset Restructuring and Disposal) Bill 2009
may, by gazette notice, declare a government owned entity to come under
the scheme of the Act but only for the purposes of a declared project.
Clause 7 sets out that when the term "function" is used in the Act, it
includes a power.
Part 3 Particular Ministerial powers and
activities relating to declared
projects
Clause 8 provides that the Minister may take any necessary or incidental
action for the purposes of facilitating the disposal of a declared entity or of
a business, asset or liability of a declared entity, and to ensure the continued
operation of entities. The operation of this clause is limited to the purpose
of the declared project.
Clause 9 provides that the Minister may do a number of things for the
purposes of the project by way of a transfer notice which must be gazetted
to have effect. The transfer notice is available to transfer assets and
liabilities from one entity to another entity and make other provision for
restructuring as necessary. The Minister's powers under clause 9 are
limited to the purposes of the declared project and to declared entities and
are similar to the transfer notice provisions under the Energy Assets
(Restructuring and Disposal) Act 2006 and the Airport Assets
(Restructuring and Disposal) Act 2008.
Clause 10 provides for limitations on the Minister's power to second
employees of a declared entity under clause 9. For example, the
secondment of an employee under a transfer notice must not reduce the
employee's status or unreasonably change the employee's duties, without
the employee's consent.
Clause 11 provides that the Minister may give a direction to a declared
entity or its board requiring it to do something necessary and convenient
for effectively carrying out a declared project. A declared entity and its
board is required to comply with a direction given pursuant to this section.
This clause is similar to the project direction provisions under the Energy
Assets (Restructuring and Disposal) Act 2006 and the Airport Assets
(Restructuring and Disposal) Act 2008.
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Infrastructure Investment (Asset Restructuring and Disposal) Bill 2009
Part 4 Application of other laws and
instruments
Clause 12 provides for the validity of acts done under the Act despite
contrary provisions under any other Act or instrument.
Clause 13 is a displacement provision for the purposes of section 5F of the
Corporations Act 2001(Cth) to protect the Minister from liability in
circumstances where the Minister is impacting the business of the declared
entity by exercising powers under this Act.
Clause 14 provides that no duty under the Duties Act 2001 is payable in
relation to anything done under a transfer notice issued by the Minister
under the Act. This facilitates the restructuring of businesses which are
government owned for the purposes of the project to occur without
attracting duty.
Clause 15 excludes the operation of section 121 of the Property Law Act
1974 (Provisions as to covenants not to assign etc. without licence or
consent) over the lease of land granted by a government owned lessor.
Thus, if disposal of a business occurs by means of a long term lease, the
government owned lessor will not be subject to a statutory obligation to act
reasonably in considering a request by the lessee to assign the lease. This
allows the government lessor to protect the State's interests under a long
term lease.
Clause 16 provides that where a transfer notice or project direction results
in the disposal of a public record, the public record is taken to be disposed
of under legal authority, justification or excuse for the purposes of section
13 of the Public Records Act 2002.
Clause 17 provides that a decision made under the Act is final and
conclusive and is not subject to challenge or review under the Judicial
Review Act 1991, or otherwise.
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Infrastructure Investment (Asset Restructuring and Disposal) Bill 2009
Part 5 Miscellaneous
Clause 18 provides that the Minister may not perform a function under the
Act on or after 1 July 2014. In particular, the Minister will be unable to
issue new project directions or transfer notices.
Clause 19 provides that the registrar of titles or other registering authority
may without formal application register the transfer of an asset or liability
under a transfer notice issued by the Minister under the Act. However, the
registrar of titles or other registering authority must register the transfer if a
written application is made by a transferee entity. This clause also requires
the registration of a transaction related to a transfer under a transfer notice
even if the transferee entity has not been registered as a proprietor of the
asset or liability provided that the transaction is effected by an instrument
otherwise in registrable form. In addition, this clause provides that the
registrar of titles is not obliged to enquire as to whether an asset or liability
has been transferred under a transfer notice provided that the asset or
liability is registered in the name of a transferor entity before registering a
dealing.
Clause 20 provides that a prospective purchaser may enter into a
confidentiality agreement with the State for the purpose of obtaining access
to information in the possession or control of a declared entity.
Clause 21 (1) provides that a person may disclose information in the
possession or control of a declared entity for the purpose of a declared
project. Clause 21(1) limits disclosure to those persons who are involved
with the project or have entered into a confidentiality agreement mentioned
in clause 20, and to declared entities (including any employee or agent).
Clause 21 (2) compels a declared entity or its board to comply with a
request by the Minister for the disclosure of information for the purpose of
a project. A person, who in acting honestly discloses or uses information
under clause 21, is not liable in relation to any civil, criminal or other
administrative action in relation to that use or disclosure.
Clause 22 protects the State and other relevant entities from liability for
things done under the Act. Clauses 22(2) and (3) provide that where notice
or consent is required to do something under the Act that notice or consent
is taken to be given unconditionally.
Clauses 20, 21 and 22 are read together to facilitate the restructure and
disposal of the selected declared entity assets. For example, if a
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Infrastructure Investment (Asset Restructuring and Disposal) Bill 2009
commercial agreement contains a confidentiality clause permitting the
disclosure of confidential information to another person if required by law,
clause 21(2) will be regarded as a sufficient lawful authority to do so. If a
commercial agreement includes a condition that certain information
(including terms of the relevant agreement) cannot be disclosed to any
person without that third party's consent, clause 22 will operate to override
that condition by deeming that consent has been given unconditionally.
Clause 20 will ensure that a prospective purchaser who is the recipient of
such information is subject to confidentiality obligations that may be
attached to the information.
Clause 23 provides that a thing is taken to be done under this Act in
compliance with a transfer notice or a project direction even if steps are
required to be taken under another Act. For example if the Minister grants
a sub-lease of land under the Land Act 1994 by way of a transfer notice, the
grant is deemed to be done under this Act and due to the operation of
clause 22(2) of the Act, any approval required under the Land Act 1994,
section 322 is taken to have been given unconditionally.
Clause 24 preserves all rights, benefits, entitlements or remuneration of
employees seconded from a declared entity to another declared entity as
part of any action taken to facilitate the disposal of the assets and liabilities
of a declared entity to the extent permitted by applicable Commonwealth
legislation.
Clause 25 preserves all rights, benefits, entitlements or remuneration of
employees transferred from a declared entity to another declared entity as
part of any action taken to facilitate the disposal of the assets and liabilities
of a declared entity to the extent permitted by applicable Commonwealth
legislation.
Clause 26 provides that the Minister's certificate is conclusive evidence
that a stated thing was, or is being done for the purpose of a declared
project or that a person is, or was at a stated time involved in a declared
project, or that a company was established for a declared project, or a stated
direction by a Minister related to a declared project.
Clause 27 provides that the Minister may delegate the Minister's functions
under the Act to the chief executive of the department responsible for
administering the Act, except for the power to issue a transfer notice under
clause 9, or to declare a thing to be part of a project under clause 5, or a
declared entity under clause 6.
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Infrastructure Investment (Asset Restructuring and Disposal) Bill 2009
Clause 28 provides for the Governor in Council to make regulations under
the Act.
Part 6 Amendment of Right to
Information Act 2009
Clause 29 provides that the Right to Information Act 2009 is amended.
Clause 30 provides that a new exemption is introduced into Part 2 of
Schedule 2 of the Right to Information Act 2009 in relation to a declared
entity in connection with a declared project under the Act. Accordingly,
documents which are specifically brought into existence for the purposes of
the State's restructuring and sale program of the nominated commercial
businesses and assets cannot be required to be released by the entity under
the Right to Information Act 2009.
Schedule Dictionary
The Schedule contains the dictionary of defined words as referred to in
clause 4.
© State of Queensland 2009
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