Legislative Council Thursday 16 March 2017
Ms FORREST ( Murchison ) - Mr President, I am not opposed to spending TT-Line funds on TT-Line business. I ask, is this bill the only way to do it? Some of the questions the member for Apsley and others asked may be answered in some respect. This proposal was put forward in the 2016-17 Budget, as the Leader said in her speech. When I did my budget reply I made it very clear that my support for the budget did not guarantee my support for everything that flowed from it. There were a number of reasons I gave at the time, and I will not go back over those now. I want to focus on this bill before us.
There are a number of ways parties with an interest in the company, in this case shareholders who own and control all the issued shares, can dictate and control how a company operates. I have never previously heard of shareholders compelling a company to hand over funds to be held by shareholders in a separate account, effectively in trust for the shareholders. The funds then have to be handed back by the shareholders to the company at the time it may be right. I say 'may be right' advisedly. If the shareholders decide otherwise and the parliament approves the funds can go elsewhere, effectively at any time, it only requires another bill to be introduced, possibly just an amendment bill, as the member for Huon was alluding to.
The notion is really quite ludicrous. Perhaps the Leader, in her response, can inform me of the names of other companies that have done such a thing. I cannot imagine, for example, BHP shareholders telling the board they do not trust them with the money on important and necessary future infrastructure so give us $40 million or $80 million or whatever it might be, and we will put it in a trust account to return to you at a later time, when we think you need it.
That is the sort of thing that is being proposed here. What other options did the Government pursue in trying to achieve the proposed aims of this bill? I imagine that the TT-Line Board would be as keen as anyone to ensure their funds were used to buy replacement vessels. As alluded to by the Leader, they would want to ensure the funds are invested well. There is always some risk but with a low-risk approach to ensure that the return is good.
I would like the Leader to advise who initiated this process. Was it the TT-Line that suggested this course of action as proposed in the bill, or was it the Government? Why the grand flourish of a bill, followed by two such dividends, one this year and one the next? I hope the Leader will not tell me that it had nothing to do with the fact that dividends boost the Government's surplus, or is that just a coincidence?
I asked the Leader why this process has not been proposed via an equity withdrawal. Again, a coincidence; an equity withdrawal would not have any effect on the Government's bottom line. I bet my bottom dollar that when the Government decides to return the funds to TT-Line, it does so as an equity injection rather than a grant. This explains some of the questions the member for Apsley was asking.
A grant would obliterate the bottom line where an equity injection has no effect. Another coincidence I suspect. You take it as a dividend, improve your bottom line; put it back as an equity contribution and no damage to your bottom line.
There is no long-term future in treating us like idiots, which appears to be what the Government is doing here. If the Government's sole aim is to ensure the funds are only used to buy replacement vessels, I challenge the Government to take the funds out as an equity withdrawal and put them back as capital grants.
That is the question I have for the Leader. If the Government agreed to do that, then I would have some comfort that it is not just about propping up the bottom line and basically effecting an illusionary surplus. Put the Government's bona fides on display for all to see.
I do not know that it would need changes to the bill, except perhaps the deletion of the word 'dividends' in clause 4. I will take some advice from the Leader on that if they are serious about this. Otherwise I am not sure whether I can support this bill.
I would like the Leader to explain why this approach has been taken and advise as to whether this alternative option will be considered and, if so, will the amendment be required? I am not opposed to spending TT-Line funds on replacement vessels, but this bill strikes me as a PR flourish rather than a necessary addition to sensible policy. I cannot help but feel a little bit taken aback by the trivialisation of public policy represented by this bill. I would appreciate a response from the Leader regarding the specific approach the Government planned to use in accounting for this shifting around of funds.
To claim the Government is back on track and in surplus on the back of some sort of policy as this is disingenuous at best. Other members have raised similar concerns, so there are a number of questions that need answering. I believe that TT-Line has a very strong interest in getting its investment right and being able to replace the vessels.
The Treasurer said in his budget speech, or sometime around that, he did not want another party getting their grubby little mitts on this money. TT-Line know it has to replace a vessel at some stage. A former government gave TT-Line a dividend holiday to enable that which helped fund the refurbishment that the member for Apsley spoke about. TT-Line has acted responsibly. Why do we not trust them now
Dr GOODWIN (Pembroke - Leader of the Government in the Legislative Council) - Mr President, it is a bit unfortunate that members did not take the opportunity to have a briefing, as it was offered. We could have canvassed some of these issues. It is important -
Ms Forrest - I was not available.
Dr GOODWIN - We would have organised it when members were available. We can still have one if that is what members would like. TT-Line will not be self-sustaining in its own right. The Government will be called upon to assist when it comes time to replace the vessels. Vessel replacement will be many hundreds of million dollars. It is appropriate the Government has a more direct relationship with funds that will go towards this cost.
In terms of other company examples, TT-Line is a state-owned company. By its nature it has a closer relationship with shareholders. The company will not be able to fund the replacement costs of its core assets in its own right. It is not the same as a commercial entity with no relationship to government. The budget surplus is not contingent on special dividends from TT Line. The accumulative surplus over the budget and forward Estimates is around $360 million. Are there any further questions members have?
Ms Forrest - How will the money be transferred out and get back? What is the process?
Dr GOODWIN - That really depends on what the structure of the purchase is, what the cost is, all of those things.
Ms Forrest - Transfer the dividends out - what process would that be? Would it be an equity withdrawal?
Dr GOODWIN - It sounds to me like you do need a briefing. To clarify, are you talking about the special dividends that have come out?
Ms Forrest - Yes.
Dr GOODWIN - They are special dividends. It is not an equity transfer.
Ms Forrest - They will prop up the bottom line in doing that. It will have a positive impact on the bottom line. When the money is given back to TT-Line at a future time, how will that go back? As an equity transfer or a capital grant?
Dr GOODWIN - I do not think there has been any discussion around that as yet because we do not know what the cost will be.
Ms Forrest - It will not make any difference to what the cost is. It is a process.
Dr GOODWIN - That is a matter to be determined in the future because it depends on how the ships are to be bought, whether they are being purchased outright or whether there is some sort of lease arrangement will occur. That is something to be decided in the future.
Mr Hall - Leader, given there is some confusion here, or contention, is it possible to have a briefing?
Dr GOODWIN - Of course it is possible to have a briefing.
Ms Forrest - As long as TT-Line is there.
Dr GOODWIN - That is probably a very good idea. It is very difficult to get answers to questions from the Floor. I want members to be clear about what is proposed. This is taken very seriously by Cabinet, there is a subcommittee of Cabinet and TT-Line is comfortable with the proposed arrangements. TT-Line is part of the subcommittee process. This is not about us being suspicious of TT-Line in any way. We have complete trust in the company. This is about reflecting the reality of the situation that there will need to be Government investment in purchasing these ships. The TT-Line will not be able to do it on its own.