EXPLANATORY STATEMENT
Statutory Rules 1987 No 116
Bounty (Ships) (Reservation of Bounty) Regulations (Amendment)
Issued by the Authority of the Minister of State for Industry, Technology and Commerce
The Bounty (Ships) Act 1980 (“the Act”) was amended by Part II of the Bounty and Subsidy Legislation Amendment Act (No. 2) of 1986 (Act No. 119 of 1986). The amendments, effective on and from 2 December 1986 (the date of Royal Assent of the amending Act) implement the Government’s decisions to impose a total monetary limit on this bounty scheme for all eligible vessels produced pursuant to it, and to extend the contract-based reservation of bounty system to all eligible vessels, regardless of market destination. Previously, only vessels constructed or modified for export were subject to the monetary limits and the reservation of bounty pre-condition.
The Regulations described in the attached Schedule give effect to the amendments to the Act
(SR 135/87)
THE SCHEDULE
Regulation 1 provides that the term “Principal Regulations” of in these Regulations are the Bounty (Ships) (Reservation of Bounty) Regulations.
Regulation 2 amends the definitions of certain terms used in the Principal Regulations. In particular, the Regulations provide:
• “the available amount” in relation to the payment of bounty or advances for eligible constructions or modifications during the period commencing on 1 July 1986 and ending on 30 June 1989 as being the maximum amount of money available under the bounty scheme, less:
- all amounts paid in meeting valid claims for payment, or for advances paid on account of bounty; and
- all amounts of bounty that are the subject of a reservation made and in force under the Principal Regulations in relation to the bounty period.
• Other definitions, now redundant owing to the amendment of the Act, are omitted.
Regulation 3 amends the criteria that must be satisfied by a shipbuilder when a claim for bounty is made.
• Paragraph (a) amends sub-regulation 3(1) of the Principal Regulations to provide that a shipbuilder may apply for reservation of bounty before the shipbuilder lodges a valid claim for bounty. Previously an applicant must have applied for reservation before the completion of the construction or modification of the vessel.
• Paragraph (b) replaces the existing paragraph 3 (2)(c) by requiring the shipbuilder to specify the amount of bounty sought to be reserved during the bounty period in the application on the application for the reservation of bounty.
- The reservation system envisaged by the new section 6B of the Act for the distribution of bounty departs from the previous scheme in some important aspects. Most notably applicants under the new scheme will receive absolute priority for bounty funds according to the date of their reservation application; the date of completion of the repair or modification of the vessel will not be a factor in this regard, as long as completion occurs during a period to which the Act applies.
Regulation 4 amends the existing Regulation 5, by adding new subregulation 5(2) and 5(3). which require the Comptroller-General to notify an applicant for reservation of bounty in writing of any decision the Comptroller-General may make with regards to an application to reserve bounty;
• the new subregulation 5(3) additionally requires the Comptroller-General to set out the reasons for decision when an application is refused.
Regulation 5 amends the administrative procedure to be followed where an application to reserve bounty is accepted.
• The existing subregulation 5(1) is omitted, and a new subregulation 5(1) is inserted, requiring the Comptroller-General to:
- when the Comptroller-General accepts the application for the reservation of bounty, and
- the amount of bounty reserved at the time of the acceptance of the application is already equal to, or exceeds the maximum amount available for bounty - to file the application; or
where the amount proposed to be reserved by an application would not lead to the maximum amount of bounty being exceeded - reserve the amount of bounty in the name of the applicant, or
- where the amount proposed, if accepted in full would lead to the maximum amount of bounty being exceeded -reserve that amount applied for in the application for reservation that would not exceed the maximum amount available. (Paragraph 5(a))
• paragraphs 5 (b) and (c) considers how applications that have either had an amount of bounty reserved in part, or filed, are to be dealt with when an application for bounty which has higher priority has been subsequently cancelled or varied;
- these amendments are necessary as there is a distinct possibility that available funds might be exhausted in a given financial year.
Regulation 6 alters the facility allowing for the reservation of an additional amount of bounty for which an application to reserve bounty has already been lodged. In particular,
• the existing subregulation (1) is omitted, and a new subregulation (1) is inserted, providing that where a person who has already lodged an application for the reservation of bounty considers that more bounty is payable for the eligible construction then was reserved, the person may, before the lodgement of a valid claim for bounty, claim the difference between the two amounts.
- The same procedures described in Regulation 5 above, when applications for the reservation of bounty exceed the amount of bounty available applies for the applications for reservation of additional amounts of bounty.
Regulation 7 amends Regulation 10 of the Principal Regulations, which deals with the circumstances where a reservation of bounty may be cancelled, by omitting the prohibition on paying bounty on ships that are to be exported upon construction (paragraphs 8(a) and 8(b)), and the requirement that a person must notify the Comptroller-General of that person’s acceptance of the reservation of an amount of bounty lower than the amount applied for (paragraph 8(c)).
• This amendment to the Principal Regulations takes into account amendments made to the Principal Act.
Regulation 8 amends Regulation 11 of the Regulations, dealing with the capacity of the Comptroller-General to increase amounts previously reserved to applicants, where funds become available owing to a cancellation or variation of a reservation.
- this amendment takes into account that bounty is reserved during a “bounty period” rather than a “prescribed period”.
Regulation 9 inserts a new Regulation 11A into the Principal Regulations. The new Regulation establishes the order of priority of the payment of reserved amounts.
• Subregulation 11A(1) requires the Comptroller-General to pay for claims of bounty or applications for an advance in the order in which they are received.
• Subregulation 11A(2) accords priority to a claim for payment over an application for an advance when at least one claim for payment and one application for an advance are made on the same day.
• Subregulation 11A(3) provides that where 2 or more claims for payment are received in any one day, the claim worth more money will be treated as having been received earlier than the other amounts.
• Subregulation 11A(4) provides that where 2 or more claims of similar value are received on the same day the claim with the earlier completion date will be treated as having been received earlier than the other amounts.
• Subregulation 11A(5) provides that the conditions described in sub-regulation 11A(3) and (4) above relation to claims for payment also pertain to claims for advances.
• Subregulation 11A(6) provides that where the amount of money available for bounty is insufficient to meet all valid claims, unpaid claims of the previous year have priority over valid claims for payment or applications for an advance of bounty in the immediately following financial year.
Regulation 10 amends Regulation 12 of the Principal Regulations by adding a new subregulation 12(2), so as to provide that where a vessel for which bounty is reserved is completed during the period 1 July 1988 - 31 December 1988, the construction or modification of the vessel will be deemed to have been completed within the 1987-88 financial year.
Regulation 11 is a transitional provision.
A transitional provision is required to accommodate and prioritise the reservation applications already lodged under the new bounty assistance regime for ships. The Government, in a press release on the proposed new assistance arrangements for ships dated 28 August 1986, gave notice that the new regime would have a reservation of bounty pre-condition, and invited ship builders to lodge reservation applications for the new regime in anticipation of the legislative framework for the new system, on the basis that such applications would be considered against the new criteria, and would be prioritised on the first come first served basis in the existing regulations.
- Subregulatlon 12(1) deems that applications received between 28 August 1986 and the commencement date of these Regulations shall be taken to be an application received on the day on which these Regulations commenced.
- Subregulatlon 2 provides that for the purposes of these Regulations, ships constructed or modified since 28 August 1986 shall be deemed to have been completed on the day these Regulations commence.
- Subregulation 3 provides that a claim for reservation of bounty lodged between 28 August 1986 and the day of commencement of these Regulations shall be taken as having been received before a claim for payment.