EXPLANATORY STATEMENT
Select Legislative Instrument 2007 No. 113
MINUTE No. 6 of 2007 - Parliamentary Secretary to the Minister for Finance and Administration
Subject: Public Works Committee Amendment Regulation 2007 (No. 1)
Public Works Committee Act 1969
The Public Works Committee Act 1969 (the PWC Act) established the Public Works Committee to inquire into and report on public works referred to it by the Parliament. A public work is a work that is proposed to be carried out by or for the Commonwealth and for which moneys are appropriated by Parliament.
Section 40 of the PWC Act provides, in part, that the Governor-General may make regulations, not inconsistent with this Act, prescribing all matters that by that Act are required or permitted to be prescribed or are necessary or convenient to be prescribed for carrying out or giving effect to that Act.
Subsection 6A(1) of the PWC Act advises that the Act applies to every authority of the Commonwealth. However, subsection 6A(3) provides that where the Governor-General is satisfied that an authority of the Commonwealth is engaging in trading or other activities, or is providing services, in competition with other bodies, the Governor-General may make regulations declaring that the Act does not apply to that authority.
The purpose of the proposed Regulations is to exempt ASC Pty Ltd (ASC) and its subsidiaries from the provisions of the PWC Act.
ASC (formerly Australian Submarine Corporation) was established in 1987 as a majority privately owned entity, and remained in majority private ownership until the Commonwealth assumed 100% ownership in October 2000. The PWC Act did not apply to ASC until the Commonwealth assumed control in 2000 and the opportunity was not taken up to exempt it from the PWC Act at that time.
ASC is subject to the Commonwealth Authorities and Companies Act 1997 as the Commonwealth currently owns 100% of the shares. It operates, and has always operated, as a fully corporatised commercial entity independent from the Department of Defence. It is not in receipt of any Government moneys other than on an arms length, fee for service basis.
The main activities of ASC are derived from highly competitive tender processes. It routinely competes with the private sector which is not subject to the PWC Act. The PWC Act requires that all public works for the Commonwealth which are estimated to cost more than $15 million be referred to the Public Works Committee and shall not be commenced unless, after the report of the Committee has been presented to both Houses of the Parliament, the House of Representatives has resolved that it is expedient to carry out the work. ASC could be disadvantaged compared to its competitors if it is subject to these administrative requirements. The proposed Regulations would remove this potential disadvantage.
The Government intends to return ASC to full private ownership with the sale likely to be completed in the second half of 2008. Once privatised, the PWC Act will cease to apply to ASC.
The Regulations will substitute the table in Schedule 3 to the Public Works Committee Regulations 1969, which lists Commonwealth authorities that have been exempted under subsection 6A(3) of the PWC Act, with a new table including ASC and its wholly-owned subsidiaries.
The PWC Act specifies no condition that need to be satisfied before the power to make the proposed Regulations may be exercised.
The Regulations will be a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations will commence on the day after they are registered on the Federal Register of Legislative Instruments.
Overview
The Public Works Committee Amendment Regulation 2007 (No. 1) was enacted to address the issue of ASC Pty Ltd and its subsidiaries being subject to the Public Works Committee Act 1969 (PWC Act) despite operating as a fully corporatised commercial entity. This discrepancy arose because, although the Commonwealth assumed 100% ownership of ASC in October 2000, it was not exempted from the PWC Act at that time. The PWC Act mandates that public works estimated to cost over $15 million be referred to the Public Works Committee, a requirement that places ASC at a competitive disadvantage compared to its private sector competitors who are not subject to the same administrative procedures. The proposed regulation aims to exempt ASC and its subsidiaries from the PWC Act until its eventual return to private ownership, which the Government intends to complete by the second half of 2008. The enacting body for these regulations is the Governor-General, acting under the authority provided by the PWC Act to make regulations necessary for its implementation.
Scope and Application
The Public Works Committee Amendment Regulation 2007 (No. 1) amends the Public Works Committee Regulations 1969 by exempting ASC Pty Ltd and its subsidiaries from the requirements of the Public Works Committee Act 1969. The PWC Act applies to all authorities of the Commonwealth, but the Governor-General may exempt an authority from the Act if it is engaging in trading or other activities in competition with other bodies. ASC, which operates as a fully corporatised commercial entity independent from the Department of Defence, was established as a majority privately owned entity and became wholly owned by the Commonwealth in 2000. The proposed Regulations seek to exempt ASC from the PWC Act due to its highly competitive tender processes and to prevent it from being disadvantaged compared to its competitors who are not subject to the Act. The Regulations will substitute the table in Schedule 3 of the 1969 Regulations with a new table including ASC and its subsidiaries. The Regulations will commence on the day after they are registered on the Federal Register of Legislative Instruments.
Key Provisions
The Public Works Committee Amendment Regulation 2007 (No. 1) (the Regulation) amends the Public Works Committee Regulations 1969 to exempt ASC Pty Ltd (ASC) and its subsidiaries from the Public Works Committee Act 1969 (PWC Act). This change is necessary as ASC, a wholly-owned Commonwealth entity, operates in a highly competitive commercial environment, and the PWC Act's requirements could potentially disadvantage it compared to private sector competitors that do not have to comply with the PWC Act. Section 40 of the PWC Act allows the Governor-General to make regulations necessary or convenient to carry out the Act, while subsection 6A(3) permits exemptions for Commonwealth authorities engaged in competitive activities.
Under the Regulation, ASC and its subsidiaries will no longer be subject to the PWC Act's provisions, which include the referral of public works costing over $15 million to the Public Works Committee and the requirement that such works not commence until the House of Representatives resolves it is expedient. By removing these obligations, the Regulation aims to ensure that ASC can compete on an equal footing with private entities not subject to the PWC Act. The Regulation also updates Schedule 3 of the Public Works Committee Regulations 1969 to include ASC and its subsidiaries among the authorities exempted from the PWC Act. This substitution takes effect from the day after the Regulation is registered on the Federal Register of Legislative Instruments.
The Regulation imposes no new obligations on ASC or its subsidiaries beyond the exemption from the PWC Act. However, it ensures that ASC will operate under the same conditions as its private sector competitors, without the administrative burdens of the PWC Act. The Regulation is a legislative instrument under the Legislative Instruments Act 2003 and comes into effect on the day after its registration.
There are no specific offences, penalties, or civil or criminal consequences outlined in the Explanatory Statement for breaches of the Regulation itself. However, any failure by ASC or its subsidiaries to adhere to the terms of the exemption, such as engaging in activities that should have been referred to the Public Works Committee, could potentially lead to legal consequences under the PWC Act before the Regulation's commencement. The maximum penalties for breaches of the PWC Act, which are not directly addressed in the Regulation, could include fines and other civil remedies as prescribed by the Act.