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4RflIUR ROT~TSON& fIEDDL?~WIC~
LIBRARY
1997
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
BOUNTY LEGISLATION AMENDMENT BILL 1997
SUPPLEMENTARY EXPLANATORY MEMORANDUM
(Amendments to be moved on behalf ofthe Government)
(Circulated by authority ofthe Minister for Industry, Science and Tourism,
the Honourable John Moore, MP)
88526 Cat No. 96 77364 ISBN 0644 50277 0
BOUNTY LEGISLATION AMENDMF~NTBThL1997
OUTLINE
The purpose of these Government amendments is to amend the Bounty Legislation
Amendment Bill 1997 to:
(i) restore the bounty period in the Bounty (Machine Tools and Robots) Act 1985 to
30 June 1997; and
(ii) give effect to the Governments decision to extend the operation of the Bounty
(Ships) Act 1989 to 30 June 1999 as announced by the Minister for Industry,
Science and Tourism on 7 May 1997.
The Bounty Legislation Amendment Bill currently before the Senate includes
amendments announced in the 1996 Budget which propose the termination ofthe
Machine Tools and Robots (MTR) Bounty with effect from 20 August 1996. Had the
amendments taken effect immediately upon announcement, the early termination of the
MTR Bounty was expected to result in savings of $2704 million over financial years
1996-97 and 1997-98. In the interim Customs has been obliged to process and pay
claims for bounty under this scheme in accordance with the current terms of the
Bounty (Machine Tools and Robots) Act 1985, the bounty period of which is due to
expire on 30 June 1997.
The Government has no intention of recovering this money from people who have
lodged eligible claims during the time that this Bill has been in the Parliament and is
moving amendments to the Bill to remove all changes to the Bounty (Machine Tools
and Robots) Act 1985, allowing it to expire on 30 June 1997 according to the current
terms of the Act.
The extension ofthe Shipbuilding bounty to 30 June 1999 is in accordance with an
agreement reached by the Minister for Industry, Science and Tourism and the
Australian Shipbuilders Association on 7 May 1997 and announced by the Minister on
that date.
The extension will only apply in respect of vessels the construction or modification of
which is the subject of a firm commitment in existence on 31 December 1997. Such
commitments are to be evidenced by their inclusion in a business plan lodged with the
Minister by 15 January 1998. The business plans may cover vessels to be built
pursuant to a contract entered into before 1 January 1998 or non contract vessels that
the shipbuilder can evidence a commitment to build during the period from 31
December 1997 to 30 June 1999.
The amendments also introduce a new element to the Bounty (Ships) Act 1989 which
allows claims to be made for the construction or modification of vessels ifthe
construction or modification is at least 50% complete by 30 June 1999. This will allow
shipbuilders to claim bounty on the proportion of eligible costs incurred up until 30
June 1999, provided that those costs are at least 50% of the costs specified in the
contract or business plan relating to the vessel.
3
FINANCIAL IMPACT STATEMENT
These amendments are expected to have the following financial impact on the Bill
currently before the Senate:
� Amendments relating to the Bounty (Machine Tools and Robots) Act
1985 expected costs of:
-
1996-97 1997-98
$0.00 $3.50m
� Amendments relating to the Bounty (Ships) Act 1989 expected
-
additional costs of:
1996-97 1997-98 1998-99 1999-2000
$4.50m $8.OOm $21.OOm $1.OOm
4
SUPPLEMENTARY AMENDMENTS TO THE BOUNTY LECTTST.ATTON
AMENDMENT BILL 1996
NOTES ON AMENDMENTS
Amendment (1)
This amendment replaces the current retrospective commencement clause in the Bill to
provide for the amendments in Schedule 1 to commence on the date the Royal Assent
is received. Ifthe Royal Assent is not received before 1 July 1997, Schedule I is taken
to have commenced on 1 July 1997.
1 July 1997 is the critical date for this Bill as it is the date:
(i) on which the Shipbuilding Bounty is currently due to expire;
(ii) the proposed early termination date for the Computers and the Books Bounties;
and
(iii) the date to which the Machine Tools and Robots Bounty is to be restored.
Amendment (2)
This amendment removes items 6, 7, 8 and 9 relating to the Bounty (Machine Tools
and Robots) Act 1985 from the Bill. This amendment will result in the Machine Tools
and Robots Bounty expiring on 30 June 1997, according to the current terms of the
Act.
Amendment (3)
Item 10 of Schedule 1 originally extended the operation ofthe Bounty (Ships) Act
1989 from 30 June 1997 to 31 December 1997. This amendment proposes to extend
the operation of this Act furtherto 30 June 1999.
Amendment (4)
This amendment proposes to insert into Schedule I after item 10 the following new
items:
Item IOA Subsection 4(2)
-
This item repeals the current subsection 4(2) and substitutes it with a new subsection
4(2) to give the CEO the power to determine whether a construction or modification
of a vessel is at least 50% completed as at 30 June 1999 in addition to the existing
power to determine the date on which a construction or modification is completed.
A decision of the CEO that the construction or modification of a vessel has not
reached the 50% point is to be subject to review by the Administrative Appeals
Tribunal (amendment (7) new item 18 refers).
5
Item lOB Subsection 4(4)
-
This item amends subsection 4(4) to extend its operation to cover the modification of a
vessel which is not completed but that if so completed, the vessel would be a
bountiable vessel. This is a technical amendment consequential upon the introduction
of the new 50% completed at 30 June 1999 rule proposed in item bE.
Item 1OC Paragraph 5(l)(e)
-
This item amends paragraph 5(1)(e) to allow a shipbuilder to include the costs
identified in this paragraph as eligible costs of construction or modification in respect
of vessels constructed or modified pursuant to a firm commitment made as evidenced
by the shipbuilder's business plan in addition to those vessels constructed or modified
pursuant to a contract.
Item 1OD Paragraph 5(1)ffl
-
This item amends paragraph 5(1)(f) in the same way as the amendment to paragraph
5(1)(e) above.
Item IOE Paragraph 8(3)(a)
-
This item repeals the existing paragraph 8(3)(a) (which required completion of the
construction or modification of a vessel within the bounty period) and substitutes new
paragraphs 8(3)(a) and (ab). The proposed paragraphs 8(3)(a) and (ab) only allow a
shipbuilder to be entitled to a payment of bounty if the construction or modification of
the vessel is carried out as a result of a firm commitment made before 1 January 1998
and is completed or at least 50% completed by 30 June 1999.
New paragraph 8(3)(a) gives effect to the Government's decision that the extension of
the Shipbuilding bounty to 30 June 1999 is only in respect of firm commitments in
existence as at 31 December 1997.
New paragraph 8(3)(ab) gives effect to the Government's decision to allow bounty to
be paid on vessels that are at least 50% completed as at 30 June 1999.
Item 1OF Subsections 8(3A) and (3B)
-
This item introduces two new proposed subsections 8(3A) and (3B) after subsection
8(3). Proposed subsection 8(3 A) expands on the requirement of a "firm commitment"
in the proposed paragraph 8(3)(a). A construction or modification will not be treated
as having been carried out as the result of a "firm commitment" unless the shipbuilder
has lodged with the Minister before 15 January 1998 a business plan or a varied
business plan covering the period to 30 June 1999. The business plan or varied
business plan must contain a statement of the kind referred to in subsection 1 7(7A)
indicating that the construction or modification of particular vessels on which bounty
will be claimed was committed to before 1 January 1998.
6
It should be noted that shipbuilders are already required to lodge business plans with
the Minister for the purposes of their annual registration under the Act. This
amendment gives the business plan an additional purpose, that is to identify firm
commitments to construct or modify vessels as at 31 December 1997.
Proposed subsection 8(3B) provides the criterion by which the construction or
modification of a vessel may be taken to be at least 50% completed. That 50% point is
reached when the eligible costs of the construction or modification of a vessel amount
to at least 50% of the construction or modification costs specified in the contract or
business plan provided in accordance with subsection 8(3 A) relating to that particular
vessel.
Item lOG Subsection 8(5)
-
This item effects a technical amendment to subsection 8(5) of the Act to require that
the eligible costs incurred in the modification of a bountiable vessel, or would be
incurred if the modification were completed, must be at least $1,000,000. This is a
technical amendment consequential upon the introduction of the new 50% completed
at 30 June 1999 rule proposed in item bE.
Amendment (5) and (6)
Items 11 and 12 originally effected consequential amendments to section 10 to provide
that bounty is payable at a rate of 1.2 x 5% of the amount of eligible costs incurred up
to 31 December 1997. These amendments insert the new dates of 1 July 1999 and
30 June 1999 to reflect the Government's extension of the operation of the Bounty
(Ships) Act 1989 to 30 June 1999.
Amendment (7)
This amendment proposes to insert into Schedule I after the end of the Schedule the
following items:
Item 13 - Subsection 10(2)
This item effects a consequential amendment to section 10 so that the rate of bounty in
section 10 applies to the construction or modification of a vessel that is not completed
but is at least 50% completed as at 30 June 1999. Currently, the rate of bounty in
section 10 only applies to vessels that are completed.
Item 14 Paragraph 1 l(2)(d)
-
This item amends paragraph 11(2)(d) so that, in addition to the normal lodgment of
claim within 12 months from the date of completion of a vessel, a claim for a payment
of bounty in the case of a vessel which is at least 50% completed as at 30 June 1999
may also be lodged within 12 months from 30 June 1999.
This means that a shipbuilder is not allowed to claim for bounty for a vessel which is
not completed but is at least 50% completed on 30 June 1999 until after 30 June 1999.
7
Such a shipbuilder would still be eligible for advances on account of bounty under
section 12, which is not affected by the 50% complete rule. However, advances paid
p may be recovered if a shipbuilder fails to completed at least 50% of the construction or
modification of a vessel by 30 June 1999 (amendment (7) new item 17 refers).
Item 15 Paragraph b3(2)(d)
-
This item amends paragraph b3(2)(d) so that, in addition to the normal lodgment of a
claim varying an inadequate bounty claim within 12 months from the date of
completion of a vessel, a claim varying an inadequate bounty claim in the case of a
vessel which is at least 50% completed as at 30 June 1999 may also be lodged within
12 months from 30 June 1999.
Item 16 - After subsection 17(7)
This item introduces new proposed subsections I 7(7A), (7B), (7C) and (7D).
The proposed subsection I 7(7A) requires a statement to be included in a business plan
under subsection 17(7) which sets out the matters contained in paragraphs 17(7A)(a)
and (b). The matters set out in those paragraphs are intended to identify particular
vessels the construction or modification of which will be eligible for bounty
Failure to include that statement in the business plan will result in the business plan not
being treated as indicating that the construction or modification of a particular vessel
was committed to before 1 January 1998. This would mean that bounty would not be
payable on that particular vessel.
The proposed 17(7B) allows a person who is a registered shipbuilder immediately
before 1 January 1998 to modify a business plan covering the period to 30 June 1999
by lodging with the Minister before 15 January 1998:
(a) if the plan did not contain a statement of the kind set out in subsection 17(7A) -
such a statement; or
(b) if the plan did contain such a statement but at a date before 1 January 1998,
particulars of the vessels whose construction or modification is proposed to be
P commenced before 30 June 1999 have been varied a statement reflecting the
variation.
-
Once the modified plan is lodged before 15 January 1998, the plan will be treated as if
it were the plan lodged with the application for registration.
The proposed subsection 17(7C) deals with the situation where a person is not a
registered shipbuilder immediately before 1 January 1998 but who wishes to be so
registered with effect from 1 January 1998 or any subsequent day before 1 July 1999.
Such a person must lodge with the Minister before 15 January 1998 a business plan
covering the period from registration until 30 June 1999 and which contains a
statement of the kind referred to in subsection 17(7A) in order to qualify for bounty
under the Bounty (Ships) Act 1989.
8
The proposed subsection 1 7(7D) provides that the lodgement of a plan under
subsection I 7(7C) will be treated as compliance with subsections 17(7) and (7A) when
an application for registration is subsequently made. It also provides that the
lodgement of a plan under subsection I 7(7C) does not mean that the person lodging
that plan cannot subsequently vary the plan, provided that the variation does not
increase the number of vessels proposed to be constructed or modified or vary the
requirements of any such construction or modification otherwise than by deletion ofa
requirement.
Item 17 Section 28
-
This item effects a technical amendment to section .28 so that ~nyoverpayment or
wrong payment of advances under subsection 12(2) and (3) may recovered by the
Commonwealth as a debt due to the Commonwealth by action in a court of competent
jurisdiction.
Item 18 Before paragraph 31(I)(a)
-
This item proposes to insert a new paragraph 31(1)(aa) so that a decision ofthe CEO
under paragraph 4(2)(b), that the construction or modification of a vessel has not
reached the 50% point, would be a decision that is reviewable by the Administrative
Appeals Tribunal.
I
Printed by Authority by the Commonwealth Government Printer
HI~ VII l ~llhI~
9 7806144 50277]~
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