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SNOWY HYDRO CORPORATISATION BILL 1997

1997




THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA





HOUSE OF REPRESENTATIVES





SNOWY HYDRO CORPORATISATION BILL 1997





EXPLANATORY MEMORANDUM





(Circulated by authority of the Minister for Resources and Energy, Senator the Hon
Warwick Parer)



SNOWY HYDRO CORPORATISATION BILL 1997

OUTLINE
This Bill is part of a package of measures to reform the Snowy Mountains
Hydro-electric Authority (the Authority) and establish Snowy Hydro Limited
(Snowy Hydro Company) to replace the Authority as the corporate body to operate
and maintain the Snowy Mountains Scheme. The Bill will operate concurrently
with proposed New South Wales and Victorian Corporatisation Acts.
88820 Cat. No. 96 9211 8 ISBN 0644 50505 2

The Snowy Scheme is presently regulated by agreements between the
Commonwealth, New South Wales and Victoria and by complementary legislation
of the three jurisdictions which provides for the operation of the Scheme and which
establishes a Snowy Mountains Council appointed by the Ministers to control the
Scheme.
The principal purposes of the reforms are as follows:
(a) to create a financially viable entity (Snowy Hydro Company) to operate on a
competitively neutral basis and participate effectively in the emerging national
electricity market;
(b) to replace the existing rights of the Commonwealth, New South Wales and
Victoria in the Scheme (including electricity entitlements) with an initial issue of
equity in Snowy Hydro Company, as follows:
+ Commonwealth 13%
+ New South Wales 58%
+ Victoria 29%;
(c) to enable the environmental, planning and other laws of New South Wales
to be applied to the operations of the Scheme;
(d) to facilitate the refinancing and repayment of the debt to the Commonwealth
under the Scheme; and
(e) to provide, before corporatisation takes effect, for the establishment of a public
water inquiry with respect to environmental issues arising from current water flows
in the Scheme and the implementation of the outcomes of that inquiry agreed by
New South Wales and Victoria.
The reforms have been agreed between the Commonwealth, New South Wales and
Victoria. Further detailed agreements between the Governments will be required to
implement these reforms. A copy of principles agreed as at 1 May 1997 to guide the
corporatisation process is set out at Attachment 1 to this Explanatory Memorandum.

FINANCIAL IMPACT STATEMENT

The major financial impact from the corporatisation of the Snowy Mountains
Scheme will be the offset to outlays in 1998-99 when the Snowy Hydro Company
pays to the Commonwealth the net present value at corporatisation of the existing
Commonwealth debt of the Authority (estimated at $916m).

The existing Commonwealth debt of the Authority comprises Advances from the
Commonwealth to the Authority and commercial borrowings of the Authority in
the form of Inscribed Stock guaranteed by the Commonwealth. The Bill provides
for the assumption by the Commonwealth of obligations associated with the
outstanding Inscribed Stock component of the debt.

The payment by the Snowy Hydro Company to the Commonwealth of an amount
equal to the net present value of the Authority+s debt will involve the existing debt
being replaced by a new loan to the Authority to be transferred at corporatisation to
the Snowy Hydro Company on terms and conditions to be agreed with the
governments of New South Wales and Victoria. In accordance with principles
agreed between the Commonwealth, New South Wales and Victoria, this loan will
be secured by the Snowy Hydro Company and the two States, and will be repayable
within a term of six months of corporatisation or as otherwise agreed between the
three governments.

Other financial implications of corporatisation include:

. the replacement of existing Commonwealth rights to 13% of the electricity
generated by the Scheme with shareholder equity of 13% in Snowy Hydro
Company;

. the elimination of interest and principal repayment receipts from the
Authority for the existing Advances (annual principal and interest are
presently some $9m and $68m respectively);

. the sharing between the Commonwealth, New South Wales and Victoria of
certain tax payments by the Snowy Hydro Company.



NOTES ON INDIVIDUAL CLAUSES
PART 1 - PRELIMINARY
Clause 1 : Short Title
1. The Act will be called the Snowy Hydro Corporatisation Act 1997.
Clause 2 : Commencement
2. This clause specifies that various Parts of the Act will commence at different
times. Part 1 and 2, Division 3 of Part 3, sections 25, 47, 48, 49, 50, 57, 58, subsection
62(1) and Part 1 of Schedule 2 commence on the day on which this Act receives
Royal Assent.
3. The remaining provisions commence on a day or days to be fixed by
proclamation. This is necessary for two reasons. The corporatisation of the Scheme
is being achieved through the complementary operation of legislation from the
Commonwealth, New South Wales and Victorian jurisdictions. As this legislation
will be before the State Parliaments of Victoria and New South Wales, a common
date for proclamation for some of the sections will be necessary and will be
determined in due course. Timing of the proclamation in part depends on the
outcome of a public Water Inquiry, which will run for six months, with a further
two months for the results to be finalised. The Act specifically provides that the
proclamation date for the section that effects the repeal of the Snowy Mountains
Hydro-electric Power Act 1949 is required to be agreed with New South Wales and
Victoria.
Clause 3 : Object of Act
4. This clause states the principle purposes of the Act and that it is to operate
concurrently with New South Wales and Victorian corporatisation legislation
where such legislation applies.
Clause 4 : Simplified Outline
5. This clause outlines the main features of the legislation.
Clause 5 : Interpretation
6. This clause provides various definitions that will assist in the interpretation
of the Act.
Clause 6 : Act binds the Crown
7. This clause binds the Commonwealth to meet the specific provisions of the
Act.
PART 2 - SNOWY HYDRO COMPANY
Clause 7 : Holding of Shares in Snowy Hydro Company
8. This clause establishes the basis on which the Commonwealth may acquire,
hold, dispose of or deal with shares in Snowy Hydro Company. As at the date
of corporatisation, the proportion of the Company+s share capital comprised
by the Commonwealth's issued shares, which are taken to have been fully
paid up shares, will be based on its equity in the Snowy Scheme, ie 13 per cent,
as agreed between the Commonwealth, New South Wales and Victorian
Governments. Shares are taken to have been issued for valuable
consideration, being the relevant percentage of the value of the Snowy hydro
undertaking transferred to the Company. This value is determined by
agreement between the Governments.
Clause 8 : Snowy Hydro-group company is not the Crown
9. Unless a specific provision is made by the Commonwealth, Snowy Hydro
Company is not an instrumentality or agency of the Crown and is therefore
not entitled to any immunity or privilege of the Crown. The same provision
is in the New South Wales and Victorian legislation. Apart from specific
provisions included in this Act and the related State legislation, the Company
will therefore be subject to the same laws and requirements that apply to any
other entity incorporated in, and operating in, New South Wales.
Clause 9 : Liabilities of Snowy hydro-group companies not guaranteed by the
Commonwealth
10. Snowy Hydro Company+s liabilities are not guaranteed by the
Commonwealth. This provision ensures that the financial basis of the
Company or its subsidiaries is competitively neutral.
PART 3 - TRANSFERS OF ASSETS AND LIABILITIES
Division 1 - Transfer of existing Snowy hydro undertaking to Company
Clause 10 : Transfer to Company of assets and liabilities of Snowy Mountains Hydro-
electric Authority
11. This clause provides for all assets and liabilities of the Authority existing
immediately before the corporatisation date to be transferred to Snowy Hydro
Company. The liabilities transferred will include liabilities arising from
works constructed or activities carried out under the agreements set out in
the Schedules to the Snowy Mountains Hydro-electric Power Act 1949 . The
assets and liabilities will not include those relating to the electricity
transmission business currently undertaken by the Authority, which are to be
transferred to TransGrid, the New South Wales Electricity Transmission
Authority. Stored water will not be transferred as an asset. Schedule 1 applies
to the transfer of the Authority+s assets or liabilities to the Company.
Clause 11 : Transfer to Company of assets and liabilities of the Commonwealth
12. This clause provides that Commonwealth assets or liabilities, as distinct from
Authority assets or liabilities, may be transferred to Snowy Hydro Company
by way of Ministerial order. Assets or liabilities are transferred with the
agreement of New South Wales and Victoria. The States+ legislation makes
similar provision for the transfer of relevant State assets. The order may be
made jointly with the States. Schedule 1 applies to an order concerning the
transfer of Commonwealth assets or liabilities to the Company.
Division 2 - Transfer of electricity transmission undertaking to TransGrid
Clause 12 : Transfer to TransGrid of existing Snowy electricity transmission
undertaking
13. This clause enables the existing assets and liabilities of the Authority, or of the
participating Governments, relating to the electricity transmission business of
the Scheme to be transferred to TransGrid by way of Ministerial order. A
similar provision is included in States+ legislation. The details of the transfer,
including the consideration, may be determined by agreement between the
three Governments. Schedule 1 applies to an order concerning the transfer of
assets or liabilities to TransGrid.
Division 3 - Snowy Mountains Hydro-electric Authority+s debts
Subdivision A - Loans by the Commonwealth
Clause 13 : Scope of Subdivision
14. This clause provides that the Subdivision applies to loans to the Authority
made by the Commonwealth. It defines the term loan as any amount owing
by the Authority to the Commonwealth.
Clause 14 : Minister for Finance may declare that all loans are due and payable
15. The Minister for Finance may declare that all loans and any accrued interest
are payable by the Authority at a time (the repayment time) before the
corporatisation date. The amount to be repaid is to be agreed with New South
Wales and Victoria. Subclause 14(4) provides that the Commonwealth must
not lend any money to the Authority after the repayment time except in
accordance with this Division.
Clause 15 : Commonwealth must lend to the Authority an amount equal to the
amount owing
16. If the Minister for Finance makes a declaration under clause 14, the Minister
must lend the Authority the amount so declared at or before the repayment
time on the terms and conditions notified and agreed to by New South Wales
and Victoria. The Authority will then use this loan to pay the
Commonwealth the amount owing by virtue of the clause 14 declaration.
The process described in clauses 14 and 15 provides for the discharge of the
Authority+s public debt to be properly recorded in the Commonwealth+s
accounts. This loan will be transferred to Snowy Hydro Company upon
corporatisation as a liability of the Authority.
Subdivision B - Other borrowing transactions
Clause 16 : Scope of Subdivision
17. This clause establishes that this Subdivision applies to borrowing transactions
of the Authority other than those dealt with in sections 14 and 15.
Clause 17 : Borrowing transactions
18. This clause defines a borrowing transaction and notes that this includes
borrowing by the issue of inscribed stock under regulations made under the
Snowy Mountains Hydro-electric Power Act 1949.
Clause 18 : Authority+s borrowing transactions may become the Commonwealth+s
borrowing transactions
19. This clause provides that the Treasurer may declare on a date before the
corporatisation date (the transfer time) that specified borrowing transactions
of the Authority may be taken over by the Commonwealth. The Treasurer
may authorise payment of money by the Commonwealth to discharge any or
all of the obligations so taken over. Subclause 18(4) applies clause 4 of
Schedule 1 to the operation of this clause.
Clause 19: Application of the Loans Securities Act 1919
20. This clause provides that certain sections of the Loans Securities Act 1919
apply to a borrowing transaction assumed under section 18 by the
Commonwealth as if that borrowing were a borrowing of money outside
Australia.
Clause 20 : Commonwealth takeover of obligations - payments by the Authority to
the Commonwealth
21. This clause provides that if the Commonwealth, under subsection 18(1), takes
over specified borrowing transactions then the Authority is liable to pay the
Commonwealth an amount in consideration of the transfer. The amount is
to be agreed between the Commonwealth, New South Wales and Victoria.
The Minister for Finance must on behalf of the Commonwealth, before the
transfer time, lend the Authority the same amount on such terms and
conditions as are agreed with the States. The Authority must use this loan to
pay the Commonwealth the amount owing by virtue of the operation of
subsection 20(1). This loan will be transferred to Snowy Hydro Company
upon corporatisation as a liability of the Authority. The transactions in
sections 18, 19 and 20 provide for the assumption of the Authority+s Inscribed
Stock debt to be properly recorded in the Commonwealth+s accounts.
Subdivision C - Miscellaneous
Clause 21 : Agreement relating to Commonwealth debt
22. This clause provides that the Commonwealth, New South Wales and
Victoria may enter into an agreement with respect to the discharge of the
liabilities of the Authority to the Commonwealth that are to be transferred to
Snowy Hydro Company on the corporatisation date. This agreement will,
among other things, provide for the accelerated repayment of the loans
described above by the Company after corporatisation.
Clause 22 : Appropriation of Consolidated Revenue Fund
23. This clause allows the Consolidated Revenue Fund to be appropriated for the
purposes of this Division.
PART 4 - TRANSFER AND RIGHTS OF EMPLOYEES
Division 1 - Transfer of employees from Snowy Mountains Hydro-electric Authority
to Snowy Hydro Company
Clause 23 : Transfer to Snowy Hydro Company of employees of Snowy Mountains
Hydro-electric Authority
24. This clause provides for the transfer of all Authority employees to Snowy
Hydro Company. Subclause 23(1)(c) provides that employees shall be
transferred on the same terms and conditions (as defined in subclause 23(5)),
subject to any exceptions provided by the regulations. Subclause 23(2)
provides certainty that employees transferring to the Company will be
regarded as having continuous service for all purposes as if they had
remained an employee of the Authority.
25. Subclause 23(3) provides that a transferred employee is not entitled to receive
any payment or benefit (eg severance pay) merely because that employee
stopped being employed by the Authority. This does not preclude the making
of payments for reasons other than the mere act of ceasing employment with
the Authority.
26. Subclause 23(4) provides that an auditor of the Authority does not become the
auditor of the Company by operation of this Bill. Section 23(5) defines the
core terms and conditions of employment under which transferring
employees will continue to be employed (subject to any regulations). Where
under this clause there is a reference to a contract of employment this does
not include contracts for services (for example consultancy services).
Subclause 23(6) provides that the clause has effect subject to Part 4 of this Bill.
This ensures, for example, that core terms and conditions of employment can
be varied by due process as provided for in clause 24.
Clause 24 : Variations of terms and conditions of employment
27. Terms and conditions of employment of a transferred employee can be varied
(through omission, addition or substitution) after corporatisation, but only in
accordance with the existing terms and conditions of their employment or
under a law or by an award, agreement or other determination. These
subclauses maintain the existing avenues for varying terms and conditions of
employment.
Division 2 - Transitional and saving provisions in relation to long service leave
Clause 25 : General Interpretation
28. This clause provides that expressions used in this Division that are also used
in the Long Service Leave (Commonwealth Employees) Act 1976 (Long
Service Leave Act) (as in force immediately prior to the corporatisation date)
have the same meanings as in that Act.
Clause 26 : Specific definitions
29. This clause provides definitions for terms used in the Division. -Combined
service period+ is defined, in relation to an employee, as the total of the
period of service of the employee for the purposes of the Long Service Leave
Act prior to corporatisation and the period, starting on the corporatisation
date, that the employee continues to be an employee of Snowy Hydro
Company. -Future long service leave rights+ are defined as any long service
leave rights an employee acquires under an award, determination, industrial
agreement or on or after the corporatisation date in relation to service after
that date.
Clause 27 : Long service leave for employees with less than 10 years service
30. This clause provides for the granting of long service leave, for leave accrued
under the Long Service Leave Act prior to commencement of Snowy Hydro
Company, for employees of the Authority who have transferred to the
Company with a period of service at corporatisation of less than 10 years.
Long service leave credit for the purpose of this clause is defined in subclause
30(1).
31. If the employee continues to be employed by the Company until his or her
combined service period with the Company is at least 10 years, the Company
may grant the employee long service leave, which includes some
acknowledgement of pre-corporatisation accruals.
32. Subclause 27(4) provides for granting of long service leave in the
circumstances of retirement or retrenchment as long as the employee has a
combined service period with the Company of at least one year. Leave
granted under subclause 4 is to be taken so as to expire immediately before the
employee is to retire or be retrenched.
33. Subclause 27(7) provides for the application of section 20 of the Long Service
Leave Act to calculate the rate of salary to be used in working out the final
salary of an employee for the purposes of this provision.
Clause 28 : Payments in lieu of long service leave for employees with less than 10
years service.
34. Clause 28 sets out the circumstances in which an employee who has
transferred to Snowy Hydro Company can be paid an amount in lieu of long
service leave accrued under the Long Service Leave Act for employment with
the Authority. The provision allows for an employee to elect not to be paid
under this clause or to accept a lesser amount. The rate of salary to be used for
this provision is to be the rate applicable to an employee under section 21 of
the Long Service Leave Act, and the amount of leave is determined by
subclause 30(2).
35. This provision may apply to employees on reaching minimum retirement
age, or retrenchment, or cessation due to ill health. It also covers cessation of
employment when an employee has a combined service period of at least 10
years.
Clause 29 : Payments on the death of an employee
36. This clause provides for the payment to a deceased employee's dependant/s
of the amount that would have been payable to the employee under clause 28
if, on the day of the employee's death, the employee had stopped being an
employee on or after reaching minimum retirement age. This provision
applies so long as immediately before Snowy Hydro Company+s
corporatisation date the employee had less than 10 years service, and at the
time of death, had a combined service period of at least one year.
Clause 30 : Employee's long service leave credit for the purposes of sections 27 and
28
37. This clause defines the long service leave credit of Authority employees as
being equal to the employee's long service leave under the Long Service
Leave Act as at the corporatisation date.
Clause 31 : Division not to affect an employee's future long service leave rights
38. The clause provides certainty that the application of the provisions in this
Division do not affect an employee's post-transfer long service leave rights.
Clause 32 : Saving - Long Service Leave Act
39. This clause ensures that accrued long service leave credits, arising from
service with the Authority under the Long Service Leave Act, are retained
after corporatisation.
Division 3 - Transitional and saving provisions relating to the Safety, Rehabilitation
and Compensation Act 1988
Clause 33 : Interpretation
40. Expressions used in this Division have the same meaning as in the Safety
Rehabilitation and Compensation Act 1988 ("SRC Act").
Clause 34 : Transitional provisions relating to the SRC Act in respect of certain
employees of the Snowy hydro-group company
41. This clause provides that the SRC Act continues to apply in respect of claims
arising from injuries, or loss of property, suffered by employees of the
Authority prior to corporatisation of the Scheme, where that employee has
transferred to Snowy Hydro Company.
42. The clause also provides that the SRC Act continues to apply in respect of
claims arising from loss of, or damage to, property incurred by an employee of
the Authority prior to the corporatisation of the Scheme and transfer of the
employee to the Company.
Clause 35 : Snowy Hydro Company liable to meet certain SRC Act liabilities and to
be taken to be the employer in certain circumstances under the SRC Act.
43. This clause provides certainty that Snowy Hydro Company continues to be
liable to pay for any injuries suffered by employees of the Authority prior to 1
July 1989. Section 128A of the SRC Act provides that Comcare+s liability in
respect of any injuries occurring before 1 July 1989 by an employee of a
prescribed Commonwealth authority must be discharged by that authority
and not Comcare.
Clause 36 : Sections 40 and 71 of the SRC Act
44. This clause provides for the continued application of section 40 and 71 of the
SRC Act to Snowy Hydro Company after corporatisation. In relation to
Section 40 of the SRC Act, the clause ensures that the Company is responsible
for taking all reasonable steps to find suitable employment for transferred
employees returning to work from rehabilitation programs. Regarding
Section 71 of the SRC Act, the clause ensures that the Company, which will
hold the relevant records following the transfer of employees, will provide
information from those records to the Commonwealth to enable the
Commonwealth to fulfil its obligations under the SRC Act in relation to
transferred employees.
Division 4 - Transitional and saving provisions in relation to maternity leave
Clause 37 : Interpretation
45. Unless specifically mentioned to the contrary, this clause provides for the
expressions used in this Division to have the same meaning as in the
Maternity Leave (Commonwealth Employees) Act 1973 (Maternity Leave
Act).
Clause 38 : Transitional maternity leave provisions for maternity leave beginning
on or after corporatisation date
46. This clause preserves the rights of employees of Snowy Hydro Company, who
were employees of the Authority prior to corporatisation, to apply for and be
granted leave under the Maternity Leave Act, provided that such leave is
begun within 12 months of commencing employment with the Company.
Clause 39 : Transitional maternity leave provisions relating to employees of the
Snowy Mountains Hydro-electric Authority who were on maternity leave
immediately before the corporatisation date
47. This clause preserves the entitlements of an employee of the Authority who
becomes an employee of Snowy Hydro Company and who would have been,
under the Maternity Leave Act, eligible to begin leave within twelve months
of corporatisation, or who is on leave, at or prior to the corporatisation of the
Company.
Division 5-Other transitional and savings provisions
Clause 40 : Saving - deferred benefits under the DFRDB Act
48. This clause relates to the Defence Force Retirement and Death Benefits Act
1973 (the DFRDB Act). Employees of Snowy Hydro Company, who have
transferred from the Authority and who were formerly members of the
Defence Force who have elected to take deferred DFRDB benefits, are required
to complete an aggregate of 20 years (in most circumstances) in the Defence
Force or in subsequent public employment to enable benefits to be paid.
49. In the absence of a specific provision, an employee who has not served the
required period prior to the corporatisation date would lose his or her
entitlement to the benefits available under the DFRDB Act.
50. Subclause 40(1) is intended to enable former members of the Defence Forces
who are: employed by the Company, had deferred their benefits under the
DFRDB Act, and were accruing service in public employment with the
Authority, to count employment with the Company as public employment
after the corporatisation date.
51. These employees would be entitled to their deferred benefits if they remain
with the Company (or in other public employment) until the qualifying
period (usually 20 years) is completed.
Clause 41 : Saving - period of eligible employment for the purposes of Division 3 of
Part IX of the DFRDB Act
52. This clause ensures that any period of employment with Snowy Hydro
Company, which would have been eligible employment for the purposes of
Division 3 of Part IX of the DFRDB Act (which allows for the preservation of
rights of contributing members who cease to be members of the Defence
Forces) prior to the corporatisation date, continues to be regarded as such for
the purposes of a person qualifying for deferred benefits.
Clause 42 : Transitional provision relating to the Crimes (Superannuation Benefits)
Act 1989
Continuing application of Crimes (Superannuation Benefits) Act 1989
53. This clause ensures that the Crimes (Superannuation Benefits) Act 1989 (CSB
Act) continues to apply in relation to corruption offences committed by an
employee of the Authority prior to corporatisation after they become an
employee of Snowy Hydro Company.
54. Where a person who was an employee of the Authority commits a
corruption offence while employed by the Authority, an order may be made
under the CSB Act against that person even after corporatisation as if the
Company was a Commonwealth authority. This is necessary because the CSB
Act can only apply if the employer of the person committing the offence is the
Commonwealth or a Commonwealth authority.
Limitation on superannuation orders
55. Subclause 42(2) ensures that if Snowy Hydro Company has paid contributions
into the employee's superannuation scheme after the corporatisation date, a
superannuation order may not be made against those contributions but only
against contributions that were paid or payable before corporatisation.
Superannuation schemes
56. Subclause 42(3) ensures that an order cannot be made against the
superannuation scheme of the employee if his or her corruption offence is
committed after the corporatisation date.
Paragraph 19(3)(d) orders
57. Subclause 42(4) provides that where an order pursuant to paragraph 19(3)(d)
of the CSB Act is made by the court in respect of funds paid into the
Consolidated Revenue Fund, or Superannuation Fund before the
corporatisation date by or on behalf of the Authority , the order must specify
that the amount is to be retained by the Commonwealth. This provision
relates to funds not yet paid to the employee from the superannuation
scheme.
Paragraph 19(4)(b) orders
58. Subclause 42(5) provides that where an order pursuant to paragraph 19(4)(b)
of the CSB Act is made by the court in respect of funds paid to an employee
from the Consolidated Revenue Fund, or Superannuation Fund, the order
must specify that an amount equivalent to that amount is to be paid to the
Commonwealth. This provision relates to funds which have been paid to the
employee from the superannuation fund prior to the corporatisation date.
59. Subclause 42(4) and (5) ensure that any amount which was paid prior to the
corporatisation date by the Authority to the Commonwealth in respect of
employees under the Commonwealth Superannuation Scheme (CSS), who
are convicted of a corruption offence is either retained by, or paid back to, the
Commonwealth. Without these subclauses it would be up to the court to
determine whether the Commonwealth or the Authority was the relevant
body to which to return the employer contribution to the employee's
superannuation.
Clause 43 : Saving - Director of Public Prosecutions Act 1993
60. This clause ensures that the Director of Public Prosecutions Act 1983 ("DPP
Act") continues to apply (after corporatisation) to acts or omissions that
occurred prior to the corporatisation date and that civil remedies in relation
to those matters can continue to be pursued. This provision is required
because the Authority will not exist after the corporatisation date and the DPP
Act will not apply to Snowy Hydro Company because it will not fit within the
definition of an authority of the Commonwealth under that Act.
Clause 44 : Saving - Judiciary Act 1903
61. This clause is intended to ensure that the Australian Government Solicitor
(-the AGS") will, after corporatisation, be able to act on behalf of Snowy
Hydro Company in relation to proceedings which were commenced prior to
the corporatisation date. The AGS may also act where a certificate has been
given by the Secretary to the Attorney-General's Department, or a person
holding a Senior Executive Service office in that Department, where
instructions were given by the Authority prior to the corporatisation date.
Such a certificate is conclusive evidence unless the contrary is established.
Clause 45 : Refund of contribution paid under the Occupational Health and Safety
(Commonwealth Employment) Act 1991
62. Schedule 5 of the Snowy Hydro Limited Agreement (Consequential
Amendments) Bill provides that Snowy Hydro Company will cease to be a
Commonwealth authority for the purposes of the Occupational Health and
Safety (Commonwealth Employment) Act 1991 from the corporatisation date.
Clause 45 provides for a refund of the Authority+s contribution to the cost of
the administration of that Act to the Company if the commencement date
falls part way through a financial year, to be appropriated from the
Consolidated Revenue Fund.
Clause 46 : Cessation of mobility rights
63. Clause 46 deals with the mobility rights of those employees of the Authority
who transferred from the Commonwealth to the Authority and were entitled
to retain mobility rights under the Public Service Act 1922 upon their transfer
to the Authority. The clause restates the current position of the Public
Service Act 1992 under which mobility rights of those employees are
extinguished when those employees cease to be employed by a statutory
authority such as the Authority. Subclause 46(1) provides that if Division 2 or
3 of Part IV of the Public Service Act 1922 applied to an employee prior to his
or her transfer to Snowy Hydro Company, then that Division will cease to
apply at the time of the transfer. Subclause 46(2) operates in a similar way in
relation to Division 4 of Part IV of the Public Service Act 1922 (covering the
Officers+ Rights Declaration Act 1928).
PART 5 - MISCELLANEOUS
Clause 47 : Sharing of land tax with New South Wales
64. This clause provides for the Commonwealth to enter an agreement with
New South Wales covering tax compensation arrangements, under which
the Commonwealth, while it remains a shareholder of Snowy Hydro
Company, receives a proportion of the land tax paid by the Company to New
South Wales. This proportion, which would be equal to the proportion the
Commonwealth+s shareholding comprises of the Company+s entire
shareholding, is to be paid to the Commonwealth by New South Wales.
Clause 48 : Minister may execute agreements on behalf of the Commonwealth
65. As part of the corporatisation process, prior to the corporatisation date,
various agreements will be entered between the Commonwealth, New South
Wales, Victoria and/or Snowy Hydro Company that are necessary to give
effect to the objects of this Act, ie, the corporatisation of the Snowy Mountains
Scheme. This clause empowers the Minister to execute such agreements on
behalf of the Commonwealth.
Clause 49 : Exemption from Taxes
66. This provision provides that an exempt matter or anything done because of,
or for a purpose connected with, or arising out of an exempt matter is exempt
from Commonwealth, State or Territory taxes. -Exempt matter+ is defined in
clause 5, and includes the issue or transfer of shares, the transfer of assets and
liabilities, the entering of any agreement and any debt of Snowy Hydro
Company to the Commonwealth, including any refinancing.
67. The Minister for Finance, or the Secretary to the Department of Finance, or an
authorised delegate, may certify that a matter is exempt or has been done
because of, or for a purpose connected with, or arising out of, a particular
exempt matter. Such a certificate is conclusive evidence of that matter unless
the contrary is established.
Clause 50 : Exemption from Corporations Law
68. This clause provides an exemption from Section 205 and Part 3.2A of the
Corporations Law in connection with Snowy Hydro Company taking over
any debt to the Commonwealth envisaged under this Act or the State
Corporatisation Acts or any agreement under any such Act, including the
giving of any security, and in relation to the acquisition of initial shares in the
Company by the Commonwealth, New South Wales of Victoria. Section 205,
broadly speaking, prohibits a company from giving any financial assistance in
connection with the acquisition or proposed acquisition of shares in the
Company. Part 3.2A relates to financial benefits to related parties of public
companies.
Clause 51 : Ministerial determination for purposes of application of Income Tax
Assessment Acts in respect of assets transferred to Snowy Hydro Company
69. This clause provides for the Minister to determine certain matters in relation
to assets transferred to Snowy Hydro Company, including the acquisition of
an asset, the time of the acquisition, deeming consideration to have been
given for it and the amount of such consideration.
70. The amount of consideration is to be the same as that determined in an
agreement with the States entered under clause 6 of Schedule 1.
Clause 52 : Modification by regulations of Income Tax Assessment Acts as applying
to Snowy Hydro Company
71. This clause provides that regulations may be made modifying the application
of provisions of the Income Tax Assessment Act 1997 and the Income Tax
Assessment Act 1936, in relation to the Snowy Hydro Company.
Modifications may include additions, omissions and substitutions. This
clause has effect subject to any determinations in force under clause 51.
Clause 53 : Registration etc. of changing title to assets
72. This clause provides that a person or authority empowered under a law of the
Commonwealth, a State or Territory may take whatever action as is necessary
to register, record or otherwise give effect to the transfer to Snowy Hydro
Company or TransGrid, as appropriate, of assets vested in the Company or
TransGrid by operation of sections 10, 11 and 12. This includes the
registration by the Registrar of Titles in the relevant state of a certificate
identifying land or interest that has vested in the Company or TransGrid
under clauses 10, 11 or 12.
Clause 54 : Compensation - constitutional safety net
73. The clause provides that if, in giving effect to the operation of this Act,
property is acquired otherwise than on just terms, the Commonwealth is
liable to pay reasonable compensation to a person so affected for such
property. In the event that agreement cannot be reached between the
Commonwealth and the party affected, the matter of compensation is to be
determined by a court of competent jurisdiction.
Clause 55 : Snowy Hydro Company's financial statements and reports to be laid
before Parliament
74. This clause provides that while the Commonwealth is a shareholder of
Snowy Hydro Company, the Minister is required to table the Company's
financial statements and reports (which are required under Corporations Law
in respect of the Company's annual general meeting) in each of the
Commonwealth Houses of Parliament.
Clause 56 : Commonwealth records, etc.
75. Subclause 56(1) defines -pre-corporatisation day+ to be the day immediately
before the corporatisation date and provides that -personal information+ has
the same meaning as in the Privacy Act. This clause provides for
Commonwealth records, and the copyright in those records, in existence prior
to the pre-corporatisation day to become the property of the Commonwealth
on the pre-corporatisation day and for those coming into existence
throughout that day to become the property of the Commonwealth when
they come into existence. This ensures that ownership of Commonwealth
records is transferred to the Commonwealth prior to corporatisation. As such
these records will not be assets that will automatically be transferred to Snowy
Hydro Company. Any disclosure to the Company of information contained
in a record by the Commonwealth is taken to have been authorised by law.
This ensures that any disclosure does not contravene the provisions of the
Privacy Act. New records of the Company will not be Commonwealth
records.
Clause 57 : Authorised persons
76. This clause provides that the Minister may appoint a person as an authorised
person for this part of the Act. In relation to Clause 49, the Minister
administering the provision in respect to that matter is the Minister for
Finance.
Clause 58 : Regulations
77. The Governor-General may make regulations prescribing matters which are
required or permitted under the Act.
Clause 59 : Repeal
78. This clause repeals the Snowy Mountains Hydro-electric Power Act 1949.
The Snowy Mountains Hydro-electric Power Act 1949 relates to the
construction and operation of works for the generation of hydro-electric
power in the Snowy Mountains Area. The Act establishes the Authority
and provides for its function, powers, corporate governance and financial
arrangements. There are two Schedules to the Act which comprise an
agreement, and supplemental agreement, between the Commonwealth,
New South Wales and Victoria in relation to the construction, operation
and maintenance of the Snowy Mountains Scheme. These Schedules will
be terminated as part of the Snowy Hydro Corporatisation Act 1996.
Clause 60 : Termination and amendment of certain existing agreements relating to
Snowy Mountains Scheme
79. From the date of corporatisation the following agreements between the
Commonwealth and the States are terminated, and any rights and obligations
arising under the agreements are extinguished: Schedules 1 and 2 of the
Snowy Mountains Hydro-electric Power Act 1949; the Schedule to the
Blowering Water Storage Works Agreement Act 1963; and Clause 10 is
omitted from the agreement set out in the First Schedule to the Seat of
Government Acceptance Act 1909.
Clause 61 : Authority and Council abolished
80. From the date of corporatisation, both the Snowy Mountains Hydro-electric
Authority and the Snowy Mountains Council are abolished.
Clause 62 : Validation of treatment of certain expenditure by the Authority
81. This clause provides that if the Authority has treated expenditure incurred by
it under the agreement in Schedule 2 to the Snowy Mountains Hydro-electric
Power Act 1949 incorrectly, the action taken is deemed to have been correct.
This agreement provides for the classification of expenditure as being of
either a capital or non-capital nature, with non-capital expenditure being
incorporated in the net cost of production for that year. If expenditure in a
given year was incorrectly classified, the net cost of production for that year
will have been incorrectly calculated, resulting in Governments having
either over or under paid for their electricity entitlement. Whilst a specific
instance has not been identified in due diligence reporting, the purpose of
this provision is to avoid any potential problems arising in the future
regarding alleged over or under payment of the net cost of production.
Clause 63 : Savings, transitional and other provisions
82. This clause provides for Parts 1 and 2 of Schedule 2 to have effect as set out in
the Schedule.
SCHEDULES
Schedule 1 : Provisions relating to transfer of undertakings
Clause 1 : Definitions
83. Clause 1 provides definitions to assist with the interpretation of this
Schedule.
Clause 2 : Application
84. This clause specifies that the Schedule applies to transfer instruments which
transfer assets and liabilities of the Commonwealth, New South Wales,
Victoria and the Authority to the Snowy Company under clauses 10 and 11 of
the Act (and the equivalent provisions in the State legislation) and to
TransGrid under clause 12 (and the equivalent provisions in the State
legislation).
Clause 3 : Vesting of undertaking in transferee
85. Assets or liabilities transferred by an instrument under this Schedule vest in
the transferee (ie, Snowy Hydro Company or TransGrid). This includes the
transfer of any proceedings in relation to those assets and liabilities.
Clause 4 : Operation of Schedule
86. This clause provides that the operation of this Schedule cannot: place a
person in breach of contract or confidence; place them in breach of a
contractual provision prohibition restricting or regulating the assignment or
transfer of assets or liabilities; or give rise to a remedy by a party to or causing
or permitting the termination of any legal instrument because of a change in
the ownership of any asset or liability. The operation of the Schedule is not
an event of default under any contract or legal instrument. Subclause 4(3)
ensures that no formal acknowledgement is required from a lessee from the
transferor of the transfer of any interest in land to the transferree.
Clause 5 : Date of Vesting
87. This clause provides that a transfer instrument under this Schedule takes
effect on the date enacted or on such other date specified in the instrument.
Clause 6 : Value of particular assets transferred
88. This clause provides that the value of the particular assets transferred by an
instrument under this Schedule may be determined by agreement between
the Commonwealth, New South Wales and Victoria. Where an amount of
consideration is determined by the Minister in a determination made
pursuant to clause 51(2)(c)(i) of the Act in relation to an asset which is also the
subject of a valuation under this agreement, the amount is to be the same as
the value of the asset determined under the agreement.
Clause 7 : Transfer of interests in land
89. This clause enables part of a transferor+s interest in land covered by this
Schedule to be transferred as specified in the instrument.
Clause 8 : Confirmation of vesting in Snowy Hydro Company
90. This clause provides that the Minister may in writing confirm the transfer of
particular assets or liabilities to Snowy Hydro Company under of the
operation of Clause 10 and this constitutes evidence of the transfer. An order
made under this clause to confirm the transfer of assets or liabilities to the
Company may be combined with an order under the New South Wales
Corporatisation Act or the Victorian Corporatisation Act.
Clause 9 : Successor of Authority
91. This clause provides that Snowy Hydro Company is to be for all purposes the
successor of the Authority, except in relation to those assets and liabilities of
the Authority+s not transferred to it.
Schedule 2 : Savings, transitional and other provisions
Part 1 - Preliminary
Clause 1 : Regulations
92. Regulations made under clause 58 may contain provisions of a savings or
transitional nature. If regulations are made that predate notification in the
Commonwealth Gazette, such provisions are not to prejudicially affect the
rights of an individual, or impose liabilities in respect of anything done or
omitted to be done, existing before the notification.
Part 2 - Provisions consequent on enactment of this Act
Clause 2 : Judicial Notice
93. This clause maintains the judicial status of the official seal of the Authority
after the repeal of its enabling legislation.
Clause 3 : Final Report by Authority
94. This clause provides for the continued existence of the Authority after
corporatisation for the sole purpose of complying with any outstanding
obligations under the Audit Act 1901 regarding the preparation and
completion of its final report and its tabling in the Houses of Parliament. The
Auditor-General is given such powers as required for the purposes of
performing his or her duties in relation to the above. Snowy Hydro
Company is required to provide whatever reasonable assistance is required to
enable the Authority to undertake these duties.
Clause 4 : Final Report by Council
95. This clause requires Snowy Hydro Company to provide assistance to the
Council, which will remain in existence for the sole purpose of preparing its
final Annual Report.
Attachment 1 to the Explanatory Memorandum: Corporatisation Principles
96. Attachment 1 sets out the principles which the Commonwealth, New South
Wales and Victorian Governments have agreed are the framework for the
corporatisation legislation, and which will be used to develop detailed
Implementation Agreements between the Governments and between a
Government and Snowy Hydro Company. Governments are committed to
taking all actions reasonably necessary, including the introduction of
legislation and the completion of various contractual arrangements, to
corporatise the Snowy Mountains Scheme in accordance with these
principles.

ATTACHMENT 1 TO THE EXPLANATORY MEMORANDUM

SNOWY CORPORATISATION PRINCIPLES

1. Introduction

1.1 Corporatisation of the Snowy Mountains Hydro-electric Authority
(-SMHEA+) and related aspects of the Snowy Mountains Hydro-electric
Scheme (collectively the -Scheme+) by the Commonwealth, New South
Wales and Victoria is a significant national micro-economic reform
initiative and is being undertaken in accordance with Council of
Australian Governments+ commitments.

1.2 Corporatisation is being implemented to create a financially viable
corporatised entity (-Snowy Hydro+) to operate on a competitively
neutral basis and which is able to effectively participate in the emerging
national electricity market (-NEM+).

1.3 Corporatisation will bring Snowy Hydro under New South Wales laws
generally, including the New South Wales environmental, planning
and water regulatory frameworks. Amongst other things, it will also
facilitate substantial Commonwealth debt to be refinanced and repaid.

2. Purpose

2.1 The Scheme is to be corporatised by the Commonwealth, New South
Wales and Victoria in accordance with these principles.

2.2 The Governments will take all actions reasonably necessary, including
the introduction of legislation and the completion of various
contractual arrangements, to corporatise the Scheme in accordance with
these principles.

3. Corporate

3.1 The Scheme is to be corporatised through the establishment of a
company limited by shares under the Corporations Law.

3.2 The principal purposes of Snowy Hydro are to include:

(1) participation on a commercial basis in the emerging NEM as an
independent electricity generator;

(2) participation on a commercial basis in any future developments
and operations approved by its Board; and

(3) meeting appropriate water arrangements.

3.3 Upon or following corporatisation:

(1) SMHEA and the Snowy Mountains Council will be dissolved;

(2) the legislation and associated agreements will be repealed,
amended or terminated; and

(3) each of the Governments+ existing rights in relation to the Scheme
(including electricity entitlements) will be extinguished in
consideration of the issue of equity in Snowy Hydro.

3.4 Equity in Snowy Hydro will be held:

(1) Commonwealth 13%;

(2) Victoria 29%; and

(3) New South Wales 58%.

3.5 As between Government equity holders:

(1) shareholder voting rights are to be equal unless otherwise agreed;
and

(2) unanimous resolutions will be required on agreed major matters.

3.6 The initial board of directors of Snowy Hydro, including its Chairman,
will be appointed by the unanimous agreement of the Governments.

3.7 The Chief Executive Officer will be appointed by the Board and will be a
director.

3.8 Board decisions will be based on a simple majority vote with each
director having one vote and the Chairman a casting vote.

4. Transfer of business undertaking

4.1 Upon corporatisation the existing business undertaking (assets, rights
and liabilities) of the Scheme will be transferred to Snowy Hydro apart
from those assets, rights and liabilities comprising the transmission
undertaking.

4.2 In addition, at corporatisation the business undertakings of the States+
respective Snowy traders (being separate business divisions of Pacific
Power and the State Electricity Commission of Victoria respectively)
and Snowy Hydro Trading Pty Ltd ACN 076 841 686 (including all
vesting, hedging and other contracts entered into by such parties and
which relate to the sale of energy produced by the Scheme) will be
transferred on an agreed basis to Snowy Hydro.

4.3 The transmission undertaking will be transferred to TransGrid at an
agreed fair market value. Thereafter, that undertaking will be operated
on an open access basis and in accordance with usual regulatory
arrangements for comparable assets in New South Wales.


5. Debt

5.1 At corporatisation Snowy Hydro will assume debt equivalent to the
market value of SMHEA+s agreed debt to the Commonwealth at
corporatisation together with the market value of inscribed stock issued
by SMHEA which will be novated to the Commonwealth at
corporatisation (collectively the -Interim Loan+).

5.2 The Interim Loan will be for a term of six months or as otherwise
agreed and will contain usual commercial terms and conditions.

5.3 The Interim Loan will be secured by Snowy Hydro and the States.

5.4 The full amount of the Interim Loan will be refinanced and repaid to
the Commonwealth as soon as practicable following corporatisation on
usual commercial terms and conditions. If the full amount is unable to
be refinanced on reasonable commercial terms and conditions, the
shareholder Governments will inject equity into Snowy Hydro to
enable the company to refinance and repay the full Interim Loan to the
Commonwealth.

6. Water rights

6.1 Water will not be an asset of Snowy Hydro. The existing rights of the
Scheme with respect to water will be continued under a licence granted
by the appropriate NSW water authority (-Water Licence+).

6.2 The Water Licence will:

(1) be in respect of an agreed geographical area (-Area+);

(2) specify Snowy Hydro+s right to use, collect, divert, store and release
water;

(3) provide that Snowy Hydro+s water rights are subject to the rights of
certain water users to extract up to a total of 3 gigalitres per annum
from within the Area;

(4) be for an initial term of 75 years with a 50 year renewal option;

(5) only be revoked or terminated following agreed defaults by Snowy
Hydro; and

(6) be capable of amendment by the appropriate NSW water authority
through an agreed process. Financial consideration will be
provided to Snowy Hydro by NSW if such amendments have an
adverse material financial impact on the company.

6.3 Apart from fees under the Water Licence (to be calculated in accordance
with principle 9.3 below), no other charges will be imposed on Snowy
Hydro in relation to water.

7. Water releases

7.1 The Water Licence will set out Snowy Hydro+s water release obligations.

7.2 Unless otherwise agreed, those water release obligations will be
consistent with the existing arrangements governing the Scheme. In
any case they will:

(1) protect Victoria+s existing right to a share of inflows into the
Scheme;

(2) protect South Australia+s existing rights;

(3) prescribe minimum release volumes in times of drought;

(4) provide for variations in releases in emergency situations;

(5) include provisions for consultation between Snowy Hydro and the
relevant water authorities;

(6) include requirements for the development by Snowy Hydro of
annual water operating plans in consultation with the appropriate
NSW water authority; and

(7) provide for the outcomes of the Water Inquiry.

7.3 With respect to releases referred to in principles 7.2(3) and 7.2(4), no
financial consideration will be payable to Snowy Hydro.

8. Water inquiry

8.1 Prior to proclamation in full of any corporatisation legislation the States
will sponsor a public inquiry into environmental issues arising out of
the current pattern of water flows caused by the operation of the
Scheme in accordance with agreed terms of reference (-Water Inquiry+).

8.2 The inquiry will submit to the States comprehensive, costed options to
address the issues considered by the inquiry within six months of its
commencement. Thereafter, the States will consider the final report of
the inquiry and agree upon a final outcome within two months or such
other time as may be agreed by them.

9. Regulatory framework

9.1 To the maximum extent possible, Snowy Hydro is to operate under a
competitively neutral regulatory framework as it applies to other
relevant participants in the electricity and water industries.

9.2 In particular, Snowy Hydro is to operate under the NSW
environmental and planning regulatory framework with due
recognition being given to the fact that that regulatory framework has
not been applied to the SMHEA from the time of the construction of
the Scheme.

9.3 All charges incurred in connection with the KNP Lease and the Water
Licence will be calculated so as to recoup only the reasonable costs of
issuing and administering that lease and licence.

10. Employees

10.1 Employees working on the Scheme will be transferred to Snowy Hydro
upon corporatisation on substantially the same terms and conditions as
their current employment.

11. Kosciuszko National Park occupation

11.1 Snowy Hydro will occupy areas within the Kosciuszko National Park
under a lease (and associated licences) granted by NSW (-KNP Lease+).

11.2 The KNP Lease will:

(1) be for an initial term of 75 years with a renewal option of 50 years;

(2) provide for occupation on a competitively neutral basis;

(3) recognise the long-term nature of the Snowy Hydro assets within
the Park; and

(4) contain limited termination rights and appropriate arrangements
on termination.

12. Taxation

12.1 Snowy Hydro will not be exempt from Commonwealth, State and local
Government taxes and charges, which will be applied on a
competitively neutral basis.

12.2 The Commonwealth will compensate the States in proportion to their
shareholding through a rebate or any other agreed mechanism of any
Commonwealth income tax and wholesale sales tax paid by Snowy
Hydro.

12.3 NSW will compensate the Commonwealth and Victoria in proportion
to their shareholding through a rebate for any land tax paid by Snowy
Hydro.


13. Alternative dispute resolution

Any disputes between a Government and Snowy Hydro will be
resolved where possible through alternative dispute resolution
mechanisms.
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