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Legislative Assembly for the ACT: 1997 Week 10 Hansard (23 September) . . Page.. 3080 ..

MRS CARNELL (Chief Minister and Treasurer) (10.32): Mr Speaker, I ask for leave to present the Territory Owned Corporations (Amendment) Bill (No. 3) 1997.

Leave granted.

MRS CARNELL: Mr Speaker, I am pleased to present to the Assembly the Territory Owned Corporations (Amendment) Bill (No. 3) 1997, together with its explanatory memorandum.

Title read by Clerk.

MRS CARNELL: I move:

That this Bill be agreed to in principle.

Section 24 of the Territory Owned Corporations Act 1990 currently prohibits the Territory from lending money to a Territory-owned corporation, except where the borrowing is appropriated by the Legislative Assembly. The borrowing activities of central government are currently undertaken through the Central Financing Unit, the CFU. The requirement to specifically appropriate borrowing proceeds to TOCs has practical difficulties in its application. It is not always possible for a TOC to determine its annual borrowing requirements in the budget context to enable inclusion in annual Appropriation Acts. This was the case in the 1997-98 budget for an amount of $100m which may require ACTEW to borrow to some unspecified extent. The operation of section 24 of the Territory Owned Corporations Act places TOCs in an adverse position compared to ACT statutory authorities, which are able to borrow directly from government by virtue of section 57 of the Financial Management Act.

The most cost-effective method of raising loan funds from a whole-of-government perspective is through the CFU. The Central Financing Unit is able to take advantage of the ACT's AAA credit rating and has an established market presence which results in lower borrowing costs. To the extent that a Territory-owned corporation is prohibited from borrowing through the CFU, the Territory as a whole would be subject to a borrowing cost differential of approximately 0.2 per cent. In the case of a borrowing of $50m this would amount to $100,000 per annum. The passage of this Bill will therefore provide the opportunity for the ACT to minimise its overall cost of borrowings. Mr Speaker, I think it is worth realising that TOCs can already borrow externally; they just cannot borrow through the CFU. I commend the Bill to the Assembly.

Debate (on motion by Mr Berry) adjourned.

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