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Legislative Assembly for the ACT: 2004 Week 07 Hansard (Thursday, 1 July 2004) . . Page.. 3103 ..

The bill proposes that the directors of a territory owned corporation or subsidiary must, as soon as practicable, inform the voting shareholders of any event that may significantly affect the entity’s value or performance. The bill also proposes amendments to provide that voting shareholders, after consulting with the directors, may inform them of the general government policies that are to apply to the entity. The directors must ensure that these policies are complied with as far as is practicable.

Audit committees play an important role in corporate governance in terms of reviewing risk management, reporting and accounting and the structures thereof, monitoring internal controls and performance and ensuring compliance with relevant legislation. Accordingly, the bill proposes that each territory owned corporation should be required to establish an audit committee.

The bill also addresses certain anomalies in existing legislation. These changes will essentially ensure that territory owned corporations have similar standards of accountability that apply to statutory authorities. It is proposed that the definition of “borrowing” be amended to include financing leases. This method of financing is widely used in both commercial and non-commercial sectors. In fact, the definition of “borrowing” in the Financial Management Act 1996 that applies to departments or statutory authorities includes financing leases. The proposed amendment removes this anomaly.

Under current provisions of section 8 of the Territory Owned Corporations Act, territory owned corporations and their subsidiaries are not intended to have any immunity or privilege from the Crown nor be exempt from paying taxes, duties or fees. However, section 21 of the Legislation Act may inadvertently defeat the intention of the Territory Owned Corporations Act. Accordingly, the bill proposes to amend section 8 to preserve the original intention.

The bill proposes that the giving of guarantees by territory owned corporations and subsidiaries be subject to the Treasurer’s approval. This is in keeping with similar requirements applying to statutory authorities under the Financial Management Act.

Finally, the bill includes an amendment that authorises the Department of Treasury to invest surplus funds on behalf of territory owned corporations and their subsidiaries. The proposal does not apply to money held in trust by a territory owned corporation or a subsidiary. There are some other minor amendments. These proposed amendments include creating a dictionary and moving it to the end of the Territory Owned Corporations Act, and renumbering various sections of the schedule.

In conclusion, the amendments proposed in this bill will improve and strengthen the governance and accountability arrangements for territory owned corporations and subsidiaries. I trust that members will support this bill. I commend this bill to the Assembly.

Debate (on motion by Mr Cornwell) adjourned to the next sitting.

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