Page 3823 - Week 12 - Thursday, 23 November 2006
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As members of this Assembly will recall, the government announced as part of the 2006-07 budget that a scoping study would be undertaken with a view to a future sale of Rhodium. The scoping study, which was prepared by Horwath Pty Ltd, indicates that selling the shares of Rhodium in concert with the management of the ACT government fleet contract would enhance the potential sale value of the company. This type of sale would also minimise any potential disruption to the business.
The sale is expected to achieve the optimum financial return for the government. Potential bidders may be prepared to pay a premium to gain access to Rhodium’s customer base. The government is poised to make cost savings as a result of the fleet contract being managed at competitive rates. This means that the sale will have a positive impact for the territory, as it will save taxpayers’ money, which can be used for higher priority purposes for the benefit of the community.
Rhodium has been actively pursuing opportunities to grow the business. It is at a stage where only about 25 per cent of its business operations are directed towards providing services to the government. As Rhodium has successfully expanded its customer base, this has also raised the risk profile of the company.
Commercial operations of this kind are not core government business. The government considers it would not be prudent to expose scarce public finances to this level of risk indefinitely. The government has therefore decided it is appropriate to move quickly to sell the shares in the company.
It is unlikely that the sale will have a major impact for the local motor vehicle industry, as most fleet companies tend to obtain vehicles from local dealers, and also to do the vehicle servicing and repairs. The Rhodium staff will be closely consulted throughout the sale process.
The sale will be conducted by an open tender process. The government will call for expressions of interest after the appointment of a sales adviser. The government is at the stage where it is seeking the agreement of this Assembly to allow the sale to proceed by supporting this bill. The Territory-Owned Corporations Act requires the shares of Rhodium to be held by an ACT government minister. Therefore, the shares cannot be sold until Rhodium has been removed from schedule 1 of the act.
Arranging for the legislative amendments to be passed at an early stage will facilitate a more efficient sales process by removing any buyer uncertainty about when the bill, and hence the sale transfer, could take effect. The bill will allow the Treasurer to notify the commencement date after the sale negotiations have been completed. It is important to note that the provisions of the Territory-Owned Corporations Act will continue to apply to Rhodium until the sale has been completed.
The bill also provides for consequential amendments to the Taxation of Government Business Enterprises Regulations 2003. This bill allows the government to divest itself of Rhodium. I commend the bill to the Assembly.
Debate (on motion by Mr Mulcahy) adjourned to the next sitting.
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