Privatisation measures will affect many
business sectors and will be divided into short term (2014- 2016),
medium term (after 2016) and long term (no fixed date) projects.
The realisation of assets in the long-term could generate more than
$11 billion for the government.
This follows the recommendation in the National Commission
of Audit report, released on May 1, that government enterprises
such as NBN Co, Snowy Hydro Limited (13 per cent stake), Defence
Housing Australia and the Royal Australian Mint be sold to the
private sector. The government has held off on decisions for now on
a number of those targets for privatisation, but it has announced
in the budget that "'scoping studies" will be
undertaken into the current ownership of Australian Hearing,
Defence Housing Australia, the ASIC registry function and the Royal
Australian Mint with only the previously-announced Medibank
privatisation definitely to proceed. The government enterprises up
for sale are those that are seen to operate in contestable
Norton Rose Fulbright partner Iain
Laughland says that a number of methods of privatisation may be
used. For instance, the ASIC registry function could be privatised
by a single asset sale, while other sales, such as Defence Housing
Australia could be the subject of an initial public offering.
"One of the outcomes of the scoping studies announced is
likely to be a recommendation on the method of sale which will be
the method that provides the best opportunity to government to
maximise value on the realisation of the asset," he said.
"Until the scoping studies have been completed it is
difficult to determine with certainty what business sectors are
best placed to benefit. But prospective buyers or investors in the
assets that have been ear-marked for privatisation should maintain
a close eye on developments and announcements regarding the
implementation of the privatisation program by the
While the National Commission of Audit mentioned ASC Pty Ltd as
one potential sale target, it was omitted from the list of
enterprises for which a scoping study will be commissioned from the
budget overview papers. Norton Rose Fulbright partner
Alena Titterton says that the omission is a logical one
"given the significance of the future submarines project for
Defence and the naval shipbuilding industry".
In relation to any proposed privatisation of Defence Housing
Australia, the issues for government might not be straight forward.
Ms Titterton says that the Military Superannuation and Benefits
Act 1991 (Cth) and Defence Housing Australia Act 1987
(Cth), which respectively establish the Military Superannuation and
Benefits Scheme and the Defence Housing Australia body, will need
to be repealed if the National Commission of Audit recommendation
is to be adopted.
There are benefits to industry, though, from these potential
sales. "Any sales following the commissioned scoping studies
represent a windfall for the road infrastructure industry given
that any funds arising from the sales will go towards the
government's Asset Recycling Fund (see below) with funding
targeting major road infrastructure projects", Ms Titterton
However, Ms Titterton said that as part of any focus on
"strategic and nationally significant infrastructure, high
speed rail ought to be somewhere on the agenda".
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