National Rail Corporation (Agreement) Act 1991 (NSW)

National Rail Corporation (Agreement) Act 1991 No 82 An Act to approve and give effect to an Agreement between the State of New South Wales, the Commonwealth and certain other States relating to the National Rail Corporation Limited; to refer certain powers arising out of the Agreement to the Parliament of the Commonwealth; to amend the Transport Administration Act 1988 as a consequence of the Agreement; and for other purposes. 1 Name of Act This Act may be cited as the National Rail Corporation (Agreement) Act 1991. 2 Commencement This Act commences on a day or days to be appointed by proclamation. 3 Definitions (1) In this Act: the Agreement means the Agreement, a copy of which is set out in Schedule 1, as varied by any further Agreement made in accordance with clause 8 of that Agreement. the Company means the National Rail Corporation Limited. (2) If the Agreement is varied by a further Agreement, the Governor may, by proclamation published on the NSW legislation website, amend this Act by inserting at the end of this Act a Schedule containing a copy of the further Agreement. 4 Approval of Agreement (1) The Agreement is approved. (2) The execution of the Agreement by the Honourable Nicholas Frank Greiner for and on behalf of the State of New South Wales is ratified. 5 Agreement to be given effect to by parties to the Agreement The parties to the Agreement, and each authority of those parties: (a) are authorised to do anything which they are authorised to do under the Agreement, and (b) are required to observe the provisions of the Agreement that are applicable to them. 6 Referral of power to the Parliament of the Commonwealth (1) The matter of the Commonwealth of Australia holding shares in the Company in accordance with the Agreement, to the extent to which it is not otherwise included in the legislative powers of the Parliament of the Commonwealth, is referred to the Parliament of the Commonwealth for a period commencing on the day on which this section commences and ending on the day fixed under subsection (2) as the day on which the reference under this section terminates, but not longer. (2) The Governor may, at any time, fix by proclamation published on the NSW legislation website a day as the day on which the reference under this section terminates. (3) In this section, a reference to holding shares includes a reference to acquiring, disposing of or dealing with those shares. 7 (Repealed) 8 Shares in Company issued to State to be held by eligible Ministers (1) The shares in the Company issued to or acquired by the State of New South Wales in accordance with the Agreement or with the articles of association of the Company are to be held by an eligible Minister. (2) Those shareholders hold their shares in the Company for and on behalf of the State of New South Wales. (3) A person ceases to be eligible to hold those shares in the Company on ceasing to be an eligible Minister, and may thereafter exercise no rights as a shareholder (except to transfer his or her shares as directed by the Premier). (4) The Premier is empowered to execute a transfer of any of those shares, whether or not the person to whom they were issued or previously transferred consents, and whether or not the person still holds office as an eligible Minister. (5) In this section, eligible Minister means the Minister administering this Act and any other Minister for the time being nominated by the Premier as being eligible to hold shares in the Company. 9 Transfer of rail freight assets of State to Company (1) The Minister may, with the approval of the Company, from time to time direct by order in writing that any specified rail freight assets of the State be transferred to the Company. (2) The consideration for the transfer is (subject to the order) the issue to the State of shares in the Company in accordance with the Agreement. (3) On the commencement of the order, the following provisions have effect (subject to the order): (a) the transferred rail freight assets vest in the Company by force of this section and without the need for any conveyance, transfer, assignment or assurance, (b) the rights and liabilities of the State relating to the transferred rail freight assets become, by force of this section, the rights and liabilities of the Company, (c) all proceedings by or against the State relating to the transferred rail freight assets pending immediately before the transfer are taken to be proceedings pending by or against the Company, (d) anything done or not done in relation to the transferred rail freight assets before the transfer by, to or in respect of the State is (to the extent that it has any effect) taken to have been done or not done by, to or in respect of the Company. (4) The operation of this section is not to be regarded: (a) as a breach of contract or confidence or otherwise as a civil wrong, or (b) as a breach of any contractual provision prohibiting, restricting or regulating the assignment or transfer of assets, rights or liabilities, or (c) as giving rise to any remedy by a party to an instrument, or as causing or permitting the termination of any instrument, because of a change in the beneficial or legal ownership of any asset, right or liability. (5) This section does not limit any other method of transfer of rail freight assets of the State to the Company. (5A) For the purposes of this section: (a) the Minister may, with the approval of the Company, give a direction to a Rail Corporation within the meaning of the Transport Administration Act 1988, and (b) a reference to rail freight assets includes a reference to assets vested in or owned by a Rail Corporation, and (c) a Rail Corporation stands in the same position as the State Rail Authority stands under section 13 (9) of the Transport Administration Act 1988 in relation to financial loss as a result of complying with any direction given by the Minister under this section. (6) In this section: assets means any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description, and includes securities, choses in action and documents. liabilities means liabilities, debts and obligations (whether present or future and whether vested or contingent). rail freight assets of the State means any assets of the State that are required or authorised to be transferred to, or acquired by, the Company under the Agreement. rights means all rights, powers, privileges and immunities (whether present or future and whether vested or contingent). the State includes the State Rail Authority and any other authority of the State of New South Wales. 10 Stamp duty on statutory transfer of assets etc (1) The Minister must not make an order under section 9 unless satisfied that arrangements have been made for the payment to the Crown of the amount of stamp duty forgone. (2) The amount of stamp duty forgone is the amount of stamp duty that would have been payable if the assets transferred by the order had been transferred by instrument in writing executed by the parties to the transfer instead of by the operation of section 9. (3) Any order under section 9 or any instrument executed only for: (a) a purpose ancillary to or consequential on the operation of that section, or (b) the purpose of giving effect to that section, is not chargeable with stamp duty. 11 Company not the Crown etc (1) The Company and its subsidiaries are not, and do not represent, the Crown. (2) Without limiting the generality of subsection (1), the Company and its subsidiaries: (a) are not instrumentalities or agencies of the Crown, and (b) are not entitled to any immunity or privilege of the Crown, and (c) are not public authorities for any purpose. (3) The obligations of the Company or any of its subsidiaries are not guaranteed by the State of New South Wales. 12 Appropriation of money (1) All money required to be provided by the State of New South Wales under the Agreement is to be provided out of money to be appropriated by Parliament for the purpose. (2) The approval of the Agreement by this Act does not operate to appropriate that money from the Consolidated Fund. 13 Act to bind the Crown This Act binds the Crown not only in right of New South Wales but also, so far as the legislative power of Parliament permits, in all its other capacities. 14 Regulations The Governor may make regulations, not inconsistent with this Act, for or with respect to any matter that by this Act is required or permitted to be prescribed or that is necessary or convenient to be prescribed for carrying out or giving effect to this Act or the Agreement. 15 (Repealed) 16 Repeal of Grafton-Kyogle to South Brisbane Railway Management Act 1943 No 30 and related Acts (1) The following Acts are repealed: Grafton-Kyogle to South Brisbane Railway Management Act 1943 No 30 Grafton-Kyogle to South Brisbane Railway Agreement Ratification (Amendment) Act 1927 No 17 Grafton-Kyogle to South Brisbane Railway Agreement Ratification Act 1924 No 20 (2) Despite the repeal of the Grafton-Kyogle to South Brisbane Railway Management Act 1943, the Agreement and Supplementary Agreement set out in that Act (and any further Agreement made under that Act) continue in force until such time as they are terminated in accordance with those Agreements or by further agreement of the parties concerned. (3) The repeal of the above Acts does not prevent the State Rail Authority from entering into a further agreement with a railway authority of Queensland for the operation by the State Rail Authority of the railway services to which those Acts applied. Schedule 1 Agreement AGREEMENT BETWEEN THE COMMONWEALTH OF AUSTRALIA THE STATE OF NEW SOUTH WALES THE STATE OF VICTORIA THE STATE OF QUEENSLAND THE STATE OF WESTERN AUSTRALIA Relating to the Establishment of the NATIONAL RAIL CORPORATION AUSTRALIAN GOVERNMENT SOLICITOR ROBERT GARRAN OFFICES BARTON A.C.T. THIS AGREEMENT is made on 30th day of July 1991. BETWEEN: THE COMMONWEALTH OF AUSTRALIA of the first part THE STATE OF NEW SOUTH WALES of the second part THE STATE OF VICTORIA of the third part THE STATE OF QUEENSLAND of the fourth part and THE STATE OF WESTERN AUSTRALIA of the fifth part WHEREAS: A. To achieve micro-economic reform in the Australian rail industry, the Commonwealth, State and Territory Governments have agreed that a company should be established for the purpose of conducting, among other things, rail freight operations in Australia on a commercial basis in accordance with principles compatible with those set out in the Heads of Government Agreement on the National Rail Freight Corporation dated 31 October 1990. B. These principles are: (a) that the Company will: (i) operate on a strictly commercial basis, with a financially viable corporate plan, and be subject to the Trade Practices Act 1974 (Commonwealth); (ii) have access (by ownership or other appropriate arrangements) to the assets, including track infrastructure, necessary to achieve commercial viability; (iii) operate under labour arrangements incorporated in an enterprise award, which reflects best practice in productivity standards through efficient work and manning practices, determined by the technical capacity of its equipment and commercial considerations, with cost efficiencies being, as a minimum, in line with those identified by the National Rail Freight Initiative Task Force in Attachment I to its Report of 21 March 1991; (iv) have the capacity to contract out activities where that is the most efficient approach; (v) provide access on a commercial basis to the NRC network and to terminal facilities for private and public sector operators; (vi) have the capacity to provide services to Governments, with the charging for such services being on a strictly commercial basis; and (vii) not be responsible, financially or in any other way, for redundancies that may arise in rail authorities resulting from its formation and transfer of functions and assets to it; and (b) that during the Establishment Period the current financial position of the Commonwealth and State rail authorities' interstate rail freight operations will not deteriorate as a result of the Commonwealth and the States participating in the formation and operation of the Company. C. The Company will be established and operated in accordance with the terms and conditions set out in this Agreement and its Memorandum and Articles of Association to give effect to the principles referred to in Recital B(a). IT IS AGREED as follows: PART I INTERPRETATION — 1. In this Agreement, except where a contrary intention appears or the context otherwise requires: "asset" means any real or personal property of any description. "Best Practice Industrial Agreements" means labour arrangements negotiated by the Company which reflect the most efficient work and manning practices, determined by the technical capacity of equipment and commercial considerations. "Commonwealth" means the Commonwealth of Australia as a party to this Agreement. "Company" means the National Rail Corporation Limited, a company to be incorporated in the Australian Capital Territory under the Corporations Law. "Corporate Plan" means the corporate plan prepared in accordance with the Articles of Association of the Company. "date of commencement of operations" means 31 January 1992, or such later date as is mutually agreed between the Relevant Ministers, other than the Ministers of the other States, being the common date from which all rail authorities of the Commonwealth and the States carry interstate rail freight on behalf of the Company. "Establishment Period" means a five year period commencing on the date of commencement of operations. "finally valued" means, in relation to the value of an asset or assets transferred (by way of ownership or long term lease) by the Commonwealth, the States, or their rail authorities to the Company, that the value of the asset or assets has been agreed or fixed by arbitration. "interstate rail freight" means interstate rail freight carried on the NRC network. "long term lease" means a lease which has a term of or in excess of 20 years. "NRC network" means the rail network connecting the mainland State capital cities and Alice Springs as specified in the Corporate Plan. "NRC Standard Costs" means those costs that the Company projects, with the objective of achieving as a minimum, the potential cost efficiencies identified by the National Rail Freight Initiative Task Force in Attachment I of its Report of 21 March 1991, that the Company would achieve by the end of the Transition Period, if the Company were from the date of commencement of operations to: (a) assume the management and operations of all the interstate rail freight functions set out in Schedule 2 from all rail authorities; (b) have in place Best Practice Industrial Agreements; and (c) undertake a capital works program in accordance with the Corporate Plan. "other State and other States" means the State of Queensland. "predominant use": (a) where used in relation to an asset which is a terminal, means the greatest use of the terminal under consideration taken for the period of 12 months prior to the date on which the matter is to be determined, having regard to the volume of freight handled at the terminal (measured in appropriate units of originating and terminating throughput). (b) where used in relation to track, means the greatest use of the section of track under consideration (as identified in the Corporate Plan) taken for the period of 12 months prior to the date on which the matter is to be determined, having regard to the volume of freight carried and the frequency of freight and passenger services. "rail authorities" means the railway authorities of the Commonwealth, the States and, where used in connection with the other States, the railway authorities of those other States. "Railways of Australia Agreement" means the interstate rail freight revenue sharing arrangements determined by the rules contained in Railways of Australia Commissioners Conference Minute 7248, as they stand at the date of commencement of operations. "Relevant Ministers" means Ministers of the Commonwealth, the States and the other States having responsibility for administration of this Agreement. "State" means the State of New South Wales, the State of Victoria, the State of Western Australia and the State of Queensland if it becomes a shareholder of the Company. "States" means the State of New South Wales, the State of Victoria, the State of Western Australia and the State of Queensland if it becomes a shareholder of the Company. "Transition Period" means the first three year period of the Establishment Period. PART II COMMENCEMENT OF OPERATION OF AGREEMENT — 2(1) Clause 3 and subclauses 4(1), (2), (3), (4) and (5) will come into operation when this Agreement has been executed by the Commonwealth, the States and the other States. 2(2) The remainder of this Agreement will come into operation on the date on which the last of the legislation referred to in clause 3 (except the legislation referred to in subparagraph 3(1)(a)(i)) comes into force. PART III LEGISLATION — 3(1) The Commonwealth, the States and the other States will, in relation to the legislation referred to in paragraphs (a)(ii) and (iii), as soon as possible after the execution of this Agreement by all of them, and in relation to the legislation referred to in paragraph (a)(i), if the relevant State or other State proposes to give its approval in writing to the Company engaging in intra-State rail transport services in that State or other State, prior to giving that approval, take all practicable steps to seek the enactment of the following legislation: (a) legislation by the respective Parliaments of the Commonwealth, the States and the other States to approve this Agreement and to make such provision as shall be necessary or appropriate on the part of those Parliaments respectively for the implementation of this Agreement, including: (i) legislation by the States and the other States referring to the Commonwealth, under s.51(xxxvii) of the Constitution, the matter of the Commonwealth holding shares in the Company when the Company engages in intra-State rail transport services in the States and in the other States; (ii) legislation by the Commonwealth, the States and the other States to provide for an additional means for the transfer or vesting in the Company of assets owned or leased by the Commonwealth, the States or the other States and their rail authorities, and for substituting the Company for the Commonwealth, the States, the other States and their rail authorities in contracts, in cases where the legislative transfer or vesting of assets, or contract substitution, has been agreed in accordance with this Agreement between the Commonwealth, the States, the other States and their rail authorities, respectively and the Company; and (iii) legislation by the Commonwealth, the States and the other States authorising the making of regulations or by-laws that are necessary or convenient for carrying out or giving effect to this Agreement and to the legislation for the implementation of this Agreement; PART IV INCORPORATION OF THE COMPANY AND SHAREHOLDERS ARRANGEMENTS — 4(1) (a) The Commonwealth, the States and the other States agree that the Company shall be incorporated as a public company limited by shares which shall be operated on a strictly commercial basis with a financially viable corporate plan, and have as a principal objective the carriage of interstate rail freight on a national network. (b) The Commonwealth will, as soon as practicable after this Agreement has been executed, arrange for the Company to be incorporated under the Corporations Law, with the name of "National Rail Corporation Limited" and with a Memorandum and Articles of Association substantially in the form set out in Schedule 1. Nothing in this Agreement shall be construed as limiting or restricting the amendment of the Memorandum and Articles of Association of the Company in accordance with their provisions and the Corporations Law. 4(2) The Commonwealth will, itself and though trustees, subscribe to 500 ordinary and 500 B convertible shares in the Company and will, within 30 days of the date referred to in subclause 2(2), transfer to the States, at par value, out of these shares, the following number of shares: New South Wales—140 ordinary shares and 125 B convertible shares Victoria—65 ordinary shares and 125 B convertible shares Western Australia—25 ordinary shares and 125 B convertible shares 4(3) The funds required for the establishment and functioning of the Company, until the date of commencement of operations, shall be provided out of the equity payment to be made by the Commonwealth pursuant to clause 6. 4(4) The Commonwealth and the States agree that subject to subclause 4(6), until the end of the Establishment Period, there will be nine (9) Directors of the Company and the Commonwealth, as subscriber and member of the Company, and the States, as members of the Company, will exercise their appointment and voting rights in respect of the appointment of the first and subsequent Directors in such a way as to have during the Establishment Period: (a) three Directors nominated by the Commonwealth, one being the Chairperson of the Board of Directors and one, as a matter of Commonwealth policy, being a nominee of the Australian Council of Trade Unions, not being a member of a union directly associated with operations of the Company; (b) two Directors nominated by the State of New South Wales; (c) two Directors nominated by the State of Victoria; and (d) one Director nominated by the State of Western Australia, holding office during the Establishment Period. The remaining Director, who will be the Managing Director, will be appointed by the Board of Directors in accordance with the Articles. 4(5) The Commonwealth and the States agree that, until the end of the Establishment Period, they will as members of the Company, exercise their voting rights in respect of the removal of Directors so that a Director nominated by any of them will, at the request of the Commonwealth, in the case of a Director nominated by it, or of a State, in respect of a Director nominated by it, be removed. 4(6) If any other State becomes a shareholder of the Company pursuant to subclauses 6(8) and 6(9), that State shall have a right from the date it becomes a shareholder to nominate and have appointed one Director of the Company, in addition to the Directors referred to in subclause 4(4), to hold office during the Establishment Period in accordance with the provisions of subclauses 4(4) and 4(5). 4(7) The Commonwealth and the States agree that, after the Establishment Period, during such time as the Commonwealth and any of the States are the only shareholders of the Company, the Commonwealth and those States (as members of the Company) shall exercise their voting rights relating to the appointment and removal of Directors in such a way as to ensure that the Commonwealth and those States each will have the right to nominate at least one (1) Director, to have that Director appointed and to have that Director removed. The remainder of the Directors will be appointed in accordance with the Articles of Association of the Company. PART V ESTABLISHMENT AND OPERATION OF THE COMPANY — 5(1) The Commonwealth and the States will, to the extent each in its capacity as a shareholder in the Company is able, procure the Company to: (a) negotiate Best Practice Industrial Agreements with the relevant unions leading to an enterprise award as envisaged by Recital B(a)(iii); (b) before the commitment of any capital upgrading have in place Best Practice Industrial Agreements which the Company advises provide a basis for commercial operations; (c) commence and conduct national interstate rail freight operations; (d) conduct all marketing and determine pricing for interstate rail freight carried on by the Company; (e) collect and retain all revenue generated by the carriage of interstate rail freight from the date of commencement of operations; (f) take over progressively from the rail authorities of the Commonwealth and the States, in whole or in part, functions of the type listed in Schedule 2 and the management of the associated assets pursuant to the provisions of this Agreement and the agreements entered into pursuant to subclauses 5(3), 5(4) and 5(5); and (g) give effect to this Agreement and to those obligations which by this Agreement are expressed to be obligations of the Company. 5(2) The Commonwealth, the States and the other States will, and will cause their respective rail authorities to assist the Company, when requested by the Company, to undertake the matters set out in subclause 5(1), except, in the case of the other States, in relation to the matters set out in paragraph 5(1)(f). 5(3) Contracts for Services Prior to and during the Transition Period, at the request of the Company, the Commonwealth and the States shall, and shall cause their respective rail authorities to, enter into contracts with the Company for the provision of rail services to the Company, relating to interstate rail freight. Those contracts will make provision for the following during the Transition Period: (a) The price for services performed under the contracts shall be agreed on the basis that: (i) the initial contract price, to apply for no longer than for the period of 12 months after the date of commencement of operations, will be set having regard to: (A) the Company being able to meet its costs incurred in performing the functions assumed by it in whole or in part, during the period for which the initial contract price applies (being reasonable costs); and (B) the revenue that the rail authority would have received under the Railways of Australia Agreement, had that agreement still applied. and, (ii) thereafter the contract price will, on the basis that the Company has achieved Best Practice Industrial Agreements and is implementing its approved capital investment program, reduce progressively to NRC Standard Costs. (b) liquidated damages, in an amount or by a formula to be agreed between the parties to the contract, to be paid to the Company by the respective rail authorities, or by the Company to the respective rail authorities, in respect of a failure by a party to meet such performance standards as are specified in the contract; (c) the Company and the relevant rail authority are to maintain and make available to each other externally audited accounts of the costs of carrying out their respective obligations under any contract. The accounts shall be in the form specified from time to time by the auditors of the Company in accordance with generally accepted accounting practices. Such accounts shall be retained by the parties to a contract for at least a period of 12 months after the expiration of the contract. These accounts will only be used for the purpose of determining payments pursuant to clause 5. 5(4) Transfer of Functions (a) Subject to this Agreement, the Commonwealth and the States shall and shall cause their respective rail authorities to permit the Company to assume performance of the functions relating to interstate rail freight of the type listed in Schedule 2, in whole or in part, in accordance with a detailed list of specific functions and the timetable set out in the Corporate Plan and being no later than the end of the Transition Period. (b) When a function is assumed pursuant to subclause 5(4)(a) by the Company, an assessment will be made at that time by the Company of the initial full cost to the Company of performing that function determined having regard to any accounts kept pursuant to subclause 5(3)(c) or in the absence of such accounts, such other accounts as may be relevant. Where that assessed cost exceeds NRC Standard Costs for that function: (i) the transferring rail authority and the Company will agree as to the rate and the time, which is not to exceed three years from the date of transfer, or the end of the Establishment Period, whichever shall first occur, at which, and within which the Company will be able to reduce costs in relation to that function to NRC Standard Costs, while meeting the Company's performance standards; (ii) the Company and the Commonwealth, or the State concerned, will agree a schedule of payments, to be made by the Commonwealth or the State to the Company, during the period agreed to in subclause (i) above while the Company is in the process of achieving NRC Standard Costs in respect of the function in the time agreed. The schedule will be based on the difference between NRC Standard Costs to carry out the function and the actual costs measured on a comparable basis determined having regard to any accounts kept pursuant to subclause 5(3)(c) (or in the absence of such accounts, such other accounts as may be relevant), to the Commonwealth, the States or their rail authorities, as the case may be, of carrying out the function in the twelve month period prior to the transfer. (c) In the case of the State of Western Australia, if it is established by an independent expert to be appointed by the Company and approved by the State of Western Australia, as soon as practicable after the date of commencement of operations, that transfer of its interstate rail freight business to the Company would have a detrimental effect on the financial position of the rail authority of Western Australia, because of a reduction in revenues not matched by a commensurate reduction in costs, including fixed costs and overheads, then assessments shall be made by that expert of the extent in dollar terms, of that effect for each year of the Establishment Period, and of the maximum practicable rate at which the Western Australian rail authority could reduce fixed costs and overheads as a consequence of the transfer of the functions and assets to the Company. The Company, the Commonwealth and the States must agree a schedule of annual payments to be made to the State of Western Australia by the Company within the Establishment Period, which provides compensation to the State of Western Australia based on these assessments. (d) Payments to be made by the rail authority of the State of Western Australia pursuant to subclause 5(4)(b), as well as payments received by the rail authority of the State of Western Australia pursuant to subclause 5(3), shall be taken into account in assessing the payments to be made to the State of Western Australia pursuant to subclause 5(4)(c), as well as any reductions in costs occasioned by the transfer of functions by the rail authority of the State of Western Australia, giving rise to payments by the State of Western Australia pursuant to subclause 5(4)(b). (e) Prior to any application of Part VII in relation to payments to be made to the State of Western Australia pursuant to subclause 5(4)(c), agreement as to payments to the State of Western Australia pursuant to that subclause shall, if necessary, be negotiated at Heads of Government level. 5(5) Access to and Transfer of Assets The Commonwealth and the States shall, or shall cause their rail authorities to transfer ownership of, or for as long as the Company continues to conduct national interstate rail fre