Page 788 - Week 03 - Wednesday, 13 April 1994
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Mrs Carnell: And that is what happens in other sites?
MR CONNOLLY: Just settle down again. If they are selling petrol at the rate at which the Motor Trades Association say they are selling the petrol, there will be a net gain to the ACT Government, even in the first year, of the order of $200,000. It depends on how much petrol they sell. If they sell only the 3.6 million litres that we estimated for the first year, there will be no net payment across, but in future years that will balance out. You will see it all in the document I have tabled, and you will see that that was based on advice from the Australian Valuation Office as to what would be a fair rate of valuation.
If I wanted to operate a service station and went along to Smith Petroleum, who owned a petrol station site, I would pay a licence fee for that site of, the Motor Trades Association tells us, around 2c a litre for 12 months or three years or whatever; but what I would get for that 2c a litre would be access to an operative site. When Burmah came to us, we did not have an operative site in that the tanks were old and needed to be replaced. There were two ways of doing that. The ACT Government could have paid for the tanks and over a period of three to five years we could have recouped that, and at the end of the period they would probably be scrapped because that site will be closed. I could have done that and thus incurred an outgoing for the ACT Government straight off. On the other hand, we could have allowed Burmah to pay to put those tanks in and allowed them to offset that in terms of what they were paying by way of a licence agreement, which the Australian Valuation Office said was a fair thing to do, and you will see that their letter says how you balance that out.
At the end of the day, Burmah have paid out quite a bit of money in order to have access to a site that was a redundant ACT Government site. They will not get back anything on those tanks. Equally, they make no capital gain because we own the site. They are not paying nothing; they are incurring a cost which was a cost that was within the order that the Motor Trades Association has said is about what a licensee pays for a site. I am also advised that the Prices Surveillance Authority has confirmed - I presume that this is to officers in my department - that the rental charges for the Burmah Kingston site are within the parameters of existing rentals charged to independent petrol retailers with respect to equivalent sites interstate. So again, what they are paying, what it is costing them, is about what it would cost anyone to license a site for a period.
The site as we owned it was inoperative in that it had to have new tanks. Rather than investing ACT Government dollars and then getting that back over time, we allowed them to put the tanks in and recoup. That means, on 3.6 million litres, no net gain in the first year. If, however, they are selling the million litres a month that the MTAA say they are selling, there is a significant net gain to the ACT revenue because, at the end of the day, the exercise was about getting a strong independent retailer into the ACT and smashing what Mr Humphries has described in this place as the cartel that applied in relation to fuel pricing in the ACT.
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