The South Australian Ports Corporation (the Corporation) is a public corporation pursuant to the provisions of the South Australian Ports Corporation Act 1994.
The primary function of the Corporation is to manage the ports and related facilities vested under the Act on a sound commercial basis and to use its best endeavours to:
ensure that orderly, efficient and reliable services, including safe and secure cargo storage and handling facilities, are provided to users;
maximise the use and promote the proper exploitation of the ports and related facilities both within and outside Australia;
encourage and facilitate private or public sector investment and participation, whether from within or outside the State, in the provision of services and facilities;
undertake such activities as will encourage and facilitate the development of trade or commerce for the economic benefit of the State.
The port facilities managed by the Corporation are located at Port Adelaide, Port Giles, Wallaroo, Port Pirie, Port Lincoln, Thevenard, Klein Point, Cape Jervis, Penneshaw and Kingscote.
The Corporation is not responsible for indentured ports which are privately operated, or for certain recreational facilities (eg jetties) which are managed by the Department for Transport, Urban Planning and the Arts.
During 1997-98, the South Australian Government announced that it was considering the sale of the Corporation. As a result, a scoping review was initiated to examine a range of feasible options and to provide the Government with relevant advice so that it may determine its long term policy and regulatory role in sea transport in South Australia. In particular, the scoping review was to look at the future of the Corporation and to advise on the approach necessary to implement the selected option.
Following the announcement of the scoping review, a Ministerial direction was given to the Corporation pursuant to section 6 of the Public Corporations Act 1993, which limited the Corporation entering into any long term commitments, and providing direction on information to be made available to the review team.
In April 1999 the Government announced its intention to proceed in principle with the sale of the Corporation and established the Ports Corp Sale Project Team within the Department for Administrative and Information Services. Since that time a private sector corporate advisory firm has been appointed to ‘… assist the Government to achieve a vibrant, competitive transport sector for South Australia and maximise the value of the Ports Corp trade sales’.
In November 1999 the Government announced that the Kangaroo Island ports, including Kingscote, Penneshaw and Cape Jervis would be separated from the sale, as these ports ‘… are community ferry ports and quite different from the larger commercial wharves that operate elsewhere in the state’. Navigational aids, channels and breakwaters have also been excluded from the proposed divestment of South Australian Ports Corporation.
Three bills were introduced into Parliament
in May 2000 to provide for the disposal of the assets of the South Australian Ports
Corporation. At the time of the preparation
of this Report, the legislation was still before Parliament.
As a result of the sale process a Ministerial Direction was given to the Corporation on 28 May 2000, pursuant to section 6 of the Public Corporations Act 1993. The Direction included:
limitation on the Corporation employing staff and entering into agreements without the approval of the Minister;
a requirement for the Corporation and its staff to cooperate with those responsible for the sale or lease of the Corporation;
a requirement ‘To enter into negotiations with any potential purchaser or lessee of Ports Corp assets … in accordance with a request by the Minister …’
With respect to the latter point, subsequent requests have been made in writing by the Minister with respect to:
a site currently used by the Royal South Australian Yacht Squadron;
parcels of land located at Port Pirie;
the transfer of Kangaroo Island related ports (Cape Jervis, Penneshaw and Kingscote) to the Minister for Transport and Urban Planning;
the negotiation of recreational access arrangements with relevant local councils.
The Corporation made a repayment of borrowings of $12.1 million which contributed to a decrease in cash of $8 million.
Subsection 32(4) of the Public Corporations Act 1993 provides for the Auditor-General to audit the accounts of the Corporation in respect of each financial year.
The audit program covered all major financial systems and was directed primarily towards obtaining sufficient evidence to enable an audit opinion to be formed with respect to the financial statements and internal control.
Work undertaken by Audit during the year indicated that there was a sound internal control environment in place, although opportunities were identified to enhance the existing controls. These matters were raised with the Corporation for consideration and a satisfactory response was received.
The Board Audit Committee met on a regular basis during the year to oversee the financial reporting and auditing processes. Representatives of the Auditor-General attended meetings of the Committee as observers.
Directors’ Questionnaires were used again in 1999-2000 to provide the Directors’ with a mechanism for assessing the internal controls and corporate governance practices within the Corporation. The representations from management included matters relating to the integrity and fairness of information conveyed within the financial statements, legal compliance, and the effectiveness of internal controls.
Internal Audit
The Corporation has an established internal audit function, which has been contracted to an external accounting firm. An internal audit plan was approved and monitored by the Board Audit Committee. Work undertaken by Internal Audit was considered in determining the nature and extent of external audit coverage.
The Department of Treasury and Finance’s Accounting Policy Statement APS 3 ‘Revaluation of Non-Current Assets’ requires physical non-current assets greater than $1 million to be revalued every three years. As the assets of the Corporation had last been revalued in July 1995 they were due for revaluation during 1998-99.
In June 1999 the Treasurer exempted the Corporation from compliance with APS 3 in the 1998-99 year due to the decision in principle to sell the Corporation. In June 2000 a further exemption was granted with respect to the 1999-2000 year.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987, the audit of the South Australian Ports Corporation included an assessment of the controls exercised in relation to the receipt, expenditure and investment of money, the acquisition and disposal of property and the incurring of liabilities.
Audit formed the opinion that the controls exercised by the South Australian Ports Corporation in relation to the receipt, expenditure and investment of money; the acquisition and disposal of property; and the incurring of liabilities, were sufficient to provide reasonable assurance that the financial transactions of the organisation were conducted properly and in accordance with the law.
Income from Cargo and Shipping Services and Port Operations decreased by $2 million (6 percent) due mainly to a decrease in usage of port facilities associated with a lower grain harvest.
Contributions to Government through dividend and tax payments increased by $2.2 million (27 percent). Contributions by the Corporation since 1995 have been as follows:
As a result of strong cash flows from operating activities and asset sales over the past four years, the Corporation has been able to significantly reduce its level of borrowings from $72.1 million in 1995 to $16.8 million in 2000. The significance of borrowings to the Corporation’s financial position is demonstrated in the following diagram:
