Australia Pacific LNG Pty Ltd & Ors v Building & Construction Industry (Portable Long Service Leave) Authority [2015] ICQ 13

INDUSTRIAL COURT OF QUEENSLAND CITATION: Australia Pacific LNG Pty Ltd & Ors v Building & Construction Industry (Portable Long Service Leave) Authority [2015] ICQ 013 PARTIES: AUSTRALIA PACIFIC LNG PTY LIMITED (ACN 001 646 331) (first appellant) AUSTRALIA PACIFIC LNG (CSG) PTY LIMITED (ACN 099 577 769) (second appellant) AUSTRALIA PACIFIC LNG (MOURA) PTY LIMITED (ACN 064 989 813) (third appellant) AUSTRALIA PACIFIC LNG CSG PROCESSING PTY LIMITED (ACN 109 043 487) (fourth appellant) AUSTRALIA PACIFIC LNG GLADSTONE PIPELINE PTY LIMITED (ACN 144 653 921) (fifth appellant) AUSTRALIA PACIFIC LNG CSG TRANSMISSIONS PTY LIMITED (ACN 138 156 466) (sixth appellant) AUSTRALIA PACIFIC LNG CSG MARKETING PTY LIMITED (ACN 008 750 945) (seventh appellant) AUSTRALIA PACIFIC LNG MARKETING PTY LIMITED (ACN 141 937 920) (eighth appellant) AUSTRALIA PACIFIC LNG (SHARED FACILITIES) PTY LIMITED (ACN 141 941 595) (ninth appellant) AUSTRALIA PACIFIC LNG PROCESSING PTY -- 1 of 19 -- 2 LIMITED (ACN 141 937 948) (tenth appellant) v BUILDING AND CONSTRUCTION INDUSTRY (PORTABLE LONG SERVICE LEAVE) AUTHORITY (respondent) CASE NO/S: C/2014/20 PROCEEDING: Appeal DELIVERED ON: 28 April 2015 HEARING DATE: 21 August 2014 MEMBER: Martin J, President ORDER/S: Appeal dismissed. CATCHWORDS: INDUSTRIAL LAW – INDUSTRIAL REGULATION OF PARTICULAR INDUSTRIES – BUILDING AND CONSTRUCTION INDUSTRY – OTHER MATTERS – where the Building and Construction Industry (Portable Long Service Leave) Act 1991 imposes levies on building and construction work – where the respondent made a determination in respect of the levies to be paid – where the determination was affirmed on appeal by the Industrial Magistrate’s Court – whether the price paid for goods manufactured and acquired outside Australia and thereafter incorporated into the project is a cost of building and construction work – whether GST paid by the first appellant on domestic goods and services supplied for the project is a cost of building and construction work – whether GST payable on goods imported by the first appellant for the project is a cost of building and construction work Acts Interpretation Act 1954, s 14A Building and Construction Industry (Portable Long Service Leave) Act 1991, s 3AA, s 66, s 67, 68, s 68A, s 72, s 73, s 74, s 80, s 89 Building and Construction Industry (Portable Long Service Leave) Regulation 2002, s 7 Construction and Tourism (Red Tape Reduction) and other Legislation Amendment Act 2014, s 7 CASES: Dixon v Anti-Discrimination Commissioner of Queensland [2005] 1 Qd R 33 HP Mercantile Pty Ltd v Commissioner of Taxation (2005) 219 ALR 591 Meridien AB Pty Ltd & Anor v Jackson & Ors [2014] 1 Qd R 142 Nominal Defendant v GLG Australia Pty Ltd (2006) 80 ALJR 688 -- 2 of 19 -- 3 APPEARANCES: G Thompson QC and P Bickford instructed by Clayton Utz for the first to tenth appellants P O’Shea QC and H Lakis instructed by McCullough Robertson for the respondent [1] The Building and Construction Industry (Portable Long Service Leave) Act 1991 (“the Act”) creates, in s 66, three levies which may be imposed on building and construction work. They are the: (a) building and construction industry training levy; (b) long service leave levy; (c) work health and safety levy. [2] Those levies are imposed on “building and construction work” as defined in the Act and are liable to be paid by the person for whom the work was, or is to be, done. [3] The levies are calculated by reference to a prescribed percentage of the cost of the work. In October 2011 the respondent (“the Authority”) made a determination setting the sum of $85,445,240 as the amount of the levies to be paid by the first appellant (“APLNG”). In November 2011 the appellants appealed that determination to an industrial magistrate. [4] The then Deputy Chief Magistrate heard the appeal and confirmed the determination of the authority. An appeal from that decision is now brought to this court under s 89 of the Act. The background facts [5] APLNG is involved in a substantial venture concerning the drilling for gas, the transmission of that gas, and the construction of gas liquefaction and purification facilities. The second to tenth appellants are wholly owned subsidiaries of APLNG and are involved in the ownership or delivery or both of various aspects of the venture. [6] For the purposes of the venture the work is divided into two sections – the “Upstream Project” and the “Downstream Project”. [7] The Upstream Project involves the development of gas fields (including all upstream wells, drilling and gathering infrastructure to support up to two LNG trains) and the construction of a gas transmission pipeline (of approximately 450 kilometres in length) to connect various gas fields in central Queensland to an LNG liquefaction, loading and export facility. [8] The Downstream Project involves the construction of the LNG facility comprising two or more LNG trains together with associated common infrastructure at Laird Point on Curtis Island near Gladstone. An LNG train comprises the gas liquefaction and purification facilities that are used to pool the gas to condense it into liquid form for storage in a tank until shipment. [9] Section 72 of the Act provides that a regulation may prescribe the amount imposed for the levies, as percentages of the cost of building and construction work. The relevant rate for each of the levies is prescribed by s 7 of the Building and -- 3 of 19 -- 4 Construction Industry (Portable Long Service Leave) Regulation 2002 (as at 6 June 2011) (“the Regulation”). Those percentages are: (a) Building and Construction Industry Training Levy – 0.1%; (b) Long Service Leave Levy – 0.3%; and (c) Work Health and Safety Levy – 0.125% [10] In July 2011 APLNG, for itself and the other appellants, submitted to the Authority the notification and payment forms required by s 67 of the Act with respect to the Upstream Project and the Downstream Project. In these forms APLNG estimated the cost of building and construction work for the relevant component of the venture to be as follows: (a) Upstream Project – $5,610,473,507 (b) Downstream Project – $5,914,209,899 [11] In arriving at the figure for the Upstream Project, APLNG excluded the following amounts from that estimate: (a) Non-APLNG projects – $226,814,559; (b) Operations and maintenance – $292,189,823; (c) Conditions required by EIS – $329,983,626; (d) QLeave factored into budget – $39,168,000; (e) Off shore costs – $1,004,710,845; (f) Own employee costs – $554,106,238; (g) GST – $625,073,042. [12] With respect to the Downstream Project, a similar exercise was carried out and the following amounts were excluded from the estimate provided by APLNG: (a) Non-APLNG projects – $502,351,495; (b) Operations and maintenance – $187,298,566; (c) Conditions required by EIS – $84,114,119; (d) QLeave factored into budget – $46,526,684; (e) Off shore costs – $2,190,054,023; (f) Own employee costs – $170,035,812; (g) GST – $725,798,845. [13] The Authority did not agree with the assessments provided by APLNG. With respect to the levies for the building and construction work in the Upstream Project, the Authority estimated the cost of the building and construction work at $8,055,848,808. In arriving at this estimate, the Authority included the amounts identified in paragraph 11(c), (e) and (f) above but did not include the amounts identified in paragraph 11 (a), (b) and (d). The Authority also included the amount of $560,640,736 as representing the GST component of the relevant costs. [14] The Authority also differed with respect to the Downstream Project. It estimated the cost of building and construction work at $8,229,435,017. In arriving at this estimate, the Authority included the amounts identified in paragraph 12(c), (e) and (f) above but did not include the amounts identified in paragraph 12(a), (b) and (d). The respondent also included the amount of $534,806,897 as representing the GST component of the relevant costs. [15] Under s 87 of the Act, APLNG requested the Authority to reconsider its assessments. The Authority did reconsider and affirmed the assessments it had earlier made. -- 4 of 19 -- 5 Relevant provisions of the Act [16] For the purposes of this appeal the following provisions of the Act (as at 6 June 2011) are relevant: 3AA Meaning of building and construction industry (1) The building and construction industry is the industry of constructing, deconstructing, reconstructing, renovating, altering, demolishing, relocating, maintaining or repairing any of the following— … (k) works for extracting, refining, processing or treating materials or for producing or extracting products and by-products from materials; (l) works for conveying products, by-products or materials; … (s) pipe lines; … (2) The building and construction industry also includes landclearing and site preparation, other than for farming. (3) The building and construction industry also includes the industry of, whether on or off site— (a) constructing a thing, other than ordinary stock for sale, in accordance with working drawings; or (b) deconstructing, reconstructing, renovating, altering, demolishing, relocating, maintaining or repairing a thing, other than ordinary stock for sale, constructed in accordance with working drawings. (4) The building and construction industry does not include the industry of performing maintenance or repairs of a minor nature to anything mentioned in subsection (1) or (3) for a person not substantially engaged in activity mentioned in subsection (1), (2) or (3). … 66 Imposition of levies The following levies are imposed on building and construction work— (a) building and construction industry training levy; (b) long service leave levy; (c) work health and safety levy. 67 Notification of building and construction work (1) If building and construction work is to be carried out, an approved form must be filed, as required under subsection (2), with the authority or its agent by or for the person for whom the work is to be done. Maximum penalty—40 penalty units. (2) The approved form must be filed— -- 5 of 19 -- 6 (a) if a development permit or compliance permit under the Sustainable Planning Act 2009 is required for the work—before the permit is given; or (b) if an approval under the Plumbing and Drainage Act 2002 is required for the work—before the approval is given; or (c) otherwise—before the work starts. (3) However, the form need not be filed if levy is not payable because of section 70(2)(a). (4) Also, if the actual cost of carrying out building and construction work is at least $50000 more than the amount on which the levy payable for the work was calculated, the person for whom the work was done must, within 30 days after the work ends— (a) give the authority notice of the increased cost of the work; and (b) pay to the authority the additional amount of levy payable because of the increased cost. Maximum penalty for subsection (4)—40 penalty units. 68 Offence for failure to pay levy A person liable to pay levy and not fully exempt from payment under section 71 must pay to the authority or its agent the amount of levy at or before the time for its payment. Maximum penalty—40 penalty units. 68A Deciding who is person for whom work is to be done or was to be done (1) This section applies for deciding who is the person for whom work is to be done or was to be done. (2) Regard may be had to any document or anything else reasonably likely to help to establish the identity of the person for whom the work is to be done or was to be done. (3) The authority may, by written notice given to a person, require the person to give the authority within a reasonable time a document or information or any thing else that may help to establish the identity of the person for whom the work is to be done or was to be done. (4) The person given a notice under subsection (3) must comply with the requirement, unless the person has a reasonable excuse. Maximum penalty—40 penalty units. (5) If a court finds that a person has contravened subsection (4), the court may, in addition to any order the court may make imposing a penalty, make any other order the court considers appropriate. (6) The person must comply with the order, unless the person has a reasonable excuse. Maximum penalty—40 penalty units. … -- 6 of 19 -- 7 72 Rate of levy (1) A regulation may prescribe percentages of the cost of building and construction work as the amount imposed for the following— (a) building and construction industry training levy; (b) long service leave levy; (c) work health and safety levy. (2) An amount calculated under subsection (1) is to be rounded to the nearest dollar (with 50c to be rounded downwards). 73 Meaning of cost of building and construction work (1) The cost of building and construction work is the total of all costs that relate to the work directly or indirectly. Examples of costs— costs of labour, materials, plant, equipment, design, project management, consultancy, prefabricated goods, commissioning, installation (2) Without limiting subsection (1), the total of all costs may be ascertained having regard to— (a) the contract price for the work; or (b) if the work is being done for someone other than the Commonwealth and involves more than 1 contract, the total of the contract prices. (3) Despite subsections (1) and (2), if there is no contract price or the authority is satisfied that the contract price, or the total of the contract prices, for carrying out the building and construction work does not accurately establish the total of all costs that relate to the work, the cost may be decided by the authority. 74 Liability for levy Levy for building and construction work must be paid by— (a) if the work is being done for the Commonwealth— the contractor engaged by the Commonwealth to carry out the work; or (b) if the work is being done for a local government, government entity or non-Queensland government entity—the local government or entity; or (c) if neither paragraph (a) nor (b) applies and under the Sustainable Planning Act 2009 an application is made to the assessment manager in relation to the work for a development permit for building work, plumbing or drainage work or operational work as defined under that Act—the applicant under that Act; or (ca) if paragraph (a), (b) or (c) does not apply and a request for compliance assessment under the Sustainable Planning Act 2009 is made in relation to the work—the person who requested the compliance assessment under that Act; or (d) if none of paragraphs (a), (b), (c) and (ca) apply and under the Plumbing and Drainage Act 2002 an application is made to a local government for an -- 7 of 19 -- 8 approval that authorises plumbing or drainage work—the applicant under that Act; or (e) otherwise — the person for whom the work is to be done. … 80 Additional provisions about levy (1) This section applies in relation to building and construction work for which the authority believes, on reasonable grounds, that levy is payable. (2) The authority may, by written notice, require anyone the authority reasonably believes has information or documents about the work, to give the authority the information and documents about the work, including the actual cost of carrying out the work, asked for in the notice within the reasonable time stated in the notice. (3) A person to whom a notice under subsection (2) is given must comply with the notice, unless the person has a reasonable excuse. Maximum penalty—40 penalty units. (4) If a court finds that a person has contravened subsection (3), the court may, in addition to any order the court may make imposing a penalty, make any other order the court considers appropriate. (5) The person must comply with the order, unless the person has a reasonable excuse. Maximum penalty—40 penalty units. (6) If— (a) the levy payable for the actual cost of carrying out the work is more than the levy that has been paid for the work; and (b) the difference between the cost of the work for which levy has been paid and the cost of the work for which levy is payable is more than the amount prescribed under a regulation; then, despite anything in section 74, each person for whom any of the work was or is to be done must, on receiving written notice from the authority, pay to the authority without delay the amount of additional levy decided by the authority as fairly attributable to the work done or to be done for the person. Maximum penalty—40 penalty units. (7) Payment of additional levy may be claimed and ordered in a proceeding for— (a) recovery of the additional levy brought in a court of competent jurisdiction; or (b) an offence against subsection (6) brought against the person liable to pay the additional levy. (8) The additional levy must be worked out under a regulation. -- 8 of 19 -- 9 [17] In the Schedule to the Act, the term “building and construction work” is defined to mean “work performed in the building and construction industry”. The issues before the Industrial Magistrate [18] Four issues were raised for consideration in the court below: (a) Whether the price paid for goods that are manufactured and acquired by or on behalf of APLNG outside Australia and which are thereafter imported and incorporated into the Upstream Project or the Downstream Project is a cost of building and construction work within the meaning, or for the purposes, of the Act (“the extraterritorial issue”); (b) Whether the amounts paid by APLNG corresponding to the GST payable by the supplier, in respect of the supply by an Australian supplier of goods or services that are acquired by or on behalf of APLNG for the Upstream Project or the Downstream Project, are a cost of building and construction work within the meaning, or for the purposes, of the Act, where the acquisition of those goods and services gives rise to an input tax credit equal to the amount of the GST payable by the supplier in respect of the supply (“the domestic GST Issue”); (c) Whether the GST that APLNG becomes liable to pay on goods that are imported into Australia by or on its behalf for the Upstream Project or the Downstream Project is a cost of building and construction work within the meaning, or for the purposes, of the Act, where that importation also gives rise to an input tax credit, equal to the GST payable on the importation of the goods (“the offshore GST Issue”); (d) Whether the costs incurred for the purposes of complying with approval conditions for the venture which are imposed by State and/or Commonwealth authorities under regulatory decisions or approvals are properly to be assessed as a cost of building and construction work of the venture within the meaning, or for the purposes, of the Act (“the approval conditions Issue”). [19] Only the first, second and third of the issues set out above are the subject of appeal in this court. The extraterritorial issue [20] APLNG undertakes a key coordination role for both the Upstream Project and the Downstream Project. In doing that, it is acting in its own capacity for that part of each project where it is the principal entity for which the work is undertaken. For those parts of each project where one of the other appellants is the principal entity for which the work is undertaken, APLNG acts in its capacity as agent for the particular appellant. [21] In order to procure the necessary goods and services and the carrying out of the works for each of the projects, APLNG (both for itself and as agent for the other appellants) has appointed Origin Energy Resources Limited (“OERL”) as the upstream operator for the Upstream Project and ConocoPhillips Australia Pty Ltd (“CPA”) as the downstream operator for the purposes of the Downstream Project. -- 9 of 19 -- 10 Origin was appointed as the corporate services provider in respect of the entire venture. OERL, CPA and Origin could enter into contracts with suppliers for the acquisitions of materials or services or both. The contracts into which they have entered include contracts for the acquisition of: (a) goods that are manufactured and acquired outside Australia; and (b) goods or services acquired from an Australian supplier. [22] Where OERL or CPA have entered into a contract as agent for one of the appellants, then each will pay the amounts invoiced by the supplier and then recharge the invoiced amount to the relevant appellant in accordance with the appropriate operating agreement. [23] Pursuant to the arrangement set out above, the appellants, either by themselves or through their agents, have entered into a number of contracts whereby they have acquired goods manufactured outside Australia. Examples of these goods include: (a) Line-pipe and associated goods manufactured outside of Australia that were delivered, first, to a facility in Malaysia for the application to them of a particular coating, and secondly, for delivery to APLNG at Gladstone; (b) Another appellant entered into a contract with a German company for the supply of goods comprising centrifugal compression trays and associated goods which were made outside Australia and were delivered to the appellant at a port in Northern Europe; (c) Another appellant entered into a contract for line-pipe and induction bends and associated goods – these were manufactured outside Australia and were delivered to a Malaysian facility for more work to be done and then they were delivered at Gladstone; and (d) APLNG entered into a contract with a Thai company for the sale of modularised pre-assembled units and separators – these were made outside Australia and were delivered to APLNG at ports in Thailand. [24] Other material of a substantial nature was also obtained and, in each case, the material was made outside Australia, and was delivered to one of the appellants or an agent outside Australia. With respect to each of the contracts for the supply of foreign sourced goods: (a) Title to the relevant goods passed to the relevant appellant prior to the goods entering Australian waters. (b) The relevant appellant (or its agent) imported the goods into Australia. (c) The contract price to be paid for the goods acquired overseas by the relevant appellant (or an agent) did not include any GST component. [25] The general arrangement was to this effect. Goods which were paid for and obtained overseas and later imported into Australia were, in some cases, called “free issue materials”. Those goods which were acquired by the appellants in that way have and will be made available to the contractors so that the contractors will then incorporate those goods into the contract works to be undertaken by them. It is the case with the various contracts that the contract prices do not include the cost of such “free issue materials”. [26] In simple terms, the appellants say that the costs of those goods which are: (a) bought overseas, (b) imported into Australia by the appellants, (c) provided at no cost to the contractors, -- 10 of 19 -- 11 (d) and incorporated into either the Upstream or Downstream Projects should not be included in the calculation in the cost of the building and construction work. [27] APLNG argues that to include the costs incurred by the appellants under contracts entered into and completed overseas is to impermissibly apply the Act extraterritorially. It argues that the range of costs incurred by the appellants in making off shore purchases should not be included in the “cost of building and construction work”. As a result, says APLNG, the various levies may not be applied to the costs of acquisition of those particular items. [28] Much of the appellants’ argument was directed to supporting the conclusion that the Act is presumed not to have any extraterritorial operation and that it does not expressly, nor by necessary implication, seek to have any such operation. [29] The construction of s 73 advanced by the appellants is that it only captures costs which are incurred in carrying out building and construction work in Queensland. It is then argued that, where the acquisition of goods occurs wholly outside Australia, that transaction does not involve the carrying out of building and construction work in Queensland. This, the appellants say, is because s 66 only applies a levy to building and construction work in Queensland. Thus, the cost of acquisition is not caught by the Act and only the cost of incorporating such goods into the building works in Queensland is subject to the levies. [30] The fallacy in that argument is that it overlooks the prescription in s 73 as to the category of costs which are caught by Part 8 of the Act. [31] Section 66 imposes levies on “building and construction work”. That term is defined to mean work performed in the building and construction industry. The very broad definition of “building and construction industry” is contained in s 3AA. It is not in dispute that the Upstream and Downstream Projects fall within that definition. The question that then arises is posed by s 73: what is the total of all costs that relate to the work directly or indirectly? [32] The term “relate to” is one of wide import. It requires only that there be some connection between two subject matters. But, in this case, it is unnecessary to discuss the many authorities upon the meaning of the term.1 The legislature has made clear that it intends that the widest net be thrown by using the words “directly or indirectly”. [33] Section 73(1) also contains examples of the type of costs intended to be covered. It includes the costs of plant, equipment, design, prefabricated goods and installation. [34] Section 73(2) allows the use of the contract price for the work as a means of ascertaining the total of all costs, but that is expressed to be without imposing a limitation on s 73(1). That the Authority is not bound by the contract price (and, thus, may look elsewhere) is made manifest by s 73(3): “Despite subsections (1) and (2), if there is no contract price or the authority is satisfied that the contract price, or the total of the 1 See, for example, the list referred to by Hill J in HP Mercantile Pty Ltd v Commissioner of Taxation (2005) 219 ALR 591 at [35]. -- 11 of 19 -- 12 contract prices, for carrying out the building and construction work does not accurately establish the total of all costs that relate to the work, the cost may be decided by the authority.” [35] In their written submissions, the appellants argue: “[35] It is the Appellants’ submission that s 73, when properly construed, captures costs which are incurred in carrying out building and construction work in Queensland. Therefore, where the acquisition of goods occurs wholly outside Australia, that transaction does not involve the carrying out of building and construction work in Queensland. It is only the subsequent incorporation of the goods into the building works in Queensland which involves the carry[ing] out of building and construction work in Queensland.” [36] Section 3AA and the Schedule to the Act define building and construction work by reference to the “constructing, deconstructing, reconstructing, renovating, altering, demolishing, relocating, maintaining or repairing” any of the many things set out in s 3AA(1). The acquisition of goods to be used in the carrying out of building and construction work will not constitute “building and construction work” no matter where it occurs because “acquisition” is not part of the meaning of that term. [37] Further, s 73 does not link the cost to any particular entity. It is not the cost to the principal or a contractor or a builder that matters. It is the total cost of the work. And that is to be determined by reference to all the costs both direct and indirect. It is recognised in s 73(2) that the relevant costs may be captured by the “contract price for the work”. [38] Section 74, likewise, does not link the cost to any particular entity. It merely identifies the entity liable for the levy. [39] The error in the approach taken by the appellants in their construction of s 66 and s 73 is that it proceeds on the basis that there needs to be an examination of each item used in the building and construction work with a view to determining whether the work which was done to create that item was done in Queensland. This led, during argument, to the “Chinese nails” argument. Nails made in China, for example, are not categorically different to pipes treated in Malaysia. Why then, would those nails not be excluded? The appellants drew back at this point. Their construction drove them to submit that a distinction should be drawn between the types of the items which were purchased overseas (such as pipes) and consumables (such as nails) which could also be bought overseas. On the appellant’s argument it would be possible for the cost of building and construction work being done in Coolangatta to be confined to the cost of labour if all the necessary materials were obtained (and title to them passed) in Tweed Heads. [40] This approach requires the conclusion that, in some way which was not identified, the individual pipes which were bought overseas were not “consumed” when they were joined to form a pipeline. This is a conclusion which finds no support in the Act. -- 12 of 19 -- 13 [41] The levy is not just imposed on the costs of the work done in Queensland but on the total of all costs that relate to the work directly or indirectly. The Construction and Tourism (Red Tape Reduction) and other Legislation Amendment Act 2014 (“the Red Tape Act”) [42] Both the appellants and the respondent referred me to the Red Tape Act. It came into effect on 1 July 2014. If it is construed as the appellants contend, then: (a) the cost of acquiring material overseas which is used in building and construction work is a cost subject to the levies, but (b) GST is not included in the cost of building and construction work. [43] Both the appellants and the respondent took me to the Explanatory Note which accompanied the Bill upon which Red Tape Act was based. This is, of course, permissible under s 14A of the Acts Interpretation Act 1954. Unfortunately, to do so with a high expectation that extrinsic materials will clear the path to finding the true construction is no more than the triumph of hope over experience. [44] So far as is relevant, the Red Tape Act amended s 73 of the Act as follows: “7 Amendment of s 73 (Meaning of cost of building and construction work) (1) Section 73(1) and (2)— omit, insert— (1) The cost of building and construction work is the total of all costs (excluding GST) that relate to the work directly or indirectly, less any exempt costs. Examples of costs— costs of labour, materials, plant, equipment, design, project management, consultancy, prefabricated goods, commissioning, installation (2) Without limiting subsection (1), the total of all costs— (a) includes the direct and indirect cost of all materials— (i) manufactured, purchased, acquired or otherwise sourced interstate or overseas; and (ii) used for the work in Queensland; and (b) may be ascertained having regard to— (i) the contract price for the work; or (ii) if the work is being done for someone other than the Commonwealth and involves more than 1 contract, the total of the contract prices.” (emphasis added) [45] APLNG argued that reference can be made to amending legislation to construe earlier legislation if the object of the amendment is to clarify the earlier provision. The contention that the object of this part of the Red Tape Act was to clarify the earlier section arose from the relevant part of the Explanatory Note. It is appropriate to take account of explanatory notes to determine whether a Bill is meant to clarify -- 13 of 19 -- 14 rather than change the meaning of a word.2 At the same time, it must be remembered that it is the words of the statute, not non-statutory words seeking to explain them, which have paramount significance.3 [46] The Explanatory Note provided: “The Bill amends the Building and Construction Industry (Portable Long Service Leave) Act 1991 to: … • clarify what is included and what is exempt in the meaning of cost of building and construction work. This will not only reduce the cost to the building and construction industry but also the cost incurred to Queenslanders for whom work is done; … Clause 7 clarifies what is included and what is not included in the total cost of building and construction work. The total cost of building and construction industry work is calculated regardless of where the goods, materials, supplies and/or services are collated from for work in Queensland. Clarity has also been provided that GST is not included in the total cost of building and construction industry work.” (emphasis added) [47] The extent to which “clarifying” legislation may be taken into account has been considered in a number of cases. But, before engaging in that exercise, a reader must be reasonably confident that the legislation is intended to clarify rather than change. Perhaps the drafter of the Explanatory Note was not entirely familiar with the baggage which comes with use of the word “clarity”. In any event, the Second Reading Speech of the Attorney-General deals with the GST amendment in a straight forward way. He said: “The bill clarifies components of the Building and Construction Industry (Portable Long Service Leave) Act 1991 to ensure an equitable and efficient system of portable long service leave in the building and construction industry. In addition, the bill takes into consideration concerns raised by the Queensland Resources Council regarding the changing face of building and construction and its integration with the mining industry, by ensuring the portable long service leave scheme is fair and equitable across the resources sector and maintains simplicity and efficiency in administration. The bill provides cost savings and minimises red tape to the system through the following changes: by removing the GST component from the leviable cost of work—it is estimated that this will save the industry approximately $10 million per annum; by clarifying those who are not substantially engaged in the building and construction industry and not required to pay the levy; by removing the costs associated with undertaking feasibility studies and 2 Dixon v Anti-Discrimination Commissioner of Queensland [2005] 1 Qd R 33 at [17]. 3 Nominal Defendant v GLG Australia Pty Ltd (2006) 80 ALJR 688 at [22]. -- 14 of 19 -- 15 environmental impact assessments from the leviable cost of work, enabling expected savings of approximately $0.5 million per annum; by clarifying long service leave eligibility for building and construction workers; and by confirming that private certifiers as well as councils are remunerated for sighting the requisite notification and payment form for a development application approval.”4 [48] The Attorney-General made no specific reference to what is included and what is not included in the total cost of building and construction work. [49] The use to which amending legislation may be put was considered by Muir JA in Meridien AB Pty Ltd & Anor v Jackson & Ors5. That case concerned, in part, the effect of an Act which amended the Land Sales Act 1984.6 Muir JA said: “[45] In construing s 27 in its unamended form, regard may be had to the amending legislation. In Deputy Federal Commissioner of Taxes (SA) v Elder’s Trustee and Executor Co Ltd Dixon, Evatt and McTiernan JJ said in a passage, which has often been repeated: ‘An Act of Parliament does not alter the law by merely betraying an erroneous opinion of it‘ (Maxwell, Interpretation of Statutes, 6th ed. (1920), p. 544, and, per Lord Atkinson, Ormond Investment Co. v. Betts). ‘Where the interpretation of a statute is obscure or ambiguous, or readily capable of more than one interpretation, light may be thrown on the true view to be taken of it by the aim and provisions of a subsequent statute’ (per Lord Atkinson). In Cape Brandy Syndicate v. Inland Revenue Commissioners, Lord Sterndale said: ‘I quite agree that subsequent legislation, if it proceed upon an erroneous construction of previous legislation, cannot alter that previous legislation; but if there be any ambiguity in the earlier legislation, then the subsequent legislation may fix the proper interpretation which is to be put upon the earlier.’ [46] Dixon J, in Grain Elevators Board (Vic) v Dunmunkle Corporation, said: ‘It would be a strange result if we were to interpret the prior legislation as giving a wider exemption than that conferred by the [later] provision so that the express exemption it makes would prove unnecessary and the qualifications it places upon that exemption would be futile.’ 4 Record of Proceedings, 20 May 2014, p 1638. 5 [2014] 1 Qd R 142. 6 In his Second Reading Speech the Attorney-General said (among other things): “I am also moving an amendment to the bill to clarify the meaning of section 27 of the Land Sales Act”. -- 15 of 19 -- 16 [47] That passage was referred to by Dawson J in Hunter Resources Ltd v Melville, where his Honour said: ‘In Grain Elevators Board (Vict.) v. Dunmunkle Corporation Dixon J. expressed the view that an amending Act might be taken into account in the interpretation of the prior legislation, at least to avoid a result that would render the amending legislation unnecessary or futile.’ [48] However, in determining the proper construction of earlier legislation, regard must be had to the possibility that the amendments were made out of an abundance of caution in order to remove doubt. In Interlego AG & Anor v Croner Trading Pty Ltd, Gummow J relevantly said: “There is a line of authority that an amendment may be taken into account in determining the scope of the prior legislation, at least to avoid a result which would render the amendment unnecessary, or futile or deficient: see especially Grain Elevators Board (Vic) v Dunmunkle Corporation; Hunter Resources Ltd v Melville. But in doing so caution should be exercised: see D C Pearce and R S Geddes, Statutory Interpretation in Australia (3rd ed, 1988), §3.26. It is, after all, a curious way of revealing parliamentary intention at the time of passing the earlier provision. As was observed by Viscount Haldane LC in Re Samuel: ‘It is not a conclusive argument as to the construction of an earlier Act to say that unless it be construed in a particular way a later enactment would be surplusage. The later Act may have been designed, ex abundante cautela, to remove possible doubts.’” (citations omitted) [50] The effect of the Red Tape Act can only be assessed in the light of the proper construction of the Act. [51] I have held that the cost of items obtained overseas and imported into Australia for incorporation into either the Upstream or Downstream Projects is subject to the levies. In the light of that holding, the effect of s 7(2)(a)(i) of the Red Tape Act should, therefore, be seen as clarifying legislation intended to remove doubt which may have existed as to the applicability of the levies. [52] The GST issue is different. Did the Act impose the levies on GST? Domestic supplies [53] APLNG summarises its principal submission in this way: -- 16 of 19 -- 17 “ … the term ‘cost’, as it appears in s 73(1) of the Act, should be construed as referring to the actual cost of building and construction work … it follows that any amounts paid on account of GST in respect of the supply by an Australian supplier of goods and services acquired by or on behalf of the Appellants for the Appellants’ Upstream Project or Downstream Project, but which amounts are then offset by input tax credits, are not components of the cost of building and construction work within the meaning … of the Act.” [54] The Authority correctly responds to that by submitting that the appellants make no such payment. A purchaser pays a contract price. The vendor incurs a liability for the GST on that sale. While the purchaser can claim an input tax credit for the amount of the GST it does not mean that the cost of an item is, in the hands of the purchaser, altered in some way. That is, an input tax credit does not have a discounting or offsetting effect on the “contract price”. [55] In their written Reply, the appellants restructured their argument to say that “actual cost” requires that the entitlement to input tax credits is to be taken into account. The term “actual cost” only appears in s 67(4), s 80(2) and s 80(6)(a) and none of those references are relevant to this argument. [56] The arguments between the parties on this issue are very complex and involved a careful examination of the GST legislation. But, the issue is not so intricate. How should the GST elements in the cost of goods and services be regarded? Are they costs? The appellants say that they are not because of the treatment afforded them under the relevant tax legislation. That, with respect, is not the correct way to view this question. [57] The Act does not require that there be such an intensive examination of the internal tax affairs of a person to whom the levies apply. The words of the section are plain: “The cost of building and construction work is the total of all costs that relate to the work directly or indirectly”. The fact that, at some later stage, some categories of persons subject to the levy may be able to set off GST credits against a liability to pay GST on its own supplies does not prevent the GST element from being a cost at the time of payment. [58] The appellants’ argument requires that consideration be given to the manner in which a person’s tax affairs are arranged. For example, the appellants have taken advantage of the grouping provision under the relevant legislation so that APLNG is entitled to the benefit of all the input tax credits acquired by the appellants. Thus, the 2nd to 10th appellants may not claim such credits but APLNG may. [59] Part 8 of the Act relates to “costs” and it does not distinguish between those which are incurred and might then be the subject of some favourable tax treatment and costs which are not. To proceed in the way advanced by the appellants would be to ignore the fact that the relevant GST legislation denies many operations, such as financial institutions, the capacity to claim input tax credits. The long title of the Act is: “An Act to provide an equitable and efficient system of portability of long service leave in the building and construction industry, and for other purposes.” An “equitable” system would not, ordinarily, see people being treated differently dependent upon their own tax situation. Further, while the input credits may only be -- 17 of 19 -- 18 used with respect to a GST liability which otherwise arises, there is little difference in concept (for the purposes of this exercise) between an input credit and a deduction which might otherwise be available for the goods and services acquired in the process of construction. [60] I turn now to the effect of the Red Tape Act. I have held, above, that the amendments contained in s 7 of the Red Tape Act had the effect of clarifying the operation of Part 8 of the Act so far as it concerns the cost of materials. Section 7 also amended the Act with respect to the issue of GST. It explicitly excluded GST from the cost of building and construction work. The argument which has taken place between the parties about whether or not the cost of building and construction work includes GST means that it is permissible to examine the Explanatory Note and the Second Reading Speech to obtain assistance. While the Second Reading Speech refers to the inclusion of words which show that costs include goods obtained from outside Queensland, the words are slightly different with respect to GST. The explanatory note provides: “Clarity has also been provided that GST is not included in the total costs of building and construction work.” [61] If that were all that had been said then it might be arguable that, so far as the GST issue is concerned, s 7 only worked to clarify that GST had never been intended to be included. That, though, is inconsistent with the clear words in the Second Reading Speech that the GST component is removed from the leviable cost of work. There is no lack of precision in what the Attorney-General said. He went on to say that the removal of the GST component was estimated to save “the industry approximately ten million dollars per annum”. If the GST component had not been a part of the leviable cost, then no such saving could occur. In any event, the contents of extrinsic material can only be used to assist the comprehension of, not override, the plain words of a statute. The words of Part 8 compel the conclusion that there is no reason for the GST component in the costs of building and construction work to be excluded from the amount upon which a levy is imposed. Foreign supplies [62] The appellant argues that any GST liability that arises in respect of the importation of goods into Australia which is subject to GST but which is then the subject of offset of input tax credits does not constitute a leviable cost. There is a difference between the application of GST on domestic and imported goods. When someone imports goods into Australia then the importer is liable and not the supplier. [63] The GST on imports is, with respect to the arguments of the appellant, a cost under s 73 of the Act. The GST arises immediately upon entry of imported goods for home consumption into Australia. That liability attaches to the importer. That amount of GST falls within the description of a cost that relates directly or indirectly to the building and construction work. [64] The appellant contended that the existence of a GST deferral scheme alters the character and therefore leviability of the amount of GST. To the contrary, the liability remains. When it is to be paid is the subject of negotiation between the importer and the Australian Tax Office. -- 18 of 19 -- 19 [65] Under the grouping provisions the liability to pay the GST falls on the representative member rather than the particular appellant. Nevertheless, the liability to pay GST arises. Once again, the manner in which the individual appellants have constructed their taxation position is a matter for them. I do not, in any way, suggest that anything they have done was unlawful. That is not the point. While the appellants are entitled to engage in grouping and deferral, it does not change the nature of the transaction. The GST remains a cost. How it is treated by the appellants is irrelevant for the purposes of the Act. [66] The Red Tape Act, and the Second Reading Speech of the Attorney-General provide support for the contention that, when the Red Tape Act was passed, it was parliament’s intention that the levy no longer apply to GST. It is consistent with the argument I have set out above that, before the amendment, the Act did include GST as part of the leviable cost of building and construction work, no matter whether it was incurred through the acquisition of domestic supplies or by importing material. Conclusion [67] The appellants have not demonstrated that the court below fell into error. The appeal is dismissed. -- 19 of 19 --