Electricity Privatisation

Extract from Hansard

Legislative Council
10 April 2001

Sandra Kanck
Deputy Leader Australian Democrats
Member of the Legislative Council

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The Hon. SANDRA KANCK: I seek leave to make a brief explanation before asking the Treasurer a question about electricity prices in South Australia.

The Hon. SANDRA KANCK: A short time ago in this chamber the Hon. Paul Holloway reminded members of an interview heard on 5AN this morning with Jeff Donahue, AGL's government and public affairs manager. He told listeners that grace period electricity customers in South Australia becoming contestable on 1 July this year face staggering price hikes of up to 80 percent and that the average price rise will be of the order of 30 per cent.

For the 3 000 medium-sized electricity consumers caught in the financial wildfire of this government's bungled electricity privatisation, this is a savage blow. It is no wonder that the Treasurer is now known as the `Prince of Darkness'. My questions to the Treasurer are:

1. Will he answer the question that I asked him as a supplementary a short time ago, that is, what is the government's estimated cost of the total increase in electricity for the 3 000 electricity consumers who will become contestable from 1 July this year?

2. What is the estimated total increase in annual electricity costs for the 300 state government entities that will become contestable from 1 July this year?

3. What assistance has the state government provided to the private businesses currently attempting to negotiate electricity contracts with electricity retailers?

The Hon. R.I. LUCAS (Treasurer): The honourable member has already answered the question about the reality in relation to the business customers who are coming up for contract now. It is not a question of what the government's estimate is: it is what is actually happening out there. All we know is what the honourable member knows, that is, statements similar to the statements that AGL has made today whereby the average price increase for customers is in the order of 30 per cent. It ranges from small reductions in price for some-

The Hon. R.I. LUCAS: I am not in a position to do a calculation of the total cost. I do not know the individual contracts of 3 000 customers. This is a private business. There is a private retailer-

The Hon. R.I. LUCAS: What every customer knows. Obviously, I am meant to know the electricity demand needs of 3 000 customers that are private businesses with a private retailer or a number of private retailers. It is not just AGL-there are six or seven private retailers. It is a bizarre question to expect anyone to know the private and commercial electricity demand details for 3 000 customers who are confidentially negotiating with six or seven private businesses. I know the Hon. Sandra Kanck is Deputy Leader of the Australian Democrats, but even for an Australian Democrat this is a bizarre question, with due respect-or with as much respect as I can provide-to the Deputy Leader of the Australian Democrats. Even for the Australian Democrats this is a bizarre question.

The Hon. R.I. LUCAS: There is a touch of sensitivity from the Democrats after the recent loss of their-

The Hon. R.I. LUCAS: Hear, hear! Throw him out. It is very disrespectful. I apologise and humbly confess that I do not know the confidential commercial details of 3 000 private businesses in South Australia; I also apologise and humbly confess that I do not know the commercial details of seven or eight private electricity retailers in South Australia; and I also apologise for not knowing the current negotiations going on between those seven or eight retailers and the 3 000 customers. In some cases-

The Hon. R.I. LUCAS: -one customer might be negotiating with three or four retailers. It is not just 3 000 commercial negotiations going on; there may be 5 000 or 6 000 commercial negotiations going on. I apologise to the Deputy Leader of the Australian Democrats for not knowing the details of all those discussions. We actually have a private market where negotiations are going on between private retailers and-

The Hon. R.I. LUCAS: -and private businesses in South Australia. It is impossible for anyone to be able to say with any accuracy at all what the total dollar quantum will be in relation to these issues. It is also impossible for anyone other than the retailers to know what they have offered. In the end AGL does not know whether TXU or Citipower have offered a different price- and in some cases we know they have-to the private businesses. Until 3 000 businesses sign up on contracts with either AGL or one of the competitive retailers in South Australia, it is impossible for anyone to say not only what the aggregate sum will be but also what the average will be.

Clearly, the person or the company best placed to put an indicator on the public record as to what the result is likely to be is AGL, because it is the dominant retailer at least for the next couple of years, and it has said that the average price increase is about 30 per cent-it ranges from small reductions for some, up to an 80 per cent increase for others, but it is an average of 30 per cent. I cannot offer anything more definitive in terms of the likely estimated impact other than the 30 per cent figure.

I indicated earlier to the Hon. Mr Holloway that it suits the political purposes of the opposition and the Democrats to pretend that this is all to do with privatisation, and I challenge the Hon. Sandra Kanck to explain why BHP Newcastle in New South Wales, under a non-privatised system, under government ownership and under a Labor government, is now facing a 50 per cent price increase for electricity at Newcastle.

The Hon. SANDRA KANCK: Sir, I have a supplementary question. As the Treasurer is preparing a state budget-

The PRESIDENT: Order! The honourable member will come straight to the question.

The Hon. SANDRA KANCK: -what is the estimated total increase in annual electricity costs for the 300 state government entities that will become contestable from 1 July this year?

The Hon. R.I. LUCAS: We will have a better feel for that when my colleague the Hon. Robert Lawson receives some preliminary results from the current negotiations and discussions that are taking place with retailers in South Australia for those businesses.