Electricty Supply

Extract from Hansard

Legislative Council
2 May 2001

Sandra Kanck
Deputy Leader Australian Democrats
Member of the Legislative Council

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The Hon. SANDRA KANCK: I rise to indicate my support for the motion, although I do not see it as having quite the same urgency that the opposition does because I already have a motion before the Council calling on the Premier to strip the Treasurer of responsibility for the electricity industry and at the same time to create a special minister for electricity supply. Nevertheless, despite not feeling that it is quite as urgent as the opposition does, I believe that there is an overwhelming case for taking action to strip the Treasurer of these responsibilities.

Many things were promised to this parliament if it was prepared to breach its collective commitment to the people of South Australia made at the last state election and allow the sale of our electricity assets. We were promised cheaper electricity should the `no privatisation' pledge at the last election be swept away. Instead, today we are on the cusp of enormous increases in the price of electricity for South Australian businesses. Those price increases are already beginning to bite in respect of investment and employment in South Australia.

Today Bob Goreing of Business SA reported to the Economic and Finance Committee that gross state product could be reduced to the tune of $200 million next financial year as a consequence of rising electricity prices-and that in fact might even be a conservative estimate. That this scenario was not foreseen by the Treasurer is a sin as great as the appalling deception of the South Australian electorate at the last state election. We privatised our generators despite the fact that supply was constrained.

The most basic rule of economics is that when demand outstrips supply prices will rise. The government blithely ignored that rule. The Treasurer blithely ignored that rule. We are now paying the price for that foolishness. The suggestion that the sale of our electricity utilities would be the financial saviour of the state was always total nonsense. I remind members of the report that I released back in 1998 on behalf of the Democrats when we came to the conclusion that we should not sell our electricity assets.

I have maintained contact with quite a number of people who work in our electricity supply industry; one of them rang me the other day and I found it interesting that he asked whether he was talking to Cassandra. I remember that back in February 1998 the Premier claimed `A disaster of State Bank proportions was looming if ETSA and Optima remained in public hands.' It seems in fact that we might be getting that disaster of State Bank proportions by having sold them off. Another very basic fact was ignored when the Treasurer talked of the benefits of the elimination of state debt by the sale of our electricity utilities. What we achieved was no more than-

The Hon. SANDRA KANCK: What we achieved was no more than a transfer of debt from the taxpayer to the electricity consumer and, of course, by and large these are the same people. The only difference now is that the holder of the debt is not the democratically elected government of this state but a series of private companies. Now they want their pound of flesh and they are extracting it with great efficiency. I have been told that the generators will recoup their total investment within just three years of the privatisation of ETSA. I also caution against the belief that once the market beds down relief will be on the way. The Victorian experience indicates that price increases are the long-term trend of private ownership and the national electricity market operated together. Might I add that I believe the ALP does have some culpability in this-

The Hon. SANDRA KANCK: -to ensure that we went down the path of competition policy in establishing this very flawed national electricity market. There are many other points that could be raised today, but I will hold my fire until I address my own motion in a few weeks. What I will say is that a total rethink on the issue of electricity supply is needed. If we do not have a rethink, the massive increases in the price of electricity that 3 000 businesses are facing will flow on to ordinary households.

The Treasurer is not the person to undertake this process. His stewardship of the privatisation has been an unmitigated disaster. It would be an enormous leap of faith to assume that he can now rectify the myriad problems of his own creation. Indeed, nothing short of the creation of a special minister for electricity supply is acceptable. The Premier must act now.