Electricity Motion

Extract from Hansard

Legislative Council
4 July 2001

Sandra Kanck
Deputy Leader Australian Democrats
Member of the Legislative Council

Parliament Index
2001 Autumn Sitting Index
Browse by Subject
Search all Democrats material
About the SA Parliament
Hansard on line

That this Council recommends that the Premier should relieve the Treasurer, the Hon. Robert Lucas, of all responsibility for the South Australian electricity industry and create a special minister for electricity supply to oversee and facilitate the security and reliability of the industry in this state,

which the Hon. R.R. Roberts had moved to amend by leaving out all words after `electricity industry'.

The Hon. SANDRA KANCK: As members will know, on Sunday another tranche of electricity customers became contestable in our electricity market.

The Hon. SANDRA KANCK: Yes, and tonight we are going to vote on my motion which calls for the Treasurer to be stripped of responsibility for the electricity industry and for a special minister for electricity supply to be appointed. I thank the members of this chamber who have contributed to the debate on this motion. I do note the amendment moved by the Hon. Ron Roberts, in which he attempts to cut off the latter half of the motion. I will not be accepting it in that form, because the issue of creating a special minister with responsibility for electricity supply is a very important component of this motion.

In concluding tonight I particularly want to concentrate on the response that was given by the Treasurer to my motion. I believe it is instructive of the state government's mindset regarding electricity, and perhaps the most disturbing aspect of the Treasurer's reply was the depth of his denial. At the very moment that South Australia is facing its most serious economic challenge since the collapse of the State Bank the Treasurer attempts to deny responsibility. `Nothing to do with me' he says. Nowhere in his reply did the Treasurer acknowledge his role in the ruinous escalation of electricity costs. He claims, as follows:

Yes, Treasurer, it is South Australian business and taxpayers that are losing money-hand over fist. Not a word of apology has he given to those contestable customers who have been ambushed by price increases of up to 100 per cent. Not even a nod towards his government's oft- repeated claim that privatisation of our electricity utilities was going to lead to cheaper power.

The Hon. SANDRA KANCK: Well, I expect so; I hope so. Members would know that many of these businesses are facing ruinous price increases. One Steel at Whyalla has price increases of 75 per cent for its electricity. One Steel was already paying $12 million per annum before these price increases hit them. I was up there in May and met with some of One Steel's executives and discussed what would happen if their prices went up for electricity. They told me that there would be a cost to the community because they would not be replacing anybody who left employment at One Steel.

We have seen one of South Australia's leading exporters, Sola Optical, facing a 62 per cent increase. We have seen our church based nursing homes facing increases of up to 45 per cent in their electricity cost. There is no way that organisations like that can cut back their costs. The only alternative, and it is one that the government should seriously look at as a consequence, is that some of the organisations that have got licences for beds for nursing homes may not proceed to develop them.

But the Treasurer seeks to lay the blame at the door of others. He conjures up the lame accusation that the Labor administrations of the 1980s failed to act on a government committee recommendation that a new coal-fired base load station be built by 1993. How that fact exculpates the conservative administrations that have held office in this state since 1993 is beyond me. After all, it was this government which refused to upgrade the generators at Torrens Island Power Station. The Treasurer referred in his speech to a media release I issued in 1998 entitled `Lucas caught with his pants down'. He claims it was factually incorrect. In that media release-

The Hon. SANDRA KANCK: In that media release I stated that the Auditor-General's Report showed that ETSA returned approximately $290 million to Treasury in the financial year 1998-99. The Treasurer stood in this place and claimed that part of that payment was interest on ETSA's debt and that I was misleading people about the amount of money ETSA contributed to the state's coffers. Nowhere did the Treasurer acknowledge the impact of the 1996-97 so-called special dividend. That transferred $450 million of state government debt onto ETSA's books and it had nothing to do with the operation of ETSA. It was a simple cash grab by this state government, and in the following year ETSA had to pay interest and repay the capital of that $450 million `dividend'.

Yet by some perverse logic the Treasurer imagines those interest payments and capital repayments should not be considered as state government income. It is the equivalent of an employer paying an employee's mortgage and pretending it is not part of the employee's income. The Treasurer should try that one on the taxation department. One wonders what the Treasurer imagines ETSA would have done with the money it spent on servicing the state government's debt-hide it under the carpet? The fact is that it would have been available for dividends, the very form of income the Treasurer likes to base his calculations on.

The Treasurer also likes to scoff at the use of EBIT when assessing the sale price of our electricity utilities. He suddenly goes very folksy when considering the earnings of our electricity companies. `Don't worry about that money', he says, `not all of EBIT made its way into the hands of Treasury anyway.' Using the Treasurer's logic, if a company did not return any dividends it would not be worth anything.

This leads us to a very important point: the lack of probity in the government's figures of interest saved by retiring the debt versus revenue forgone as a result of privatising the utilities. So, when the Treasurer talks about the financial benefits of selling ETSA, the people of South Australia can safely ignore him. The Treasurer has no credibility. He ignores the facts that do not suit his argument just as the honourable leader-

The Hon. SANDRA KANCK: And he has a firm friend in the Premier with this sort of behaviour.

The PRESIDENT: Order! The Hon. Sandra Kanck should adhere to her own motion, which is about the Treasurer and the words `reliability and security of the electricity industry'.

The Hon. SANDRA KANCK: Thank you, Mr President. I recently had the unfortunate experience of watching the Premier on television claiming that the state government had been misled by the economists regarding the operation of the national electricity market. It was a pitiful performance. Here was the man who had the resources of an entire state government and the additional support of $ 100 million worth of consultants claiming that he did not understand how the market would work in practice. He could not see that selling the generators with the constrained supply in South Australia was a recipe for higher prices: others could.

I refer to a letter from Mr Bruce Dinham, the former General Manager of ETSA, which was published in the Advertiser of 1 March 1998. The letter states:

Selling ETSA (including Optima) will not remove or reduce the burden of state debt. All it would do is transfer the burden from one group, the general taxpayers, to another, electricity consumers, and in the process is likely to increase the burden. The argument that privatisation will reduce electricity prices is nothing more than a fatuous cliche. It is more likely that privatisation would result in electricity tariffs even higher than the present excessive level.

Bruce Dinham, the former manager of ETSA, saw the future in March 1998. I would also like to quote from my own media release of 25 June 1998. I hope that the Hon. Mr Davis is listening. That was the day on which I announced that the Democrats would not support the government's privatisation legislation. I stated in that media release:

All the evidence indicates keeping ETSA and Optima in public hands will protect South Australian electricity users from predatory pricing.

South Australia, with the help of Labor defectors Crothers and Cameron, gave up that option. We are now paying the price, and so should the Treasurer. I urge this chamber to uphold proper standards of accountability and support this motion.