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Clause 2.
The Hon. M.J. ELLIOTT: When the Democrats went to the last election we had a slogan, `Don't sell SA short,' and I must say that I am bitterly disappointed to see that indeed this State is to be sold short and is to get a bad deal—although I suppose we should say more accurately that we are about to be `leased short' due to the agreement that apparently has been struck between the Government and the Hon. Trevor Crothers. I have tried to speak to the Hon. Trevor Crothers outside this place, because when he had last spoken in this place he had said that he was clearly opposed to the sale and gave a very impassioned speech on 11 August.
511 The Hon. T. Crothers: I still am.
The Hon. M.J. ELLIOTT: Well, I will get to that in a moment. The honourable member made a very impassioned speech on 11 August, and there was no reason for anybody in this place to believe that there had been any change—although perhaps the Treasurer has known for a little longer than the rest of us that there had been a change of mind. So, our only opportunity to discuss it with the Hon. Trevor Crothers is via this debate, although he now appears to have made another commitment in any case, but, nevertheless, it is worth a try. When the Hon. Trevor Crothers spoke on 11 August his first sentence read:
In rising to make a contribution to this debate let me first congratulate the Hon. Nick Xenophon for his ethical stand in respect of the Government's policy positions taken prior to the last election. The very last sentence of that speech read: I oppose the sale of ETSA at the second reading stage of this Bill and I urge all decent thinking, ethically minded members to do the same. I agree with him absolutely. There is a major issue before us about ethics and morality in politics. It is something of a standing joke in the community: `How can you tell a politician is lying? His lips are moving.' But it has gone well beyond a joke. At the last election, the Government clearly promised not to sell ETSA. At least one senior member of the Government, when sitting with me privately, admitted `we lied', and it was made quite plain to me that it was a deliberate and intentional lie. What this Parliament is in effect doing with this legislation is an endorsement of a lie—a big lie.It is fair to say that when people vote they do not vote on a single issue: they vote for a Party which they think best represents a wide range of matters they consider important and accept that on some matters they might disagree. But there is no question that at the last election the biggest single thing on people's minds was privatisation. So, the Government deliberately lied. People voted for the Government in the belief that ETSA would not be privatised. When they voted for the Democrats or for Labor they had a similar impression. Of course, there was not an SA First to vote for at that stage, but I suppose they assumed that the Hon. Terry Cameron as a member of the Labor Party would have been opposed to privatisation as well.
So, there has been an enormous lie and a deliberate lie, and now this Parliament is being asked to endorse it. Not only was there a deliberate lie at the last election but since that time there has been a deliberate pattern of deception and misleading by the Government in terms of the use of information and data. As the Government has sought to construct a case for sale, it has deliberately blurred risks associated with some parts of the electricity businesses and made this appear to apply to all. For instance, when the Government talks about market risk, I point out that there is no market risk in the major asset, which is the poles and wires. There is no real market risk there at all. It is a monopoly; it is a regulated asset; it is capable of giving a regulated return. In fact, it is exactly why some generating companies interstate are moving their emphasis to the poles and wires. The poles and wires simply had no risk whatsoever and had a guaranteed return. When this return goes into private hands, it will be extracted and will be much greater than that which the State Government currently gets from ETSA. So, when full deregulation strikes—and this will take about two years as the market is deregulated—we will pay the maximum that the regulator will allow, and the regulator will allow a lot more than the Government is currently taking from ETSA. The price of electricity in relation to the poles and wires part of the business will increase, and that money will leave the South Australian economy. There is no question about that, yet the Government tried to talk about risk as though it applied to what is the most valuable part of the asset, some arguing that as much as 85 per cent of the total electricity assets is the poles and wires. There is no risk; there is guaranteed return; and the guaranteed return will go to private operators who will take out a much bigger return than we currently get. Instead of paying through tax, we will pay much more—and forever—in our electricity bills.
When Government members talk about debt, it is a deliberate deception. We hear constantly how both the size and impact of the debt in South Australia have been overblown. When we hear about the amount of interest we pay on an annualised basis, we are not told that not only do we have debts upon which we are paying interest but that some of that money in fact is being re-loaned. There are parts of the commercial sector which do not count as part of Government debt and which are borrowing from the Government at a higher interest rate than the Government itself is paying. In other words, part of the debt and part of the interest payments are offset by the interest being paid by the commercial sector. The commercial sector has been meeting its own debts and has no problems with them, but the Government has quite happily collected together all the debt and interest payments because it makes a bigger number. It has been a deliberate deception in terms of the impact of interest on our economy and the budget bottom line. I do not intend to go on at great length about this dishonesty and deception: it is something which in fact my colleague and the spokesperson on this issue, the Hon. Sandra Kanck, has covered on many occasions. But it has to be noted that there was not just the big lie: the whole process of trying to persuade the public on the matter and trying to persuade some members of the Labor Party to move has been based on deliberate misrepresentation of the true situation. One only needs to consider the views of some independent commentators such as Professor Richard Blandy to see what is the true economic impact on the State. Professor Blandy makes it quite plain that the benefits the Government claims for the sale are simply not there. They are not my claims about the numbers: this is Professor Blandy and others who have been through the numbers with a fine toothcomb and who tell us that the State's bottom line will be worse off.More importantly, what really worries me is that when this legislation is finally passed not only will we not get the economic benefits that are claimed but there will be a number of costs. There are a whole lot of issues which have not been addressed, issues which are capable of being addressed by way of the committee for which the Hon. Nick Xenophon has moved.
Let us try a couple of these issues. When Flinders Power is privatised I expect that Western Mining Corporation will then seek to sign a long-term contract. Western Mining Corporation does not need to buy via the pool. All small and medium businesses will; all domestic consumers will buy from the pool; but Western Mining can buy direct. Clearly, WMC will try to strike a deal with Flinders Power, which happens to be the cheapest electricity producer in South Australia. That electricity will be taken out of the South Australian pool. Members need to understand that the price of electricity in South Australia at any one time is set by the highest bidder. The cheapest producer will largely be pulled out of the pool and will not be bidding into it, which means that the successful bidder will be bidding a quite high price. It will be a gas-based generator that will be bidding high. In fact, most of the time the last bidder will probably be what would previously have been a South Australian-owned generator, namely, Optima.
512 In terms of total market share, it is the dominant player in the market. It will be setting the price most of the time. That is one of the reasons why Pelican Point is coming in with such confidence. It knows that it is competing with a slightly older gas generator; it knows that it can bid zero and that it will dispatch all the time. It knows that Optima will always be successful in making the last bid and that it will not be able to bid below the cost of production. So Pelican Point is not coming in at any risk.
In fact, we suspect that the Government might have given Pelican Point a better deal—but we do not know because no-one will tell us what the deal is—that at peak times if gas is short it will not be a problem for Pelican Point but it will be a problem for Torrens Island which will go over to burning oil, and when it does that the cost of electricity will go up. Of course, this will happen at peak times. The last bidder, Optima, is now having to generate at peak times at higher cost. What does that mean? It means that the last bidder will be generating at higher cost and will have to bid at the higher cost, and the whole market will pay that price. The Government is not creating competition in this market. If the Government was serious it would have created different structures. For instance, it would have taken Torrens Island A and B and separated them as companies with similar costs of production and forced them to bid against each other, not knowing who was going to be the last successful bidder. That would have left the Pelican Point operators at that stage not knowing precisely how the other two were going to behave and not knowing who would be the last bidder. At least that would have created some sort of competition in the market. However, the Government has not done that. In seeking to maximise the price that we will get in terms of the return on the asset now, the Government at the same time has guaranteed a maximisation of the price we pay for our electricity in South Australia. And it has gone further: it is now promoting the unregulated interconnect, which will mean one thing. As I understand it, when it delivers the electricity into the State it will be acting like a generator and it can choos