Electricity Leasing Amendments: Government Seeks Further Changes

Extract from Hansard

Legislative Council
17 November 1999

Sandra Kanck
Deputy Leader Australian Democrats
Member of the Legislative Council

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The Hon. SANDRA KANCK: The Statutes Amendment (Electricity) Bill is the latest instalment in the Olsen government's ideologically driven, on-the-run electricity privatisation program. With the Auditor-General detailing his concerns regarding the leasing process, it is opportune to remind the Council that the original Electricity Corporations (Restructuring and Disposal) Bill was dwarfed by subsequent Government amendments; in fact, more pages of government amendments than were in the original bill. So, we seem to be following a bit of a pattern here.

I wonder what role the ferociously expensive consultants have played in this particular ongoing debacle. Will Alex Kennedy again be burning the midnight oil with taxpayers' money in an attempt to explain away the pall of incompetence that has hung over the leasing process to date? In the Australian on Monday there was an article about the payments that have been made to this person for the 1998-99 financial year. Those figures indicate that with a former business partner she managed to get $400 000 for consultancy services, and in addition, in the same period, the Premier's department paid Ms Kennedy's private company, The Right Connection, $55 721 for speech writing services. Quite clearly it is a part-time job, because she was involved in the power privatisation consultancies. That must have been where most of her time went, but she also had time to write some speeches.

I wonder what sort of speeches the taxpayer got for $55 721. I wonder how long they were? I wonder how many speeches we got? I am willing to bet that we did not get value for money. I consider it quite obscene that this person gets $55 721 for speech writing services on a part-time basis when most people in the population do not earn that much in a year. It really is obscene.

The Hon. SANDRA KANCK: I am not maligning her at all: I am questioning the equity in here and also the government decision making with the reliance that it has on consultancies.

The Hon. SANDRA KANCK: You do not think that that is a high income? Of course, we are all aware that the Treasurer was away last week looking for some more buyers for the utilities. Again, that is another cost that the taxpayer will have to bear. I wonder whether any running tally is being kept on all these sorts of costs. For instance, will the Treasurer's trip appear on any balance sheet of outgoings against any money that might be made on the privatisation, or is it something that will appear somewhere else in the Treasury budget in its balance sheet?

At any rate, this bill proposes amendments affecting three acts: the Electricity Act 1996, the Electricity Corporations Act 1994 and naturally the Electricity Corporations ( Restructuring and Disposal) Act that we passed earlier this year. Of the proposed amendments, probably the most dominant is the provision relating to electricity pricing orders. I would like to know what this actually means for the government's commitment to cap at 1.7 per cent any variation between regional and metropolitan electricity prices. Is the government's commitment through to the year 2013 still in place?

In regard to the Electricity Corporations Act, I note from the Treasurer's speech that some assets and liabilities will not be transferred to purchasers-and I specifically note the word `purchasers'-because the government has finally given up on the pretence and is actually admitting that effectively ETSA is being sold. What is the government's intention with the transfer of shares held by SA Generation once transferred to the Treasurer? Almost comically we are also legislating to allow the purchaser of the retail business to have exclusive use of the ETSA name, and that such a valuable component of the business was not initially on offer is surely an elementary error.

The value of the ETSA name is interesting. A company using that name will probably be able to con domestic customers into thinking that it is the same entity with which they have been dealing for the past 50 years. I would be very interested to know what extra amount we will get in the price for handing over the name as well. I know the government will tell us it is not prepared to put a price on it, but now that the government is willing to sell the name could it please indicate what sort of percentage difference this is likely to make to the sale price?

The rewards go both ways for the private company and the government, although not for the taxpayers of this state. The private company, as I have said, gets to take over that name and have all the benefits that go with that-

The Hon. T.G. Roberts: It's to give the impression that nothing has changed.

The Hon. SANDRA KANCK: It certainly is. For the government, it gets to have a new entity called the RESI Corporation, and when the public has to deal with something called the RESI Corporation, they will not know what it is and they will not feel the same degree of anger about the privatisation. So, it is a pretty clever move. However, I would be interested to know what the acronym `RESI' stands for. I looked through the bill, and perhaps did not look carefully enough, but I could not see it expanded in the bill.

The Hon. SANDRA KANCK: No, that will not work: I would not be very happy with that. Fortuitously, because this bill also amends the Electricity Corporations ( Restructuring and Disposal) Act, it presents the opportunity for parliament to rectify a glaring deficiency in the capacity of the Auditor- General effectively to monitor the electricity utilities leasing process and communicate this information to members of parliament. As a consequence, I have placed on file amendments to allow the Auditor-General to publish any concerns that he has with the leasing process.

With the notice of motion given by the Treasurer this afternoon, I am pleased that the government has followed my lead in this matter and is willing to provide the opportunity for the Auditor-General to publish any concerns that he may have relating to the leasing process. It was the obvious solution to the problems created by the fact that parliament will be on an extended summer break when the government privatises the most valuable economic asset the people of this state own.

I have also proposed a further amendment to provide protection from criminal and/or civil proceedings resulting from the publishing of an extract or abstract from the Auditor- General's Report, provided that it was published in good faith and without malice. Given that the parliament will not be sitting during the crucial leasing period, this amendment is important to encourage robust debate on any concerns that the Auditor-General might raise. I suspect the parliament will not be sitting because so much of the government's bureaucracy will be involved in this process of privatisation. The government was clearly hoping that a four month break, while this was happening, would prevent any scrutiny and accountability of that process. Like the Hon. Paul Holloway, I express my concern about what has happened with the first probity auditor departing and a second probity auditor being appointed without any advice to the parliament.

The government can prove me wrong by supporting this amendment. If not, I urge all non-government members in this parliament to support this most democratic of all provisions. This amendment would give courage to the media, the public and members of parliament to vigorously debate any concerns that the Auditor-General might publish. We will support the second reading knowing that the earlier majority vote of this parliament to allow privatisation makes it inevitable. However, we do so noting that this continues the saga of the sell off of our electricity assets and the sell out of the South Australian people.

The Hon. R.I. LUCAS (Treasurer): I did not realise how much I had missed electricity debates! Having listened to the contributions of the Hon. Sandra Kanck and the Hon. Paul Holloway I note that nothing has changed since we last debated these issues. It might be best to address the individual issues raised by the Hon. Sandra Kanck in committee.

The Hon. SANDRA KANCK: In the light of the fact that this bill seeks to amend three acts, it has crossed my mind that there is the possibility that, as the government proceeds still further into this privatisation, it may find that there are other deficiencies in these acts. Given that we are not supposed to be sitting for four months, has the government considered the possibility that the parliament might need to be recalled in order to further amend any of these acts?

The Hon. R.I. LUCAS: No. The bill contains a hidden amendment which allows me to amend these bills whenever I feel like it.

The Hon. R.I. LUCAS: No. I said that tongue in cheek. The government has no intention of budgeting for an additional session to further amend the electricity legislation. We are hopeful that this will be the last of the required amendments. As the honourable member and others have indicated, when these bills were first introduced it was likely that further amendments would be required. That has been the case, and I am faithfully advised that, at this stage, we are not aware of any other provisions that need to be amended.

The Hon. SANDRA KANCK: Yesterday in this chamber, the Environment, Resources and Development Committee tabled its 37th report on the topic of mining oil shale at Leigh Creek. One of the committee's findings was as follows:

The committee finds there is a large low grade oil shale deposit at Leigh Creek and finds that this deposit has the potential for commercial realisation and should be taken into consideration when Flinders Power is to be leased.

The committee recommends that the commercial value of the oil shale deposit must be taken into account when considering the lease of Flinders Power and before a decision is made whether to include it as an asset covered by the lease.

I know that at the moment the government's intentions are all around the poles and wires, but I wonder what regard, if any, the government has yet had to that recommendation and what action is likely to result.

The Hon. R.I. LUCAS: I must confess that I have not had an opportunity to read the report. Over the coming weeks, as I put my feet up and do nothing else, I will take the opportunity to read the report. Certainly, from the government's viewpoint, we will give proper consideration to the recommendations of the committee and see whether or not we can agree with its recommendations. Certainly, I think in the broad sense, the answer is that, as we look at Flinders Power, we will consider what value there is in all the assets that relate to Flinders Power, including the particular asset to which the honourable member has referred. So, we will take that question on notice and, certainly, before we come to the privatisation process-which includes Flinders Power-we will determine a final position on that matter.

The Hon. SANDRA KANCK: I observed in one of the newspapers yesterday (the Age , the Australian , or it may even have been the Financial Review ; I am getting confused with the amount of reading that I am doing) an article that referred to the $4 billion privatisation process being at risk because of what was happening with the Auditor-General and probity. I am focusing at the moment on that figure of $4 billion. Throughout the long argument we had about whether or not we should privatise, the most common figures given were $5 billion to $6 billion, and suddenly we see an article stating $4 billion.

It might be that some assiduous journalist has worked out that poles and wires are 80 per cent of the asset and therefore has done some calculations of the expected total and come up with $4 billion. However, it does cause me to ask whether or not the Treasurer has established a break-even point which would be the minimum necessary to recover costs of the privatisation process and below which the government would not be prepared to sell.

The Hon. R.I. LUCAS: Every time we debate this bill we go through the same questions, and I am happy to do so again. The government is not going to play the game of putting on the public record the government's commercial valuations of its businesses. It does not serve the interests of the taxpayers of South Australia for us publicly to speculate about what we believe we might achieve through the leasing of our assets.

Secondly, I cannot really be held responsible for the estimates of individual journalists in newspapers that the honourable member cannot recall. I suspect it might have been the Melbourne Age and Penny Debelle. However, I really cannot be held responsible for how they come to their calculations. I can only assure the honourable member, as I have before, that they are certainly not the government's calculations: we do not provide them to journalists. They either make up the figures themselves or talk to people in the industry who say what the figure is; someone in their own newspaper might have an estimate for it; or I guess they pick it out of a hat. I am not sure. It is really an issue for individual journalists in terms of what figures they happen to use.

The Hon. Sandra Kanck: You do have a figure in your own mind somewhere? I am not asking what the figure is, but you do have one at which you would have to say we need to get this?

The Hon. R.I. LUCAS: If one takes it to extremes, the government is not going to privatise our businesses for $1. I am not going to say-

The Hon. Sandra Kanck: Bob Downe said this morning at the Fringe poster launch that he was going to ring you up and see whether he could get it on EFTPOS.

The Hon. R.I. LUCAS: On EFTPOS? I would love to talk to him. The government, based on all of its commercial advice and on the basis that it can proceed with the program within the time frame about which we are talking, is confident that it can comfortably exceed any notion of a break-even. The break-even analysis, as I have previously talked about, is an issue about which the honourable member has been interested. The honourable member has raised the issue on a number of occasions. The government will not speculate publicly about what a particular figure might or might not be.

The Hon. P. HOLLOWAY: I indicated during my second reading contribution that the opposition had some concerns about clause 17. I appreciate the answer that the Treasurer provided-and he was a bit more forthcoming than in the information he had provided earlier-but the opposition has not had the opportunity to speak to its affiliates, so I indicate at this stage the opposition opposes this clause. That is our position until we have a chance to further analyse the Treasurer's answer.

The Hon. SANDRA KANCK: I rise to respond to the concerns raised initially by the Hon. Mr Holloway. This is not a matter that has been drawn to the attention of the Democrats. The unions have not been in touch with me, unless there has been a phone call today, because I have not checked my message book to see, for instance, if they are seeking to speak to me. Given that, at least to the best of my knowledge, no attempt has been made by the unions to contact me, it does not strike me as if it is something that we need to go to the barriers on. Under those circumstances, I think that I am probably content to accept what the Treasurer is saying.